SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
__________________________________

SCHEDULE 13E-3

Amendment No. 1

RULE 13E-3 TRANSACTION STATEMENT
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934 and
Rule 13e-3 ((S)240.13e-3) thereunder)

Petroleum Heat and Power Co., Inc.
(Name of Issuer)

Petroleum Heat and Power Co., Inc.
Star Gas Partners, L.P.
Star Gas Corporation
(Name(s) of Person(s) Filing Statement)

-----------------------------------------

Class A Common Stock, par value $.10 per share
(Title of Class of Securities)

-----------------------------------------

716600 309
(Cusip Number of Class of Securities)

-----------------------------------------

Joseph P. Cavanaugh                   Irik P. Sevin
President                             Chairman of the Board and
Star Gas Corporation                   Chief Executive Officer
2187 Atlantic Street                  Petroleum Heat and Power Co., Inc.
P.O. Box 120011                       2187 Atlantic Street
Stamford, Connecticut 06912-0011      Stamford, Connecticut  06902

(Name, Address and Telephone Number of Persons Authorized
to Receive Notices and Communications on Behalf of Person(s)
Filing Statement)

------------------------------------------------------------

With Copies To:

Michael Rosenwasser, Esq.  Alan Shapiro, Esq.       R. Joel Swanson, Esq.
Andrews & Kurth, L.L.P.    Phillips Nizer Benjamin  Baker & Botts, L.L.P.
805 Third Avenue            Krim & Ballon LLP       One Shell Plaza
New York, NY 10022         666 Fifth Avenue         910 Louisiana
(212) 850-2800             New York, NY 10103-0084  Houston, TX 77002-4995
(212) 977-9700           (713) 229-1300

This statement is filed in connection with (check the appropriate box):

a.  [X]  The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the
Securities Exchange Act of 1934.

b.  [X]  The filing of a registration statement under the Securities Act of
1933.

c.  [_]  A tender offer.

d.  [_]  None of the above.

Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies: [X]

Calculation of Filing Fee

- ------------------------------------------------------------------------------ 
Transaction Valuation*                             Amount of Filing Fee
- ------------------------------------------------------------------------------

$26,148,106.30                                       $5,230

*    Calculated by multiplying $0.9844, by 26,562,481, the sum of the number of
shares of Common Stock to be converted in the Transaction.

[X]  Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.

Amount Previously Paid:  $9,825
Form or Registration No.: Registration Statement on Form S-4; 
SEC File No. 333-66005
Filing Party:  Star Gas Partners, L.P.
Date Filed:  October 22, 1998

INTRODUCTION

This Rule 13e-3 Transaction Statement on Schedule 13E-3 (the "Schedule 13E-
3") is being filed by (1) Petroleum Heat and Power Co., Inc, a Minnesota
corporation (the "Issuer"); (2) Star Gas Partners, L.P., a Delaware limited
partnership and an indirect subsidiary of the Issuer (the "Partnership"); and
(3) Star Gas Corporation, a Delaware corporation and a wholly-owned subsidiary
of the Issuer ("Star Gas") and the general partner of the Partnership, pursuant
to Section 13(e) of the Securities Exchange Act of 1934, as amended, and Rule
13e-3 thereunder, in connection with a transaction (the "Transaction")
consisting of (a) the merger of a wholly-owned indirect subsidiary of the
Partnership ("Mergeco"), with and into the Issuer (the "Merger"), with the
Issuer surviving the Merger as an indirect wholly-owned subsidiary of the
Partnership, and the conversion of each outstanding share of Class A and Class C
common stock, par value $.10 per share of the Issuer, (the "Common Stock"), into
senior subordinated units of limited partner interest ("Senior Subordinated
Units") of the Partnership, upon the terms and subject to the conditions set
forth in a certain Agreement and Plan of Merger dated as of October 22, 1998
(the "Merger Agreement") among the Issuer, the Partnership and Mergeco, et al.,
a copy of which is filed as Exhibit (c)(1) hereto; and (b) the exchange (the
"Exchange") (1) by certain holders of shares of Common Stock of the Issuer that
are affiliates of the Issuer (the "LLC Owners") with (A) Star Gas LLC, a
Delaware limited liability company, of a portion of the Common Stock (the "LLC
Shares") held by the LLC Owners for 100% of the limited liability company
interests in Star Gas LLC (which in turn will exchange the LLC Shares with the
Partnership for General Partner Units) and (B) with the Partnership, of their
remaining shares of Common Stock held by the LLC Owners, for junior subordinated
units of limited partner interest ("Junior Subordinated Units") of the
Partnership, and (2) by certain other holders of Common Stock, that are
affiliates of the Issuer with the Partnership, of their Common Stock for Senior
Subordinated Units, upon the terms and subject to the conditions set forth in a
certain exchange agreement dated October 22, 1998 (the "Exchange Agreement")
among the Issuer, the Partnership, the LLC Owners and the other affiliated
holders of Common Stock referred to above, a copy of which is filed as Exhibit
(c) (2) hereto.

The following Cross Reference Sheet, prepared pursuant to General
Instruction F to Schedule 13E-3, shows the location in the joint proxy statement
and prospectus of the Partnership (the "Proxy Statement"), included in the
registration statement on Form S-4 (the "S-4") filed by the Partnership with the
Securities and Exchange Commission on the date hereof, of the information
required to be included in this Schedule 13E-3.  The information set forth in
the S-4, including all exhibits thereto and the Annual Report on Form 10-K of
the Issuer for its fiscal year ended December 31, 1997 (the "Petro 10-K"), the
Proxy Statement of the Issuer for its 1998 annual meeting of shareholders (the
"Petro Annual Meeting Proxy Statement") and the Annual Report on Form 10-K of
the Partnership for its fiscal year ended September 30, 1997 (the "Partnership
10-K") are hereby expressly incorporated herein by reference as set forth in the
Cross Reference Sheet and the responses in this Schedule 13E-3, and such
responses are qualified in their entirety by reference to the information
contained in the Proxy Statement, the

2

annexes thereto, the Petro 10-K, the Petro Annual Meeting Proxy Statement and
the Partnership 10-K which are incorporated by reference in and/or accompany the
Proxy Statement.

The information contained in this Schedule 13E-3 concerning the Issuer,
including, without limitation, the information concerning the background of the
Transaction, the deliberations of the Issuer's Board of Directors in connection
with the Transaction, the opinion of the Issuer's financial advisor and the
Issuer's capital structure and historical financial statements of the Issuer,
was supplied by the Issuer.  The Partnership and Star Gas take no responsibility
for the accuracy or completeness of such information.

The information contained in this Schedule 13E-3 concerning the
Partnership, including, without limitation, the information concerning the
background of the Transaction, the opinion of the financial advisor to the
special committee (the "Special Committee") of the board of directors of Star
Gas, the Partnership's capital structure and historical financial statements of
the Partnership, was supplied by Star Gas, on behalf of the Partnership.  Petro
takes no responsibility for the accuracy or completeness of such information.

3

CROSS REFERENCE SHEET

Item in                                            Where Located in
Schedule 13E-3                                     Proxy Statement
- --------------                                     ----------------

Item 1(a).............................  Cover Page, "Proxy Statement Summary
- Parties - Petro" and "Parties and
Conflicts - Parties to the Transaction
- Petro"

Item 1(b).............................  Cover Page, "Proxy Solicitations - The
Special Meeting - Petro Record Date,"
"Proxy Solicitations - The Special 
Meeting - Voting Rights; Vote Required"
and "Proxy Solicitations - The Special
Meeting - Petro Preferred Stock"

Items 1(c) and (d)....................  "Comparative Security Price and
Distribution Information - Petro Capital
Stock -Class A Common Stock,"
"Comparison of Securities -
Distributions and Dividends" and
"Incorporation of Certain Documents by
Reference"

Item 1(e).............................  *

Item 1(f).............................  *

Items 2(a) - (d) and (g)..............  Cover Page, "Proxy Statement Summary
- Parties," "Parties and Conflicts -
Parties to the Transaction," "Management
of the Partnership After the Transaction
- Officers and Employees of the Operating
Partnership and Petro," "Beneficial Ownership
of Principal Unitholders and Management"
and "Incorporation of Certain Documents by
Reference"

Items 2(e) and (f)....................  *

Items 3(a) and (b)....................  "Proxy Statement Summary - The
Transaction," "Proxy Statement Summary - The
Transaction - The Merger and the Exchange,"
"The Transaction - Description of the Transaction,"
"The Transaction -

4

Description of the Merger and the 
Exchange," "Special Factors - 
Background of the Transaction,"
"Management of the Partnership After the
Transaction" and "Incorporation of
Certain Documents by Reference"

Item 4(a) and (b).....................  Cover Page, "Proxy Statement Summary -
The Transaction," "Proxy Statement
Summary - The Transaction -
The Merger and the Exchange,"
"The Transaction - Description of the
Transaction," "The Transaction -
Description of the Merger and the
Exchange" and "The Transaction -
Description of the Merger Agreement"

Items 5(a) - (g)......................  "Proxy Statement Summary - The Transaction,"
"Proxy Statement Summary - The Transaction -
The Merger and the Exchange," "The
Transaction - Description of the Transaction,"
"The Transaction - Description of the Merger
and the Exchange" and "The Transaction -
Description of the Merger Agreement"

Item 6(a).............................  "Proxy Statement Summary - The
Transaction - Financings and
Refinancings," "Proxy Statement 
Summary - Financial Information - 
Estimated Sources and Uses of Funds of 
the Equity Offering and Debt Offering"
and "The Transaction - Related 
Financing and Refinancing Transactions"

Item 6(b).............................  "Proxy Statement Summary - Financial
Information - Estimated Sources and Uses
of Funds of the Equity Offering and Debt
Offering," "Proxy Solicitations - The
Unitholders Meeting - Cost of
Solicitation of Proxies," "Proxy
Solicitation - The Special Meeting -
Cost of Solicitation of Proxies,"
"Special Factors - Opinion of A.G.
Edwards - Terms of A.G. Edwards'
Engagement," "Special Factors - Opinion
of Dain Rauscher Wessels - Dain Rauscher
Wessels' Engagement Agreement" and "The
Transaction - Description of the Merger
Agreement - Expenses"

Item 6(c).............................  "Proxy Statement Summary - The
Transaction - Related Financings and
Refinancings" and "The

5

Transaction - Related Financing and
Refinancing Transactions"

Item 6(d).............................  *

Item 7(a).............................  "Proxy Statement Summary - Special
Factors - Potential Advantages to the
Common Stockholders," "Proxy Statement
Summary - Special Factors -
Recommendations of Petro Board of
Directors and Opinion of Dain Rauscher
Wessels," "Proxy Statement Summary -
Description of the Partnership Units,"
"Special Factors - Background of the
Transaction," "Special Factors - Reasons
for the Transaction that the Petro
Board Considered; Recommendation of
the Petro Board," "Cash Available for
Distribution" and "Description of the
Units"

Items 7(b) and (c)....................  "Proxy Statement Summary - The
Transaction" and "The Transaction -
Background of the Transaction"

Item 7(d).............................  "Proxy Statement Summary - Special
Factors - Potential Advantages to the
Common Stockholders," "Proxy Statement
Summary - Special Factors - Potential
Disadvantages and Risks to the Common
Stockholders," "Proxy Statement 
Summary - Financial Information - 
Summary Selected Unaudited Pro Forma
Condensed Consolidated Financial
Information," "Risk Factors - Risks to
Common Stockholders," "Risk Factors - 
Tax Risks to Common Stockholders,"
"Parties and Conflicts - Conflicts of
Interest - Certain Persons Have 
Interests in the Transaction that
Conflict, or May be Perceived to
Conflict, with the Interests of Common
Stockholders and Common Unitholders,"
"Special Factors - Reasons for the
Transaction that the Petro Board
Considered; Recommendation of the Petro
Board,"

6

"Management of the Partnership After
the Transaction," "The Amended and
Restated Partnership Agreement,"
"Cash Distribution Policy," "Cash
Available for Distribution,"
"Description of the Units,"
"Comparison of Securities" and
"Certain Federal Income Tax
Considerations"

Items 8(a) - (e)......................  Cover Page, "Proxy Statement Summary -
Special Factors - Recommendations of
Petro Board of Directors and Opinion of
Dain Rauscher Wessels," "Proxy
Solicitations - The Special Meeting -
Petro Board Recommendation," "Proxy
Solicitations - The Special Meeting -
Voting Rights; Vote Required," "Special
Factors - Background of the
Transaction," "Special Factors -
Reasons for the Transaction that the
Petro Board Considered; Recommendation
of the Petro Board" and "Special
Factors - Opinion of Dain Rauscher
Wessels"

Item 8(f).............................  *

Items 9(a) - (c)......................  "Proxy Statement Summary - Special
Factors - Recommendation of Petro Board
of Directors and Opinion of Dain
Rauscher Wessels," "Special Factors -
Background of the Transaction - Petro
Retains Dain Rauscher Wessels to Provide
a Fairness Opinion to Petro's Public
Common Stockholders" and "Special
Factors - Opinion of Dain Rauscher
Wessels"

Items 10(a)...........................  "Proxy Solicitations - The Special
Meeting - Voting Rights; Vote Required"

Item 10(b)............................  *

Item 11...............................  "Proxy Statement Summary - The
Transaction,"

7

"Proxy Statement Summary - The
Transaction - The Merger and the
Exchange," "Proxy Statement Summary -
The Transaction - Financings and
Refinancings," "The
Transaction - Description of the
Transaction," "The Transaction -
Description of the Merger and the
Exchange," "The Transaction - Related
Financing and Refinancing Transactions"
and "Parties and Conflicts - Conflicts
of Interest - Certain Persons Have
Interests in the Transaction that
Conflict, or May be Perceived to
Conflict, with the Interests of Common
Stockholders and Common Unitholders"

Items 12(a) and (b)...................  "Proxy Statement Summary - Special
Factors - Recommendation of Petro Board of
Directors and Opinion of Dain Rauscher
Wessels," "Proxy Solicitations - The
Special Meeting - Petro Board
Recommendation," "Proxy Solicitations -
The Special Meeting - Voting Rights;
Vote Required" and "Special Factors -
Reasons for the Transaction that the
Petro Board Considered; Recommendation
of the Petro Board"

Item 13(a)............................  "Proxy Solicitations - The Special Meeting
- Dissenters' Rights," "Dissenters' Rights,"
and Annex F to the Proxy Statement

Item 13(b)............................  *

Item 13(c)............................  *

Item 14(a) and (b)....................  "Proxy Statement Summary - Financial
Information - Summary Selected
Historical Financial and Operating Data
of Petro," "Proxy Statement Summary -
Financial Information - Summary Selected
Unaudited Pro Forma Condensed
Consolidated Financial Information,"
"Comparative Security Price and
Distribution Information - Comparative
Per Share/Per Unit Information
(Unaudited)," "Unaudited Pro Forma
Condensed Consolidated Financial
Information" and "Incorporation of
Certain Documents by Reference"

Item 14(b)............................  *

Item 15(a)............................  "Proxy Statement Summary - The
Transaction," "Proxy Statement
Summary - The Transaction - Financings

8

and Refinancings, "Proxy Statement 
Summary - Financial Information -
Estimated Sources and Uses of Funds of
the Equity Offering and Debt Offering,"
"Proxy Solicitations - The Unitholders
Meeting - Cost of Solicitation of
Proxies," "Proxy Solicitations - The
Special Meeting - Cost of Solicitation
of Proxies," "The Transaction - Related
Financing and Refinancing Transactions -
Public Offerings" and "The Transaction -
Description of the Merger Agreement -
Expenses"

Item 15(b)............................  "Proxy Solicitations - The Unitholders
Meeting - Cost of Solicitation of
Proxies," "Proxy Solicitations - The
Special Meeting - Cost of Solicitation
of Proxies," "Special Factors - Opinion
of A.G. Edwards - Terms of A.G. Edwards'
Engagement" and "Special Factors -
Opinion of Dain Rauscher Wessels - Dain
Rauscher Wessels' Engagement Agreement"

Item 16...............................  The Proxy Statement in its entirety

Item 17...............................  *

- --------------------

* The Item is located in the Schedule 13E-3 only.

9

ITEM 1.  ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION.

(a) The relevant information set forth in the Proxy Statement on the cover
page thereof and under "Proxy Statement Summary - Parties - Petro" and "Parties
and Conflicts - Parties to the Transaction - Petro" is incorporated herein by
reference.

(b) The information set forth in the Proxy Statement on the cover page
thereof and under "Proxy Solicitations - The Special Meeting - Petro Record
Date," "Proxy Solicitations - The Special Meeting - Voting Rights; Vote
Required" and "Proxy Solicitations - The Special Meeting - Petro Preferred
Stock" is incorporated herein by reference.

(c)  and (d)  The relevant information set forth in the Proxy Statement
under "Comparative Security Price and Distribution Information - Petro Capital
Stock -Class A Common Stock," "Comparison of Securities - Distributions and
Dividends" and "Incorporation of Certain Documents by Reference" is incorporated
herein by reference. The information set forth in Item 5, Part II of the Petro
10-K under the heading "Market for Registrant's Common Equity and Related
Stockholder Matters" is incorporated herein by reference.

(e) On December 22, 1997, the Partnership offered, in an underwritten
public offering registered under the Securities Act, 832,727 of its common units
representing limited partner interests (the "Common Units"), at an offering
price to the public of $21.25 per Common Unit.  809,000 of such Common Units
were offered by the Partnership and 23,727 of such Common Units were offered by
Star Gas as the selling unitholder.  The Partnership received net proceeds of
$16,244,720 for 809,000 Common Units sold by the Partnership, and Star Gas
received net proceeds of $2,966.358 for 87,000 Common Units sold by Star Gas
(including 62,273 Common Units sold by Star Gas pursuant to the over-allotment
option to purchase an additional 124,000 Common Units granted to the
underwriters, which was exercised in part on January 7, 1998).

(f) Not Applicable.

ITEM 2.  IDENTITY AND BACKGROUND.

(a)-(d) and (g)  This Statement is being filed by the Issuer, the
Partnership and Star Gas. The information set forth on the cover page thereof
and under "Proxy Statement Summary - Parties," "Parties and Conflicts - Parties
to the Transaction," "Management of the Partnership After the Transaction -
Officers and Employees of the Operating Partnership and Petro" and "Beneficial
Ownership of Principal Unitholders and Management" and information appearing
under Item 10 of the Petro 10-K and under "Election of Directors" and "Executive
Officers" in the Petro Annual Meeting Proxy Statement and information appearing
under Item 10 of the Partnership 10-K, which information is incorporated by
reference in the Proxy Statement under "Incorporation of Certain Documents by
Reference" and is incorporated herein by reference.

10

(e) and (f)  During the last five years, none of (i) the Issuer, the
Partnership or Star Gas or, (ii) to the best knowledge of the Issuer, the
Partnership and Star Gas, any person who is a director or executive officer of
the Issuer, the Partnership or Star Gas has been (i) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.  The Partnership and the Operating Partnership do not have any officers,
directors or employees.

ITEM 3.  PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.

(a) and (b)  The relevant information set forth in the Proxy Statement
under "Proxy Statement Summary - The Transaction," "Proxy Statement Summary -
The Merger and the Exchange" and "Proxy Statement Summary - Partnership
Structure and Management Following the Transaction," "The Transaction -
Description of the Transaction," "The Transaction - Description of the Merger
and the Exchange," "The Transaction - Background of and Reasons for the
Transaction- Background of the Transaction" and "Management of the Partnership
After the Transaction" and information appearing under Item 13 of the Petro 10-K
and under "Election of Directors - Certain Transactions" in the Petro Annual
Meeting Proxy Statement and information appearing in Note 16 (Related Party
Transactions) to the Consolidated Financial Statements of the Partnership and
its subsidiary included in the Partnership 10-K, which information is
incorporated by reference in the Proxy Statement under "Incorporation of Certain
Documents" and is incorporated herein by reference.

ITEM 4.  TERMS OF THE TRANSACTION.

(a) and (b)  The information set forth in the Proxy Statement on the cover
page thereof and under "Proxy Statement Summary - The Transaction," "Proxy
Statement Summary - The Transaction - The Merger and the Exchange," "The
Transaction - Description of the Transaction," "The Transaction - Description of
the Merger and the Exchange" and "The Transaction - Description of the Merger
Agreement" is incorporated herein by reference.

ITEM 5.  PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.

(a)-(g) The information set forth in the Proxy Statement under "Proxy
Statement Summary - The Transaction," "Proxy Statement Summary - The Merger and
the Exchange," "The Transaction - Description of the Transaction," "The
Transaction - Description of the Merger and the Exchange" and "The Transaction -
Description of the Merger Agreement" is incorporated herein by reference.

11

ITEM 6.  SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION.

(a) The information set forth in the Proxy Statement under "Proxy Statement
Summary - Financings and Refinancings, "Proxy Statement Summary - Financial
Information - Estimated Sources and Uses of Funds of the Equity Offering and
Debt Offering" and "The Transaction - Related Financing and Refinancing
Transactions" is incorporated herein by reference.

(b) The information set forth in the Proxy Statement under "Proxy Statement
Summary - Financial Information - Estimated Sources and Uses of Funds of the
Equity Offering and Debt Offering," "Proxy Solicitations - The Unitholders
Meeting - Cost of Solicitation of Proxies," "Proxy Solicitations - The Special
Meeting - Cost of Solicitation of Proxies," "Special Factors - Opinion of A.G.
Edwards - Terms of A.G. Edwards' Engagement," "Special Factors - Opinion of Dain
Rauscher Wessels - Dain Rauscher Wessels' Engagement Agreement" and "The
Transaction - Description of the Merger Agreement - Expenses" is incorporated
herein by reference.

(c) The information set forth in the Proxy Statement under "Proxy Statement
Summary - Financings and Refinancings" and "The Transaction - Related Financing
and Refinancing Transactions" is incorporated herein by reference.

(d) Not applicable.

ITEM 7.  PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS.

(a) The information set forth in the Proxy Statement under "Proxy Statement
Summary - Special Factors - Potential Advantages to the Common Stockholders,"
"Proxy Statement Summary - Special Factors - Recommendations of Petro Board of
Directors and Opinion of Dain Rauscher Wessels," "Proxy Statement Summary -
Description of the Partnership Units," "Special Factors - Background of the
Transaction," "Special Factors - Reasons for the Transaction that the Petro
Board Considered; Recommendation of the Petro Board," "Cash Available for
Distribution" and "Description of the Units" is incorporated herein by
reference.

(b) and (c) The information set forth in the Proxy Statement under "Proxy
Statement Summary - The Transaction" and "Special Factors - Background of the
Transaction" is incorporated herein by reference.

(d) The information set forth in the Proxy Statement "Proxy Statement
Summary - Special Factors - Potential Advantages to the Common Stockholders,"
"Proxy Statement Summary - Special Factors - Potential Disadvantages and Risks
to the Common Stockholders," "Proxy Statement Summary - Financial Information -
Summary Selected Unaudited Pro Forma Condensed Consolidated Financial
Information," "Risk Factors - Risks to Common Stockholders," "Risk Factors - Tax
Risks to Common Stockholders," "Parties and Conflicts - Conflicts of Interest -
Certain Persons Have Interest in the Transaction that Conflict, or May be
Perceived to Conflict, with the Interests of Common Stockholders and Common
Unitholders,"

12

"Special Factors - Reasons for the Transaction that the Petro Board Considered;
Recommendation of the Petro Board," "Management of the Partnership After the
Transaction," "The Amended and Restated Partnership Agreement," "Cash
Distribution Policy," "Cash Available for Distribution," "Description of the
Units," "Comparison of Securities" and "Certain Federal Income Tax
Considerations" is incorporated herein by reference.

ITEM 8.  FAIRNESS OF THE TRANSACTION.

(a) - (e) The information set forth in the Proxy Statement on the cover
page thereof and under "Proxy Statement Summary - Special Factors -
Recommendation of Petro Board of Directors and Opinion of Dain Rauscher
Wessels," "Parties and Conflicts - Conflicts of Interests - Certain Persons Have
Interests in the Transaction that Conflict, or May be Perceived to Conflict,
with the Interests of the Common Stockholders and Common Unitholders," "Proxy
Solicitations - The Special Meeting - Petro Board Recommendation," "Proxy
Solicitations - The Special Meeting - Voting Rights; Vote Required" "Special
Factors - Background of the Transaction," "Special Factors - Reason for the
Transaction that the Petro Board Considered; Recommendations of the Petro
Board," and "Special Factors - Opinion of Dain Rauscher Wessels" is incorporated
herein by reference.

(f) Not applicable.

ITEM 9.  REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.

(a) - (c) The information set forth in the Proxy Statement under "Proxy
Statement Summary - Special Factors - Recommendation of Petro Board of Directors
and Opinion of Dain Rauscher Wessels," "Special Factors - Background of the
Transaction - Petro Retains Dain Rauscher Wessels to Provide a Fairness Opinion
to Petro's Public Common Stockholders" and "Special Factors - Opinion of Dain
Rauscher Wessels" is incorporated herein by reference. The opinion of Dain
Rauscher Wessels is attached to the Proxy Statement as Annex E.

ITEM 10. INTEREST IN SECURITIES OF THE ISSUER.

(a)  The information set forth in the Proxy Statement under "Proxy 
Solicitations - The Special Meeting - Voting Rights; Vote Required" and the
information set forth in the Petro Annual Meeting Proxy Statement under
"Ownership of Equity Securities" is incorporated herein by reference.

(b) Not applicable.

13

ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S
SECURITIES PROXY STATEMENT - SUMMARY - THE TRANSACTION.

The information set forth in the Proxy Statement under "Proxy Statement
Summary - The Transaction," "Proxy Statement Summary - The Transaction - The
Merger and the Exchange," "Proxy Statement Summary - The Transaction -Financings
and Refinancings," "The Transaction - Description of the Transaction," "The
Transaction - Description of the Merger and the Exchange," "Parties and
Conflicts - Conflicts of Interest - Certain Persons Have Interests in the
Transaction that Conflict, or May be Perceived to Conflict, with the Interests
of Common Stockholders and Common Unitholders," and "The Transaction - Related
Financing and Refinancing Transactions" is incorporated herein by reference.

ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO
THE TRANSACTION.

(a) and (b) The information set forth in the Proxy Statement under "Proxy
Statement Summary - Special Factors - Recommendation of Petro Board of Directors
and Opinion of Dain Rauscher Wessels," "Proxy Solicitations - The Special
Meeting - Petro Board Recommendation," "Proxy Solicitations - The Special
Meeting - Voting Rights; Vote Required" and "Special Factors - Reasons for the
Transaction that the Petro Board Considered; Recommendation of the Petro Board"
is incorporated herein by reference.

ITEM 13. OTHER PROVISIONS OF THE TRANSACTION.

(a) The information set forth in the Proxy Statement under "Proxy
Solicitations - The Special Meeting - Dissenters' Rights," "Dissenters' Rights,"
and Annex F to the Proxy Statement is incorporated herein by reference.

(b) Not applicable.

(c) Not applicable.

ITEM 14. FINANCIAL INFORMATION.

(a) The information set forth in the Proxy Statement under "Proxy Statement
Summary - Financial Information - Summary Selected Historical Financial and
Operating Data of Petro," "Proxy Statement Summary - Financial Information -
Summary Selected Unaudited Pro Forma Condensed Consolidated Financial
Information," "Comparative Security Price and Distribution Information-
Comparative Per Share/Per Unit Information (Unaudited)" and "Unaudited Pro Forma
Condensed Consolidated Financial Information" is incorporated herein by
reference. The consolidated financial statements of Petro and its subsidiaries
included in the Petro 10 - K have been incorporated by reference in the Proxy
Statement under "Incorporation of Certain Documents by Reference" are
incorporated herein by reference.

14

(b) Not applicable.

ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED.

(a) The relevant information set forth under "Proxy Statement Summary - The
Transaction," "Proxy Statement Summary - The Transaction - Financings
and Refinancings," "Proxy Statement Summary - Financial Information - Estimated
Sources and Uses of Funds of the Equity Offering and Debt Offering," "Proxy
Solicitations - The Unitholders Meeting - Cost of Solicitation of Proxies,"
"Proxy Solicitations - The Special Meeting - Cost of Solicitation of Proxies,"
"The Transaction - Related Financing and Refinancing Transactions - Public
Offerings" and "The Transaction - Description of the Merger Agreement -
Expenses" is incorporated herein by reference.

(b) The relevant information set forth under "Proxy Solicitations - The
Unitholders Meeting - Cost of Solicitation of Proxies," " Proxy Solicitations
The Special Meeting - Cost of Solicitation of Proxies," "Special Factors -
Opinion of A.G. Edwards - Terms of A.G. Edwards' Engagement" and "Special
Factors - Opinion of Dain Rauscher Wessels - Dain Rauscher Wessels' Engagement
Agreement" is incorporated herein by reference.

ITEM 16. ADDITIONAL INFORMATION.

The information set forth in the Proxy Statement, a copy of which is filed
as Exhibit (d)(l) hereto, is incorporated herein by reference.

15

ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.

(a)     Loan Agreements referred to in Item 6.**

(b)(1)  Opinion of Dain, Rauscher Wessels, dated October 22, 1998 (attached
as Annex E to the Proxy Statement).**

(b)(2)  Dain Rauscher Wessels' Presentation to the Issuer's Board of 
Directors.*

(b)(3)  PaineWebber Incorporated's Presentations to the Issuer's Board of 
Directors.*

(b)(4)  Opinion of A. G. Edwards, dated October 16, 1998 (attached as Annex
D to the Proxy Statement).**

(b)(5)  A. G. Edwards' Preliminary Report to Star Gas' Special Committee 
dated April 28, 1998.*

(b)(6)  A. G. Edwards' Appendices to Preliminary Report to Star Gas'
Special Committee dated April 28, 1998.*

(b)(7)  A. G. Edwards' Preliminary Status Report to the Partnership's
Board of Directors draft dated May 4, 1998.*

(b)(8)  A. G. Edwards' Round II Appendices to Preliminary Report to the
Special Committee-Analyses Performed at $2.00 per share dated
May 4, 1998.*

(b)(9)  A. G. Edwards' Round II Appendices to Preliminary Report to the
Special Committee-Analyses Performed at $2.50 per share dated
May 4, 1998.*

(b)(10) A. G. Edwards' Preliminary Status Report to the Partnership's
Board of Directors dated May 7, 1998.*

(b)(11) A. G. Edwards' Proposal to Star Gas' Special Committee draft
dated May 20, 1998.*

(b)(12) A. G. Edwards' Round III Update to Preliminary Report to Star
Gas' Special Committee dated May 21, 1998.*

(b)(13) A. G. Edwards' Round III Appendices to Preliminary Report to
Star Gas' Special Committee-Analyses Performed at $2.50 per
share plus issuances of DPUs dated May 21, 1998.*

(b)(14) A. G. Edwards' Revised Proposal to Star Gas' Special Committee
draft dated May 26, 1998.*

(b)(15) A. G. Edwards' Revised Proposal to Star Gas' Special Committee
draft dated July 28, 1998.*

(b)(16) A. G. Edwards' Fairness Opinion Presentation to Star Gas' Special
Committee dated October 16, 1998.*

(b)(17) A. G. Edwards' Appendix I to Fairness Opinion Presentation to
Star Gas' Special Committee dated October 16, 1998.*

(b)(18) A. G. Edwards' Appendix II to Fairness Opinion Presentation to
Star Gas' Special Committee dated October 16, 1998.*

(c)(1)  Agreement and Plan of Merger dated October 22, 1998, among Issuer,
the Partnership, the Operating Partnership, and Mergeco and the
Company (attached as Annex A to the Proxy Statement).**

(c)(2)  Exchange Agreement dated October 22, 1998 among the Partnership and
certain affiliated Common Stockholders of Petro (attached as Annex
B to the Proxy Statement).**

(d)(l)  Preliminary Proxy Statement/Prospectus dated December 22, 1998.**

(d)(2)  Form of Letter of Transmittal to holders of Petro Common Stock .**

(d)(3)  Form of Notice of Special Meeting.**

(d)(4)  Press Release issued by Parent on August 14, 1998.*

(e)     Section 302A-471 and 302A-473 of the Minnesota Business Corporation
Act (attached as Annex F to the Proxy Statement).***

(f)     Not applicable.

-  -  -  -  -  -  -  - 
*    Filed herewith.

**   Incorporated by reference to the Registration Statement on Form S-4 filed
by the Issuer with the Securities and Exchange Commission on October 22,
1998.

***  Filed on October 22, 1998.

16

SIGNATURES

After due inquiry and to the best of my knowledge and belief, each of the
undersigned hereby certifies that the information set forth in this statement is
true, complete and correct.

December 23, 1998.

PETROLEUM HEAT AND POWER CO., INC.

By:  /s/ Irik P. Sevin
------------------------------------
Name:  Irik P. Sevin
Title: Chairman of the Board and Chief
Executive Officer

STAR GAS PARTNERS, L.P.

By:   Star Gas Corporation 
------------------------------------
its General Partner

By:   /s/ Joseph P. Cavanaugh   
------------------------------------
Name:   Joseph P. Cavanaugh
Title:  President

STAR GAS CORPORATION

By:   /s/ Joseph P. Cavanaugh   
------------------------------------
Name:   Joseph P. Cavanaugh
Title:  President

17

EXHIBIT INDEX

EXHIBIT NO.  DESCRIPTION

(a)     Loan Agreements referred to in Item 6.***

(b)(1)  Opinion of Dain, Rauscher Wessels, dated October 22, 1998 (attached
as Annex E to the Proxy Statement).**

(b)(2)  Dain, Rauscher Wessels' Presentation to the Issuer's Board of 
Directors.*

(b)(3)  Paine Webber Incorporated's Presentations to the Issuer's Board of 
Directors.* 

(b)(4)  Opinion of A.G. Edwards, dated October 16, 1998 (attached as Annex 
D to the Proxy Statement).**

(b)(5)  A.G. Edwards' Preliminary Report to Star Gas' Special Committee 
dated April 28, 1998.*

(b)(6)  A. G. Edwards' Appendices to Preliminary Report to Star Gas'
Special Committee dated April 28, 1998.*

(b)(7)  A. G. Edwards' Preliminary Status Report to the Partnership's
Board of Directors draft dated May 4, 1998.*

(b)(8)  A. G. Edwards' Round II Appendices to Preliminary Report to the
Special Committee-Analyses Performed at $2.00 per share dated
May 4, 1998.*

(b)(9)  A. G. Edwards' Round II Appendices to Preliminary Report to the
Special Committee-Analyses Performed at $2.50 per share dated
May 4, 1998.*

(b)(10) A. G. Edwards' Preliminary Status Report to the Partnership's
Board of Directors dated May 7, 1998.*

(b)(11) A. G. Edwards' Proposal to Star Gas' Special Committee draft
dated May 20, 1998.*

(b)(12) A. G. Edwards' Round III Update to Preliminary Report to Star
Gas' Special Committee dated May 21, 1998.*

(b)(13) A. G. Edwards' Round III Appendices to Preliminary Report to
Star Gas' Special Committee-Analyses Performed at $2.50 per
share plus issuances of DPUs dated May 21, 1998.*

(b)(14) A. G. Edwards' Revised Proposal to Star Gas' Special Committee
draft dated May 26, 1998.*

(b)(15) A. G. Edwards' Revised Proposal to Star Gas' Special Committee
draft dated July 28, 1998.*

(b)(16) A. G. Edwards' Fairness Opinion Presentation to Star Gas' Special
Committee dated October 16, 1998.*

(b)(17) A. G. Edwards' Appendix I to Fairness Opinion Presentation to
Star Gas' Special Committee dated October 16, 1998.*

(b)(18) A. G. Edwards' Appendix II to Fairness Opinion Presentation to
Star Gas' Special Committee dated October 16, 1998.*

(c)(1)  Agreement and Plan of Merger dated October 22, 1998, among Issuer,
the Partnership, the Operating Partnership, and Mergeco and the
Company (attached as Annex A to the Proxy Statement).**

(c)(2)  Exchange Agreement dated October 22, 1998 among the Partnership and
certain affiliated Common Stockholders of Petro (attached as Annex
B to the Proxy Statement).**

(d)(l)  Preliminary Proxy Statement/Prospectus dated December 22, 1998.**

(d)(2)  Form of Letter of Transmittal to holders of Petro Common Stock.**

(d)(3)  Form of Notice of Special Meeting.**

(d)(4)  Press Release issued by Parent on August 14, 1998.*

(e)     Section 302A-471 and 302A-473 of the Minnesota Business Corporation
Act (attached as Annex F to the Proxy Statement).***

(f)    Not applicable.

- ----------------- 
*    Filed herewith.

**   Incorporated by reference to the Registration Statement on Form S-4 filed
by the Issuer with the Securities and Exchange Commission on October 22,
1998.

***  Filed on October 22, 1998.

19

EXHIBIT 99(b)(2)

[LOGO OF PETRO APPEARS HERE]

Materials Prepared for Discussion
Board of Directors Meeting

October 6, 1998

DAIN RAUSCHER WESSELS

a division of Dain Rauscher Incorporated

- --------------------------------------------------------------------------------

PROJECT INTENSE HEAT

Table of Contents
- --------------------------------------------------------------------------------

TABLE OF CONTENTS:                                             SECTION
- -----------------                                              -------

Transaction Summary...........................................       1 
Pro Forma Analysis............................................       2
Unit Reference Value Analysis.................................       3     
Historical and Pro Forma MVE and MVC Comparison...............       4
Discounted Cash Flow Analysis.................................       5
Relative Contribution Analysis................................       6
Net Asset Value Analysis......................................       7
Comparable Company Trading Analysis                           
Energy and Fuel Marketing and Distribution Companies..........       8
Propane Master Limited Partnerships...........................       9
Comparable Transactions Analysis..............................      10     
Merger Premiums Analysis......................................      11
Price and Volume Data.........................................      12

LOGO PETRO     Project Intense Heat
- --------------------------------------------------------------------------------

Transaction Summary

- --------------------------------------------------------------------------------
Dain Rauscher Wessels                                                    Page 1

LOGO PETRO     Transaction Summary
Summary of Proposed Terms
- --------------------------------------------------------------------------------

PROJECT INTENSE HEAT
Summary of Proposed Terms
(In thousands, except as otherwise indicated)

Pro Forma Star Units                      
Historical     -------------------------------------------------------------  
Petro           Common           Sr Sub          Jr Sub           GP       
Petro Shareholders (A only)                         Common            Units           Units           Units           Units     
- -------------------------------------------        ----------     ------------     ------------    ------------    ------------ 

Class A                                               12,918                --           1,688              --                 

Petro Shareholders (excluding A only)                                                                                           
- -------------------------------------------                                                                                      
Class A (to receive Sr Sub Units)

8,258                --           1,079              --                  

Class A & C (to receive Jr Sub Units)                  5,386                --              --             578             279  

Class B                                                   11                --              --              --              --
---------        ----------      ----------      ----------      ---------- 
Total Petro Shareholders (excluding A only)           13,655                             1,079             578             279  
---------        ----------      ----------      ----------      ----------   
Total Petro Shareholders                              26,573                             2,766             578             279  
=========        ==========      ==========      ==========      ==========   
Existing Star Public Unitholders                          --             3,832              --              --              --  

New Star Units                                                                                                                  
- -------------------------------------------                                                                                      
Debt and Preferred Stock Exchange                         --               104              --              --              --  

Public Offering                                           --             6,375              --              --              --  
----------      ----------      ----------      ----------    
Pro Forma Star Units Outstanding                          --            10,311           2,766             578             279  
==========      ==========      ==========      ==========   

General Assumptions
- -------------------------------------------                                                                                      
Exchange Ratio (Petro Share / Star Unit)                  --                --         0.13064         0.15913         0.15913

Star Historical MQD                                   $2.200

Star Pro Forma MQD                                    $2.300

GP Interest                                             2.0%

Pro Forma Star Units                       
----------------------------------------------------------------        GP 
Total              DPUs          Total Units     Fully-Diluted    Incentive
Petro Shareholders (A only)                            Units            (Sr Sub)        (incl. DPUs)      Ownership    Distributions
- -------------------------------------------         ----------        ------------      ------------     ------------  -------------
Class A                                                  1,688               423              2,111             14.2%          46.6%

Petro Shareholders (excluding A only)              
- -------------------------------------------         

Class A (to receive Sr Sub Units)                        1,079               271              1,349              9.1%          29.8%

Class A & C (to receive Jr Sub Units)                      857               215              1,072              7.2%          23.7%

Class B                                                     --                --                 --                --             --
----------        ----------         ----------        ----------     ----------
Total Petro Shareholders (excluding A only)              1,936               486              2,422             16.3%          53.4%
----------        ----------         ----------        ----------     ----------
Total Petro Shareholders                                 3,624               909              4,533             30.5%         100.0%
==========        ==========         ==========        ==========     ==========
Existing Star Public Unitholders                         3,832                --              3,832             25.8%             --

New Star Units                                     
- -------------------------------------------         
Debt and Preferred Stock Exchange                          104                --                104              0.7%             --

Public Offering                                          6,375                --              6,375             43.0%             --
----------        ----------         ----------        ----------     ----------
Pro Forma Star Units Outstanding                        13,934               909             14,843            100.0%         100.0%
==========        ==========         ==========        ==========     ==========
General Assumptions                                
- -------------------------------------------         
Exchange Ratio (Petro Share / Star Unit)                    --                --                 --               --             --

Star Historical MQD                                

Star Pro Forma MQD                                 

GP Interest                                        

DPU Distribution      Pro rata distribution of Sr Sub Units based upon Petro pro
forma ownership of total Star Units issued to Petro. Up to
303,000 DPUs can be earned each year if Petro provides
$0.50 per Unit accretion to Star, up to a maximum of
909,000 DPUs.

GP Incentive 
Distributions       Pro rata distribution based upon Petro pro forma ownership
of total Star Units issued to Petro.

Petro Debt & 
Preferred Exchange  Petro will issue to holders of certain Petro debt and
preferred stock 3.37 shares of Petro Junior Convertible
Preferred Stock for each $1,000 in principal or
liquidation value. Each share of Petro Junior Convertible
Preferred Stock will be exchangeable into 0.13 Star Common
Units.

- ------------------------------------------------------------------------------
Dain Rauscher Wessels                                                  Page 2

LOGO PETRO     Project Intense Heat
- ------------------------------------------------------------------------------

Pro Forma Analysis

- ------------------------------------------------------------------------------
Dain Rauscher Wessels                                                  Page 3

LOGO PETRO      Pro Forma Analysis
Petro Summary Historical Financial Data
- --------------------------------------------------------------------------------

PETROLEUM HEAT AND POWER CO., INC.
Summary Historical Financial Data
(In thousands, except as otherwise indicated)

At or for the Year Ended December 31,            
------------------------------------------------------------
INCOME STATEMENT DATA                                        1993            1994            1995            1996       
- ------------------------------------------------------   ------------    ------------    ------------    ------------       
Net Sales                                                  $538,526        $546,677        $609,507        $608,161     
Gross Profit (after direct delivery expense)                141,815         150,701         185,048         147,671     
EBITDA (1)                                                   48,436          55,387          56,753          42,070     
EBITDA (including SGU Distributions) (1)                     48,436          55,387          56,753          46,383     
EBIT                                                         13,772          22,992          17,710          12,125     
Net Income (Loss) before Extraordinary Items                 (7,564)         (3,611)        (22,043)        (21,901)    
Net Income (Loss)                                            (8,431)         (4,265)        (23,479)        (28,315)    
Net Income (Loss) to Common                                 (11,798)         (7,776)        (26,742)        (30,704)    
Cash Flow (Loss) to Common                                   25,971          28,905          16,028           8,764     
Less: Maintenance Capex (2)                                   3,000           3,000           3,000           3,000     
Free Cash Flow (Loss)                                        22,971          25,905          13,028           5,764     

PER SHARE DATA                                                                                                          
- ------------------------------------------------------   
Earnings (Loss) per Share before Extra Items                 ($0.50)         ($0.33)         ($1.00)         ($0.95)    
Earnings (Loss) per Share                                    ($0.54)         ($0.36)         ($1.06)         ($1.20)    
Cash Flow (Loss) per Share                                    $1.19           $1.32           $0.63           $0.34     
Free Cash Flow (Loss) per Share                               $1.06           $1.18           $0.51           $0.23     
Dividends Paid per Share                                      $0.53           $0.55           $0.60           $0.60     
Weighted Average Shares Outstanding                          21,755          21,897          25,324          25,593     

BALANCE SHEET DATA                                                                                                      
- ------------------------------------------------------   
Working Capital                                             $16,694         $28,345         $65,408         $18,093     
Total Assets                                                256,589         397,174         357,241         275,025     
Total Debt (including short-term)                           213,344         315,562         341,430         316,384     
Preferred Stock (including current maturities)               25,000          20,834          16,667          12,500     
Total Stockholders' Equity (Deficiency)                     (61,964)        (66,176)       (100,903)       (145,733)    
Total Capitalization                                        176,380         270,220         257,194         183,151     

FINANCIAL RATIO DATA                                                                                                    
- ------------------------------------------------------   
Interest Expense                                            $22,156         $25,282         $41,084         $34,669     
EBITDA to Interest Expense                                    2.2 x           2.2 x           1.4 x           1.2 x     
EBITDA (including SGU Distributions) to Interest Expense      2.2 x           2.2 x           1.4 x           1.3 x     
Total Debt to EBITDA                                          4.4 x           5.7 x           6.0 x           7.5 x     
Total Debt to EBITDA (including SGU Distributions)            4.4 x           5.7 x           6.0 x           6.8 x     
Total Debt to Total Capitalization                           121.0%          116.8%          132.8%          172.7%     
Total Debt & Preferred to Total Capitalization               135.1%          124.5%          139.2%          179.6%     

At or for the Year Ended December 31, 1997            
-------------------------------------------------------------------------
INCOME STATEMENT DATA                                         Q1              Q2              Q3              Q4         Total   
- ------------------------------------------------------   ------------    ------------    -------------   -----------   -----------

Net Sales                                                  $248,095         $87,972         $50,788        $161,286     $548,141 
Gross Profit (after direct delivery expense)                 72,443          17,793           4,161          43,990      138,387 
EBITDA (1)                                                   47,147          (6,945)        (20,908)         16,716       36,010 
EBITDA (including SGU Distributions) (1)                     48,524          (5,568)        (19,532)         18,093       41,517 
EBIT                                                         39,796         (14,380)        (28,362)          9,210        6,264 
Net Income (Loss) before Extraordinary Items                 33,388         (27,454)        (40,316)         11,483      (22,899)
Net Income (Loss)                                            33,388         (27,454)        (40,316)         11,483      (22,899)
Net Income (Loss) to Common                                  32,492         (28,375)        (42,177)         10,517      (27,543)
Cash Flow (Loss) to Common                                   39,328         (17,035)        (30,400)          7,000       (1,107)
Less: Maintenance Capex (2)                                     750             750             750             750        3,000 
Free Cash Flow (Loss)                                        38,578         (17,785)        (31,150)          6,250       (4,107)

PER SHARE DATA                                                                                                                   
- ------------------------------------------------------                                                                           
Earnings (Loss) per Share before Extra Items                  $1.26          ($1.09)         ($1.61)          $0.40       ($1.06)
Earnings (Loss) per Share                                     $1.26          ($1.09)         ($1.61)          $0.40       ($1.06)
Cash Flow (Loss) per Share                                    $1.53          ($0.66)         ($1.16)          $0.27       ($0.04)
Free Cash Flow (Loss) per Share                               $1.50          ($0.69)         ($1.19)          $0.24       ($0.16)
Dividends Paid per Share                                      $0.08           $0.08           $0.08           $0.08        $0.30 
Weighted Average Shares Outstanding                          25,759          25,935          26,147          26,359       26,050 

BALANCE SHEET DATA                                                                                                               
- ------------------------------------------------------                                                                           
Working Capital                                             $78,544         $54,179          $5,414         $12,436      $12,436 
Total Assets                                                296,338         259,761         223,918         247,846      247,846 
Total Debt (including short-term)                           297,888         291,654         291,472         294,348      294,348 
Preferred Stock (including current maturities)               42,500          42,500          38,334          36,656       36,656 
Total Stockholders' Equity (Deficiency)                    (116,158)       (145,848)       (189,361)       (177,033)    (177,033)
Total Capitalization                                        224,230         188,306         140,445         153,971      153,971 

FINANCIAL RATIO DATA                                                                                                             
- ------------------------------------------------------                                                                           
Interest Expense                                             $8,805          $8,344          $8,432          $8,232      $33,813 
EBITDA to Interest Expense                                       --              --              --              --        1.1 x 
EBITDA (including SGU Distributions) to Interest Expense         --              --              --              --        1.2 x 
Total Debt to EBITDA                                             --              --              --              --        8.2 x 
Total Debt to EBITDA (including SGU Distributions)               --              --              --              --        7.1 x 
Total Debt to Total Capitalization                           132.8%          154.9%          207.5%          191.2%       191.2% 
Total Debt & Preferred to Total Capitalization               151.8%          177.5%          234.8%          215.0%       215.0% 

LTM
Fiscal 1998             Ended
----------------------------   June 30, 
INCOME STATEMENT DATA                                           Q1             Q2           1998
- ------------------------------------------------------     ------------  --------------  -----------
Net Sales                                                    $183,139        $66,227       $461,440
Gross Profit (after direct delivery expense)                   63,483         14,081        125,715
EBITDA (1)                                                     40,733         (6,355)        30,186
EBITDA (including SGU Distributions) (1)                       42,154         (4,934)        35,781
EBIT                                                           33,318        (13,432)           734
Net Income (Loss) before Extraordinary Items                   26,978        (22,974)       (24,829)
Net Income (Loss)                                              26,978        (22,974)       (24,829)
Net Income (Loss) to Common                                    25,415        (23,939)       (30,184)
Cash Flow (Loss) to Common                                     32,165        (12,857)        (4,092)
Less: Maintenance Capex (2)                                       750            750          3,000
Free Cash Flow (Loss)                                          31,415        (13,607)        (7,092)

PER SHARE DATA                                           
- ------------------------------------------------------   
Earnings (Loss) per Share before Extra Items                    $0.96         ($0.90)        ($1.14)
Earnings (Loss) per Share                                       $0.96         ($0.90)        ($1.14)
Cash Flow (Loss) per Share                                      $1.21         ($0.48)        ($0.15)
Free Cash Flow (Loss) per Share                                 $1.18         ($0.51)        ($0.27)
Dividends Paid per Share                                 
Weighted Average Shares Outstanding                            26,564         26,571         26,410

BALANCE SHEET DATA                                       
- ------------------------------------------------------   
Working Capital                                               $40,653        $23,139        $23,139
Total Assets                                                  248,777        229,120        229,120
Total Debt (including short-term)                             287,010        286,978        286,978
Preferred Stock (including current maturities)                 36,819         36,854         36,854
Total Stockholders' Equity (Deficiency)                      (151,137)      (175,066)      (175,066)
Total Capitalization                                          172,692        148,766        148,766

FINANCIAL RATIO DATA                                     
- ------------------------------------------------------   
Interest Expense                                               $8,275         $8,210        $33,149
EBITDA to Interest Expense                                         --             --          0.9 x
EBITDA (including SGU Distributions) to Interest Expense           --             --          1.1 x
Total Debt to EBITDA                                               --             --          9.5 x
Total Debt to EBITDA (including SGU Distributions)                 --             --          8.0 x
Total Debt to Total Capitalization                             166.2%         192.9%         192.9%
Total Debt & Preferred to Total Capitalization                 187.5%         217.7%         217.7%

- ---------------
(1) EBITDA excludes non-recurring expenses.
(2) Petro provided estimate for maintenance capital expenditures.

- ------------------------------------------------------------------------------
Dain Rauscher Wessels                                                  Page 4

LOGO PETRO     Pro Forma Analysis
Star Gas Summary Historical Financial Data
- --------------------------------------------------------------------------------

STAR GAS PARTNERS, L.P.
Summary Historical Financial Data
(In thousands, except as otherwise indicated)

At or for the Year Ended September 30,       
-------------------------------------------------     
INCOME STATEMENT DATA                                 1993         1994         1995         1996     
- ------------------------------------------------   ----------   ----------   ----------   ----------

Sales                                              $ 143,216    $ 128,040    $ 104,550    $ 119,634   
Gross Profit (after delivery and branch expense)      23,103       27,957       19,668       26,327   
EBITDA                                                19,437       21,946       13,541       19,870   
EBIT                                                 (30,313)       8,907        3,468       10,062   
Net Income (Loss)                                    (47,049)      (1,404)      (6,169)       2,593   
Limited Partners' Interest in Net Income (Loss)        
Cash Flow (Loss)                                       4,271       11,966        5,626       13,083   
Maintenance Capex                                      4,688        5,419        7,988        5,332   
Distributable Cash Flow (Loss)                          (417)       6,547       (2,362)       7,751   

PER UNIT DATA                                                                                         
- ------------------------------------------------                                                      
Net Income (Loss) per Unit                                                                            
Cash Flow (Loss) per Unit                                                                             
Distributable Cash Flow (Loss) per Unit                                                               
Cash Distributions per Unit                                                                   $1.17  (1)
Weighted Avg. Limited Partner Units Outstanding                                                       

BALANCE SHEET DATA                                                                                    
- ------------------------------------------------                                                      
Working Capital (Deficit)                                          $1,976        ($486)      $7,546   
Total Assets                                                      147,608      155,393      156,913   
Total Debt (including short-term)                                  74,929        2,137       87,350   
Cumulative Redeemable Preferred Stock                               8,264        8,625           --     
Total Partners' Capital                                            44,328       44,305       61,398   
Total Capitalization                                              127,521       55,067      148,748   

FINANCIAL RATIO DATA                                                                                  
- ------------------------------------------------                                                      
Interest Expense                                     $16,479      $10,497       $8,549       $7,124   
EBITDA to Interest Expense                             1.2 x        2.1 x        1.6 x        2.8 x   
Total Debt to EBITDA                                                3.4 x        0.2 x        4.4 x   
Total Debt to Total Capitalization                                  58.8%         3.9%        58.7%   

At or for the Year Ended September 30, 1997         
------------------------------------------------------------   
INCOME STATEMENT DATA                                    Q1          Q2          Q3           Q4          Total   
- ------------------------------------------------     ----------  ----------  ----------   ----------   ---------- 

Sales                                                $  50,876   $  46,442   $  20,078    $  17,763    $ 135,159  
Gross Profit (after delivery and branch expense)        12,001      12,019       1,744          757       26,521  
EBITDA                                                  10,402       9,725         253         (677)      19,703  
EBIT                                                     7,816       7,095      (2,400)      (3,213)       9,298  
Net Income (Loss)                                        5,892       5,325      (4,143)      (5,062)       2,012  
Limited Partners' Interest in Net Income (Loss)          5,774       5,218      (4,060)      (4,960)      (1,972)
Cash Flow (Loss)                                         8,650       8,049      (1,245)      (2,430)      13,024  
Maintenance Capex                                        2,517       1,271         666          825        5,279  
Distributable Cash Flow (Loss)                           6,133       6,778      (1,911)      (3,255)       7,745  

PER UNIT DATA                                                                                                     
- ------------------------------------------------                                                                  
Net Income (Loss) per Unit                               $1.10       $0.99      ($0.77)      ($0.94)       $0.37  
Cash Flow (Loss) per Unit                                $1.61       $1.50      ($0.23)      ($0.45)       $2.42  
Distributable Cash Flow (Loss) per Unit                  $1.14       $1.26      ($0.36)      ($0.61)       $1.44  
Cash Distributions per Unit                              $0.55       $0.55       $0.55        $0.55        $2.20  
Weighted Avg. Limited Partner Units Outstanding          5,271       5,271       5,271        5,271        5,271  

BALANCE SHEET DATA                                                                                                
- ------------------------------------------------                                                                  
Working Capital (Deficit)                              $12,428     $14,583      $9,684       $3,319       $3,319  
Total Assets                                           168,485     158,678     153,767      147,469      147,469  
Total Debt (including short-term)                       91,850      85,000      85,000       85,000       85,000  
Cumulative Redeemable Preferred Stock                       --          --          --           --           --
Total Partners' Capital                                 64,332      66,699      59,598       51,578       51,578  
Total Capitalization                                   156,182     151,699     144,598      136,578      136,578  

FINANCIAL RATIO DATA                                                                                              
- ------------------------------------------------                                                                  
Interest Expense                                        $1,848      $1,771      $1,671       $1,676       $6,966  
EBITDA to Interest Expense                                  --          --          --           --        2.8 x  
Total Debt to EBITDA                                        --          --          --           --        4.3 x  
Total Debt to Total Capitalization                       58.8%       56.0%       58.8%        62.2%        62.2%  

LTM   
Fiscal 1998                Ended  
----------------------------------    June 30,      
INCOME STATEMENT DATA                                  Q1          Q2          Q3          1998
- ------------------------------------------------   ----------- ----------- ----------

Sales                                              $  41,844   $  37,884   $  16,243    $ 113,734
Gross Profit (after delivery and branch expense)      10,041      12,736       1,187       24,721
EBITDA                                                 8,672      11,287        (415)      18,867
EBIT                                                   5,847       8,381      (3,328)       7,687
Net Income (Loss)                                      3,707       6,363      (5,235)        (227)
Limited Partners' Interest in Net Income (Loss)        3,633       6,236      (5,130)        (221)
Cash Flow (Loss)                                       6,690       9,421      (2,179)      11,502
Maintenance Capex                                      2,085         943         797        4,650
Distributable Cash Flow (Loss)                         4,605       8,478      (2,976)       6,852

PER UNIT DATA                                      
- ------------------------------------------------   
Net Income (Loss) per Unit                             $0.66       $1.00      ($0.82)      ($0.04)
Cash Flow (Loss) per Unit                              $1.20       $1.48      ($0.34)       $1.94
Distributable Cash Flow (Loss) per Unit                $0.82       $1.33      ($0.47)       $1.16
Cash Distributions per Unit                            $0.55       $0.55       $0.55        $2.20
Weighted Avg. Limited Partner Units Outstanding        5,474       6,228       6,228        5,800

BALANCE SHEET DATA                                 
- ------------------------------------------------   
Working Capital (Deficit)                            $10,475     $14,841      $4,242       $4,242
Total Assets                                         179,451     178,308     173,265      173,265
Total Debt (including short-term)                     96,000      96,000      96,950       96,950
Cumulative Redeemable Preferred Stock                     --          --          --           --
Total Partners' Capital                               71,883      74,751      66,020       66,020
Total Capitalization                                 167,883     170,751     162,970      162,970

FINANCIAL RATIO DATA                               
- ------------------------------------------------   
Interest Expense                                      $2,086      $1,875      $1,873       $7,510
EBITDA to Interest Expense                                --          --          --        2.5 x
Total Debt to EBITDA                                      --          --          --        5.1 x
Total Debt to Total Capitalization                     57.2%       56.2%       59.5%        59.5%

Note: Financial data prior to December 20, 1995 reflects operations of the
Predecessor Company.
(1)   Includes two quarters of distributions and a pro rata distribution of
$0.0725 per Unit for the period December 20, 1995 to December 31, 1995.

- ------------------------------------------------------------------------------
Dain Rauscher Wessels                                                  Page 5

LOGO PETRO      Pro Forma Analysis
Pro Forma Unit Coverage Analysis
- ------------------------------------------------------------------------------

PROJECT INTENSE HEAT
Pro Forma Unit Coverage Analysis
(In thousands, except as otherwise indicated)

Projected for the Year Ended September 30,             
--------------------------------------------------------------------  
15 Year Weather Case                        
---------------------------------------------------------
Estimated  Normalized                                                
Pro Forma EBITDA                                1998E       1998E       1999E       2000E       2001E       2002E  
- ------------------------------------------   ---------   ---------   ---------   ---------   ---------   --------- 

Star                                          $ 18,781    $ 20,731    $ 23,032    $ 24,465    $ 25,898    $ 27,331 
Petro                                           37,630      44,749      46,094      49,605      52,824      55,897 
Synergies                                          500         500         500         500         500         500 
---------   ---------   ---------   ---------   ---------   ---------  
Pro Forma EBITDA                              $ 56,911    $ 65,980    $ 69,626    $ 74,570    $ 79,222    $ 83,728 

Distributable Cash Flow                                                                                            
- ------------------------------------------                                                                         
Pro Forma EBITDA                              $ 56,911    $ 65,980    $ 69,626    $ 74,570    $ 79,222    $ 83,728 
Interest Expense                               (27,722)    (27,722)    (28,186)    (29,479)    (31,065)    (32,560)
Maintenance Capex                               (6,210)     (6,210)     (6,298)     (6,419)     (6,541)     (6,667)
Other                                             (525)       (525)       (525)       (525)       (525)       (525)
---------   ---------   ---------   ---------   ---------   ---------  
Distributable Cash Flow                       $ 22,454    $ 31,523    $ 34,617    $ 38,147    $ 41,091    $ 43,976 

Weighted Average Units Outstanding                                                                                 
- ------------------------------------------                                                                         
Common Units                                    10,311      10,311      10,682      11,260      11,676      12,111 
Senior Subordinated Units (incl. DPUs)           2,766       2,766       2,766       3,069       3,372       3,675 
Junior Subordinated & General Partner Units        857         857         857         857         857         857 
---------   ---------   ---------   ---------   ---------   ---------  
Total Weighted Average Units Outstanding        13,934      13,934      14,305      15,186      15,905      16,643 

Distributable Cash Flow per Unit                                                                                   
- ------------------------------------------                                                                         
Common Units                                  $   2.18    $   3.06    $   3.24    $   3.39    $   3.52    $   3.63 
Senior Subordinated Units (incl. DPUs)        $   1.72    $   2.41    $   2.57    $   2.66    $   2.73    $   2.79 
Junior Subordinated & General Partner Units   $   1.61    $   2.26    $   2.42    $   2.51    $   2.58    $   2.64 
---------   ---------   ---------   ---------   ---------   ---------  
Total Units Outstanding                       $   1.61    $   2.26    $   2.42    $   2.51    $   2.58    $   2.64 

Distributions per Unit                                                                                             
- ------------------------------------------                                                                         
MQD per Unit                                  $   2.20    $   2.20    $   2.30    $   2.30    $   2.30    $   2.30 
Indicated Distribution per Unit               $   2.20    $   2.20    $   2.30    $   2.40    $   2.40    $   2.50 

MQD Coverage per Unit                                                                                              
- ------------------------------------------                                                                         
Common Units                                    0.99 x      1.39 x      1.41 x      1.47 x      1.53 x      1.58 x 
Senior Subordinated Units (incl. DPUs)          0.78 x      1.10 x      1.12 x      1.16 x      1.19 x      1.21 x 
Junior Subordinated & General Partner Units     0.73 x      1.03 x      1.05 x      1.09 x      1.12 x      1.15 x 
---------   ---------   ---------   ---------   ---------   ---------  
Total Units                                     0.73 x      1.03 x      1.05 x      1.09 x      1.12 x      1.15 x 

Indicated Distribution Coverage per Unit                                                                           
- ------------------------------------------                                                                         
Common Units                                    0.99 x      1.39 x      1.41 x      1.41 x      1.47 x      1.45 x 
Senior Subordinated Units (incl. DPUs)          0.78 x      1.10 x      1.12 x      1.11 x      1.14 x      1.11 x 
Junior Subordinated & General Partner Units     0.73 x      1.03 x      1.05 x      1.05 x      1.08 x      1.06 x 
---------   ---------   ---------   ---------   ---------   ---------  
Total Units                                     0.73 x      1.03 x      1.05 x      1.05 x      1.08 x      1.06 x 

Projected for the Year Ended September 30, 
--------------------------------------------------------------------- 
30 Year Weather Case
---------------------------------------------------------
Estimated   Normalized
Pro Forma EBITDA                                1998E       1998E       1999E       2000E       2001E       2002E
- ------------------------------------------    ---------   ---------  ----------  ----------  ----------  ---------- 

Star                                          $ 18,781    $ 22,135    $ 24,491    $ 26,029    $ 27,566    $ 29,104
Petro                                           37,630      46,900      48,881      53,536      57,814      61,900
Synergies                                          500         500         500         500         500         500
---------   ---------  ----------  ----------  ----------  ----------  
Pro Forma EBITDA                              $ 56,911    $ 69,535    $ 73,872    $ 80,065    $ 85,880    $ 91,504

Distributable Cash Flow                       
- ------------------------------------------    
Pro Forma EBITDA                              $ 56,911    $ 69,535    $ 73,872    $ 80,065    $ 85,880    $ 91,504
Interest Expense                               (27,722)    (27,608)    (28,857)    (31,150)    (33,254)    (35,120)
Maintenance Capex                               (6,210)     (6,210)     (6,273)     (6,393)     (6,516)     (6,641)
Other                                             (525)       (525)       (525)       (525)       (525)       (525)
---------   ---------  ----------  ----------  ----------  ----------  
Distributable Cash Flow                       $ 22,454    $ 35,192    $ 38,217    $ 41,997    $ 45,585    $ 49,218

Weighted Average Units Outstanding            
- ------------------------------------------    
Common Units                                    10,311      10,311      10,311      10,357      10,550      10,874
Senior Subordinated Units (incl. DPUs)           2,766       2,766       2,766       3,069       3,372       3,675
Junior Subordinated & General Partner Units        857         857         857         857         857         857
---------   ---------  ----------  ----------  ----------  ----------  
Total Weighted Average Units Outstanding        13,934      13,934      13,934      14,284      14,780      15,407

Distributable Cash Flow per Unit              
- ------------------------------------------    
Common Units                                  $   2.18    $   3.41    $   3.71    $   4.05    $   4.32    $   4.53
Senior Subordinated Units (incl. DPUs)        $   1.72    $   2.69    $   2.92    $   3.13    $   3.27    $   3.38
Junior Subordinated & General Partner Units   $   1.61    $   2.53    $   2.74    $   2.94    $   3.08    $   3.19
---------   ---------  ----------  ----------  ----------  ----------  
Total Units Outstanding                       $   1.61    $   2.53    $   2.74    $   2.94    $   3.08    $   3.19

Distributions per Unit                        
- ------------------------------------------    
MQD per Unit                                  $   2.20    $   2.20    $   2.30    $   2.30    $   2.30    $   2.30
Indicated Distribution per Unit               $   2.20    $   2.20    $   2.30    $   2.50    $   2.70    $   2.90

MQD Coverage per Unit                         
- ------------------------------------------    
Common Units                                    0.99 x      1.55 x      1.61 x      1.76 x      1.88 x      1.97 x
Senior Subordinated Units (incl. DPUs)          0.78 x      1.22 x      1.27 x      1.36 x      1.42 x      1.47 x
Junior Subordinated & General Partner Units     0.73 x      1.15 x      1.19 x      1.28 x      1.34 x      1.39 x
---------   ---------  ----------  ----------  ----------  ----------  
Total Units                                     0.73 x      1.15 x      1.19 x      1.28 x      1.34 x      1.39 x

Indicated Distribution Coverage per Unit      
- ------------------------------------------    
Common Units                                    0.99 x      1.55 x      1.61 x      1.62 x      1.60 x      1.56 x
Senior Subordinated Units (incl. DPUs)          0.78 x      1.22 x      1.27 x      1.25 x      1.21 x      1.17 x
Junior Subordinated & General Partner Units     0.73 x      1.15 x      1.19 x      1.18 x      1.14 x      1.10 x
---------   ---------  ----------  ----------  ----------  ----------  
Total Units                                     0.73 x      1.15 x      1.19 x      1.18 x      1.14 x      1.10 x

- --------------------------------------------------------------------------------
Dain Rauscher Wessels                                                    Page 6

Pro Forma Analysis
Pro Forma Credit Analysis

PROJECT INTENSE HEAT
Pro Forma Credit Analysis
(In thousands, except as otherwise indicated)

Projected for the Year Ended September 30, 
------------------------------------------------------------------
15 Year Weather Case                   
Estimated    ----------------------------------------------------   
Pro Forma EBITDA                          1998E         1999E         2000E         2001E         2002E     
- ------------------------------------    ----------    ----------    ----------    ----------    ----------   

Star                                    $  18,781     $  23,032     $  24,465     $  25,898     $  27,331   
Petro                                      37,630        46,094        49,605        52,824        55,897   
Synergies                                     500           500           500           500           500   
----------    ----------    ----------    ----------    ----------    
Pro Forma EBITDA                        $  56,911     $  69,626     $  74,570     $  79,222     $  83,728   

Distributable Cash Flow                                                                                     
- ------------------------------------                                                                        
Pro Forma EBITDA                        $  56,911     $  69,626     $  74,570     $  79,222     $  83,728   
Interest Expense                          (27,722)      (28,186)      (29,479)      (31,065)      (32,560)  
Maintenance Capex                          (6,210)       (6,298)       (6,419)       (6,541)       (6,667)  
Other                                        (525)         (525)         (525)         (525)         (525)  
----------    ----------    ----------    ----------    ----------    
Distributable Cash Flow                 $  22,454     $  34,617     $  38,147     $  41,091     $  43,976   

Fixed Charges                                                                                               
- ------------------------------------                                                                        
Interest Expense                        $  27,722     $  28,186     $  29,479     $  31,065     $  32,560   
Lease and Rental Expense                    5,281         4,676         4,058         3,642         3,541   
----------    ----------    ----------    ----------    ----------    
Total Fixed Charges                     $  33,003     $  32,862     $  33,537     $  34,707     $  36,101   

Pro Forma Balance Sheet Data                                                                                
- ------------------------------------                                                                        
Working Capital                         $   7,177     $   7,177     $   7,177     $   7,177     $   7,177   
Total Assets                              376,824       379,732       379,450       373,923       363,512   
Total Long-Term Debt                      314,234       329,549       351,798       372,734       393,010   
Total Partners' Capital (Deficit)         (37,889)      (55,252)      (84,504)     (117,291)     (154,104)  
Total Capitalization                      276,345       274,297       267,294       255,443       238,906   

Pro Forma Credit Analysis                                                                                   
- ------------------------------------                                                                        
Interest Coverage Ratio (1)                2.05 x        2.47 x        2.53 x        2.55 x        2.57 x   
Fixed Charge Coverage Ratio (2)            1.72 x        2.12 x        2.22 x        2.28 x        2.32 x   
Total Debt to Total Capitalization         113.7%        120.1%        131.6%        145.9%        164.5%  
Total Debt to EBITDA                       5.52 x        4.73 x        4.72 x        4.70 x        4.69 x   
Total Debt to Distributable Cash Flow     13.99 x        9.52 x        9.22 x        9.07 x        8.94 x   

Projected for the Year Ended September 30,
------------------------------------------------------------------
30 Year Weather Case 
Estimated     ----------------------------------------------------
Pro Forma EBITDA                           1998E         1999E         2000E         2001E         2002E
- ------------------------------------     ----------    ----------    ----------    ----------    ---------- 

Star                                     $  18,781     $  24,491     $  26,029     $  27,566     $  29,104
Petro                                       37,630        48,881        53,536        57,814        61,900
Synergies                                      500           500           500           500           500
----------    ----------    ----------    ----------    ---------- 
Pro Forma EBITDA                         $  56,911     $  73,872     $  80,065     $  85,880     $  91,504

Distributable Cash Flow                  
- ------------------------------------     
Pro Forma EBITDA                         $  56,911     $  73,872     $  80,065     $  85,880     $  91,504
Interest Expense                           (27,722)      (28,857)      (31,150)      (33,254)      (35,120)
Maintenance Capex                           (6,210)       (6,273)       (6,393)       (6,516)       (6,641)
Other                                         (525)         (525)         (525)         (525)         (525)
----------    ----------    ----------    ----------    ---------- 
Distributable Cash Flow                  $  22,454     $  38,217     $  41,997     $  45,585     $  49,218

Fixed Charges                            
- ------------------------------------     
Interest Expense                         $  27,722     $  28,857     $  31,150     $  33,254     $  35,120
Lease and Rental Expense                     5,281         4,676         4,058         3,642         3,541
----------    ----------    ----------    ----------    ---------- 
Total Fixed Charges                      $  33,003     $  33,533     $  35,208     $  36,896     $  38,661

Pro Forma Balance Sheet Data             
- ------------------------------------     
Working Capital                          $   7,177     $   7,177     $   7,177     $   7,177     $   7,177
Total Assets                               376,824       384,961       389,763       388,457       381,446
Total Long-Term Debt                       314,234       348,066       379,371       405,538       430,848
Total Partners' Capital (Deficit)          (37,889)      (69,178)     (103,669)     (138,643)     (178,219)
Total Capitalization                       276,345       278,888       275,702       266,895       252,629

Pro Forma Credit Analysis                
- ------------------------------------     
Interest Coverage Ratio (1)                 2.05 x        2.56 x        2.57 x        2.58 x        2.61 x
Fixed Charge Coverage Ratio (2)             1.72 x        2.20 x        2.27 x        2.33 x        2.37 x
Total Debt to Total Capitalization          113.7%        124.8%        137.6%        151.9%        170.5%
Total Debt to EBITDA                        5.52 x        4.71 x        4.74 x        4.72 x        4.71 x
Total Debt to Distributable Cash Flow      13.99 x        9.11 x        9.03 x        8.90 x        8.75 x

- ---------------
(1) Interest coverage ratio is EBITDA divided by interest expense.
(2) Fixed charge coverage ratio is EBITDA divided by total fixed charges.

- ------------------------------------------------------------------------------
Dain Rauscher Wessels                                                  Page 7

LOGO PETRO     Project Intense Heat
- ------------------------------------------------------------------------------

Unit Reference Value Analysis

- ------------------------------------------------------------------------------
Dain Rauscher Wessels                                                  Page 8

LOGO PETRO     Unit Reference Value Analysis
Unit Reference Value Analysis Summary
- ------------------------------------------------------------------------------

PROJECT INTENSE HEAT
Unit Reference Value Analysis Summary

Dain
15 Year     30 Year     Rauscher
Downside     Weather     Weather     Wessels
Indicated Reference Values per Star Unit                            Case        Case        Case        Case
- ----------------------------------------------------------       ---------   ---------   ---------   --------- 

Common Unit                                                       $ 20.75     $ 26.33     $ 31.55     $ 22.54

Senior Subordinated Unit                                          $ 17.74     $ 26.90     $ 35.62     $ 22.76

Junior Subordinated / General Partner Unit                        $ 13.74     $ 20.78     $ 27.83     $ 17.73

Exchange Ratio (Petro Share / Star Unit)
- ---------------------------------------------------------- 
Senior Subordinated Unit                                          0.13064     0.13064     0.13064     0.13064

Junior Subordinated / General Partner Unit                        0.15913     0.15913     0.15913     0.15913

Implied Reference Value per Petro Share                                   Senior Subordinated Unit
- ----------------------------------------------------------      ----------------------------------------------  
Implied Reference Value (excluding DPUs and GP Incentives)        $  2.32     $  2.98     $  3.80     $  2.54

DPUs and GP Incentives Value                                           --        0.54        0.85        0.43
---------   ---------   ---------   ---------  
Total Implied Reference Value                                     $  2.32     $  3.51     $  4.65     $  2.97
=========   =========   =========   =========  

Implied Reference Value per Petro Share                           Junior Subordinated / General Partner Unit
----------------------------------------------  
Implied Reference Value (excluding DPUs and GP Incentives)        $  2.19     $  2.76     $  3.57     $  2.39

DPUs and GP Incentives Value                                         0.54        0.86        0.44
Total Implied Reference Value                                     $  2.19     $  3.31     $  4.43     $  2.82

- ------------------------------------------------------------------------------
Dain Rauscher Wessels                                                  Page 9

LOGO PETRO     Unit Reference Value Analysis
Unit Reference Value Analysis Discount Rate Assumptions
- ------------------------------------------------------------------------------

PROJECT INTENSE HEAT
Unit Reference Value Analysis Discount Rate Assumptions

15 Year                30 Year            Dain Rauscher
Downside Case          Weather Case           Weather Case          Wessels Case
--------------------   --------------------   --------------------   --------------------
Discount  Bps Spread   Discount  Bps Spread   Discount  Bps Spread   Discount  Bps Spread
Rate     to Common     Rate     to Common     Rate     to Common     Rate     to Common
--------  ----------   --------  ----------   --------  ----------   --------  ----------

Common Unit                                 11.30%          --      9.50%          --      9.00%          --     10.75%          --

Senior Subordinated Unit                                                                                     
- ------------------------------------------ 
Senior Subordinated Unit Distributions      13.30%     200 bps     11.00%     150 bps      9.75%      75 bps      12.50%    175 bps

Petro Incentive Distributions (DPU)             --          --     13.00%     350 bps     12.50%     350 bps      14.25%    350 bps

GP Incentive Distributions                      --          --     13.50%     400 bps     13.00      400 bps      14.75%    400 bps

Junior Subordinated / General Partner Unit                                                                               
- ------------------------------------------                                                                               
Junior Subordinated Unit Distributions      14.30%     300 bps     12.00%     250 bps     10.50%     150 bps      13.50%    275 bps

Petro Incentive Distributions (DPU)             --          --     13.00%     350 bps     12.50%     350 bps      14.25%    350 bps

GP Incentive Distributions                      --          --     13.50%     400 bps     13.00%     400 bps      14.75%    400 bps

Dain Rauscher Wessels                                                   Page 10

[LOGO OF PETRO(TM) APPEARS HERE]

Unit Reference Value Analysis
Projected Indicated Distribution per Unit and Cash Distributions per Unit Class

================================================================================

- --------------------------------------------------------------------------------

PROJECT INTENSE HEAT
Projected Indicated Distribution per Unit and Cash Distributions per Unit Class
(In thousands, except as otherwise indicated)

Projected for the Year Ended September 30,
-----------------------------------------------
15 Year Weather Case
-----------------------------------------------
Distributable Cash Flow                                                               1999E        2000E        2001E       2002E
- ----------------------------------------------                                      ---------    ---------    ---------   ---------

Distributable Cash Flow                                                              $34,617      $38,147      $41,091     $43,976
Indicated Distribution per Unit                                                        $2.30        $2.40        $2.40       $2.50

Cash Distributions         
- ----------------------------------------------
Distributions to Unitholders                                                         $32,902      $36,447      $38,173     $41,608
GP Incentive Distributions                                                                 0            0            0         247
---------    ---------    ---------   ---------
Total Cash Distributions                                                             $32,902      $36,447      $38,173     $41,855
=========    =========    =========   =========

Weighted Average Units Outstanding
- ----------------------------------------------
Common Units                                                                          10,682       11,260       11,676      12,111
Senior Subordinated Units (Incl. DPUs)                                                 2,766        3,069        3,372       3,675
Junior Subordinated Units                                                                578          578          578         578
General Partner Units                                                                    279          279          279         279
---------    ---------    ---------   ---------
Total Units Outstanding                                                               14,305       15,186       15,905      16,643

Splits
---------------------- 
Annual       Unit.        GP
GP Incentive Distributions Targets                Target      holders    Incentives
- ----------------------------------------------   ---------   ---------   ----------

Minimum Quarterly Distribution                     $2,300       98%           2%
First Target Distribution                          $2,416       98%           2%
Second Target Distribution                         $2,844       85%          15%
Third Target Distribution                          $3,704       75%          25%
Thereafter                                             --       50%          50%

Cash Distributions prior to First Target
- ----------------------------------------------

Cash Distributed to Unitholders                                                      $32,902      $36,447      $38,173     $40,210 
Allocation to Common Units                                                            24,568       27,023       26,022      29,260 
Allocation to Senior Subordinated Units                                                6,363        7,367        8,094       8,880 
Allocation to Junior Subordinated Units                                                1,330        1,388        1,388       1,397 
Allocation to General Partner Units                                                      641          669          669         673 
GP Incentive Distributions                                                                --           --           --          -- 
Total Cash Distributed                                                                32,902       36,447       38,173      40,210 

Cash Distributions First to Second Target                                                                                          
- ----------------------------------------------                                                                                     
Cash Distributed to Unitholders                                                           $0           $0           $0      $1,398 
Allocation to Common Units                                                                 0            0            0       1,017 
Allocation to Senior Subordinated Units                                                    0            0            0         309 
Allocation to Junior Subordinated Units                                                    0            0            0          49 
Allocation to General Partner Units                                                        0            0            0          23 
GP Incentive Distributions                                                                 0            0            0         247 
Total Cash Distributed                                                                     0            0            0       1,645 

Cash Distributions Second to Third Target                                                                                          
- ----------------------------------------------                                                                                     
Cash Distributed to Unitholders                                                           $0           $0           $0          $0 
Allocation to Common Units                                                                 0            0            0           0 
Allocation to Senior Subordinated Units                                                    0            0            0           0 
Allocation to Junior Subordinated Units                                                    0            0            0           0 
Allocation to General Partner Units                                                        0            0            0           0 
GP Incentive Distributions                                                                 0            0            0           0 
Total Cash Distributed                                                                     0            0            0           0 

Cash Distributions Third to Thereafter Target                                                                                      
- ----------------------------------------------                                                                                     
Cash Distributed to Unitholders                                                           $0           $0           $0          $0  
Allocation to Common Units                                                                 0            0            0           0  
Allocation to Senior Subordinated Units                                                    0            0            0           0  
Allocation to Junior Subordinated Units                                                    0            0            0           0  
Allocation to General Partner Units                                                        0            0            0           0  
GP Incentive Distributions                                                                 0            0            0           0  
Total Cash Distributed                                                                     0            0            0           0 

Projected for the Year Ended September 30,
-----------------------------------------------
30 Year Weather Case
-----------------------------------------------

Distributable Cash Flow                            1999E        2000E        2001E       2002E
- ----------------------------------------------   ---------    ---------    ---------   ---------
Distributable Cash Flow                           $38,217      $41,997      $45,585     $49,218
Indicated Distribution per Unit                     $2.30        $2.50        $2.70       $2.90

Cash Distributions                                                                             
- ----------------------------------------------                                                 
Distributions to Unitholders                      $32,049      $35,709      $39,905     $44,680
GP Incentive Distributions                              0          212          714       1,451
---------    ---------    ---------   ---------
Total Cash Distributions                          $32,049      $35,921      $40,646     $46,131
=========    =========    =========   =========

Weighted Average Units Outstanding                                                             
- ----------------------------------------------                                                 
Common Units                                      $10,311       10,357       10,550      10,874
Senior Subordinated Units (Incl. DPUs)              2,766        3,069        3,372       3,675
Junior Subordinated Units                             578          578          578         578
General Partner Units                                 279          279          279         279
---------    ---------    ---------   ---------
Total Units Outstanding                            13,934       14,284       14,780      15,407 

Cash Distributions prior to First Target         
- ----------------------------------------------   
Cash Distributed to Unitholders                   $32,049      $34,510      $35,708     $37,223
Allocation to Common Units                         23,715       25,023       25,489      26,272
Allocation to Senior Subordinated Units             6,363        7,416        8,148       8,880
Allocation to Junior Subordinated Units             1,330        1,397        1,397       1,397
Allocation to General Partner Units                   641          673          673         673
GP Incentive Distributions                             --           --           --          --
Total Cash Distributed                             32,049       34,510       35,708      37,223

Cash Distributions First to Second Target                                                      
- ----------------------------------------------                                                 
Cash Distributed to Unitholders                        $0       $1,200       $4,197      $6,594
Allocation to Common Units                              0          870        2,996       4,654
Allocation to Senior Subordinated Units                 0          258          958       1,573
Allocation to Junior Subordinated Units                 0           49          164         248
Allocation to General Partner Units                     0           23           79         119
GP Incentive Distributions                              0          212          741       1,164
Total Cash Distributed                                  0        1,412        4,938       7,758

Cash Distributions Second to Third Target                                                      
- ----------------------------------------------                                                 
Cash Distributed to Unitholders                        $0           $0           $0        $863 
Allocation to Common Units                              0            0            0         609
Allocation to Senior Subordinated Units                 0            0            0         206
Allocation to Junior Subordinated Units                 0            0            0          32
Allocation to General Partner Units                     0            0            0          16
GP Incentive Distributions                              0            0            0         288
Total Cash Distributed                                  0            0            0       1,150

Cash Distributions Third to Thereafter Target                                                  
- ----------------------------------------------                                                 
Cash Distributed to Unitholders                        $0           $0           $0          $0 
Allocation to Common Units                              0            0            0           0 
Allocation to Senior Subordinated Units                 0            0            0           0 
Allocation to Junior Subordinated Units                 0            0            0           0 
Allocation to General Partner Units                     0            0            0           0 
GP Incentive Distributions                              0            0            0           0 
Total Cash Distributed                                  0            0            0           0 

- --------------------------------------------------------------------------------

================================================================================
Dain Rauscher Wessels                                                   Page  11

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Unit Reference Value Analysis
Projected Indicated Distribution per Unit and Cash Distributions per Unit Class

================================================================================

- --------------------------------------------------------------------------------

PROJECT INTENSE HEAT
Projected Indicated Distribution per Unit and Cash Distributions per Unit Class
(In thousands, except as otherwise indicated)

Projected for the Year Ended September 30,
-----------------------------------------------------------
15 Year Weather Case
-----------------------------------------------------------
Common Unit Cash Distributions                                1999E           2000E            2001E            2002E
- -------------------------------------------------           ---------       ---------        ---------        --------- 

Cash Distributions prior to First Target                      $24,568         $27,023          $28,022          $29,260
Cash Distributions First to Second Target                           0               0                0            1,017
Cash Distributions Second to Third Target                           0               0                0                0
Cash Distributions Third to Thereafter Target                       0               0                0                0
---------       ---------        ---------        --------- 
Total Cash Distributions                                      $24,568         $27,023          $28,022          $30,277
Total Cash Distributions per Unit                              $2,300          $2,400           $2,400           $2,500
Weighted Average units Outstanding                             10,682          11,260           11,676           12,111

Senior Subordinated Unit Cash Distributions
- -------------------------------------------------
Cash Distributions prior to First Target                      $6,363           $7,367           $8,094           $8,880
Cash Distributions First to Second Target                          0                0                0              309
Cash Distributions Second to Third Target                          0                0                0                0
Cash Distributions Third to Thereafter Target                      0                0                0                0
---------       ---------        ---------        --------- 
Total Cash Distributions                                       $6,363          $7,367           $8,094           $9,169
Total Cash Distributions per Unit                              $2,300          $2,400           $2,400           $2,500
Weighted Average Units Outstanding                              2,766           3,069            3,372            3,675

Junior Subordinated Unit Cash Distributions
- -------------------------------------------------
Cash Distributions prior to First Target                       $1,330          $1,388           $1,388           $1,397
Cash Distributions First to Second Target                           0               0                0               49
Cash Distributions Second to Third Target                           0               0                0                0
Cash Distributions Third to Thereafter Target                       0               0                0                0
---------       ---------        ---------        --------- 
Total Cash Distributions                                       $1,330          $1,388           $1,388           $1,446
Total Cash Distributions per Unit                              $2,300          $2,400           $2,400           $2,500
Weighted Average Units Outstanding                                578             578              578              578

General Partner Unit Cash Distributions
- -------------------------------------------------
Cash Distributions prior to First Target                         $641            $669             $669             $673
Cash Distributions First to Second Target                           0               0                0               23
Cash Distributions Second to Third Target                           0               0                0                0
Cash Distributions Third to Thereafter Target                       0               0                0                0
---------       ---------        ---------        --------- 
Total Cash Distributions                                         $641            $669             $669             $697
Total Cash Distributions per Unit                              $2,300          $2,400           $2,400           $2,500
Weighted Average Units Outstanding                                279             279              279              279

GP Incentive Distributions
- -------------------------------------------------
Cash distributions prior to First Target                            -               -                -                -
Cash Distributions First to Second Target                           0              $0               $0             $247
Cash Distributions Second to Third Target                           0               0                0                0
Cash Distributions Third to Thereafter Target                       0               0                0                0
---------       ---------        ---------        --------- 
Total Cash Distributions                                           $0              $0               $0             $247
Total Cash Distributions per unit (Sr, Jr & GP)                $0.000          $0.000           $0.000           $0.054
Weighted Average Units Outstanding (Sr, Jr & GP)                3,624           3,927            4,230            4,533
- ----------------------------------------------------------------------------------------------------------------------

Projected for the Year Ended September 30,
-----------------------------------------------------------
30 Year Weather Case
-----------------------------------------------------------
Common Unit Cash Distributions                                1999E           2000E            2001E            2002E
- -------------------------------------------------           ---------       ---------        ---------        --------- 

Cash Distributions prior to First Target                      $23,715         $25,023          $25,489          $26,272
Cash Distributions First to Second Target                           0             870            2,996            4,654
Cash Distributions Second to Third Target                           0               0                0              609
Cash Distributions Third to Thereafter Target                       0               0                0                0
---------       ---------        ---------        --------- 
Total Cash Distributions                                      $23,715         $25,893          $28,486          $31,535
Total Cash Distributions per Unit                              $2,300          $2,500           $2,700           $2,900
Weighted Average units Outstanding                             10,311          10,357           10,550           10,874

Senior Subordinated Unit Cash Distributions
- -------------------------------------------------
Cash Distributions prior to First Target                      $6,363           $7,416           $8,148           $8,880
Cash Distributions First to Second Target                          0              258              958            1,573
Cash Distributions Second to Third Target                          0                0                0              206
Cash Distributions Third to Thereafter Target                      0                0                0                0
---------       ---------        ---------        --------- 
Total Cash Distributions                                       $6,363          $7,674           $9,106          $10,659
Total Cash Distributions per Unit                              $2,300          $2,500           $2,700           $2,900
Weighted Average Units Outstanding                              2,766           3,069            3,372            3,675

Junior Subordinated Unit Cash Distributions
- -------------------------------------------------
Cash Distributions prior to First Target                       $1,330          $1,397           $1,397           $1,397
Cash Distributions First to Second Target                           0              49              164              248
Cash Distributions Second to Third Target                           0               0                0               32
Cash Distributions Third to Thereafter Target                       0               0                0                0
---------       ---------        ---------        --------- 
Total Cash Distributions                                       $1,330          $1,446           $1,562           $1,677
Total Cash Distributions per Unit                              $2,300          $2,500           $2,700           $2,900
Weighted Average Units Outstanding                                578             578              578              578

General Partner Unit Cash Distributions
- -------------------------------------------------
Cash Distributions prior to First Target                         $641            $673             $673             $673
Cash Distributions First to Second Target                           0              23               79              119
Cash Distributions Second to Third Target                           0               0                0               16
Cash Distributions Third to Thereafter Target                       0               0                0                0
---------       ---------        ---------        --------- 
Total Cash Distributions                                         $641            $697             $752             $808
Total Cash Distributions per Unit                              $2,300          $2,500           $2,700           $2,900
Weighted Average Units Outstanding                                279             279              279              279

GP Incentive Distributions
- -------------------------------------------------
Cash distributions prior to First Target                            -               -                -                -
Cash Distributions First to Second Target                          $0            $212             $741           $1,164
Cash Distributions Second to Third Target                           0               0                0              288
Cash Distributions Third to Thereafter Target                       0               0                0                0
---------       ---------        ---------        --------- 
Total Cash Distributions                                           $0            $212             $741           $1,451
Total Cash Distributions per unit (Sr, Jr & GP)                $0.000          $0.054           $0.175           $0.320
Weighted Average Units Outstanding (Sr, Jr & GP)                3,624           3,927            4,230            4,533
- ----------------------------------------------------------------------------------------------------------------------

================================================================================
Dain Rauscher Wessels                                                    Page 12

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Unit Reference Value Analysis
Cumulative Incremental DPU per Unit Calculation

================================================================================

- --------------------------------------------------------------------------------

PROJECT INTENSE HEAT
Cumulative Incremental DPU per Unit Calculation
(In thousands, except as otherwise indicated)

Projected for the Year Ended September 30,
------------------------------------------
15 Year Weather Case           
------------------------------------------       
Units to Receive DPUs                                    1999E      2000E     2001E      2002E    
- ----------------------------------------------        ----------- --------- --------- ---------- 

Senior Subordinated Units (Includes DPUs)                  2,766      3,069     3,372     3,675           
Junior Subordinated Units                                    578        578       578       578           
General Partner Units                                        279        279       279       279           
- ----------------------------------------------        ----------- --------- --------- ---------- 
Total Units                                                3,624      3,927     4,230     4,533                              

Cumulative Incremental DPU per Unit                                                                      
- ----------------------------------------------                                                           
DPUs Distributed                                               0        303       303       303           
DPU per Outstanding Unit                                   0.000      0.084     0.077     0.072                              
- ------------------------------------------------------------------------------------------------
Cumulative incremental DPU per Unit                        0.000      0.084     0.167     0.251           
- ------------------------------------------------------------------------------------------------          

Projected for the Year Ended September 30,
------------------------------------------
30 Year Weather Case
------------------------------------------
Units to Receive DPUs                                    1999E      2000E     2001E      2002E
- ----------------------------------------------        ----------- --------- --------- ---------- 

Senior Subordinated Units (Includes DPUs)                  2,766      3,069     3,372     3,675
Junior Subordinated Units                                    578        578       578       578
General Partner Units                                        279        279       279       279
- ----------------------------------------------        ----------- --------- --------- ---------- 
Total Units                                                3,624      3,927     4,230     4,533

Cumulative Incremental DPU per Unit                    
- ----------------------------------------------         
DPUs Distributed                                               0        303       303       303
DPU per Outstanding Unit                                   0.000      0.084     0.077     0.072

- ------------------------------------------------------------------------------------------------
Cumulative incremental DPU per Unit                        0.000      0.084     0.167     0.251
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------

================================================================================
Dain Rauscher Wessels                                                    Page 13

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Unit Reference Value Analysis
Unit Reference Value Analysis
(Downside Case)                       
================================================================================

- --------------------------------------------------------------------------------
PROJECT INTENSE HEAT
Unit Reference Value Analysis (Downside Case)

Downside Case
-----------------------------------------------------------------------------------------
Projected for the Year Ended September 30,                         
------------------------------------------ Terminal     Total     Liquidity     Adjusted
Common Unit (1)                              1998E     2000E     2001E     2002E      Value (2)     NPV     Discount (3)     NPV
- -----------------------------------------   -------   -------   -------   -------    -----------  -------  --------------  --------

Cash Distributions                            $2.30     $2.30     $2.30     $2.30      $20.36                         
Period                                         0.50      1.50      2.50      3.50        4.00
- ------------------------------------------------------------------------------------------------------------------------------------
NPV @ 11.30%                                  $2.18     $1.96     $1.76     $1.58      $13.27      $20.75          --        $20.75
- ------------------------------------------------------------------------------------------------------------------------------------

Senior Subordinated Unit
- -----------------------------------------                                                                                           
Cash Distributions                            $2.30     $2.30     $2.30     $2.30      $17.30                         
Period                                         0.50      1.50      2.50      3.50        4.00                         
- ------------------------------------------------------------------------------------------------------------------------------------
NPV @ 13.30% (200 bps spread to Common)       $2.16     $1.91     $1.68     $1.49      $10.50      $17.74          --        $17.74 
- ------------------------------------------------------------------------------------------------------------------------------------

Junior Subordinated/General Partner Unit      
- -----------------------------------------     
Cash Distributions                            $2.30     $2.30     $2.30     $2.30      $18.09                            
Period                                         0.50      1.50      2.50      3.50        4.00                                 
- ------------------------------------------------------------------------------------------------------------------------------------
NPV @ 14.30% (300 bps spread to Common)       $2.15     $1.88     $1.65     $1.44       $9.43      $16.55       17.0%        $13.74
- ------------------------------------------------------------------------------------------------------------------------------------

- --------------------

(1)  Common Unit discount rate is derived by using the appropriate rate to
calculate a net present value equal to the 09/25/98 closing price of
$20.75.
(2)  Terminal value is calculated as a perpetuity by dividing 2002E distribution
by the discount rate.
(3)  The Junior Subordinated and General Partner Unit discount is determined by
using a 20% liquidity discount for both Units and a 10% control premium for
a General Partner Unit. The weighted average based upon pro forma Unit
ownership is a discount of 17%.

- --------------------------------------------------------------------------------

================================================================================
Dain Rauscher Wessels                                                    Page 14

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Unit Reference Value Analysis
Common Unit Reference Value Analysis
(15 Year Weather Case)
================================================================================

- --------------------------------------------------------------------------------

PROJECT INTENSE HEAT
Common Unit Reference Value Analysis (15 Year Weather Case)

15 Year Weather Case
--------------------------------------------------------------------------------------
Projected for the Year Ended September 30,              Terminal          Total      
----------------------------------------------------         
Common Unit (1)                            1999E          2000E          2001E          2002E          Value (2)          NPV 
- ---------------------------------         -------        -------        -------        -------        -----------      ---------

Cash Distributions                          $2.30          $2.40          $2.40          $2.50          $26.32                

Period                                       0.50           1.50           2.50           3.50            4.00                
- --------------------------------------------------------------------------------------------------------------------------------
NPV @ 9.50%                                 $2.20          $2.09          $1.91          $1.82          $18.30          $26.33
- --------------------------------------------------------------------------------------------------------------------------------

- --------------
(1) Common Unit discount rate is a Dain Rauscher Wessels assumed yield based
upon the growth rate in distributions in the 15 year weather case.
(2) Terminal value is calculated as a perpetuity by dividing 2002E distribution
by the discount rate.

- --------------------------------------------------------------------------------

================================================================================
Dain Rauscher Wessels                                                    Page 15

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Unit Reference Value Analysis
Senior Subordinated Unit Reference Value Analysis
(15 Year Weather Case)
================================================================================

- --------------------------------------------------------------------------------

PROJECT INTENSE HEAT
Senior Subordinated Unit Reference Value Analysis (15 Year Weather Case)

15 Year Weather Case
-------------------------------------------------------------------------
Projected for the Year Ended September 30,        
----------------------------------------------      Terminal       Total
Senior Subordinated Unit Distributions                   1999E        2000E        2001E        2002E       Value (1)       NPV
- -----------------------------------------------         -------      -------      -------      -------     -----------   --------

Cash Distributions                                        $2.30        $2.40        $2.40        $2.50       $22.73
Period                                                     0.50         1.50         2.50         3.50         4.00
NPV@ 11.00% (150 bps spread to Common)                    $2.18        $2.05        $1.85        $1.74       $14.97       $22.79

Deferred Participation Unit (DPU)
- -----------------------------------------------
Cumulative Incremental DPU per Unit                       0.000        0.084        0.167        0.251
Cash Distributions per Fractional Unit                    $0.00        $0.20        $0.40        $0.63        $4.82
Period                                                     0.50         1.50         2.50         3.50         4.00
NPV @ 13.00% (350 bps spread to Common)                   $0.00        $0.17        $0.30        $0.41        $2.96        $3.83

GP Incentive Distributions
- -----------------------------------------------
Cash Distributions                                        $0.00        $0.00        $0.00        $0.05        $0.40
Period                                                     0.50         1.50         2.50         3.50         4.00
NPV @ 13.50% (400 bps spread to Common)                   $0.00        $0.00        $0.00        $0.03        $0.24        $0.28

- ---------------------------------------------------------------------------------------------------------------------------------
Total Net Present Value per Unit                          $2.18        $2.22        $2.14        $2.18       $18.17       $26.90
- ---------------------------------------------------------------------------------------------------------------------------------

- ------------------
(1)  Terminal value is calculated as a perpetuity by dividing 2002E distribution
by the discount rate.

- --------------------------------------------------------------------------------

================================================================================
Dain Rauscher Wessels                                                    Page 16

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Unit Reference Value Analysis
Junior Subordinated/General Partner Unit Reference Value Analysis 
(15 Year Weather Case)
================================================================================

- --------------------------------------------------------------------------------
PROJECT INTENSE HEAT
Junior Subordinated/General Partner Unit Reference Value Analysis 
(15 Year Weather Case)

15 Year Weather Case
----------------------------------------------------------------------------------------

Projected for the Year Ended September 30,  Terminal     Total    Liquidity    Adjusted
-------------------------------------------
Junior Subordinated/GP Unit Distributions       1999E     2000E     2001E       2002E    Value(1)      NPV     Discount (2)    NPV 
- ------------------------------------------- ----------- --------  --------   ----------  --------     ------  ------------  --------

Cash Distributions                              $2.30     $2.40     $2.40     $2.50       $20.83      
Period                                           0.50      1.50      2.50      3.50         4.00                                 
NPV @12.00% (260 bps spread to Common)          $2.17     $2.02     $1.81     $1.68       $13.24      $20.93      17%        $17.37

Deferred Participation Unit (DPU)                                                                                              
- -------------------------------------------
Cumulative Incremental DPU per Unit             0.000     0.084     0.167     0.251                                            
Cash Distributions per Fractional Unit          $0.00     $0.20     $0.40     $0.63        $4.82       
Period                                           0.50      1.50      2.50      3.50         4.00                                   
NPV @ 13.00% (350 bps spread to Common)         $0.00     $0.17     $0.30     $0.41        $2.96       $3.83      17%         $3.18

GP Incentive Distributions                                                                                                     
- -------------------------------------------
Cash Distributions                              $0.00     $0.00     $0.00     $0.05        $0.40       
Period                                           0.50      1.50      2.50      3.50         4.00      
NPV @ 13.50% (400 bps spread to Common)         $0.00     $0.00     $0.00     $0.03        $0.24       $0.28      17%         $0.23

- ------------------------------------------------------------------------------------------------------------------------------------

Total Net Present Value per Unit                $2.17     $2.19     $2.10     $2.13       $16.44      $25.04      17%        $20.78
- ------------------------------------------------------------------------------------------------------------------------------------

- ---------------------
(1)  Terminal value is calculated as a perpetuity by dividing 2002E distribution
by the discount rate.
(2)  The Junior Subordinated and General Partner Unit discount is determined by
using a 20% liquidity discount for both Units and a 10% control premium for
a General Partner Unit.  The weighted average based upon pro forma Unit
ownership is a discount of 17%.

- --------------------------------------------------------------------------------

================================================================================
Dain Rauscher Wessels                                                    Page 17

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Unit Reference Value Analysis
Common Unit Reference Value Analysis
(30 Year Weather Case)
================================================================================

- --------------------------------------------------------------------------------
PROJECT INTENSE HEAT
Common Unit Reference Value Analysis (30 Year Weather Case)

30 Year Weather Case
----------------------------------------------------------------------
Projected for the Year Ended September 30 
-------------------------------------------      Terminal       Total
Common Unit (1)                                  1999E       2000E       2001E       2002E       Value (2)       NPV
- ------------------------------------------      -------     -------     -------     -------     -----------    -------

Cash Distributions                                $2.30       $2.50       $2.70       $2.90       $32.22
Period                                             0.50        1.50        2.50        3.50         4.00
- ----------------------------------------------------------------------------------------------------------------------
NPV @ 9.00%                                       $2.20       $2.20       $2.18       $2.14       $22.83       $31.55
- ----------------------------------------------------------------------------------------------------------------------

- -------------------
(1)  Common Unit discount rate is a Dain Rauscher Wessets assumed yield based
upon the growth rate in distributions in the 30 year weather case.
(2)  Terminal value is calculated as a perpetuity by dividing 2002E distribution
by the discount rate.  
- --------------------------------------------------------------------------------

================================================================================
Dain Rauscher Wessels                                                    Page 18

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Unit Reference Value Analysis
Senior Subordinated Unit Reference Value Analysis
(30 Year Weather Case)
================================================================================

- --------------------------------------------------------------------------------

PROJECT INTENSE HEAT
Senior Subordinated Unit Reference Value Analysis (30 Year Weather Case)

30 Year Weather Case
----------------------------------------------------------------------------------------

Projected for the Year Ended September 30,                 
-------------------------------------------------------         Terminal          Total
Senior Subordinated Unit Distributions       1999E           2000E           2001E           2002E          Value (1)          NPV 
- -----------------------------------------   -------         -------         -------         -------        -----------      --------

Cash Distributions                            $2.30           $2.50           $2.70           $2.90          $29.74                
Period                                         0.50            1.50            2.50            3.50            4.00                
NPV @ 9.75% (75 bps spread to Common)         $2.20           $2.17           $2.14           $2.09          $20.50          $29.10

Deferred Participation Unit DPU
- -----------------------------------------                                                                                          
Cumulative Incremental DPU per Unit           0.000           0.084           0.167           0.251                                
Cash Distributions per Fractional Unit        $0.00           $0.21           $0.45           $0.73           $5.82
Period                                         0.50            1.50            2.50            3.50            4.00                
NPV @ 12.50% (350 bps spread to Common)       $0.00           $0.18           $0.34           $0.48           $3.63           $4.63

GP Incentive Distributions
- -----------------------------------------                                                                                          
Cash Distributions                            $0.00           $0.05           $0.18           $0.32           $2.46                
Period                                         0.50            1.50            2.50            3.50            4.00                
NPV @ 13.00% (400 bps spread to Common)       $0.00           $0.04           $0.13           $0.21           $1.51           $1.89

- ------------------------------------------------------------------------------------------------------------------------------------

Total Net Present Value per Unit              $2.20           $2.39           $2.61           $2.78          $25.65          $35.62
- ------------------------------------------------------------------------------------------------------------------------------------

- ----------------------
(1)  Terminal value is calculated as a perpetuity by dividing 2002E distribution
by the discount rate.

- --------------------------------------------------------------------------------

================================================================================
Dain Rauscher Wessels                                                    Page 19

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Unit Reference Value Analysis
Junior Subordinated/General Partner Unit Reference Value Analysis 
(30 Year Weather Case)
================================================================================

- --------------------------------------------------------------------------------
PROJECT INTENSE HEAT
Junior Subordinated General Partner Unit Reference Value Analysis 
(30 Year Weather Case)

30 Year Weather Case
---------------------------------------------------------------------------------------
Projected for the Year Ended September 30,
------------------------------------------ Terminal     Total     Liquidity    Adjusted
Junior Subordinated/GP Unit Distributions      1999E     2000E     2001E      2002E     Value (1)     NPV     Discount (2)     NPV
- -------------------------------------------   -------   -------   -------    -------   -----------  -------   ------------  --------

Cash Distributions                              $2.30     $2.50     $2.70      $2.90     $27.62                                     
Period                                           0.50      1.50      2.50       3.50       4.00                                     
NPV @ 10.50% (150 bps spread to Common)         $2.19     $2.15     $2.10      $2.04     $18.53      $27.01       17%        $22.42 

Deferred Participation Unit (DPU)
- -------------------------------------------                                                                                         
Cumulative Incremental DPU per Unit             0.000     0.084     0.167      0.251                                                
Cash Distributions per Fractional Unit          $0.00     $0.21     $0.45      $0.73      $5.82                                     
Period                                           0.50      1.50      2.50       3.50       4.00                                     
NPV @ 12.50% (350 bps spread to Common)         $0.00     $0.18     $0.34      $0.48      $3.63       $4.63       17%         $3.84 

GP incentive Distributions
- -------------------------------------------                                                                                         
Cash Distributions                              $0.00     $0.05     $0.18      $0.32      $2.48                                     
Period                                           0.50      1.50      2.50       3.50       4.00                                     
NPV @ 13.00% (400 bps spread to Common)         $0.00     $0.04     $0.13      $0.21      $1.51       $1.89       17%         $1.57 

- ------------------------------------------------------------------------------------------------------------------------------------
Total Net Present Value per Unit                $2.19     $2.37     $2.57      $2.74     $23.67      $33.53       17%        $27.83 
- ------------------------------------------------------------------------------------------------------------------------------------

- ----------------------
(1)  Terminal value is calculated as a perpetuity by dividing 2002E distribution
by the discount rate.
(2)  The Junior Subordinated and General Partner Unit discount is determined by
using a 20% liquidity discount for both Units and a 10% control premium for
a General Partner Unit. The weighted average based upon pro form a Unit
ownership is a discount of 17%.
- --------------------------------------------------------------------------------

================================================================================
Dain Rauscher Wessels                                                    Page 20

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Unit Reference Value Analysis 
Common Unit Reference Value Analysis
(Dain Rauscher Wessels Case)
================================================================================

- --------------------------------------------------------------------------------
PROJECT INTENSE HEAT
Common Unit Reference Value Analysis (Dain Rauscher Wessels Case)

Dain Rauscher Wessels Case
-------------------------------------------------------------------------------------
Projected for the Year Ended September 30,
----------------------------------------------------         Terminal         Total
Common Unit (1)                     1999E          2000E          2001E          2002E          Value (2)         NPV
- ------------------------------     -------        -------        -------        -------        -----------     ---------

Cash Distributions                   $2.30          $2.30          $2.40          $2.40          $22.33
Period                                0.50           1.50           2.50           3.50            4.00
- ------------------------------------------------------------------------------------------------------------------------
NPV @ 10.75%                         $2.19          $1.97          $1.86          $1.68          $14.84          $22.54
- ------------------------------------------------------------------------------------------------------------------------

- -------------------

Note: Dain Rauscher Wessels Case assumes distributions of $2.30, $2.30, $2.40
and $2.40 for the years 1999E, 2000E, 2001E and 2002E, respectively.
(1)  Common Unit discount rate is a Dain Rauscher Wessels assumed yield based
upon the growth rate in distributions in the Dain Rauscher Wessels case.
(2)  Terminal value is calculated as a perpetuity by dividing 2002E distribution
by the discount rate.
- --------------------------------------------------------------------------------

================================================================================
Dain Rauscher Wessels                                                    Page 21

[LOGO OF PETRO(TM) APPEARS HERE]

Unit Reference Value Analysis
Senior Subordinated Unit Reference Value Analysis 
(Dain Rauscher Wessels Case)
================================================================================

- --------------------------------------------------------------------------------
PROJECT INTENSE HEAT
Senior Subordinated Unit Reference Value Analysis (Dain Rauscher Wessels Case)

Dain Rauscher Wessels Case
-------------------------------------------------------------------------
Projected for the Year Ended September 30,
----------------------------------------------      Terminal      Total
Senior Subordinated Unit Distributions           1999E        2000E        2001E        2002E       Value (1)      NPV
- ------------------------------------------      -------      -------      -------      -------     -----------  ---------

Cash Distributions                                $2.30        $2.30        $2.40        $2.40       $19.20
Period                                             0.50         1.50         2.50         3.50         4.00
NPV @ 12.50% (175 bps spread to Common)           $2.17        $1.93        $1.79        $1.59       $11.99       $19.46

Deferred Participation Unit (DPU)
- ------------------------------------------
Cumulative Incremental DPU per Unit               0.000        0.084        0.167        0.251
Cash Distributions per Fractional Unit            $0.00        $0.19        $0.40        $0.60        $4.23
Period                                             0.50         1.50         2.50         3.50         4.00
NPV @ 14.25% (350 bps spread to Common)           $0.00        $0.16        $0.29        $0.38        $2.48        $3.30

GP Incentive Distributions
- ------------------------------------------
Cash Distributions                                $0.00        $0.00        $0.00        $0.00        $0.00
Period                                             0.50         1.50         2.50         3.50         4.00
NPV @ 14.75% (400 bps spread to Common)           $0.00        $0.00        $0.00        $0.00        $0.00        $0.00

- -------------------------------------------------------------------------------------------------------------------------
Total Net Present Value per Unit                  $2.17        $2.09        $2.08        $1.97       $14.47       $22.76
- -------------------------------------------------------------------------------------------------------------------------

- -------------------
Note: Dain Rauscher Wessels Case assumes distributions of $2.30, $2.30, $2.40
and $2.40 for the years 1999E, 2000E, 2001E and 2002E, respectively.
(1)  Terminal value is calculated as a perpetuity by dividing 2002E distribution
by the discount rate.

================================================================================
Dain Rauscher Wessels                                                    Page 22

[LOGO OF PETRO(TM) APPEARS HERE]

Unit Reference Value Analysis
Junior Subordinated/General Partner Unit Reference Value Analysis 
(Dain Rauscher Wessels Case)
================================================================================

- --------------------------------------------------------------------------------
PROJECT INTENSE HEAT
Junior Subordinated General Partner Unit Reference Value Analysis 
(Dain Rauscher Wessels Case)

Dain Rauscher Wessels Case
--------------------------------------------------------------------------------------
Projected for the Year Ended September 30,  
------------------------------------------  Terminal     Total   Liquidity    Adjusted
Junior Subordinated/GP Unit Distributions       1999E     2000E     2001E       2002E     Value (1)     NPV   Discount (2)    NPV   
- ------------------------------------------     -------   -------   -------     -------   -----------  ------  ------------  --------

Cash Distributions                               $2.30     $2.30     $2.40       $2.40     $17.78                                   
Period                                            0.50      1.50      2.50        3.50       4.00                                   
NPV @ 13.50% (276 bps spread to Common)          $2.16     $1.90     $1.75       $1.54     $10.71     $18.06       17%       $14.99 

Deferred Participation Unit (DPU)
- ------------------------------------------
Cumulative Incremental DPU per Unit              0.000     0.084     0.167       0.251                                              
Cash Distributions per Fractional Unit           $0.00     $0.19     $0.40       $0.60      $4.23                                   
Period                                            0.50      1.50      2.50        3.50       4.00                                   
NPV @ 14.26% (350 bps spread to Common)          $0.00     $0.16     $0.29       $0.38      $2.48      $3.30       17%        $2.74 

GP Incentive Distributions
- ------------------------------------------ 
Cash Distributions                               $0.00     $0.00     $0.00       $0.00      $0.00                                   
Period                                            0.50      1.50      2.50        3.50       4.00                                   
NPV @ 14.75% (400 bps spread to Common)          $0.00     $0.00     $0.00       $0.00      $0.00      $0.00       17%        $0.00 

- ------------------------------------------------------------------------------------------------------------------------------------
Total Net Present Value per Unit                 $2.16     $2.06     $2.04       $1.92     $13.19     $21.37       17%       $17.73 
- ------------------------------------------------------------------------------------------------------------------------------------

- -------------------                                              
Note: Dain Rauscher Wessels Case assumes distributions of $2.30, $2.30, $2.40
and $240 for the years 1 999E, 2000E, 2001E and 2002E, respectively.
(1)  Terminal value is calculated as a perpetuity by dividing 2002E distribution
by the discount rate.
(2)  The Junior Subordinated and General Partner Unit discount is determined by
using a 20% liquidity discount for both Units and a 10% control premium for
a General Partner Unit. The weighted average based upon pro forma Unit
ownership is a discount of 17%.

- --------------------------------------------------------------------------------

================================================================================
Dain Rauscher Wessels                                                    Page 23

[LOGO OF PETRO(TM) APPEAR HERE]

Project Intense Heat

================================================================================

Historical and Pro Forma
MVE and MVC Comparison

================================================================================
Dain Rauscher Wessels                                                    Page 24

[LOGO OF PETRO(TM) APPEARS HERE]

Historical and Pro Forma MVE and MVC Comparison
Petro Historical and Pro Forma Adjusted MVE and MVC Summary

================================================================================

- --------------------------------------------------------------------------------

PROJECT INTENSE HEAT
Petro Historical and Pro Forma Adjusted Market Value of Equity 
and Market Value of Capitalization Summary
(In thousands, except as otherwise indicated)

Pro Forma Adjusted Market Value of Equity and
Market Value of Capitalization
Historical  ----------------------------------------------
MVE &       Common     Sr Sub     Jr Sub/GP    Total    Percent
Market Value of Equity                                               MVC        Units       Units       Units      Units    Change
- ---------------------------------------------------------------  ----------  ----------  ----------  ----------  --------- ---------

Shares/Units Outstanding                                            26,573          --       2,766         857      3,624
Valuation per Share/Unit (1)                                        $1.875     $22,537     $22.762     $17.733
Market Value of Equity                                             $49,824          --     $62,970     $15,199    $78,169      56.9%

Principal Amount of Debt estimated at 9/30/98 (pre-transaction)
- ---------------------------------------------------------------    
11.96% Senior Notes                                                $60,000                                        $60,000
14.10% Senior Notes                                                  3,100                                          3,100
14.10% Subordinated Notes                                            3,100                                          3,100
10.13% Subordinated & Senior Subordinated Notes                     50,000                                         50,000
9.38% Subordinated & Senior Subordinated Notes                      75,000                                         75,000
12.25% Subordinated & Senior Subordinated Notes                     81,250                                         81,250
8.00% Acq. & Other Notes                                            14,508                                         14,508
8.25% Existing Credit Facility                                           0                                              0
----------                                      ---------
Total Principal Amount of Debt                                    $286,958                                       $286,958

Value of Preferred Stock estimated at 9/30/98 (2)
- ---------------------------------------------------------------
14.33% Preferred Stock                                              $4,167                                         $4,167
12.88% Preferred Stock                                              30,000                                         27,600
----------                                      ---------
Total Liquidation Value of Preferred Stock                         $34,167                                        $31,767

Debt and Preferred Stock Exchange (Common Units Issued)
- ---------------------------------------------------------------
Common Units Issued in Exchange                                         --         104
Dain Rauscher Wessels Reference Value per Unit                          --     $22,537
Total Value of Units Issued                                             --      $2,337                             $2,337

Market Value of Capitalization
- ---------------------------------------------------------------
Total Value of Equity, Debt & Preferred                           $370,949                                       $399,231
Less: Excess Cash (pre-transaction)                                (20,000)                                       (20,000)
----------                                      ---------

Market Value of Capitalization                                    $350,949                                       $379,231       8.1%
==========                                      =========

- --------------------
(1) Petro historical value per share is the closing market price one day prior
to announcement and the Star pro forma value per Unit is based on the Unit
Reference Value Analysis (Dain Rauscher Wessels Case), [See Unit Reference
Value Analysis Summary on page 9].
(2) Petro value for Preferred Stock is liquidation value estimated at September
30, 1998, except pro forma value for the 12.88% Preferred, which is 92% of
liquidation value.

- --------------------------------------------------------------------------------

================================================================================
Dain Rauscher Wessels                                                    Page 25

[LOGO OF PETRO(TM) APPEARS HERE]

Historical and Pro Forma MVE and MVC Comparison
Star Historical and Pro Forma Adjusted MVE and MVC Summary

================================================================================

- --------------------------------------------------------------------------------

PROJECT INTENSE HEAT
Star Historical and Pro Forma Adjusted Market Value of Equity and Market Value
of Capitalization Summary
(in thousands, except as otherwise indicated)

Historical Market Value of Equity and        
Market Value of Capitalization              
----------------------------------------------------------------------
Common                Sub               Implied              Total
Market Value of Equity                                     Units                Units              GP Units             Units
- ------------------------------------------               ---------            ---------           ----------         ----------

Units Outstanding                                           3,832                2,396                 127               6,355

Valuation per Unit (1)                                    $21,063              $14,744             $18,956

Market Value of Equity                                    $80,706              $35,327              $2,409            $118,442

Market Value of Capitalization
- ------------------------------------------

Market Value of Equity                                                                                                $118,442

Total Debt (2)                                                                                                         110,080 

Less: Excess Cash (2)                                                                                                     (501)
----------

Market Value of Capitalization                                                                                        $228,021 
==========

Pro Forma Adjusted Market Value of Equity and 
Market Value of Capitalization                      
-------------------------------------------------------------
Common          Sr Sub           Jr Sub/GP          Total        Percent
Market Value of Equity                              Units            Units             Units            Units        Change 
- -------------------------------------------       ---------        --------         -----------       ---------    -----------

Units Outstanding                                   10,311            2,766               857            13,934    

Valuation per Unit (1)                             $22,537          $22,762           $17,733                      

Market Value of Equity                            $232,371          $62,970           $15,199          $310,540      162.2%

Market Value of Capitalization                                                                                     
- -------------------------------------------                                                                        

Market Value of Equity                                                                                 $310,540            

Total Debt (2)                                                                                          314,234    

Less: Excess Cash (2)                                                                                    (7,177)   
----------   

Market Value of Capitalization                                                                         $617,597      170.9%
==========

- ---------------------
(1)  Star historical value per Common Unit is the closing market price one day
prior to announcement, the Star value per Subordinated Unit is the value of
a Common Unit less a 20% liquidity discount and a 10% subordination
discount. The value of an implied General Partner Unit is the value of a
Common Unit less a 20% liquidity discount plus a 10% control premium. The
value of each pro forma Star Unit is based on the Unit Reference Value
Analysis (Dain Rauscher Wessels Case).
(2)  Total debt and excess cash for historical is based on the Star September
30, 1998 estimated balance sheet and for pro forma is based on the Star
September 30, 1998 pro forma balance sheet.

- --------------------------------------------------------------------------------

================================================================================
Dain Rauscher Wessels                                                    Page 26

[LOGO OF PETRO(TM) APPEARS HERE]

Project Intense Heat

================================================================================

Discounted Cash Flow Analysis

================================================================================
Dain Rauscher Wessels                                                    Page 27

[LOGO OF PETRO(TM) APPEARS HERE]

Discounted Cash Flow Analysis 
Petro Stand-Alone Free Cash Flow Projections (Unlevered)

================================================================================

- --------------------------------------------------------------------------------

PETROLEUM HEAT AND POWER CO., INC.
Stand-Alone Free Cash Flow Projections (Unlevered)
(In thousands, except as otherwise indicated)

Projected for the Year Ended September 30,
------------------------------------------------------------------------------
15 Year Weather Case
Estimated       -------------------------------------------------------------
1998E            1999E            2000E            2001E            2002E
----------       ----------       ----------       ----------       ----------

Volume (gallons)                                     355,157          369,707          356,249          343,852          332,333

Sales                                               $475,541         $490,828         $477,965         $466,187         $455,287
Cost of Sales                                        318,900          328,642          318,786          309,754          301,400
----------       ----------       ----------       ----------       ----------
Gross Profit                                         156,641          162,186          159,179          156,433          153,887
Operating Expenses                                   119,011          118,794          117,410          116,196          115,118
----------       ----------       ----------       ----------       ----------
Heating Oil EBITDA                                    37,630           43,392           41,769           40,237           38,769
MLP Distribution                                       5,684            2,788            2,981            3,266            3,576
----------       ----------       ----------       ----------       ----------
Total EBITDA                                          43,314           46,180           44,750           43,503           42,345
Depreciation and Amortization                         28,710           23,500           19,500           15,500           11,500
----------       ----------       ----------       ----------       ----------
Pretax Income (Loss)                                  14,604           22,680           25,250           28,003           30,845
Income Tax Expense                                       500              500              500              500              500
----------       ----------       ----------       ----------       ----------
Net Income                                            14,104           22,180           24,750           27,503           30,345
Plus: Depreciation and Amortization                   28,710           23,500           19,500           15,500           11,500
----------       ----------       ----------       ----------       ----------
Cash Flow                                            $42,814          $45,680          $44,250          $43,003          $41,845
==========       ==========       ==========       ==========       ==========
Less: Maintenance Capex                               (2,776)          (3,000)          (3,000)          (3,000)          (3,000)
----------       ----------       ----------       ----------       ----------
Free Cash Flow                                       $40,038          $42,680          $41,250          $40,003          $38,845
==========       ==========       ==========       ==========       ==========

Projected for the Year Ended September 30,
------------------------------------------------------------------------------
30 Year Weather Case
Estimated       -------------------------------------------------------------
1998E            1999E            2000E            2001E            2002E
----------       ----------       ----------       ----------       ----------

Volume (gallons)                                     355,157          380,161          366,323          353,575          341,730

Sales                                               $475,541         $504,120         $490,912         $478,817         $467,624
Cost of Sales                                        318,900          337,106          326,993          317,724          309,151
----------       ----------       ----------       ----------       ----------
Gross Profit                                         156,641          167,014          163,919          161,093          158,473
Operating Expenses                                   119,011          121,466          120,052          118,810          117,707
----------       ----------       ----------       ----------       ----------
Heating Oil EBITDA                                    37,630           45,548           43,867           42,283           40,766
MLP Distribution                                       5,684            4,436            5,008            5,570            5,577
----------       ----------       ----------       ----------       ----------
Total EBITDA                                          43,314           49,984           48,875           47,853           46,343
Depreciation and Amortization                         28,710           23,500           19,500           15,500           11,500
----------       ----------       ----------       ----------       ----------
Pretax Income (Loss)                                  14,604           26,484           29,375           32,353           34,843
Income Tax Expense                                       500              500              500              500              500
----------       ----------       ----------       ----------       ----------
Net Income                                            14,104           25,984           28,875           31,853           34,343
Plus: Depreciation and Amortization                   28,710           23,500           19,500           15,500           11,500
----------       ----------       ----------       ----------       ----------
Cash Flow                                            $42,814          $49,484          $48,375          $47,353          $45,843
==========       ==========       ==========       ==========       ==========
Less: Maintenance Capex                               (2,776)          (3,000)          (3,000)          (3,000)          (3,000)
----------       ----------       ----------       ----------       ----------
Free Cash Flow                                       $40,038          $46,484          $45,375          $44,353          $42,843
==========       ==========       ==========       ==========       ==========
- ---------------------------------------------------------------------------------------------------------------------------------

================================================================================
Dain Rauscher Wessels                                                    Page 28

[LOGO OF PETRO(TM) APPEARS HERE]

Discounted Cash Flow Analysis
Leveraged Weighted Average Cost of Capital Calculation

================================================================================

- --------------------------------------------------------------------------------

PETROLEUM HEAT AND POWER CO., INC.
Leveraged Weighted Average Cost of Capital Calculation

Risk Free Rate
--------
30-Year treasury bond yield (9/25/98)                                                               Risk Free Rate (Rf)      5.12%
--------

Expected Return on Equity Market
30-Year treasury bond yield (9/25/98)                                                                                Rf      5.12%
Historical spread between equity returns and 30-year treasury bond yield (Ibbotson Associates)                        S      7.00%
--------
Expected Return on Equity Market (Rm) = Rf+S     12.12%
--------
Cost of Debt
Long-term debt interest rate (Petro Estimate)                                                                        lr     12.00%
Corporate tax rate                                                                                                    t     35.00%
--------
Cost of Debt (Cd) = lr*(1-t)      7.80%
--------
Unleveraged Beta
--------
Unleveraged beta (Dain Rauscher Wessels estimate)                                                 Unleveraged Beta (Ub)      1.25
--------

Leveraged Beta
Target long-term debt/total capitalization                                                                           Td     60.00%
Target long-term equity/total capitalization                                                                         Te     40.00%
Debt/equity ratio                                                                                                    De    150.00%
--------
Leveraged Beta (B) = Ub*(1+(1-t)*De)      2.47
--------
Unleveraged Cost of Equity
Risk free rate                                                                                                       Rf      5.12%
Expected return on equity market                                                                                     Rm     12.12%
Unleveraged beta                                                                                                     Ub      1.25
--------
Unleveraged Cost of Equity = Rf+Ub(Rm-Rf)     13.87%
--------
Leveraged Cost of Equity
Risk free rate                                                                                                       Rf      5.12%
Expected return on equity market                                                                                     Rm     12.12%
Leveraged beta                                                                                                        B      2.47
--------
Leveraged Cost of Equity (Ceu) = Rf+B(Rm-Rf)     22.40%
--------
Leveraged Weighted Average Cost of Capital
Target long-term debt/total capitalization                                                                           Td     60.00%
Target long-term equity/total capitalization                                                                         Te     40.00%
Leveraged cost of equity                                                                                            Ceu     22.40%
Cost of debt                                                                                                         Cd      7.80%
--------
Leveraged Weighted Average Cost of Capital (WACC) = (Td*Cd) + (Te*Ceu)     13.64%
--------

- --------------------------------------------------------------------------------

================================================================================
Dain Rauscher Wessels                                                    Page 29

[LOGO OF PETRO(TM) APPEARS HERE]

Discounted Cash Flow Analysis
Petro Stand-Alone Discounted Cash Flow Analysis (15 Year Weather Case)

================================================================================

- --------------------------------------------------------------------------------

PETROLEUM HEAT AND POWER CO,. INC.
Stand-Alone Discounted Cash Flow Analysis (15 Year Weather Case)
(In thousands, except as otherwise Indicated)

Terminal       
Projected for the Year Ended September 30,                   Value         Total     
----------------------------------------------------------------      @ 7.5 x      Enterprise  
1998E (1)        1999E        2000E        2001E        2002E         EBITDA        Value
-----------      -------      -------      -------      --------     ----------    ---------  

Unlevered Free Cash Flow                $6,787       $42,680      $41,250      $40,003      $38,845       $317,588

Period                                    0.25          1.25         2.25         3.25         4.25           4.75

Discounted Cash Flow
- -----------------------------
@ 12.0%                             $6,597       $37,043      $31,966      $27,678      $23,997       $185,386      $312,667    

@ 13.0%                             $6,583       $36,633      $31,333      $26,890      $23,107       $177,722      $302,268
- ---------------------------------------------------------------------------------------------------------------------------------
@ 14.0%                             $6,568       $36,232      $30,718      $26,131      $22,258       $170,438      $292,345
- ---------------------------------------------------------------------------------------------------------------------------------
@ 15.0%                             $6,554       $35,839      $30,120      $25,399      $21,447       $163,512      $282,871    

@ 16.0%                             $6,540       $35,453      $29,539      $24,695      $20,672       $156,923      $273,822    

Less: Total                             
Debt & Pref.                          Total   
Plus:             Total            Equity  
Working           Equity          Value Per
Capital (2)          Value           Share(3)  
-------------       ---------       -----------

Unlevered Free Cash Flow                                                       

Period                                                                         

Discounted Cash Flow
- ----------------------------
@ 12.0%                           ($301,125)          $11,542           $0.43  

@ 13.0%                           ($301,125)           $1,143           $0.04
- --------------------------------------------------------------------------------
@ 14.0%                           ($301,125)          ($8,780)         ($0.33) 
- --------------------------------------------------------------------------------
@ 15.0%                           ($301,125)         ($18,254)         ($0.69) 

@ 16.0%                           ($301,125)         ($27,303)         ($1.03) 

- -------------------
(1)  1998E results include only the last two quarters of the year.
(2)  Total debt, preferred stock and working capital are estimated at
September 30, 1998.
(3)  Per share numbers are based upon shares outstanding of 26,573.
- --------------------------------------------------------------------------------

================================================================================
Dain Rauscher Wessels                                                    Page 30

[LOGO OF PETRO APPEARS HERE]     DISCOUNTED CASH FLOW ANALYSIS
Petro Stand-ALone Discounted Cash Flow Analysis
(30 Year Weather Case)
================================================================================

- --------------------------------------------------------------------------------

PETROLEUM HEAT AND POWER CO., INC,
STAND-ALONE DISCOUNTED CASH FLOW ANALYSIS (30 YEAR WEATHER CASE)
(IN THOUSANDS, EXCEPT AS OTHERWISE INDICATED)

LESS:TOTAL
TERMINAL             DEBT & PREF             TOTAL
VALUE     TOTAL       PLUS:       TOTAL     EQUITY
PROJECTED FOR THE YEAR ENDED SEPTEMBER 30,       @ 7.5 X  ENTERPRISE   WORKING      EQUITY  VALUE PER
------------------------------------------------
1998E (1)    1999E     2000E     2001E     2002E     EBITDA    VALUE     CAPITAL (2)   VALUE   SHARE(3)
--------   -------   -------   -------   -------   --------  ----------  -----------   -----   ---------

UNLEVERED FREE CASH FLOW      $6,787   $46,375   $45,375   $44,353   $42,843   $347,573

PERIOD                          0.25      1.25      2.25      3.25      4.25       4.75

Discounted Cash flow
- --------------------

@ 12.0%                  $6,597   $40,344   $35,162   $30,688   $26,467   $202,890   $342,148   ($301,125)   $41,023    $1.54

@ 13.0%                  $6,583   $39,898   $34,466   $29,814   $25,486   $194,501   $330,748   ($301,125)   $29,623    $1.11
- ----------------------------------------------------------------------------------------------------------------------------------
@ 14.0%                  $6,568   $39,461   $33,789   $28,972   $24,549   $186,529   $319,870   ($301,125)   $18,745    $0.71
- ----------------------------------------------------------------------------------------------------------------------------------
@ 15.0%                  $6,554   $39,033   $33,132   $28,161   $23,655   $178,950   $309,484   ($301,125)   $ 8,359    $0.31

@ 16.0%                  $6,540   $38,613   $32,493   $27,380   $22,800   $171,739   $299,565   ($301,125)  ($ 1,560)  ($0.06)

____________________

(1) 1998E results include only the last two quarters of the year.
(2) Total debt, preferred stock and working capital are estimated at September 
30, 1998.
(3) Per share numbers are based upon shares outstanding of 26,573.

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Page 31

[LOGO OF PETRO APPEARS HERE]    DISCOUNTED CASH FLOW ANALYSIS
Stand-Alone Discounted Cash Flow Analysis Matrix

================================================================================

- --------------------------------------------------------------------------------
PETROLEUM HEAT AND POWER CO., INC.                     
STAND-ALONE DISCOUNTED CASH FLOW ANALYSIS MATRIX             
(IN THOUSANDS, EXCEPT AS OTHERWISE INDICATED)               

TERMINAL VALUE MULTIPLES (EBITDA)                             
--------------------------------------------------------------------------         
15 YEAR WEATHER CASE                  30 YEAR WEATHER CASE                 
------------------------------------   ------------------------------------         
DISCOUNTED CASH FLOW               6.5X         7.5X         8.5X         6.5X         7.5X         8.5X           
- -------------------------------    ----------   ----------   ----------   ----------   ----------   ----------        

@ 12.0%                           ($0.50)        $0.43        $1.36        $0.53        $1.54        $2.56        
@ 13.0%                           ($0.85)        $0.04        $0.93        $0.14        $1.11        $2.09
- --------------------------------------------------------------------------------------------------------------        
@ 14.0%                           ($1.19)       ($0.33)       $0.52       ($0.23)       $0.71        $1.64        
- --------------------------------------------------------------------------------------------------------------        
@ 15.0%                           ($1.51)       ($0.69)       $0.13       ($0.58)       $0.31        $1.21        
@ 16.0%                           ($1.81)       ($1.03)      ($0.24)      ($0.92)      ($0.06)       $0.80        

__________

Note: Per share numbers are based upon shares outstanding of 26,573.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Page 32

[LOGO OF PETRO APPEARS HERE] PROJECT INTENSE HEAT

================================================================================

RELATIVE CONTRIBUTION ANALYSIS

- --------------------------------------------------------------------------------
Page 33

[LOGO OF PETRO APPEARS HERE]       RELATIVE CONTRIBUTION ANALYSIS
(Not Adjusted for Pro Forma Unit Class Value 
Difference)
================================================================================

- --------------------------------------------------------------------------------

PROJECT INTENSE HEAT
RELATIVE CONTRIBUTION ANALYSIS (NOT ADJUSTED FOR PRO FORMA 
UNIT CLASS VALUE DIFFERENCE)
(in thousands, except as otherwise indicated)

Projected for the Year Ended September 30,      
--------------------------------------------------------
Normalized                              16 Yr. Weather
Star Stand-Alone Distributable Cash FLow                       1998E                                    1999E     
- ----------------------------------------------            --------------                            -------------- 

EBITDA                                                          $ 20,731                                  $ 23,032
Interest Expense                                                  (7,662)                                   (8,538)
Maintenance Capex                                                 (2,710)                                   (2,657)
Other                                                                (25)                                      (25)
--------------                            --------------  
Distributable Cash Flow                                         $ 10,334                                  $ 11,812

Distribution to Star Common
- ----------------------------------------------                                                              
Cash Distribution to Star Common Units                          $  8,430                                  $  8,430
Distribution per Common Unit                                    $   2.20                                  $   2.20
Weighted Avg. Star Common Units Outstanding                     $  3,832                                     3,632

Distribution to Star Sub Units (Petro)                                                                      
- ----------------------------------------------                                                              
Cash Distribution to Star Sub Units                             $  1,904                                  $  3,362
Weighted Avg. Star Sub Units outstanding                           2,396                                     2,396
Cash Distribution per Star Sub Unit                             $   0.79                                  $   1.41

Petro Distributable Cash Flow                                                                               
- ----------------------------------------------                                                              
EBITDA                                                          $ 44,749                                  $ 46,094
Pro Forma Synergies                                                  500                                       500
Preferred Dividends                                               (5,026)                                   (4,432)
Interest Expense                                                 (31,444)                                  (30,971)
Maintenance Capex                                                 (2,776)                                   (3,000)
Taxes                                                               (500)                                     (500)
--------------                            --------------
Distributable Cash Flow                                         $  5,503                                  $  7,691
Cash Distribution to Star Sub Units                                1,904                                     3,382
--------------                            --------------
Total Distribution Cash Flow                                    $  7,407                                  $ 11,073
==============                            ==============
Star Pro Forma Units Outstanding
- ----------------------------------------------
Star                                                               3,832                                     3,832
Petro                                                              3,624                                     3,624
--------------                            --------------
Total Units                                                        7,455                                     7,455

Star Relative Contribution
- ----------------------------------------------
Distributable Cash Flow Contribution                                53.2%                                     43.2%
Percent of Pro Forma Units Received                                 51.4%                                     51.4%

Petro Relative Contribution                                      
- ----------------------------------------------
Distributable Cash Flow Contribution                                46.8%                                     56.8%
Percent of Pro Forma Units Received                                 48.6%                                     48.6%

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Page 34

[LOGO OF PETRO APPEARS HERE] RELATIVE CONTRIBUTION ANALYSIS
(Adjusted for Pro Forma Unit Class Value Difference) 

================================================================================

PROJECT INTENSE HEAT
Relative Contribution Analysis (Adjusted for Pro Forma Unit Class Value Difference)
(In thousands, except as otherwise Indicated)

Projected for the Year Ended September 30,
-----------------------------------------------------
Normalized                        15 Yr. Weather
Star Stand-ALone Distributable Cash Flow                         1998E                               1998E
- -------------------------------------------------------     ---------------                    ------------------

EBITDA                                                            $20,731                              $ 23,032
Interest Expense                                                   (7,662)                               (8,538)
Maintenance Capex                                                  (2,710)                               (2,657)
Other                                                                 (25)                                  (25)
--------------                    ------------------
Distributable Cash Flow                                           $10,334                              $ 11,812

Distribution to Star Commmon
- -------------------------------------------------------
Cash Distribution to Star Common Units                            $ 8,430                              $  8,430
Distribution per Common Unit                                      $  2.20                              $   2.20
Weighted Avg. Star Common Units Outstanding                       $ 3,832                              $  3,832

Distribution to Star Sub Units (Petro)
- -------------------------------------------------------
Cash Distribution to Star Sub Units                               $ 1,904                              $  3,382
Weighted Avg. Star Sub Units Outstanding                          $ 2,398                              $  2,398
Cash Distribution per Star Sub Unit                               $  0.79                              $   1.41

Petro Distributable Cash Flow
- -------------------------------------------------------
EBITDA                                                            $44,749                              $ 48,094
Pro Forma Synergies                                                   500                                   500
Preferred Dividends                                                (5,028)                               (4,432)
Interest Expense                                                  (31,444)                              (30,971)
Maintenance Capex                                                  (2,778)                               (3,000)
Taxes                                                                (500)                                 (500)
---------------                    ------------------
Distributable Cash Flow                                           $ 5,503                              $  7,691
Cash Distribution to Star Sub Units                                 1,904                                 3,382
---------------                    ------------------
Total Distributable Cash Flow                                     $ 7,407                              $ 11,079
===============                    ==================
Pro Forma Unit Class Value Adjustment
- -------------------------------------------------------
Pro Forma Senior Subordinated Units                                 2,766                                 2,766
Senior Subordinated / Common Unit Value Ratio (1)                    1.01                                  1.01
Adjusted Senior Subordinated Units                                  2,794                                 2,794
Pro Forma Junior Subordinated & GP Units                              857                                   857
Junior Subordinated & GP / Common Unit Value Ratio (1)               0.79                                  0.79
Adjusted Junior Subordinated & GP Units                               674                                   674
Total Star Units Received by Petro (Value Adjusted)                 3,468                                 3,468

Star Pro Forma Units Outstanding
- -------------------------------------------------------
Star                                                                3,832                                 3,832
Petro (Adjusted)                                                    3,468                                 3,468
---------------                    ------------------
Total Units                                                         7,900                                 7,300

Star Relative Contribution
- -------------------------------------------------------
Distributable Cash Flow Contribution                                 53.2%                                 43.2%
Percent of Pro Forma B Units Received                                52.5%                                 52.5%

Petro Relative Contribution
- -------------------------------------------------------
Distributable Cash Flow Contribution                                 48.8%                                 58.8%
Percent of Pro Forma Units Received                                  47.5%                                 47.5%

_________________

(1) Value ratio is based on the Dain Rauscher Wessels Case.

- --------------------------------------------------------------------------------
Page 35

[LOGO PETRO APPEARS HERE]     PROJECT INTENSE HEAT

================================================================================

NET ASSET VALUE ANALYSIS

- --------------------------------------------------------------------------------
Page 36

[LOGO OF PETRO APPEARS HERE]  NET ASSET VALUE ANALYSIS
Home Heating Oil Business Valuation

================================================================================
------------------------------------------------------------------------------

PETROLEUM HEAT AND POWER CO., INC.
Home Heating Oil Business Valuation
(in thousands, except as otherwise indicated)

Method 1                                               Method 2
- -------------------------------------------------      ------------------------------------------------

Petro 1998E Normalized EBITDA (1)       $ 44,749       Petro 1998E Normalized Gallons           384,390
Mean EBITDA Multiple                         4.2x      Mean Acquisition Cost per Gallon      $     0.84   
Total Enterprise Value                  $187,946       Total Enterprise Value                $  322,888
Petro Size Premium                          10.0%      Petro Size Premium                          10.0%
Total Adjusted Enterprise Value         $206,740       Total Adjusted Enterprise Value       $  355,176 

Methodology                                Petro       Methodology                               Petro
Acquisitions                                          Acquisitions                      
1996-1997                                             1996-1997
Ten Largest                                           Ten Largest

Method 3                                               Method 4
- -------------------------------------------------      ------------------------------------------------

Petro 1998E Forecasted Customers         335,000       Petro 1998E Normalized EBITDA (1)       $ 44,749 
Mean Acquisition Cost per Customer      $  1,194       Mean EBITDA Multiple                         6.1x
Total Enterprise Value                  $399,990       Total Enterprise Value                  $272,969   
Petro Size Premium                          10.0%      Petro Size Premium                          10.0% 
Total Adjusted Enterprise Value         $439,989       Total Adjusted Enterprise Value         $300,266

Methodology                                Petro       Methodology                             Star Gas
Acquisitions                                           Acquisitions 
1996-1997                                              1994-1998
Ten Largest                                           

Method 5                                               Method 6
- -------------------------------------------------      -------------------------------------------------

Petro LTM 6/30/98 EBITDA (1)            $ 30,186       Petro LTM 6/30/98 EBITDA (1)            $ 30,186        
Mean EBITDA Multiple                        11.4x      Consolidator Growth Rate Factor             66.3
Total Enterprise Value                  $344,120       Petro EBITDA CAGR (2)                        6.6%
Implied EBITDA Multiple                      4.4x
Total Enterprise Value                  $132,818

Methodology                      Selected Energy       Methodology                             Selected
Marketing &                                               Industry
Distribution                                          Consolidators    
M&A Analysis 

_________________
(1)Excludes Star Gas distributions.
(2)Petro EBITDA compound annual growth rate (CAGR) from 1999E to 2002E, assuming
15 year weather and $25.0 million of acquisitions per year.

- --------------------------------------------------------------------------------
________________________________________________________________________________
Page 37

[LOGO OF PETRO APPEARS HERE]      NET ASSET VALUE ANALYSIS
NET ASSET VALUE SUMMARY

================================================================================

- --------------------------------------------------------------------------------

PETROLEUM HEAT AND POWER CO., INC.
NET ASSET VALUE SUMMARY
(In thousands, except as otherwise indicated)

HOME HEATING OIL BUSINESS                                   METHOD 1    METHOD 2    METHOD 3    METHOD 4    METHOD 5    METHOD 6
- ---------------------------------------------------------  ----------  ----------  ----------  ----------  ----------  ---------- 

Total Enterprise Value (See Previous Page)                 $  206,740  $  355,176  $  439,989  $  300,266  $  344,120  $  132,818

INVESTMENT IN STAR               
- --------------------------------------------------------- 
Total Subordinated Units                                        2,396       2,396       2,396       2,396       2,396       2,396
Implied OP Units                                                  127         127         127         127         127         127 
Total Implied Units                                             2,523       2,523       2,523       2,523       2,523       5,523 
Common Unit Price (one day prior to announcement)          $   21,063  $   21,063  $   21,063  $   21,063  $   21,063  $   21,063  
Structural Subordination Discount                                  15%         15%         15%         15%         15%         15%
Value per Unit                                             $    17.90  $    17.90  $    17.90  $    17.90  $    17.90  $    17.90  
Total Value of Investment in Star                          $   45,173  $   45,173  $   45,173  $   45,173  $   45,173  $   45,173 
GROSS ASSET VALUE                                          $  251,913  $  400,349  $  485,162  $  345,439  $  389,293  $  177,991

PRINCIPAL AMOUNT OF DEBT ESTIMATED AT 9/30/98               
- --------------------------------------------------------- 
11.96% Senior Notes                                        $   60,000  $   60,000  $   60,000  $   60,000  $   60,000  $   60,000  
14.10% Senior Notes                                             3,100       3,100       3,100       3,100       3,100       3,100 
14.10% Subordinated Notes                                       3,100       3,100       3,100       3,100       3,100       3,100
10.13% Subordinated & Senior Subordinated Notes                50,000      50,000      50,000      50,000      50,000      50,000 
9.38% Subordinated & Senior Subordinated Notes                 75,000      75,000      75,000      75,000      75,000      75,000
12.25% Subordinated & Senior Subordinated Notes                81,250      81,250      81,250      81,250      81,250      81,250
8.00% Acq. & Other Notes                                       14,508      14,508      14,508      14,508      14,508      14,508 
8.25% Existing Credit Facility                                      0           0           0           0           0           0 
----------  ----------  ----------  ----------  ----------  ---------- 
Total Principal Amount of Debt                             $  286,958  $  286,958  $  286,958  $  286,958  $  286,958  $  286,958

LIQUIDATION VALUE OF PREFERRED STOCK ESTIMATED AT 9/30/98
- --------------------------------------------------------- 
14.33% Preferred Stock                                     $    4,167  $    4,167  $    4,167  $    4,167  $    4,167  $    4,167  
12.88% Preferred Stock                                         30,000      30,000      30,000      30,000      30,000      30,000
----------  ----------  ----------  ----------  ----------  ----------  
Total Liquidation Value of Preferred Stock                 $   34,167  $   34,167  $   34,167  $   34,167  $   34,167  $   34,167 

PREPAYMENT PENALTIES & OTHER LIABILITIES                    
- --------------------------------------------------------- 
Prepayment Penalties on Outstanding Debt (1)               $   22,957  $   22,957  $   22,957  $   22,957  $   22,957  $   22,957 
Other Long-Term Liabilities                                    10,711      10,711      10,711      10,711      10,711      10,711 
Working Capital & Cash Escrow Adjustment                      (20,000)    (20,000)    (20,000)    (20,000)    (20,000)    (20,000)
Liquidation Transaction Costs                                   5,000       5,000       5,000       5,000       5,000       5,000 
----------  ----------  ----------  ----------  ----------  ---------- 
Total Prepayment Penalties & Other Liabilities             $   18,668  $   18,668  $   18,668  $   18,668  $   18,668  $   18,668 
----------  ----------  ----------  ----------  ----------  ---------- 
NET ASSET VALUE                                              ($87,880) $   60,556  $  145,369  $    5,646  $   49,500   ($161,802)
==========  ==========  ==========  ==========  ==========  ========== 
NET ASSET VALUE PER SHARE                                      ($3.31) $     2.28  $     5.47  $     0.21  $     1.86      ($6.09)
==========  ==========  ==========  ==========  ==========  ========== 
TOTAL SHARES OUTSTANDING                                       26,573      26,573      26,573      26,573      26,573      26,573 

___________

(1) Assumes all debt is prepaid at 108% of par.

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Page 38

[LOGO OF PETRO APPEARS HERE]     PROJECT INTENSE HEAT

================================================================================

COMPARABLE COMPANY TRADING ANALYSIS

Energy and Fuel Marketing and Distribution Companies

- --------------------------------------------------------------------------------
Page 39

[LOGO OF PETRO APPEARS HERE]  ENERGY AND FUEL MARKETING AND DISTRIBUTION 
COMPANIES
Market Value of Equity to Latest Twelve Months Net
Income from Operations

================================================================================

[GRAPH APPEARS HERE]

___________

Note: Market data as of 9/25/98.
Source: Factset Data Systems and publicly available information.
(1) Market value of equity for Petro is calculated using the closing market
price one day prior to announcement.

- --------------------------------------------------------------------------------
Page 40

[LOGO OF PETRO APPEARS HERE]   ENERGY AND FUEL MARKETING AND DISTRIBUTION 
COMPANIES
Market Value of Equity to Latest Twelve Months 
Cash Flow

================================================================================

[GRAPH APPEARS HERE]

__________________

Note: Market data as of 9/25/98.
Source: Factset Data Systems and publicly available information.
(1) Market value of equity for Petro is calculated using the closing market 
price one day prior to announcement.

- --------------------------------------------------------------------------------
Page 41

[LOGO OF PETRO APPEARS HERE]  ENERGY AND FUEL MARKETING AND DISTRIBUTION 
COMPANIES Price to Book Value per Common Share

================================================================================

[GRAPH APPEARS HERE]

____________

Note: Market data as of 9/25/98.
Source: Factset Data Systems and publicly available information.

- --------------------------------------------------------------------------------
Page 42

[LOGO OF PETRO APPEARS HERE]  ENERGY AND FUEL MARKETING AND DISTRIBUTION 
COMPANIES
Market Value of Capitalization to Latest Twelve 
Months Revenues

================================================================================

[GRAPH APPEARS HERE]

_____________

Note: Market data as of 9/25/98.
Source: Factset Data Systems and publicly available information.
(1) Market value of capitalization for Petro is calculated using the closing 
market price one day prior to announcement.

- --------------------------------------------------------------------------------
Page 43

[LOGO OF PETRO APPEARS HERE]  ENERGY AND FUEL MARKETING AND DISTRIBUTION 
COMPANIES
Market Value of Capitalization to Latest Twelve 
Months EBITDA

================================================================================

[GRAPH APPEARS HERE]

__________

Note: Market data as of 9/25/98.
Source: Factset Data Systems and publicly available information.
(1) Market value of capitalization for Petro is calculated using the closing 
market price one day prior to announcement. Petro latest twelve months
EBITDA includes Star Gas distributions and excludes non-recurring expenses.

- --------------------------------------------------------------------------------
Page 44

[LOGO OF PETRO APPEARS HERE]  ENERGY AND FUEL MARKETING AND DISTRIBUTION 
COMPANIES
Market Value of Capitalization to Latest Twelve
Months EBIT

================================================================================

[GRAPH APPEARS HERE]

_________

Note: Market data as of 9/25/98.
Source: Factset Data Systems and publicly available information.
(1) Market value of capitalization for Petro is calculated using the closing 
market price one day prior to announcement.

- --------------------------------------------------------------------------------
Page 45

[LOGO OF PETRO APPEARS HERE]  PROJECT INTENSE HEAT

================================================================================

COMPARABLE COMPANY TRADING ANALYSIS

Propane Master Limited Partnerships

- --------------------------------------------------------------------------------
Page 46

[LOGO OF PETRO APPEARS HERE]  PROPANE MASTER LIMITED PARTNERSHIPS
Percentage of 52 Week High Common Unit Price

================================================================================

[GRAPH APPEARS HERE]

__________

Note: Market data as of 9/25/98.
Source: Factset Data Systems.
(1) Percentage of 52 week high one day prior to announcement of merger on August
13, 1998.

- --------------------------------------------------------------------------------
Page 47

[LOGO OF PETRO APPEARS HERE]   PROPANE MASTER LIMITED PARTNERSHIPS

Current Yield

================================================================================

[GRAPH APPEARS HERE]

____________
Note: Market data as of 9/25/98.
Source: Factset Data Systems and publicly available information.
(1) Star Gas yield based on annual distribution of $2.20 per Unit.

________________________________________________________________________________
Page 48

[LOGO OF PETRO APPEARS HERE]   PROPANE MASTER LIMITED PARTNERSHIPS
Historical Yields

[GRAPH APPEARS HERE]

________

Source: Factset Data Systems and publicly available information.

- --------------------------------------------------------------------------------
Page 49

[LOGO OF PETRO APPEARS HERE]  PROPANE MASTER LIMITED PARTNERSHIPS
Historical Yields vs. 10-Year Treasury

================================================================================

[GRAPH APPEARS HERE]

___________

Source: Factset Data Systems and publicly available information.
(1) Peer group includes Amerigas Partners, Cornerstone Propane Partners, 
Ferrellgas Partners, Heritage Propane Partners and Suburban Propane Partners
and excludes National Propane Partners.

- --------------------------------------------------------------------------------
Page 50

[LOGO OF PETRO APPEARS HERE]   PROPANE MASTER LIMITED PARTNERSHIPS
Yield Spread To Treasury

================================================================================

[GRAPH APPEARS HERE]

_________________
Source: Factset Data Systems and publicly available information.
(1) Peer group includes Amerigas Partners, Cornerstone Propane Partners,
Ferrellgas Partners, Heritage Propane Partners and Suburban Propane Partners
and excludes National Propane Partners.

________________________________________________________________________________
Page 51

[LOGO OF PETRO APPEARS HERE]  PROPANE MASTER LIMITED PARTNERSHIPS
Adjusted Market Value of Capitalization/(1)/

================================================================================

[GRAPH APPEARS HERE]

________________________
Note: Market data as of 9/25/98.
Source: Factset Data Systems, publicly available information and Petroleum Heat 
and Power Co., Inc.
(1) Adjusted Market Value of Capitalization (MVC) is defined as adjusted market
value of equity (common units multiplied by current common unit price, plus
subordinated units multiplied by current common unit price less a 20%
liquidity discount and a 10% subordination discount, plus implied GP units
multiplied by current common unit price less a 20% liquidity discount plus a
10% control premium) plus book value of total debt, less cash and
equivalents in excess of a 1.0 working capital ratio.
(2) Adjusted MVC for Star Gas historical is calculated based upon the definition
above using the closing market price one day prior to announcement. The
adjusted MVC for Star Gas pro forma is based upon the Unit Reference Value
Analysis (Dain Rauscher Wessels Case), [See Unit Reference Value Analysis on
page 9].

- --------------------------------------------------------------------------------
Dain Rauscher Wessels                                                    Page 52

[LOGO OF PETRO APPEARS HERE]  PROPANE MASTER LIMITED PARTNERSHIPS

Adjusted Market Value of Capitalization/(1)/ to
Latest Twelve Months EBITDA

================================================================================

[GRAPH APPEARS HERE]

___________________
Note: Market data as of 9/25/98.
Source: Factset Data Systems and publicly available information.
(1) Adjusted Market Value of Capitalization (MVC) is defined as adjusted market
value of equity (common units multiplied by current common unit price, plus
subordinated units multiplied by current common unit price less a 20%
liquidity discount and a 10% subordination discount, plus implied GP units
multiplied by current common unit price less a 20% liquidity discount plus a
10% control premium) plus book value of total debt, less cash and
equivalents in excess of a 1.0 working capital ratio.
(2) Adjusted MVC for Star Gas is calculated based upon the definition above 
using the closing market price one day prior to announcement.

- --------------------------------------------------------------------------------
Page 53

[LOGO OF PETRO APPEARS HERE]   PROPANE MASTER LIMITED PARTNERSHIPS
Adjusted Market Value of Equity/(1)/ to Latest
Twelve Months Flow from Operations

================================================================================

[GRAPH APPEARS HERE]

_______________

Note: Market data as of 9/25/98.
Source: Factset Data Systems and publicly available information.
(1) Adjusted Market Value of Equity (MVE) is defined common units multiplied by
current common unit price, plus subordinated units multiplied by current
common unit price less a 20% liquidity discount and a 10% subordination
discount, plus implied GP units multiplied by current common unit price less
a 20% liquidity discount plus a 10% control premium.
(2) Adjusted MVE for Star Gas is calculated based upon the definition above 
using the closing market price one day prior to announcement.

- --------------------------------------------------------------------------------
Page 54

[LOGO OF PETRO APPEARS HERE] PROPANE MASTER LIMITED PARTNERSHIPS
Total Debt to Adjusted Market Value of
Capitalization/(1)/

================================================================================

[GRAPH APPEARS HERE]

_____________

Note: Market data as of 9/25/98.
Source: Factset Data Systems, publicly available information and Petroleum Heat 
and Power Co., Inc.
(1) Adjusted Market Value of Capitalization (MVC) is defined as adjusted market
value of equity (common units multiplied by current common unit price, plus
subordinated units multiplied by current common unit price less a 20%
liquidity discount and a 10% subordinated discount, plus implied GP units
multiplied by current common unit price less a 20% liquidity discount plus a
10% control premium) plus book value of total debt, less cash and
equivalents in excess of a 1.0 working capital ratio.
(2) Adjusted MVC for Star Gas historical is calculated based upon the definition
above using the closing market price one day prior to announcement. The
adjusted MVC for Star Gas pro forma is based upon the Unit Reference Value
Analysis (Dain Rauscher Wessels Case). [See Unit Reference Value Analysis on
page 9].

- --------------------------------------------------------------------------------
Page 55

[LOGO OF PETRO APPEARS HERE]   PROPANE MASTER LIMITED PARTNERSHIPS
Total Debt to Total Book Capitalization
================================================================================

[GRAPH APPEARS HERE]

___________

Source: Publicly available information and Petroleum Heat and Power Co., Inc.
(1) Pro forma total debt to total book capitalization for Star Gas is estimated 
at September 30, 1998.

- --------------------------------------------------------------------------------
Page 56

[LOGO OF PETRO APPEARS HERE]  PROPANE MASTER LIMITED PARTNERSHIPS
Latest Twelve Months EBITDA to Interest Expense 
(Interest Coverage)

================================================================================

[GRAPH APPEARS HERE]

______________

Source: Publicly available information and Petroleum Heat and Power Co., Inc.
(1) Pro forma EBITDA to interest expense for Star Gas is estimated for the year 
ended September 30, 1998.

- --------------------------------------------------------------------------------
Page 57

[LOGO OF PETRO APPEARS HERE]  PROPANE MASTER LIMITED PARTNERSHIPS
Total Debt to Latest Twelve Months EBITDA 

================================================================================

[GRAPH APPEARS HERE]

______________

Source: Publicly available information and Petroleum Heat and Power Co., Inc.
(1) Pro forma total debt to EBITDA for Star Gas is estimated at and for the year
ended September 30, 1998.

- -------------------------------------------------------------------------------
Page 58

[LOGO OF PETRO APPEARS HERE]  PROPANE MASTER LIMITED PARTNERSHIPS
Latest Twelve Months Profitability Margins 

================================================================================

[GRAPH APPEARS HERE]

______________

Source: Publicly available information.

- --------------------------------------------------------------------------------
Page 59

[LOGO OF PETRO APPEARS HERE]  PROPANE MASTER LIMITED PARTNERSHIPS
Latest Twelve Months Retail Gallons

================================================================================

[GRAPH APPEARS HERE]

________________

Source: Publicly available information.

- --------------------------------------------------------------------------------
Page 60

[LOGO OF PETRO APPEARS HERE]  PROPANE MASTER LIMITED PARTNERSHIPS
Latest Twelve Months Sales Percentage by Customer 
Type

================================================================================

[GRAPHS APPEARS HERE]

______________

Source: Publicly available information

- --------------------------------------------------------------------------------
Page 61

[LOGO OF PETRO APPEARS HERE]  PROPANE MASTER LIMITED PARTNERSHIPS 
Latest Twelve Months Operating Results per Retail 
Gallon 

================================================================================

[GRAPH APPEARS HERE]

_______________

Source: Publicly available information

- --------------------------------------------------------------------------------
Page 62

[LOGO OF PETRO APPEARS HERE]   PROPANE MASTER LIMITED PARTNERSHIPS
Latest Twelve Months Operating Results per Branch
================================================================================

[GRAPH APPEARS HERE]

___________

Source: Publicly available information.

- --------------------------------------------------------------------------------
Page 63

[LOGO OF PETRO APPEARS HERE]    PROJECT INTENSE HEAT

================================================================================

COMPARABLE TRANSACTIONS ANALYSIS

- --------------------------------------------------------------------------------
Page 64

[LOGO OF PETRO APPEARS HERE]  COMPARABLE TRANSACTIONS ANALYSIS
Selected Energy Marketing & Distribution Merger & 
Acquisition Transactions 
(1994 - Present)
================================================================================

- --------------------------------------------------------------------------------

PROJECT INTENSE HEAT
SELECTED ENERGY MARKETING & DISTRIBUTION MERGER & ACQUISITION TRANSACTIONS
(1994 - PRESENT)

TRANSACTION    TRANSACTION
ENTERPRISE     ENTERPRISE
DATE                                                                                               VALUE (1)      VALUE/LTM
EFFECTIVE        ACQUIROR NAME                           TARGET NAME                                   ($ MIL.)        EBITDA
- -------------      ------------------------------------    ---------------------------------------     -----------    -----------

05/31/94        Valero Energy Corporation               Valero Natural Gas Partners, LP.              $  665.6       14.6x
07/01/94        Associated Natural Gas Corporation      Grand Valley Gas Company                          53.8        7.3x
07/13/94        K N Energy, Inc.                        American Oil and Gas Company                     410.9       10.9x
12/15/94        Panhandle Eastern Corp.                 Associated Natural Gas Corporation               750.7        9.6x
03/14/95        Natural Gas Clearinghouse               Trident NGL  Holding, Inc.                       719.3        9.8x 
06/15/95        LG&E Energy Corporation                 Hadson Corporation                               143.0       11.9x
08/05/97        El Paso Natural Gas Company             Eastex Energy, Inc.                               35.6          NM  
04/15/97        PacifiCorp Holdings, Inc.               TPC Corporation                                  388.7       13.4x
11/18/97        Enron Corp.                             Enron Global Power & Pipelines L.L.C.            829.1       14.3x 
03/06/98        Kinder Morgan Energy Partners, LP.      Santa Fe Pacific Pipeline Partners, L.P.       1,464.9       10.9x

-----------------------------------------------------------------------
MEAN                                          $  566.2       11.4x
MEDIAN                                           565.1       10.9x  
HIGH                                           1,464.9       14.6x
LOW                                               35.6        7.3x
-----------------------------------------------------------------------

PENDING         STAR GAS PARTNERS, L.P.                 PETROLEUM HEAT AND POWER CO., INC. (2)        $  379.2       10.6x

TRANSACTION      TRANSACTION
TRANSACTION      TRANSACTION        EQUITY           EQUITY   
ENTERPRISE         EQUITY          VALUE/           VALUE/ 
DATE          VALUE/LTM          VALUE          LTM NET           LATEST 
EFFECTIVE           EBIT           ($ MIL.)         INCOME         BOOK VALUE
- -------------     -----------      -----------     -----------      ------------

05/31/94          21.4x          $  230.4            55.3x              4.3x
07/01/94          10.9x              56.7            26.5x              3.5x
07/13/94          20.5x             302.1            54.8x              1.6x
12/15/94          15.2x             577.5            19.5x              2.8x
03/14/95          18.2x             333.7            50.3x              1.4x
06/15/95             NM             143.0               NM                NM 
08/05/95             NM              34.2               NM              2.2x
04/15/97          23.3x             241.4            47.9x              2.5x
11/18/97          14.3x             865.3            15.4x              2.5x
03/06/98          13.0x           1,163.1            21.3x              4.3x

-----------------------------------------------------------        
17.1x          $  394.7            36.4x              2.8x
16.7x             271.8            37.2x              2.5x
23.3x           1,163.1            55.3x              4.3x
10.9x              34.2            15.4x              1.4x
-----------------------------------------------------------   

PENDING             NM           $   78.2              NM                NM 
-----------------------------------------------------------   

________________

Source: Securities Data Company, publicly available information and Petroleum 
Heat and Power Co., Inc.
(1)  Transaction Enterprise Value is defined as common equity purchase price
plus total debt and preferred stock, less cash and equivalents, excluding
fees and expenses. The stock is valued using the closing price on the last
full trading day prior to announcement.
(2)  Petro market value of capitalization and market value of equity are based
on the Unit Reference Value Analysis (Dain Rauscher Wessels Case). (See
Unit Reference Value Analysis Summary on page 9). LTM EBITDA includes Star
Gas distributions and excludes non-recurring expenses.

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

Page 65

[LOGO OF PETRO APPEARS HERE]    COMPARABLE TRANSACTIONS ANALYSIS
Petro Acquisitions Summary

================================================================================

- --------------------------------------------------------------------------------

PROJECT INTENSE HEAT

Petro Acquisitions Summary

(Dollar and gallon amounts in thousands, except per gallon and 
per customer amounts)

Mean                    Mean      
Total      Total        Target LTM EBITDA      Total     Acquisition   Total     Acquisition  
----------------------                                                  
Companies  Acquisition                  Mean     Gallons       Cost     Customers     Cost      
Petro 1996 - 1997 Acquisitions    Acquired     Costs        EBITDA      Multiple   Acquired  per Gallon   Acquired   per Customer 
------------------------------    ---------  -----------  ---------    ---------   --------  ----------   --------   ------------ 

Ten Largest                           10      $ 33,465     $ 7,848        4.2 x     40,446      $ 0.84     31,358       $ 1,194   

Excluding Ten Largest                 14         8,629       2,064        4.1 x     13,730        0.55     14,224           630   

Petroleum Heat and Power Co., Inc.
----------------------------------------------------------------------------------------------------------------------------------
Normalized 1998E EBITDA                     $334,058 (1) $44,749 (2)    7.5 x    384,390      $ 0.87    335,000       $   997
LTM 6/30/98 EBITDA                           334,058 (1)  30,186 (2)   11.1 x
----------------------------------------------------------------------------------------------------------------------------------

_______________

Source: Petroleum Heat and Power Co., Inc.

(1)  Acquisition cost is based on the Pro Forma Market Value of Capitalization
Analysis (Dain Rauscher Wessels Case), (See Petro Historical and Pro
Forma MVE and MVC Summary on page 25) less Petro's investment in Star.
The value of Petro's investment in Star is the closing market price of a
Star Common Unit one day prior to announcement less a structural
subordination discount of 15% multiplied by Petro's total implied Star
units.

(2)  EBITDA excludes Star Gas distributions and non-recurring expenses.

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Page 66

[LOGO OF PETRO APPEARS HERE]    COMPARABLE TRANSACTIONS ANALYSIS
1996 - 1997 Petro Acquisitions (Ten Largest)

================================================================================

- --------------------------------------------------------------------------------

PROJECT INTENSE HEAT
1996 - 1997 PETRO ACQUISITIONS (TEN LARGEST)
(Dollar and gallon amounts in thousands, except per gallon and per 
customer amounts)

TOTAL           TARGET LTM EBITDA         TOTAL    ACQUISITION    TOTAL      ACQUISITION
ACQUISITION   (PRO FORMA PETRO OWNERSHIP)   GALLONS      COST      CUSTOMERS        COST
---------------------------  
DATE       COMPANY ACQUIRED            COSTS        EBITDA         MULTIPLE     ACQUIRED  PER GALLON    ACQUIRED    PER CUSTOMER
- ----------    -----------------------  -----------   ----------     ------------   --------  -----------  ----------   ------------

02/01/96    Seaman                     $ 7,134       $1,552           4.6x         7,522      $0.95        7,806       $  914
01/11/96    Garrison                     5,242        1,154           4.5x         5,925       0.88        6,575          797
01/19/96    Cibro                        4,368        1,087           4.0x         6,200       0.70        2,426        1,800
10/18/96    Bergen                       3,202          718           4.5x         5,501       0.58        1,593        2,010
04/14/97    Mugullian Fuel               2,802          638           4.4x         3,000       0.93        2,570        1,090
04/01/96    McDowell                     2,723          669           4.1x         2,675       1.02        2,305        1,182 
08/29/97    Oil Burner Utility           2,633          603           4.4x         3,500       0.75        1,590        1,656
09/10/97    Romary                       2,252          545           4.1x         2,348       0.96        2,210        1,019
09/29/97    T.W. Perry                   1,619          439           3.7x         2,118       0.76        2,461          658 
08/26/97    Bellomo                      1,489          443           3.4x         1,657       0.90        1,822          817 

----------------------------------------------------------------------------------------------------------------------
TOTAL                      $33,465       $7,848            --         40,446         --      31,358            -- 
MEAN                         3,346          785           4.2x         4,045      $0.84       3,136        $1,194
WEIGHTED AVERAGE                --           --           4.3x            --       0.83          --         1,067
MEDIAN                       2,763          654           4.2x         3,260       0.89       2,366         1,055
HIGH                         7,134        1,552           4.6x         7,622       1.02       7,806         2,010
LOW                          1,489          439           3.4x         1,657       0.68       1,690           658 
---------------------------------------------------------------------------------------------------------------------- 

_____________

Source: Petroleum Heat and Power Co., Inc.

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Page 67

[LOGO OF PETRO APPEARS HERE]   COMPARABLE TRANSACTIONS ANALYSIS
1996 - 1997 Petro Acquisitions (Excluding Ten 
Largest)
================================================================================

- --------------------------------------------------------------------------------

PROJECT INTENSE HEAT

1996 - 1997 PETRO ACQUISITIONS (EXCLUDING TEN LARGEST)

(Dollar and gallon amounts in thousands, except per gallon and per customer 
amounts)

TOTAL               TARGET LTM EBITDA          TOTAL     ACQUISITION      TOTAL     ACQUISITION
ACQUISITION     (PRO FORMA PETRO OWNERSHIP)     GALLONS       COST       CUSTOMERS        COST
------------------------------
DATE    COMPANY ACQUIRED        COSTS            EBITDA        MULTIPLE      ACQUIRED    PER GALLON     ACQUIRED    PER CUSTOMER
- ---------- -------------------  -------------   -------------  --------------  ----------  ------------  -----------  --------------

11/24/97   Shreve                   $1,457            $  300       4.9X          2,425         $ 0.60        2,782         $  524
09/11/96   Flynn                     1,038               232       4.5X          1,316           0.79        1,070            970
12/18/97   Genovese                  1,011               281       3.6X             --             --        1,054            959
10/31/96   Hy-Test                     813               177       4.6X          1,468           0.55        1,269            641
01/15/97   Oils Inc.                   748               188       4.0X          1,189           0.63          826            905
10/01/97   Miltbrook                   527               112       4.7X            908           0.58          900            588
07/10/97   Good                        521               117       4.5X          1,200           0.43        1,559            334
12/26/96   Sherman                     493               103       4.8X            564           0.67          475          1,037
12/30/96   Grasso                      423               116       3.6X          1,118           0.38        1,080            392
05/14/97   Alderfer Heating            401               111       3.6X            787           0.51          740            542
12/27/96   Matco                       368                97       3.8X            988           0.37          722            510
12/18/96   Dexter Bros.                332                99       3.4X            786           0.42          700            474
09/24/96   Farren                      264                69       3.8X            481           0.55          520            507
10/18/96   Highstown                   233                62       3.8x            500           0.47          527            443
------------------------------------------------------------------------------------------------------------------------
TOTAL                   $8,629            $2,064         --         13,730             --       14,224             --
MEAN                       616               147       4.1X          1,066         $ 0.55        1,016         $  630
WEIGHTED AVERAGE            --                --       4.2X             --           0.83           --            607
MEDIAN                     507               114       3.9X            998           0.55          863            633
HIGH                     1,457               300       4.9X          2,425           0.87        2,782          1,037
LOW                        233                62       3.4X            481           0.37          475            334
------------------------------------------------------------------------------------------------------------------------

____________

SOURCE:  Petroleum Heat and Power Co. Inc.

- --------------------------------------------------------------------------------
Page 68

[LOGO OF PETRO APPEARS HERE]  COMPARABLE TRANSACTIONS ANALYSIS
1994 - 1998 Star Gas Partners Acquisitions

================================================================================

- --------------------------------------------------------------------------------

PROJECT INTENSE HEAT

1994 - 1998 STAR GAS PARTNERS ACQUISITIONS

(Dollar and gallon amounts in thousands, except per gallon and per customer 
amounts)

Total                                      
Acquisition           Target LTM EBITDA      
----------------------------
Date       Company Acquired                              Costs            EBITDA         Multiple   
- ----------    --------------------------------------   ---------------    ------------    ------------ 

06/15/94      Loveland                                        $    700         $   127         5.5x    
11/24/94      Baystate                                           1,450             209         6.9x    
09/12/95      Debolt                                               950             151         6.3x    
03/22/96      Bob White L.P. Gas/Mitchell Bottle Gas             1,500             263         5.7x    
07/22/96      Fuzzy Moore                                          850             147         5.8x    
10/22/97      Pearl Gas Co.                                     24,127           3,288         7.3x    
02/20/98      Tri-County Gas                                       550             108         5.1x    
05/28/98      Knowles LP Gas                                     3,000             426         7.0x    
05/28/98      Tioga Petroleum                                    1,200             257         4.7x    
07/30/98      Lowe Bros & Dad, Inc.                              3,750             602         6.2x    
08/11/98      Myers Appliance                                    1,200             191         6.3x    

----------------------------------------------------------------------------------------- 
TOTAL                                          $ 39,277         $ 5,769          --     
MEAN                                              3,571             524         6.1x    
WEIGHTED AVERAGE                                     --              --         6.8x    
MEDIAN                                            1,200             209         6.2x    
HIGH                                             24,127           3,288         7.3x    
LOW                                                 560             108         4.7x    
----------------------------------------------------------------------------------------- 

PETROLEUM HEAT AND POWER CO., INC.                                                       
----------------------------------------------------------------------------------------- 
Normalized 1998E EBITDA                        $334,058         $44,749 (2)     7.6x    
LTM 6/30/98 EBITDA                              334,058          30,186 (2)    11.1x    
-----------------------------------------------------------------------------------------  

______________

Source: Star Gas Partners, L.P. and Petroleum Heat and Power Co., Inc.
(1) Acquisition cost is based on the Pro Forma Market Value of Capitalization
Analysis (Dain Rauscher Wessels Case), [See Petro Historical and Pro Forma
MVE and MVC Summary on page 25] less Petro's investment in Star. The value
of Petro's investment in Star is the closing market price of a Star Common
Unit one day prior to announcement less a structural subordination discount
of 15% multiplied by Petro's implied Star units.
(2) EBITDA excludes Star Gas distributions and non-recurring expenses.

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Page 69

[LOGO OF PETRO APPEARS HERE] PROJECT INTENSE HEAT

================================================================================

MERGER PREMIUMS ANALYSIS

- --------------------------------------------------------------------------------
Page 70

[LOGO OF PETRO APPEARS HERE]   Merger Premiums Analysis
Selected Energy Industry Merger & Acquisition
Transactions (1994 - Present, Stock-for-Stock,
$100 - $500 million)
================================================================================

- ------------------------------------------------------------------------------------------------------------------------------------
PROJECT INTENSE HEAT
SELECTED ENERGY INDUSTRY MERGER & ACQUISITION TRANSACTIONS
(1994 - Present, Stock-for-Stock, $100 -$500 million)

Transaction   Transaction                            
Enterprise     Equity            Premium No.     
---------------------------
Date                                                                           Value ($)     Value For     1 Day    1 Week   4 Weeks
Announced   Acquiror Name                      Target Name                      ($ Mil.)        Share       Prior     Prior    Prior
- ---------   ------------------------------     ------------------------------  -----------   ----------  ---------  -------- -------

03/24/94   K N Energy, Inc.                   American Oil and Gas Company        $ 410.9      $ 11.05        4.0%     4.0%    5.2%
06/23/94   Drasser Industries, Inc.           Wheatley TXT Corp.                    173.8        14.70       25.1%    25.1%   32.1%
06/02/94   Ray McDermott S.A.                 Offshore Pipelines, Inc.              278.6        21.88       14.4%    15.1%   40.0%
06/13/94   Noble Drilling Corporation         Chilee Offshore Drilling Company      200.2         5.25        5.0%     2.4%   23.5%
06/20/94   Kelley Oil Corporation             Kelley Oil & Gas Partners Ltd.        101.7         5.64      -35.6%   -32.7%  -16.5%
03/10/94   United Meridian Corporation        General Atlantic Resources, Inc.      182.3        16.50       -7.0%    -9.6%   11.9%
03/13/94   BJ Services Company                Western Company of North America      377.2        20.00       63.3%    73.9%   70.2%
03/20/94   Parker & Parlsey Petroleum Company Tide West Oil Company                 141.0        14.24       -0.1%    21.2%   16.2%
11/30/94   National Energy Group, Inc.        Alexander Energy Corporation          103.6         4.46      -28.6%   -27.1%  -23.2%
03/08/95   Moorco International              Daniel Industries, Inc.                187.8        16.29       29.0%    22.9%   19.6%
05/03/95   Barnett Resources Corporation      Plains Petroleum Company              299.6        30.23       34.3%    38.2%   39.0%
11/20/95   Tidewater, Inc.                    Homeback Offshore Services, Inc.      310.8        21.67       40.9%    40.9%   46.9%
01/25/95   ENSCO International, Inc.          Dual Drilling (Mosvold Shipping)      224.7        14.22        8.9%    13.2%   23.7%
02/26/95   HS Resources, Inc.                 Tide West Oil Company                 201.3        15.91       44.6%    44.6%   51.5%
06/17/97   Baker Hughes Incorporated          Drilex International, Inc.            120.1        17.58       31.4%    37.9%   59.8%
08/10/97   Holburton Company                  Numar Corporation                     341.6        39.62       90.9%    99.3%   95.7%
06/20/97   Forcenergy Inc.                    Convest Energy Corporation            102.0         9.44       11.1%    11.1%   18.9%
06/20/97   Forcenergy Inc.                    Edisio Resources Corporation          147.7        10.27       -6.6%    -6.6%   -0.4%
06/24/97   Louis Drayfus Natural Gas Company  American Exploration Company          275.5        15.96       13.0%    15.0%   21.6%
06/30/97   Balco Oil & Gas Corporation        Hugoton Energy Corporation            263.1        15.00       15.4%    20.0%   36.4%
07/07/97   Meridan Resource Corporation       Caim Energy USA, Inc.                 233.6        13.30       22.3%    29.0%   26.7%
11/13/97   Chesapeske Energy Corporation      Hugoton Energy Corporation            377.0        13.33        7.7%    11.0%   26.9%
12/15/97   EVI, Inc.                          Christiana Companies, Inc.            214.7        34.74      -14.7%   -16.5%  -15.0%
03/12/98   El Paso Natural Gas Company        Deep Tech International               375.4        14.00        8.7%     9.8%   15.5%
05/12/98   Lomak Petroleum, Inc.              Domain Energy Corporation             151.9         9.36      -25.1%   -30.0%  -28.7%
06/13/98   MoMoRan Oil & Gas Company          Freeport-MoMo Ran Sulphur, Inc.       124.2        12.50       14.9%     6.4%    4.2%
06/03/98   CFAS Energy Corporation            Continental Natural Gas, Inc.         151.2         9.31        1.4%    26.3%   33.0%
08/10/98   R&B Falcon Corporation             Cliffs Drilling Company               452.1        28.16       39.0%    41.2%   17.0%
09/14/98   TransMontalons Inc.                Louis Dreyfus Energy Corp.            161.0        11.63        8.1%     7.5%  -15.5%

-------------------------------------------------------------------------------------
Mean                                $ 230.5                   14.3%     17.0%   21.9%

Median                                201.3                   11.1%     15.0%   21.6%

High                                  452.1                   90.9%     99.3%   95.7%

Low                                   101.7                  -35.6%    -32.7%  -28.7%
-------------------------------------------------------------------------------------

Petroluem Heat and Power Co., Inc. (Senior Subordinated Unit/Implied Reference Value
08/14/98   Parker & Parsley Premium Company    per Petro Share) (2)
-------------------------------------------------------------------------------------
Implied Reference Value (including DPUs and GP    
Incentives)                                      $  2.54      35.6%     62.7%   40.3%

DPUs and GP Incentive Value                         0.43                
--------
Total Implies Reference Value                    $  2.97      58.6%     90.3%   64.1%
-------------------------------------------------------------------------------------
_______________
Source: Securities Data Company, publicly available information and Petroleum Heat and Power Co., Inc.
(1) Transaction Enterprise Value is defined as common equity purchase price plus total debt and preferred stock, less cash and 
equivalents, excluding fees and expenses. 
The stock is valued using the closing price on the last full trading day prior to announcement. 
(2) The Senior Subordinated Unit Implied Reference Value per Petro share is based on the Unit Reference Value Analysis (Dain 
Rauscher Wessels Case), (See Unit Reference Value Analysis Summary on page 9)  
- ------------------------------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Page 71

[LOGO OF PETRO APPEARS HERE]  MERGER PREMIUMS ANALYSIS

Selected Recent All Industries Merger &
Acquisitions Transactions
(1998 - Present, Stock-for-Stock, $100 - $500
million)

================================================================================

- --------------------------------------------------------------------------------

PROJECT INTENSE HEAT
Selected Recent All Industries Merger & Acquisition Transactions
(1998 - Present, Stock-for-Stock, $100 - $500 million)

Transaction    Transaction         Premium to:      
Enterprise      Equity     -------------------------
Date                                                                            Value        Value Per   1 Day   1 Week    4 Weeks
Announced   Acquired Name                     Target Name                      ($ mill.)        Share     Prior    Prior     Prior
- -----------  --------------------------------  ----------------------------   --------------  ------------ -------------------------

01/01/98   ConAgra Inc                       GoodMark Foods Inc                    $217.8       $28.58     54.5%    75.9%   69.4% 
01/12/98   Mercantile Bancorp, St Louis, MO  CBT Corp, Paducah Kentucky             275.8        34.36      3.3%     1.8%   19.5%
01/14/98   Suiza Foods Corp                  Continental Con Co Inc                 330.5        40.65     45.8%    74.4%   71.2%
01/15/98   First Midwest Bancorp, IL         Heritage Financial Services            405.8        32.61      7.8%    10.5%   31.1%
01/15/98   International Technology Corp     OHM Corp                               326.8        11.33     24.2%    45.1%   51.4%
01/26/98   USA Waste Services Inc            TransAmerican Waste Industries         142.3         2.18     51.4%    36.6%   78.6%
02/02/98   BMC Software Inc                  BOS Systems Inc                        306.9        45.00     23.3%    32.4%   42.9%
02/02/98   CompassBank, New Bedford, MA      Sandwich Bancorp, Sandwich,MA          129.6        64.00     47.1%    48.8%   48.8%
02/02/98   Romac International Inc           Source Services Corp                   454.4        31.93     51.1%    56.7%   50.2%
02/02/98   Primus Telecomunicstions          TresCom International Inc              134.7        10.30     25.2%    30.9%   51.5%
02/09/98   Kinross Gold Corp                 Amax Gold (Cyprus Amax Mineral)        365.5         2.90     -9.0%    -1.3%   36.5%
02/17/98   Applied Graphics Technologies     Devon Group Inc                        474.4        60.08     29.2%    32.0%   37.9%
02/17/98   Bayou Steel Corp                  Northwestern Steel & Wire Co           239.7         4.00     10.3%    -4.5%   20.6%
02/17/98   Cape Cod Bank & Trust, Hyannis    Sandwich Bancorp, Sandwich, MA         121.4        60.00     20.2%    20.3%   37.9%
02/19/98   First Security Corp, Utah         California State Bank                  276.9        48.72     11.4%    14.0%   18.6%
02/19/98   PLATINUM Technology Inc           Mastering Inc                          198.7        12.50     31.6%    25.0%   33.3%
02/23/98   Network Associates Inc            Trusted Information Systems            322.1        20.19     59.9%    84.6%   92.3%
02/24/98   Baxter International Inc          Somatogen Inc                          232.9         9.00     35.8%    39.8%   92.0%
02/25/98   BB&T Corp, Winston-Salem, NC      Maryland Federal Bancorp Inc           243.6        37.05     16.7%    19.0%   22.5%
03/02/98   Unitrode Corp                     Benchmarq  Microelectronics Inc        150.6        18.81     15.6%    14.0%   67.2%
03/02/98   Sunbean Corp                      Coleman Co Inc                         333.0        30.14     44.4%    58.6%  121.2%
03/02/98   El Paso Natural Gas Co            DeepTech International                 375.4        14.00      8.7%     9.8%   15.5%
03/02/98   Slebell Systems Inc               Scopus Technology Inc                  490.7        22.39     58.5%    93.6%  100.1%
03/08/98   Protective Life Corp              United Dental Care Inc                 180.4        19.58     20.5%    49.2%   57.4%
03/09/98   Commercial Federal, Omaha, NE     First Colorado Bancorp Inc, CO         449.5        25.54     -9.6%     0.2%    0.2%
03/13/98   St. Paul Bancorp Chicago, IL      Beverly Bancorp, Tinley Park, IL       161.8        28.10     16.5%    17.4%   19.6%
03/16/98   PLATINUM Technology Inc           Logic Works Inc                        212.9        15.32     13.0%    36.2%   57.1%
03/24/98   Cognizant Corp                    Pharmaceutical Marketing Services      188.7        14.65     13.8%    22.1%   45.6%
03/24/98   Cognizant Corp                    Walsh International Inc                176.8        15.91      8.8%    36.8%   53.3%
03/25/98   Fidelity National Financial       Matrix Capital Corp                    193.1        27.95     45.2%    64.4%   74.7%
03/26/98   Aviation Sales                    Whitehall Corp                         139.9        22.57      2.6%    -2.9%    9.1%
03/27/98   ISP Holdings Inc                  Intl Speciality Products               324.5        18.25      4.3%     1.7%   14.5%
03/31/98   Union Planters Corp, Memphis, TN  Ambanc Corp, Vincennes Indiana         210.8        30.10      3.8%    22.9%   20.4%
03/31/98   Hubco Inc, Mahwah, New Jersey     Dime Financial Corp                    214.0        38.25      6.3%    25.4%   22.9%
03/31/98   Hubco Inc, Mahwah, New Jersey     IBS Financial Corp                     242.4        20.73      3.6%     2.4%   16.0% 
03/31/98   Omnicare Inc                      IBAH Inc                               154.3         5.75     12.2%    61.4%   58.6%
04/06/98   FirstMerit Corp                   Security First Corporation             251.2        29.28     30.8%    30.8%   34.6%
04/06/98   Applied Power Inc                 Zero Corp                              431.6        33.63     16.5%    18.0%   33.2%
04/09/98   Complete Business Solutions       Claremont Technology Group Inc         282.5        27.00     21.3%    77.0%  118.2%
04/15/98   Giant Industries Inc              Holly Corp                             251.4        27.43      3.0%     2.5%   -1.2%
04/16/98   Phoenix Technologies Ltd          Award Software International           129.5        16.08     12.8%    21.3%   53.1%
04/17/98   Sterling Commerce Inc             XcelleNet Inc                          214.3        22.02      6.1%    12.5%    7.7%
04/27/98   Bright Horizons Holdings Inc      Corporate Family Solutions Inc         127.0        23.69    -21.4%   -22.3%   -7.5%
05/12/98   Lomak Petroleum Inc               Domain Energy Corporation              151.9         9.36    -25.1%   -30.0%  -28.7%
05/19/98   First Charter Corp, NC            HFNC Financial Corp                    240.2        13.97    -12.4%   -12.7%  -13.4%
05/19/98   Quantum Corp                      ATL Products Inc (???)                 304.0        29.00      8.4%    19.0%   45.0% 
05/28/98   Republic Security Financial       First Palm Beach Bancorp Inc           295.0        55.05     50.8%    46.8%   45.1%
05/29/98   Pogo Producing Co                 Arch Petroleum Inc                     114.0         2.47      0.1%     5.5%   -3.5%

- --------------------------------------------------------------------------------

________________________________________________________________________________
72

[LOGO OF PETRO APPEARS HERE]   Merger Premiums Analysis
Selected Recent All Industries Merger &
Acquisition Transactions (1998 - Present, 
Stock-For-Stock, $100-$500 million)
================================================================================

PROJECT INTENSE HEAT
Selected Recent All Industries Merger & Acquisition Transactions
(1998-Present, Stock-for-Stock, $100-$500 million)

Transaction  Transaction             Preminum to:  
Enterprise    Equity      ------------------------------
Date                                                                       Value (1)    Value For     1 day      1 week     4 weeks
Announced  Acquiror Name                   Target Name                      ($ mill.)     Shares       prior       prior       prior
- ---------- -------------------             -----------------------         -----------  ----------    ------     -------     -------

06/02/98  State Financial Services Corp   Home Bancorp of Elgin. Elgin, IL     $134.0     $19.05     11.3%       11.3%        8.9%
06/04/98  PMC Commercial Trust            Supertel Hospitality Inc              131.9      12.15     -6.5%        5.6%       -4.7% 
06/04/98  World Access Inc                Telco Systems Inc                     194.5      17.00     77.8%       65.9%       63.9%
06/12/98  Davel Communications Group Inc  PhoneTel Technologies Inc             227.7       3.08     64.3%       69.9%      208.0%
06/18/98  Summit Bancorp, Princeton, NJ   HSS Bancorp, Norwalk, CT              151.3      58.83     28.2%       36.8%       31.5%
06/22/98  Leaming Co Inc                  Broderbund Software Inc               424.3      20.00     21.2%       16.4%       19.0%
06/24/98  Mylan Laboratories Inc          Penederm Inc                          193.1      21.89     39.0%       39.5%       88.3%
06/29/98  Philadelphia Suburban Corp      Consumers Water Co                    465.6      30.46     25.6%       33.1%       42.5% 
07/01/98  Metzler Group Inc               Lecg Inc                              294.4      21.98     46.5%       49.0%       41.8%
07/06/98  Davel Communications Group Inc  Peoples Telephone Co Inc              114.5       5.86     87.5%       80.3%      118.0%
07/09/98  Zebra Technologies Corp         Eltron International Inc              287.7      36.00     25.8%       34.6%       57.4%
07/16/98  First Commonwealth Financial    Southwest National Corp, PA           269.8      88.63     61.1%       80.9%       77.3%
07/20/98  Richmond County Financial Corp  Bayonne Bancshares New Jersey         177.7      19.03     11.1%       16.7%       18.9%
07/20/98  Santa Barbara Bancorp, CA       Pacific Capital Bancorp, CA           291.4      62.40     27.4%       41.8%       45.1%
07/20/98  Peoples Heritage Fini Group, ME SIS Bancorp Inc, Springfield, MA      427.6      57.23     27.2%       34.7%       44.0% 
07/23/98  HBO & Co                        IMNET Systems Inc                     287.7      27.62     69.9%       74.0%       77.4%
07/23/98  Digital Microwave Corp          Inova Corp                            115.7       6.83     16.2%       36.5%       30.0%
07/31/98  Banknorth Group Inc             Evergreen Bancorp Inc                 313.1      34.43     24.1%       28.4%       19.7%
08/03/98  CMS Energy Corporation          Continental Natural Gas, Inc.         151.2       9.31      1.4%       26.3%       33.0% 
08/03/98  McMoRan Oil & Gas Co            Freeport, McMoRan Sulphur Inc         124.2      12.50     14.9%        6.4%        4.2%
08/04/98  Public Storage Inc              Storage Trust Realty                  366.2      25.00     11.1%        8.1%        1.0%
08/07/98  City Holding Co, Charleston, WV Horizon Bancorp, Beckley WV           413.4      45.00      6.2%        8.4%       15.0%
08/10/98  R&B Falcon Corp                 Cliffs Drilling Co                    452.?      28.16     39.0%       41.2%       17.0%
08/10/98  BB&T Corp, Winston-Salem, NC    Scott & Stringfollow Financial        126.4      34.44     19.8%       28.7%       35.0%
08/24/98  Liberty Media (Tele-Commun)     Tele-Commun Inti (Tele-Commun)        379.1      20.77     -1.1%       -4.5%       -9.9%
09/02/98  Sanmina Corp                    Altron Inc                            195.3      12.39     16.6%        6.5%        7.7%
09/02/98  USWeb Corp                      CKS Group Inc                         342.9      21.66     53.3%       30.3%       23.7%
09/02/98  Rent-Way Inc                    Home Choice Holdings Inc              231.4      13.60      7.2%        4.1%        7.7%
09/08/98  Sovereign Bancorp. PA           Peoples Bancorp Inc, New Jersey       381.4      10.50     26.3%       44.8%       21.7%
09/09/98  First Consulting Group Inc      Integrated Systems Consulting         110.4      13.67     33.7%       30.2%       12.7%
09/14/98  TransMontaigne Inc.             Louis Dreyfus Energy Corp             161.0      11.63      8.1%        7.5%      -15.5%
09/14/98  Qwest Commun Int Inc.           Icon CMT Corp                         190.6      12.00     65.5%       60.0%       -4.0%

-----------------------------------------------------------------------------------------
Mean                                 $253.8                23.2%       29.6%       38.5%

Medium                                236.3                16.2%       28.6%       33.3%

High                                  490.7                87.5%       93.6%      208.0% 

Low                                   110.4               -25.?%       30.0%      -28.7%
-----------------------------------------------------------------------------------------

??         Star Gas Partners, LP.          Petroleum Heat and Power Co, Inc. (Senior Subordinated Unit/Implied Reference Value per
Petro Shares)(92)
-----------------------------------------------------------------------------------------
Implied Reference Value (excluding DPUs and GP 
Incentives)                                      $2.54     35.6%       62.7%       40.3%

DPUs and GP Incentives Value                      0.43  
------
Total Implied Reference Value                    $2.97     58.6%       90.3%       64.1% 
-----------------------------------------------------------------------------------------

__________________
Source: Securities Data Company, pubilcy available information and Petroleum heat and Power Co., Inc.
(1) Transaction Enterprise Value is defined as common equity purchase price plus total debt and preferred stock, less cash and
equivalent, excluding fees and expenses.
The stock is valued using the closing price on the last full trading day prior to announcement.
(2) The Senior Subordinated Unit Implied Reference Value per Petro share is based on the Unit Reference Value Analysis
(Dain Rauscher Wessel's Case), (See Unit Reference Value Analysis Summary on page 9)
- ------------------------------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Page 73

[LOGO OF PETRO APPEARS HERE]    PROJECT INTENSE HEAT

================================================================================

PRICE AND VOLUME DATA

- --------------------------------------------------------------------------------
Page 74

[LOGO OF PETRO APPEARS HERE] PRICE AND VOLUME DATA
First Trading Day of Class A Common Shares (July
29, 1992) - Present Petro Weekly Stock Price/Volume

================================================================================

[GRAPH APPEARS HERE]

__________________
Source: Factset Data Systems and publicly available information.

- --------------------------------------------------------------------------------
Page 75

[LOGO OF PETRO APPEARS HERE]   PRICE AND VOLUME DATA
IPO (December 14, 1995) - Present Star Gas Daily 
Unit Price/Volume

================================================================================

[GRAPH APPEARS HERE]

___________

Source: Factset Data Systems and Publicly available information. 

- --------------------------------------------------------------------------------
Page 76

[LOGO OF PETRO APPEARS HERE]   PRICE AND VOLUME DATA
1997 - Present Relative Price Performance
================================================================================

[GRAPH APPEARS HERE]

___________

Source: Factset Data Systems.
(1) Peer group includes Amerigas Partners, Cornerstone Propane Partners,
Ferrellgas Partners, Heritage Propane Partners and Suburban Propane Partners
and excludes National Propane Partners.

- --------------------------------------------------------------------------------
Page 77

[LOGO OF PETRO APPEARS HERE]   PRICE AND VOLUME DATA
Relative Price Performance Since Annoncement of
Merger (August 14, 1998)
================================================================================

[GRAPH APPEARS HERE]

___________

Source: Factset Data Systems.
(1) Peer group includes Amerigas Partners, Cornerstone Propane Partners,
Ferrellgas Partners, Heritage Propane Partners and Suburban Propane Partners
and excludes National Propane Partners.

- --------------------------------------------------------------------------------
Page 78

[LOGO OF PETRO APPEARS HERE]   PRICE AND VOLUME DATA
Present Total Return/(1)/
================================================================================

[GRAPH APPEARS HERE]

___________

Source: Factset Data Systems.
(1) Total return is defined as compound return, with distributions reinvested on
ex-dates.

- --------------------------------------------------------------------------------
Page 79

[LOGO OF PETRO APPEARS HERE]   PRICE AND VOLUME DATA
1997 - Present Total Return/(1)/
================================================================================

[GRAPH APPEARS HERE]

___________

Source: Factset Data Systems.
(1) Total return is defined as compound return, with distributions reinvested on
ex-dates.
(2) Peer group includes Amerigas Partners, Cornerstone Propane Partners,
Ferrellgas Partners, Heritage Propane Partners and Suburban Propane Partners
and excludes National Propane Partners.
- --------------------------------------------------------------------------------
Page 80

EXHIBIT 99(b)(3)

- --------------------------------------------------------------------------------
Confidential
- --------------------------------------------------------------------------------

PETROLEUM HEAT & POWER CO., INC.

BOARD OF DIRECTORS PRESENTATION

July 24, 1997

Paine Webber Incorporated

- --------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.
- --------------------------------------------------------------------------------

TABLE OF CONTENTS

---------------------------------------------------------------------------

I    SITUATION ANALYSIS

II   THE TRANSACTION

III  BENEFITS OF THE TRANSACTION

IV   ECONOMICS OF THE TRANSACTION

V    COMPARABLE MLP ANALYSIS

---------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.
- --------------------------------------------------------------------------------

PART I

SITUATION ANALYSIS

- --------------------------------------------------------------------------------
1

- ------------------------------------------------------------------------------- 
Petroleum Heat & Power Co., Inc.
- ------------------------------------------------------------------------------- 

SITUATION ANALYSIS

---------------------------------------------------------------------------
HEATING OIL BUSINESS

.  Petro remains the dominant force in the heating oil business, selling at
least 3 times as much as its nearest competitor.

.  Petro also dominates the acquisition market, acquiring a substantial
share of all heating oil businesses sold.

.  While the company has constantly made acquisitions over the last 5
years, higher than expected attrition rates have resulted in little
EBITDA growth.

.  Operational changes which were instituted on a small scale in 1996-1997
are expected to reduce the attrition rates over the next several years.

.  It is anticipated that the acquisition market will continue to be strong
as more owners approach retirement age and capital gain tax relief
appears in sight.

---------------------------------------------------------------------------
2

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Petroleum Heat & Power Co., Inc.
- --------------------------------------------------------------------------------

SITUATION ANALYSIS

___________________________________________________________________________

PETRO'S STOCK PERFORMANCE

.  Petro's stock has been in a steady decline since 1992.

.  Petro's stock was particularly hard hit as a result of the warm winter
of 1996-1997.

.  It is difficult to determine what portion of the stock's performance was
related to Petro's financial performance and what portion is
attributable to a lack of research and institutional following and a
lack of comps.

.  More importantly, one must question whether or not the operational
improvement which is expected over the next two years will be reflected
in a higher stock price.

.  Furthermore, Petro's ability to pursue accretive acquisitions will
continue to be limited by capital constraints.

___________________________________________________________________________
3

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Petroleum Heat & Power Co., Inc.
- --------------------------------------------------------------------------------

SITUATION ANALYSIS

---------------------------------------------------------------------------

PROPANE BUSINESS

. Large acquisitions have been scarce. Steady stream of mega-acquisitions
(1994-96) as over $1.5 billion of equity capital has been raised from
1992-1996.

. Pricing on all acquisitions has become extremely competitive.

. Multiples for even small deals have expanded.

. Wholesale price spike during the 1996-1997 season revealed another level
of uncertainty, even for those companies (like Star) which profited from
the spike.

. Warm winter in the Northeast compounded the problem for many players.

. The market is starting to question whether propane MLPs are really growth
vehicles.

. The market is also starting to question if the weather is ever normal (it
always seems to be abnormally warm in some section, which more than
offsets good results elsewhere).

---------------------------------------------------------------------------
4

- ------------------------------------------------------------------------------- 
Petroleum Heat & Power Co., Inc.
- --------------------------------------------------------------------------------

SITUATION ANALYSIS

---------------------------------------------------------------------------

STAR'S STOCK PERFORMANCE

. While Star has performed relatively well, it is difficult for the market
to assess how much of the performance was related to inventory gains.

. Star continues to lag behind other MLPs in terms of acquisitions, where
Star's ability to compete is limited.

- Management's limited propane experience limits deal flow

- Geographic concentration limits "blend-in" opportunities

- Larger and better capitalized players competing for the same assets

---------------------------------------------------------------------------
5

- --------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.
- --------------------------------------------------------------------------------

PART II

THE TRANSACTION

---------------------------------------------------------------------------
6

- --------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.
- --------------------------------------------------------------------------------

THE TRANSACTION

---------------------------------------------------------------------------

OVERVIEW

. We believe that a public stock corporation is not the optimal format for
Petro.

- No direct comparables

- Rapid amortization of customer lists results in no earnings

- Perceived limited growth in heating oil industry

- Small capitalization results in limited research coverage

. Furthermore, the leveraged capital structure limits financial flexibility
and growth opportunities.

*    AS A RESULT, PETRO'S STOCK HAS NOT PERFORMED WELL AND IS NOT LIKELY TO
ACHIEVE FULL VALUATION EVEN IF OPERATIONS IMPROVE.

---------------------------------------------------------------------------
7

- --------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.
- --------------------------------------------------------------------------------

THE TRANSACTION

---------------------------------------------------------------------------

IN ORDER TO ADDRESS THESE VALUATION ISSUES, PETRO SHOULD CONSIDER THE
BENEFITS OF AN MLP STRUCTURE WHICH CAN BE ACHIEVED THROUGH A MERGER WITH
STAR GAS

. MLPs typically trade on a yield basis, which currently translates into a
9-10x EBITDA multiple vs a 7-8x multiple historically at Petro.

. The combination of the two companies would result in a sizable MLP
(approximately $300 million implied equity value) which translates into
better valuation and greater liquidity.

. Concurrent with the merger, the issuance of new equity would restructure
and delever the balance sheet.

. The new entity would have substantially better access to capital to fund
future growth.

*    THE COMBINED ENTITY WOULD HAVE THE INVESTMENT STORY TO ATTRACT
RESEARCH COVERAGE AND WOULD BENEFIT BOTH PETRO AND STAR GAS SHARE/UNIT
HOLDERS.

---------------------------------------------------------------------------
8

- --------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.
- --------------------------------------------------------------------------------

THE TRANSACTION

--------------------------------------------------------------------------

THE TRANSACTION INVOLVES TWO SEPARATE STAGES:

--------------------------------------------------------------------------
STAGE 1 -- THE EXCHANGE
--------------------------------------------------------------------------

PETRO SHAREHOLDERS EXCHANGE THEIR COMMON STOCK FOR STAR GAS MASTER LIMIT
PARTNERSHIP UNITS AT $4.50/SHARE

.  Shareholders who hold only Class A shares exchange into Senior
Subordinated MLP units

.  Senior Subordinated MLP Units valued at +/- 10% discount to Common
Units

.  "Inside" shareholders /(1) /exchange either into Senior Subordinated
MLP Units or Subordinated Units plus the General Partnership Interest

.  Senior Subordinated Units offered to "Insiders" will be capped at 3.5
million Petro shares in order to provide adequate coverage to Star
Common Units

.  Subordinated Units valued at +/- 20% discount to Common Units

.  All Senior Subordinated and Subordinated Units convert to Common Units
after 3 years of "Earn & Pay" of $2.30 (i.e. increase the MQD on the
Common Units)
--------------------------------------------------------------------------

_____________________
(1)  Insiders for the purposes of this discussion are those individuals
who own Class C and Class A common shares.

- --------------------------------------------------------------------------------
9

- --------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.
- --------------------------------------------------------------------------------

THE TRANSACTION
---------------------------------------------------------------------------

THE TRANSACTION INVOLVES TWO SEPARATE STAGES:

---------------------------------------------------------------------------
STAGE 2 -- THE RECAPITALIZATION
---------------------------------------------------------------------------
APPROXIMATELY $330 MILLION OF PETRO DEBT AND PREFERRED STOCK ARE REFINANCED

.  Existing issues will be either redeemed, exchanged, defeased or tendered
for, depending on issue

.  Approximately $140 million of new Star equity will be raised through the
sale of Common Units

.  Approximately $125 million of new, investment grade debt will be issued
---------------------------------------------------------------------------

___________________________________________________________________________
10

- --------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.
- --------------------------------------------------------------------------------
THE TRANSACTION

----------------------------------------------------------------------------
[GRAPH APPEARS HERE]

* PETRO PUBLIC SHAREHOLDERS EXCHANGE FOR SENIOR SUBORDINATED; INSIDERS
EXCHANGE FOR A COMBINATION OF SENIOR SUBORDINATED AND/OR SUBORDINATED +
G.P. UNITS. THE MLP SELLS COMMON UNITS AND USES THE PROCEEDS TO
RECAPITALIZE AND REFINANCE.

----------------------------------------------------------------------------
11

- --------------------------------------------------------------------------------
Petroleum Heat & Power  Co., Inc.
- --------------------------------------------------------------------------------

THE  TRANSACTION

---------------------------------------------------------------------------

STAGE 1 -- THE EXCHANGE
--------------------------------------------------------       ----------------------------------------------------------
CURRENT                                                  CONSIDERATION RECEIVED
--------------------------------------------------------       ----------------------------------------------------------
SHARES                                                           UNITS
PETRO SHAREHOLDER TYPE                         (000'S)                      TYPE OF MLP INTEREST                (000'S)
--------------------------------------------------------       ----------------------------------------------------------

Holders of Class A Only                           16,355         Senior Subordinated Units                          3,520
Holders of Class A and C Shares
Shares Permitted To Be Exchanged
Into Senior Subordinated Units                 3,500         Senior Subordinated Units                            753
Shares To Be Exchanged Into
Subordinated Units and GP Interest             5,904         Subordinated and General Partner Interest          1,186
------                                                            -----
Sub Total                                     9,404
------
TOTAL                                           25,759         TOTAL                                              5,459
--------------------------------------------------------       ----------------------------------------------------------

STAGE 2 -- THE RECAPITALIZATION
---------------------------------------------------------------------------------
UNITS OUTSTANDING AT MLP AFTER RECAPITALIZATION (000'S)
---------------------------------------------------------------------------------

Common Units
Currently Outstanding                                            2,875
Newly Issued ($139.0 million)                                    6,046
------
Total                                                          8,921

Senior Subordinated Units                                          4,273

Subordinated Units and GP Interest                                 1,186
------
TOTAL                                                         14,380
---------------------------------------------------------------------------------

---------------------------------------------------------------------------
12

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Petroleum Heat & Power  Co., Inc.
- --------------------------------------------------------------------------------

PART III

BENEFITS OF THE TRANSACTION

---------------------------------------------------------------------------
13

- --------------------------------------------------------------------------------
Petroleum Heat & Power  Co., Inc.
- --------------------------------------------------------------------------------

BENEFITS TO PETRO SHAREHOLDERS

- --------------------------------------------------------------------------------

.  Premium to market.

-- At $4.50 per share, the exchange represents approximately a 50%
premium to market

.  Higher valuation multiples.

-- MLPS typically trade at 9-10x EBITDA

.  Enhanced growth potential due to greater access to capital.

-- Branding and internal marketing

-- Improved productivity through capital investment

-- Acquisitions

.  Lower overall cost of capital.

-- New debt at +/- 8% vs. 12% existing debt

-- Equity capital with limited upside

.  Greater size and liquidity.

-- Implied equity market value quadruples to over $300 million

.  Greater financial flexibility.

-- Extend maturities through refinancing

-- Improved covenants due to investment grade rating

---------------------------------------------------------------------------
14

- --------------------------------------------------------------------------------
Petroleum Heat & Power  Co., Inc.
- --------------------------------------------------------------------------------

BENEFITS TO STAR UNITHOLDERS

---------------------------------------------------------------------------

DESPITE ATTRACTIVE FINANCIAL PERFORMANCE, STAR TRADES AT A HIGHER YIELD
THAN ITS PEER GROUP. THIS IS DUE TO LACK OF SIZE, GROWTH POTENTIAL, AND
GEOGRAPHIC DIVERSITY. AS A RESULT OF THE TRANSACTIONS, STAR HOLDERS WILL
BENEFIT FROM THE FOLLOWING:

.  Increased earnings and distributions.

------------------------------------------------------------------------
FROM              TO /(1)/
------------------------------------------------------------------------

Distributable Cash per unit                $2.28                $2.84
Distributions per unit                     $2.20                $2.30
------------------------------------------------------------------------

.  Increase MQD to $2.30 per unit.

.  Higher total distribution coverage.

------------------------------------------------------------------------
FROM              TO /(1)/
------------------------------------------------------------------------

Coverage on Common Units                   1.9x                2.0x
Coverage on Total Units                    1.0x                1.2x
------------------------------------------------------------------------

.  Larger size equity market capitalization.

.  Provides vehicle for growth in otherwise stagnant market.

.  New identity following aborted sale.

____________
(1)  Based on weather normalized 1997 results as provided by the Company.

---------------------------------------------------------------------------
15

- --------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.
- --------------------------------------------------------------------------------

BENEFITS OF THE TRANSACTION

---------------------------------------------------------------------------

DISTRIBUTION INCREASE OF SELECTED MLPS SINCE IPO (CURRENT IMPLIED YIELD)/(1)/

[GRAPHS APPEARS HERE]

* INVESTORS HAVE REWARDED INCREASED CASH FLOW WITH ATTRACTIVE VALUATIONS.

__________________
(1) As of 7/22/07. 

---------------------------------------------------------------------------
16

- --------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.
- --------------------------------------------------------------------------------

BENEFITS OF THE TRANSACTION

---------------------------------------------------------------------------

IMPLIED MARKET VALUE OF EQUITY OF SELECTED PROPANE MLPS (CURRENT IMPLIED 
YIELD)/(1)/

[GRAPH APPEARS HERE]

*    THE LARGER PROPANE MLPS HAVE GREATER MARKET LIQUIDITY AND INVESTOR  
AWARENESS AND ARE SUBSEQUENTLY OFTEN REWARDED WITH LOWER YIELDS.

_______________________________
(1) As of 7/22/97. Implied Market Value of Equity includes all Common, 
Subordinated and GP interests.

---------------------------------------------------------------------------
17

- --------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.
- --------------------------------------------------------------------------------

BENEFITS OF THE TRANSACTIONS

---------------------------------------------------------------------------

PUBLIC UNIT DISTRIBUTION COVERAGE OF SELECTED PROPANE MLPS (CURRENT IMPLIED
YIELD)/(1)/

[GRAPH APPEARS HERE]

*  PROPANE MLPS WITH HIGHER DISTRIBUTION COVERAGE PROVIDE INVESTORS WITH 
ADDITIONAL SECURITY, RESULTING IN IMPROVED MARKET VALUATIONS.

__________________________
(1) As of 7/22/97.                        

---------------------------------------------------------------------------
18

- --------------------------------------------------------------------------------
Petroleum Heat & Co., Inc.
- --------------------------------------------------------------------------------

PART IV

ECONOMICS OF THE TRANSACTION

---------------------------------------------------------------------------
19

- --------------------------------------------------------------------------------
Petroleum Heat & Co., Inc.
- --------------------------------------------------------------------------------

TRANSACTION ASSUMPTIONS

---------------------------------------------------------------------------

PETROLEUM HEAT & POWER

BASE CARE                           OPTIMISTIC CARE                    PESSIMISTIC CARE   
-------------------------------      ------------------------------      -----------------------------
$3.5 Million Maint. CapEx            $3.5 Million Maint. CapEx            $3.5 Million Maint. CapEx
15-Year Weather                   30-Year Weather                       15-Year Weather  
60% productivity improvement         60% productivity improvement        60% productivity improvement
-------------------------------      ------------------------------      -----------------------------
ATTRITION    ACQUISITIONS/(1)/      ATTRITION    ACQUISITIONS/(1)/      ATTRITION    ACQUISITIONS/(1)/    

1998       5.0%          $15.0 MILLION       4.0%           $25.0 MILLION         5.0%          $15.0 MILLION   
1999       3.5            15.0%              3.0             25.0                 4.0             7.5    
2000       3.5            22.5               2.0             25.0                 4.0              --
2001       1.6            22.5               1.0             25.0                 4.0              --

STAR GAS PARTNERS
---------------------------------------------------------------------------
ALL CASES
---------------------------------------------------------------------------

$2.75 Million in Acquisitions Per Year at 6.5X EBITDA
2% Internal Growth
2.0 Million International Growth CapEx per Year
3.0 Million in Maintenance Growth CapEx per Year

---------------------------------------------------------------------------
Scenario 1                        Scenario 2
---------------------------------------------------------------------------
30 Year Weather                     15 Year Weather  
---------------------------------------------------------------------------

____________________
(1) Petro pro forma for the transaction assumes $25.0 million in
acquisitions per year.

---------------------------------------------------------------------------
20

- --------------------------------------------------------------------------------
Petroelum Heat & Power Co.,
- --------------------------------------------------------------------------------

ECONOMICS OF THE TRANSACTION

---------------------------------------------------------------------------

IMPACT OF TRANSACTION ON CASH DISTRIBUTION AND VALUE TO PETRO SHAREHOLDERS

---------------------------------------------------------------------------------------------------------------------
BASE CASE                  OPTIMISTIC CASE              PESSIMISTIC CASE        
CURRENT/(1)/   PRO FORMA     CURRENT/(1)/    PRO FORMA     CURRENT/(1)/   PRO FORMA    
---------------------------------------------------------------------------------------------------------------------

1997                             $0.30          $ 0.49         $ 0.30        $ 0.63           $0.30       $0.49      
1998                                 -            0.51              -          0.68               -        0.49      
1999                                 -            0.54              -          0.82               -        0.49      
2000                                 -            0.57              -          0.93               -        0.49      
2001                                 -            0.78              -          0.98               -        0.49      
Terminal Share Value             $7.53          $ 9.45         $11.86        $12.25           $2.60       $5.44      
Basis for Terminal Value      8.0x EBITDA     8.25% Yield   8.0x EBITDA    8.0% Yield     7.0x EBITDA   9.0% Yield   

Total Future Value               $7.92           $12.70        $12.25         $16.78         $2.99         $8.23     
--------------------------------------------------------------------------------------------------------------------- 

_________________________
(1)  Assumes dividends are cut in order to conserve cash and fund
acquisitions.

- -------------------------------------------------------------------------------
21

- --------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.
- --------------------------------------------------------------------------------

ECONOMICS OF THE TRANSACTION

- --------------------------------------------------------------------------------
EFFECT OF TRANSACTION ON STAR UNITHOLDER DISTRIBUTIONS AND UNIT VALUE -- BASE 
CASE

--------------------------------------------------------------------------------------------------------------------
CURRENT DISTRIBUTABLE CASH                              
------------------------------------------------------------------------------------------------
ACTUAL 1997        NORMALIZED 1997         1998            1999          2000           2001    
--------------------------------------------------------------------------------------------------------------------

Earned                $ 1.95               $ 2.28             $ 2.09          $ 2.19        $ 2.30         $ 2.42   
Paid                    2.20                 2.20               2.20            2.20          2.30           2.40   
Yield                   10.0%                10.0%              10.0%            9.5%          9.0%           9.0%  
Unit Value            $22.00               $22.00             $22.00          $23.16        $25.56         $26.67   
-------------------------------------------------------------------------------------------------------------------- 

--------------------------------------------------------------------------------------------------------------------
PRO FORMA DISTRIBUTABLE CASH                             
------------------------------------------------------------------------------------------------
ACTUAL 1997        NORMALIZED 1997         1998            1999          2000           2001    
--------------------------------------------------------------------------------------------------------------------

Earned                $ 2.17               $ 2.84             $ 2.64          $ 2.92        $ 3.12         $ 3.24   
Paid                    2.30                 2.30               2.40            2.50          2.60           2.70   
Yield                   10.0%                10.0%              10.0%            9.0%          8.0%           7.5%  
Unit Value            $22.00               $23.00             $24.00          $26.32        $32.50         $36.00   
-------------------------------------------------------------------------------------------------------------------- 

- --------------------------------------------------------------------------------
22

- -------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.
- -------------------------------------------------------------------------------

ECONOMICS OF THE TRANSACTION

--------------------------------------------------------------------------

EFFECT OF TRANSACTION ON STAR UNITHOLDER DISTRIBUTIONS AND UNIT VALUE --
BASE CASE

------------------------------------------------------------------------------------------------ 
CURRENT DISTRIBUTABLE CASH
----------------------------------------------------------------------------- 
ACTUAL 1997   NORMALIZED 1997      1998      1999      2000      2001
------------------------------------------------------------------------------------------------ 

Earned                    $ 1.95         $ 2.28           $ 2.38    $ 2.50    $ 2.63    $ 2.77
Paid                        2.20           2.20             2.38      2.49      2.60      2.72
Yield                       10.0%          10.0%            10.0%      9.5%      9.0%      8.5%
Unit Value                $22.00         $22.00           $23.80    $26.21    $28.89    $32.00 
------------------------------------------------------------------------------------------------ 

------------------------------------------------------------------------------------------------ 
PRO FORMA DISTRIBUTABLE CASH
----------------------------------------------------------------------------- 
ACTUAL 1997   NORMALIZED 1997      1998      1999      2000      2001
------------------------------------------------------------------------------------------------ 

Earned                    $ 2.17         $ 2.84           $ 2.98    $ 3.36    $ 3.63    $ 3.77 
Paid                        2.30           2.30             2.85      3.04      3.18      3.25 
Yield                       10.0%          10.0%            10.0%      9.0%      8.0%      8.0%
Unit Value                $23.00         $23.00           $28.50    $33.78    $39.75    $40.63
------------------------------------------------------------------------------------------------ 

---------------------------------------------------------------------------
23

- --------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.
- --------------------------------------------------------------------------------

ECONOMICS OF THE TRANSACTION

---------------------------------------------------------------------------
EFFECT OF TRANSACTION ON STAR UNITHOLDER DISTRIBUTIONS AND UNIT VALUE --
PESSIMISTIC CASE

------------------------------------------------------------------------------------------------ 
CURRENT DISTRIBUTABLE CASH
----------------------------------------------------------------------------- 
ACTUAL 1997   NORMALIZED 1997       1998      1999      2000      2001
------------------------------------------------------------------------------------------------ 

Earned                   $ 1.95        $ 2.28             $ 2.09    $ 2.19    $ 2.30    $ 2.42
Paid                       2.20          2.20               2.20      2.20      2.20      2.20
Yield                      10.0%         10.0%              10.0%     9.5%      9.0%      9.0%
Unit Value               $ 22.00       $ 22.00            $ 22.00   $23.16    $24.44    $24.44   
------------------------------------------------------------------------------------------------ 

------------------------------------------------------------------------------------------------ 
PRO FORMA DISTRIBUTABLE CASH
----------------------------------------------------------------------------- 
ACTUAL 1997   NORMALIZED 1997      1998      1999      2000      2001
------------------------------------------------------------------------------------------------ 

Earned                    $ 2.17         $ 2.84          $ 2.64    $ 2.87    $ 2.90    $ 2.61
Paid                        2.30           2.30            2.30      2.30      2.30      2.30
Yield                       10.0%          10.0%           10.0%     9.5%      9.0%      9.0%
Unit Value                $ 23.00        $ 23.00         $ 23.00   $24.21    $25.56    $ 25.56 
-------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------
24

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Petroleum Heat & Power Co., Inc.
- --------------------------------------------------------------------------------

ECONOMICS OF THE TRANSACTION

---------------------------------------------------------------------------

EFFECT OF THE TRANSACTION ON STAR UNIT COVERAGE -- BASE CASE

--------------------------------------------------------------------------------------------------
CURRENT COVERAGE
-------------------------------------------------------------------------------
ACTUAL 1997   NORMALIZED 1997      1998      1999      2000      2001
--------------------------------------------------------------------------------------------------

Coverage on Common Units      1.7x           1.9x            1.8x       1.9x       2.0x     2.1x
Coverage on Total Units       0.9            1.0             1.0        1.0        1.0      1.1
--------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------
PRO FORMA COVERAGE/(1)/
-------------------------------------------------------------------------------
ACTUAL 1997   NORMALIZED 1997      1998      1999      2000      2001
--------------------------------------------------------------------------------------------------

Coverage on Common Units      1.5x           2.0x            1.9x       2.1x       2.2x     2.3x
Coverage on Total Units       0.9            1.2             1.2        1.3        1.4      1.4
--------------------------------------------------------------------------------------------------

________________________________
/(1)/ Based on $2.30 minimum quarterly distribution.

---------------------------------------------------------------------------
25

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Petroleum Heat & Power Co., Inc.
- --------------------------------------------------------------------------------

ECONOMICS OF THE TRANSACTION

---------------------------------------------------------------------------

EFFECT OF TRANSACTION ON STAR UNIT COVERAGE -- OPTIMISTIC CASE

-----------------------------------------------------------------------------------
CURRENT COVERAGE
----------------------------------------------------------
ACTUAL 1997  NORMALIZED 1997  1998  1999  2000  2001
-----------------------------------------------------------------------------------

Coverage on Common Units        1.7x           1.9x       2.0x  2.1x  2.2x  2.4x

Coverage on Total Units         0.9            1.0        1.1   1.1   1.2   1.3
-----------------------------------------------------------------------------------

-----------------------------------------------------------------------------------
PRO FORMA COVERAGE /(1)/
----------------------------------------------------------
ACTUAL 1997  NORMALIZED 1997  1998  1999  2000  2001
-----------------------------------------------------------------------------------

Coverage on Common Units        1.5x           2.0x       2.1x  2.4x  2.5x  2.6x

Coverage on Total Units         0.9            1.2        1.3   1.5   1.6   1.6
-----------------------------------------------------------------------------------

____________________________
(1)  Based  on $2.30 minimum quarterly distribution.

----------------------------------------------------------------------------
26

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Petroleum Heat & Power Co., Inc.
- --------------------------------------------------------------------------------

ECONOMICS OF THE TRANSACTION

---------------------------------------------------------------------------

EFFECT OF TRANSACTION ON STAR UNIT COVERAGE -- OPTIMISTIC CASE

-----------------------------------------------------------------------------------
CURRENT COVERAGE
----------------------------------------------------------
ACTUAL 1997  NORMALIZED 1997  1998  1999  2000  2001
-----------------------------------------------------------------------------------

Coverage on Common Units        1.7x          1.9x        1.8x  1.9x  2.0x  2.1x

Coverage on Total Units         0.9           1.0         1.0   1.0   1.0   1.1
-----------------------------------------------------------------------------------

-----------------------------------------------------------------------------------
PRO FORMA COVERAGE /(1)/
----------------------------------------------------------
ACTUAL 1997  NORMALIZED 1997  1998  1999  2000  2001
-----------------------------------------------------------------------------------

Coverage on Common Units        1.5x          2.0x        1.9x  2.0x  2.0x  1.9x

Coverage on Total Units         0.9           1.2         1.2   1.3   1.3   1.1
-----------------------------------------------------------------------------------

__________________________
(1)  Based  on $2.30 minimum quarterly distribution.

---------------------------------------------------------------------------
27

- --------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.
- --------------------------------------------------------------------------------

PART V

COMPARABLE MLP ANALYSIS

---------------------------------------------------------------------------
28

- --------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.
- --------------------------------------------------------------------------------

COMPARABLE MLP ANALYSIS

----------------------------------------------------------------------------------------------------------------------------

COMPARATIVE ANALYSIS OF SELECTED MLPS
----------------------------------------------------------------------------------------------------------------------------
($ in millions, except per share data)             MARKET      IMPLIED                                                      
VALUE OF     MARKET           IMPLIED           INDICATED                 
CLOSING    PUBLIC     VALUE OF           MARKET          DISTRIBUTION     IMPLIED   
COMPANY                                22-JUL-97   EQUITY   EQUITY/(1)/    CAPITALIZATION/(2)/     PER UNIT      YIELD/(3)/
----------------------------------------------------------------------------------------------------------------------------

PIPELINES                                                                                                                   
Buckeye Partners/(4)/                   $49.13    $592.8     $  598.8          $  823.9             $3.52            7.2%   
Kinder Morgan Energy Partners/(5)/       62.13     404.4        412.7             564.5              4.00            6.4    
EOTT Energy Partners                     18.88     188.8        362.7             442.9              1.90           10.1    
Genesis Energy/(6)/                      20.38     175.7        224.1             212.6              2.00            9.8    
Kaneb Pipe Line Partners                           358.3        489.9             627.9                                     
Senior Preference Units                 30.63                                                       2.40            7.8    
Preference Units                        29.31                                                       2.40            8.2    
Lakehead Pipeline Partners/(7)/          41.88     841.3      1,025.6           1,445.2              3.12            7.5    
Leviathan Gas Pipeline Partners/(8)/     25.06     453.0        623.2             848.4              1.80            7.2    
Northern Border Partners/(9)/            29.94     592.2        800.4           1,295.8              2.20            7.3    
Santa Fe Pacific Pipeline Partners       40.38     773.1        788.9           1,166.9              3.00            7.4    
TEPPCO Partners/(10)/                    49.00     710.5        728.8           1,022.4              3.20            6.5    
PIPELINE MEAN                                                                                       $2.69            7.8%   
PIPELINE MEDIAN                                                                                      2.40            7.4    
PROPANE                                                                                                                     
AmeriGas Partners                       $25.69    $566.7     $1,096.8          $1,823.7             $2.20            8.6%   
Cornerstone Propane Partners/(11)/       22.50     221.0        377.0             608.7              2.16            9.6    
Ferrellgas Partners/(12)/                22.69     331.5        745.1           1,220.0              2.00            8.8    
Heritage Propane Partners                22.75      97.5        185.4             324.4              2.00            8.8    
National Propane Partners               $20.38    $136.5     $  233.6          $  358.8             $2.10           10.3%   
Star Gas Partners                        22.50      64.7        121.0             207.5              2.20            9.8    
Suburban Propane Partners                19.25     415.1        564.2           1,106.7              2.00           10.4    
PROPANE MEAN                                                                                        $2.09            9.5%   
PROPANE MEDIAN                                                                                       2.10            9.6    
----------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

COMPARATIVE ANALYSIS OF SELECTED MLPS                                                                             
------------------------------------------------------------------------------------------------------------------
($ in millions, except per share data)   LTM DISTRIBUTABLE CASH FLOW/           LTM DISTRIBUTABLE CASH FLOW/      
----------------------------           ----------------------------
INDICATED        INDICATED              LTM             LTM           
DISTRIBUTION     DISTRIBUTION        DISTRIBUTION     DISTRIBUTION     
COMPANY                                  TO PUBLIC UNITS   TO TOTAL UNITS      TO PUBLIC UNITS  TO TOTAL UNITS    
------------------------------------------------------------------------------------------------------------------

PIPELINES                                                                                                         
Buckeye Partners/(4)/                        1.1x              1.0x                  1.2x             1.2x        
Kinder Morgan Energy Partners/(5)/           0.5               0.5                   0.8              0.8         
EOTT Energy Partners                         2.0               1.1                   2.0              1.1         
Genesis Energy/(6)/                          1.2               1.0                   NM               NM          
Kaneb Pipe Line Partners                                                                                          
Senior Preference Units                     2.5               1.1                   2.6              1.1         
Preference Units                            1.5               1.1                   1.6              1.1         
Lakehead Pipeline Partners/(7)/              1.6               1.3                   1.9              1.6         
Leviathan Gas Pipeline Partners/(8)/         2.3               1.7                   2.8              2.1         
Northern Border Partners/(9)/                1.8               1.3                   1.8              1.3         
Santa Fe Pacific Pipeline Partners           1.4               1.4                   1.4              1.4         
TEPPCO Partners/(10)/                        1.3               1.2                   1.4              1.3         
PIPELINE MEAN                                1.6X              1.2X                  1.7X             1.3X        
PIPELINE MEDIAN                              1.5               1.1                   1.7              1.3         
PROPANE                                                                                                           
AmeriGas Partners                            1.6x              0.8x                  1.6x             0.8x        
Cornerstone Propane Partners/(11)/           1.2               0.7                   NM               NM          
Ferrellgas Partners/(12)/                    1.8               0.8                   1.8              0.8         
Heritage Propane Partners                    1.5               0.8                   1.6              0.8         
National Propane Partners                    0.7x              0.4x                  0.7x             0.4x        
Star Gas Partners                            1.6               0.9                   1.6              0.9         
Suburban Propane Partners                    0.7               0.5                   0.7              0.5         
PROPANE MEAN                                 1.3X              0.7X                  1.3X             0.7X        
PROPANE MEDIAN                               1.5               0.8                   1.6              0.8         
------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------

COMPARATIVE ANALYSIS OF SELECTED MLPS                                                         
----------------------------------------------------------------------------------------------
($ in millions, except per share data)                                                        

LTD/MARKET        EBITDA/     MARKET CAP/      
COMPANY                                       CAPITALIZATION   INTEREST EXP.    EBITDA        
----------------------------------------------------------------------------------------------

PIPELINES                                                                                     
Buckeye Partners/(4)/                              24.0%           3.7x         10.1x         
Kinder Morgan Energy Partners/(5)/                 28.4            2.6          16.8          
EOTT Energy Partners                                0.0           11.6           9.2          
Genesis Energy/(6)/                                 0.0             NM           8.9          
Kaneb Pipe Line Partners                           22.1            5.6          10.0          
Senior Preference Units                                                                      
Preference Units                                                                             
Lakehead Pipeline Partners/(7)/                    32.0            3.9           9.9          
Leviathan Gas Pipeline Partners/(8)/               25.8             NM          10.2          
Northern Border Partners/(9)/                      25.9            3.7          10.7          
Santa Fe Pacific Pipeline Partners                 30.4            3.6           8.8          
TEPPCO Partners/(10)/                              30.3            3.1           9.8          
PIPELINE MEAN                                      21.9%           4.8X         10.5X         
PIPELINE MEDIAN                                    25.8            3.7           9.9          
PROPANE                                                                                       
AmeriGas Partners                                  37.7%           2.4x         11.8x         
Cornerstone Propane Partners/(11)/                 38.2            2.7          18.4          
Ferrellgas Partners/(12)/                          37.6            2.5          10.6          
Heritage Propane Partners                          41.2            2.3          11.9          
National Propane Partners                          35.7%           2.0x         14.0x         
Star Gas Partners                                  41.0            2.9          10.4          
Suburban Propane Partners                          38.7            2.7          12.3          
PROPANE MEAN                                       38.6%           2.5X         12.8X         
PROPANE MEDIAN                                     38.2            2.5          11.9          
----------------------------------------------------------------------------------------------

____________________
(1)  Implied Market Value of Equity implies value of total equity based on
value of public units.
(2)  Implied Market Capitalization equals Implied Market Value of Equity
plus net debt and other long-term liabilities.
(3)  Based on most recent distribution declared on an annualized basis.
(4)  Indicated Distribution per Unit reflects a Quarterly Distribution of
$0.88 as proposed by the General Partner on June 24, 1997. The
increased distribution is subject to approval by the G.P.'s Board of
Directors and will be paid August 1997 to unitholders of record on
June 16, 1997.
(5)  Pro forma for the expected distribution increase from $0.63 per unit
per quarter to $1.00 per unit.
(6)  Pro forma for the public offering of 7,500,000 Common Units.
(7)  Indicated Distribution per Unit reflects an increased Quarterly
Distribution of $0.78 as announced on July 17, 1997. The Increased
distribution is payable August 14, 1997, to unitholders of record on
July 31, 1997.
(8)  Indicated Distribution per Unit reflects an increased Quarterly
Distribution of $0.45 as announced on July 21, 1997. The Increased
distribution is payable August 14, 1997, to unitholders of record on
July 31, 1997.
(9)  Distributable Cash Flow is based upon income statement items adjusted
for approximate 30% minority interest.
(10) Indicated Distribution per Unit reflects a Quarterly Distribution of
$0.80 as announced by the General Partner on July 14, 1997. The
increased distribution is payable August 8, 1997 to unitholders of
record on July 31, 1997.
(11) Pro forma for the initial public offering of 9,821,000 limited partner
units and the private placement of $220 million of Senior Secured
Notes.
(12) Pro forma for the $90 million acquisition of Skelgas on April 30,
1996.

________________________________________________________________________________
29

- --------------------------------------------------------------------------------
Petroleum Heat & Power  Co., Inc.
- --------------------------------------------------------------------------------

COMPARABLE MLP ANALYSIS

----------------------------------------------------------------------------------------------------------------

DIVERSIFIED MLPS
------------------------------------------------------------------------------------------------------------
IMPLIED MARKET
DIVERSIFIED         IMPLIED      VALUE OF EQUITY    LTM DISTRIBUTION COVERAGE
---------------------------
LINES OF BUSINESS    YIELD /(1)/       (MILLIONS)      COMMON UNITS  TOTAL UNITS
------------------------------------------------------------------------------------------------------------

Genesis Energy            Crude pipeline             9.8%          $224.1            1.2x         1.0x
Crude marketing                          

Kaneb Pipe Line           Products pipeline          8.2%          $489.9            1.5          1.1
Storage terminals                        

Kinder Morgan             Products pipeline          6.4%          $412.7            0.8          0.8
Coal storage                             
Coal transfer                            
NGL fractionation                        
Gas processing                           

Leviathan Gas Pipeline    Gas pipeline               7.2%          $623.2            2.3          1.7
Crude pipeline
Oil & gas production
------------------------------------------------------------------------------------------------------------

_____________________
(1)  As of 7/22/97.

- --------------------------------------------------------------------------------
30

- --------------------------------------------------------------------------------
Petroleum Heat & Power  Co., Inc.
- --------------------------------------------------------------------------------

STEPS OF THE TRANSACTION AND TAX IMPLICATIONS

---------------------------------------------------------------------------
31

- --------------------------------------------------------------------------------
Petroleum Heat & Power  Co., Inc.
- --------------------------------------------------------------------------------

STEPS OF THE TRANSACTION AND TAX IMPLICATIONS

-----------------------------------------------------------------------------

STEPS OF THE TRANSACTION    

.  STEP ONE: Star Gas Corp. merges into Petro. Petro obtains from Star Gas
-------- 
Corp. the GP units of MLP and OLP and MLP subordinated units. Petro
transfers the GP units to an LLC. The subordinated units are designated
Senior Subordinated Units.

.  STEP TWO: Petro transfers assets to MLP in exchange for additional Senior
--------
Subordinated Units so as to have a total number of Senior Subordinated
Units equal in value to the value of the Petro Class A Common Stock held
by the public.

.  STEP THREE: Petro exchanges all LLC shares for an equivalent value of
----------
Class C shares held by Petro insiders.

.  STEP FOUR: The Petro insiders transfer their remaining Class A and Class C
---------
Stock to the MLP in exchange for Junior Subordinated Units.

.  STEP FIVE: OLP organized Newco. MLP transfers to OLP and OLP transfer to
--------- 
Newco, all Petro shares owned by the MLP, as acquired by MLP from the
Petro insiders.

.  STEP SIX: Newco merges with and into Petro. Class A Shares owned by the
--------
public are changed into Senior Subordinated Units. Class A and Class C
shares owned by Newco are canceled. Newco shares owned by OLP are changed
into Class A Petro shares.

CORRESPONDING TAX IMPLICATION

.  Tax free.

.  Tax free.

.  This triggers tax at Petro measured by the value of the LLC shares in
excess of Petro's basis in them and tax at the Petro insider level
measured by the value of the LLC shares in excess of their basis in the
Petro shares surrendered.

.  Tax free.

.  Tax free.

.  This step is tax free to Newco and OLP. Petro will recognize gain equal to
the value of the Senior Subordinated Units in excess of Petro's basis in
them. The public shareholders will recognize gain (or loss) measured by
the excess (or deficit) in value of the Senior Subordinated Units as
compared to their basis in the Petro Class A Common Stock.

-----------------------------------------------------------------------------
32

EXHIBIT 99(B)(4)

- --------------------------------------------------------------------------------
Confidential
- --------------------------------------------------------------------------------

STAR GAS PARTNERS, L.P.

BOARD OF DIRECTORS PRESENTATION

January 26, 1998

- --------------------------------------------------------------------------------
Star Gas Partners, L.P.
- --------------------------------------------------------------------------------

TABLE OF CONTENTS

---------------------------------------------------------------------------

I    SITUATION ANALYSIS

II   PETRO'S STRATEGY

III  THE TRANSACTION

IV   BENEFITS OF THE TRANSACTION

V    ECONOMICS OF THE TRANSACTION

VI   COMPARABLE MLP ANALYSIS

Exhibit I  Steps of the Transaction and Tax Implications

---------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Star Gas Partners, L.P.
- --------------------------------------------------------------------------------

PART I

SITUATION ANALYSIS

---------------------------------------------------------------------------
1

- --------------------------------------------------------------------------------
Star Gas Partners, L.P.
- --------------------------------------------------------------------------------

SITUATION ANALYSIS

---------------------------------------------------------------------------

PROPANE BUSINESS

. Pricing on all acquisitions has become extremely competitive as over $1.5
billion of equity has come into the industry since 1994.

. Large acquisitions have been scarce and multiples for even small deals
have expanded.

. Wholesale price spike during the 1996-1997 season revealed another level
of uncertainty, even for those companies (like Star) which profited from
the spike.

. Warm winter in the Northeast compounded the problem for many players.

. The market is starting to question whether propane MLPs are really growth
vehicles, as many have failed to demonstrate internal growth.

. The market is also starting to question if the weather is ever normal (it
always seems to be abnormally warm in some section, which more than
offsets good results elsewhere).

---------------------------------------------------------------------------
2

- --------------------------------------------------------------------------------
Star Gas Partners, L.P.
- --------------------------------------------------------------------------------

SITUATION ANALYSIS

---------------------------------------------------------------------------

IN SPITE OF SOLID PERFORMANCE AND THE RECENT PEARL ACQUISITION, STAR HAS
BEEN UNABLE TO IMPROVE ITS VALUATION RELATIVE TO OTHER MLPs

STAR GAS YIELD

[GRAPH APPEARS HERE]

________________________
(1)  Index is a composite of APU, CNO, FGP, HPG, NPL and SPH.

---------------------------------------------------------------------------
3

- --------------------------------------------------------------------------------
Star Gas Partners, L.P.
- --------------------------------------------------------------------------------

SITUATION ANALYSIS

---------------------------------------------------------------------------

CURRENT LTM COVERAGES ON TOTAL UNITS

[GRAPH APPEARS HERE]

CURRENT YIELDS

[GRAPH APPEARS HERE]

*   ONLY NATIONAL PROPANE AND SUBURBAN -- WHICH ARE HAVING OPERATIONAL 
PROBLEMS -- TRADE AT A HIGHER YIELD THAN STAR.

__________________
(1)  As of 1/23/98.

---------------------------------------------------------------------------
4

- --------------------------------------------------------------------------------
Star Gas Partners, L.P.
- --------------------------------------------------------------------------------

SITUATION ANALYSIS

---------------------------------------------------------------------------

IMPLIED MARKET VALUE OF EQUITY OF SELECTED PROPANE MLPS (CURRENT IMPLIED
YIELD) /(1)/

[GRAPH APPEARS HERE]

*   THE LARGER PROPANE MLPS HAVE GREATER MARKET LIQUIDITY AND INVESTOR
AWARENESS AND ARE SUBSEQUENTLY OFTEN REWARDED WITH LOWER YIELDS.

*   AMERIGAS AND STAR HAVE COMPARABLE COVERAGES, BUT AMERIGAS TRADES AT A
100 B.P. PREMIUM - PRIMARILY DUE TO SIZE.

____________________
(1)  As of 1/23/98.  Implied Market Value of Equity includes all Common,
Subordinated and GP interests.

---------------------------------------------------------------------------
5

- --------------------------------------------------------------------------------
Star Gas Partners, L.P.
- --------------------------------------------------------------------------------

SITUATION ANALYSIS

---------------------------------------------------------------------------
STAR CONTINUES TO LAG BEHIND OTHER MLPS IN TERMS OF ACQUISITIONS, WHERE
STAR'S ABILITY TO COMPETE IS LIMITED

.  Management's limited propane experience lowers deal flow

.  Geographic concentration limits "blend-in" opportunities

.  Larger and better capitalized players compete for the same assets

---------------------------------------------------------------------------
6

- --------------------------------------------------------------------------------
Star Gas Partners, L.P.
- --------------------------------------------------------------------------------

SITUATION ANALYSIS

---------------------------------------------------------------------------

SINCE GOING PUBLIC, MOST PROPANE MLPS HAVE MADE ACQUISITIONS AT A
DISAPPOINTING PACE

PERCENTAGE GALLONS ACQUIRED AS A % OF ORIGINAL GALLONS/(1)/

[GRAPH APPEARS HERE]

*   INVESTORS HAVE RESPONDED FAVORABLY TO ACQUISITION OPPORTUNITIES. THE
ENTITIES WHICH HAVE GROWN THE MOST ON A PERCENTAGE BASIS (FGP AND HPG)
TRADE AT PREMIUM MULTIPLES.

____________
(1)  As of 1/23/98.

---------------------------------------------------------------------------
7

- --------------------------------------------------------------------------------
Star Gas Partners, L.P.
- --------------------------------------------------------------------------------

SITUATION ANALYSIS

-------------------------------------------------------------------------

HEATING OIL BUSINESS

.  Petro remains the dominant force in the heating oil business, selling at
least 3 times as much as its nearest competitor.

.  Petro also dominates the acquisition market, acquiring a substantial
share of all heating oil businesses sold.

.  While the company has constantly made acquisitions over the last 5
years, higher than expected attrition rates have resulted in little
EBITDA growth.

.  Operational changes which were instituted on a small scale in 1996-1997
are expected to reduce the attrition rates over the next several years.

.  It is anticipated that the acquisition market will continue to be strong
as more owners approach retirement age and capital gain tax relief
appears in sight.

---------------------------------------------------------------------------
8

- --------------------------------------------------------------------------------
Star Gas Partners, L.P.
- --------------------------------------------------------------------------------

PART II

PETRO'S STRATEGY

---------------------------------------------------------------------------
9

- --------------------------------------------------------------------------------
Star Gas Partners, L.P.
- --------------------------------------------------------------------------------

PETRO'S STRATEGY

---------------------------------------------------------------------------

PETRO WILL TAKE ADVANTAGE OF FAVORABLE CONDITIONS IN THE HEATING OIL MARKET

.  Significant competitive advantages.

-- Industry is populated by thousands of relatively small local family
owned businesses

-- Higher concentration of customers than in the propane industry
creates critical mass

-- Sufficient financial resources to make key strategic acquisitions

-- Management openness and ability to modify historical operating
practices

.  Consumer attitudes facilitate creation of a brand image.

-- Utility product that is delivered without affirmative purchase
decision

-- 92% of customers do not know competitor's prices

-- 35% of consumers do not know the name of another heating oil
company

-- Only 34% know the name of only one other company (no one specific
competitor)

.  Unique size provides significant opportunities.

-- Engage professional management and achieve efficient organizational
structure

-- Enhance MIS and communication technology

-- Operating and marketing efficiencies

---------------------------------------------------------------------------
10

- --------------------------------------------------------------------------------
Star Gas Partners, L.P.
- --------------------------------------------------------------------------------

PETRO'S STRATEGY

---------------------------------------------------------------------------

ANTICIPATED BENEFITS FROM STRATEGY

.  Reduced operating costs and increased profitability.

.  Growth through internal marketing.

.  Attract new customers.

.  Retain existing customers.

.  Improve products and services.

---------------------------------------------------------------------------
11

- --------------------------------------------------------------------------------
Star Gas Partners, L.P.
- --------------------------------------------------------------------------------

PETRO'S STRATEGY

---------------------------------------------------------------------------

BY CREATING A BRAND IMAGE, PETRO CAN TARGET A NEW CUSTOMER BASE

.  Consumers moving into oil heated homes.

.  Other fuel oil dealers' dissatisfied customers.

-- Represents 8% to 10% of market

.  Customers of other nationally branded companies offering home delivered
products and services.

-- HFS real estate family of companies (Century 21, ERA, Coldwell 
Banker)

-- Security systems

-- Bottled water

-- Extermination

-- Electricity  

-- Lawn care

*   CREATING A BRAND IMAGE WOULD PROVIDE PETRO THE OPPORTUNITY TO FILL THE
VOID IN THE INDUSTRY BY BECOMING THE ONLY CONSUMER-RECOGNIZABLE HEATING
OIL COMPANY.

---------------------------------------------------------------------------
12

- --------------------------------------------------------------------------------
Star Gas Partners, L.P.
- --------------------------------------------------------------------------------

PETRO'S STRATEGY

---------------------------------------------------------------------------

IMPROVE EXISTING CUSTOMER RETENTION

.  Improve product thereby increasing customer satisfaction and reducing
triggering events.

-- Reduce oil runouts

-- Reduce incomplete and repeat equipment repairs

-- Provide unique on-time repairs

.  All employees function as salesmen.

.  Segmented and unbundled pricing.

.  Create deeper customer relationships.

---------------------------------------------------------------------------
13

- --------------------------------------------------------------------------------
Star Gas Partners, L.P.
- --------------------------------------------------------------------------------

PETRO'S STRATEGY

---------------------------------------------------------------------------

CREATE SEGMENTED AND UNBUNDLED PRICING

.  Heating equipment repair and maintenance revenues lower than cost.

-- Bundled with and subsidized by oil price

.  Unlimited annual service contracts.

.  Tailor unbundled pricing packages for different customer segments.

-- Shift charges away from more visible oil to less sensitive equipment 
repair

-- Replace unlimited service contracts with co-pay program based on
usage

---------------------------------------------------------------------------
14

- --------------------------------------------------------------------------------
Star Gas Partners, L.P.
- --------------------------------------------------------------------------------

PETRO'S STRATEGY

---------------------------------------------------------------------------

CREATE DEEPER CUSTOMER RELATIONSHIPS

.  Offer rationally related products requiring similar operating expertise.

-- Air conditioning

-- Electric repair

-- Plumbing

.  Create affinity group buying benefits with cross marketing partners.

-- Security systems

-- Bottled water

-- Extermination

-- Electricity

-- Lawn care

---------------------------------------------------------------------------
15

- --------------------------------------------------------------------------------
Star Gas Partners, L.P.
- --------------------------------------------------------------------------------

Part III

THE TRANSACTION

---------------------------------------------------------------------------
16

- ------------------------------------------------------------------------------- 
Star Gas Partners, L.P.
- -------------------------------------------------------------------------------

THE TRANSACTION

--------------------------------------------------------------------------

OVERVIEW

.    Star's limited size relative to other comparable MLPs restricts both
its financial flexibility and access to strategic acquisitions.

.    We believe that a public stock corporation is not the optimal format
for Petro.

__   No direct comparables

__   Rapid amortization of customer lists results in no earnings

__   Perceived limited growth in heating oil industry

__   Small capitalization results in limited research coverage

.    Furthermore, Petro's leveraged capital structure also limits its
financial flexibility and growth opportunities.

*    AS A RESULT, STAR GAS TRADES AT A SLIGHT DISCOUNT TO ITS PEERS, WHILE
PETRO'S STOCK HAS PERFORMED POORLY AND IS NOT LIKELY TO ACHIEVE FULL
VALUATION EVEN IF OPERATIONS IMPROVE.

--------------------------------------------------------------------------
17

- ------------------------------------------------------------------------------- 
Star Gas Partners, L.P.
- -------------------------------------------------------------------------------

THE TRANSACTION

--------------------------------------------------------------------------

IN ORDER TO ADDRESS THESE VALUATION ISSUES, STAR GAS SHOULD CONSIDER THE
BENEFITS OF A MERGER WITH PETRO

.    The combination of the two companies would result in a sizable MLP
(approximately $325 million implied equity value) which translates
into better valuation and greater liquidity.

.    The new entity would have substantially better access to capital to
fund future growth.

.    Concurrent with the merger, the issuance of new equity would
restructure and delever the balance sheet.

.    The restructuring would be accretive to distributable cash flow.

*    THE COMBINED ENTITY WOULD HAVE THE INVESTMENT STORY TO ATTRACT
RESEARCH COVERAGE AND WOULD BENEFIT BOTH STAR GAS AND PETRO SHARE/UNIT
HOLDERS.

--------------------------------------------------------------------------
18

- ------------------------------------------------------------------------------- 
Star Gas Partners, L.P.
- -------------------------------------------------------------------------------

THE TRANSACTION

--------------------------------------------------------------------------

CERTAIN FACTORS MUST BE INHERENT TO THE TRANSACTION IN ORDER FOR THE MERGER
TO BE ATTRACTIVE TO STAR UNITHOLDERS

.    The transaction must be substantially accretive to Star Unitholders
based on current operations.

.    Petro shareholders must be subordinate to existing Star Unitholders.

.    The indicated distribution and Minimum Quarterly Distribution ("MQD")
must be increased from their current levels.

--------------------------------------------------------------------------
19

- ------------------------------------------------------------------------------- 
Star Gas Partners  L.P.
- -------------------------------------------------------------------------------

THE TRANSACTION            

--------------------------------------------------------------------------

THE TRANSACTIN INVOLVES TWO SEPARATE STAGES:

--------------------------------------------------------------------------
STAGE 1-- THE EXCHANGE
--------------------------------------------------------------------------

PETRO SHAREHOLDERS EXCHANGE THEIR COMMON STOCK FOR STAR GAS MASTER LIMIT
PARTNERSHIP UNITS AT $3.15/SHARE

.    Shareholders who hold only Class A shares exchange into Senior
Subordinated MLP units. 

.    Senior Subordinated MLP Units valued at + 10% discount to Common
Units.

.    "Inside" shareholders /(1) /exchange either into Senior Subordinated
MLP Units or Subordinated Units plus the General Partnership Interest.

.    Senior Subordinated Units offered to "Insiders" will be capped at 3.5
million Petro shares in order to provide adequate coverage to Star
Common Units. 

.    Subordinated Units valued at + 20% discount to Common Units.

.    All Senior Subordinated and Subordinated Units convert to Common Units
after 3 years of "Earn & Pay" of $2.30 (i.e. increase the MQD on the
Common Units).

--------------------------------------------------------------------------

___________________
(1) Insiders for the purposes of this dicussion are those individuals who
own Class C and Class A common shares.

--------------------------------------------------------------------------
20

- ------------------------------------------------------------------------------- 
Star Gas Partners, L.P.
- -------------------------------------------------------------------------------

THE TRANSACTION

--------------------------------------------------------------------------

THE TRANSACTION INVOLVES TWO SEPARATE STAGES:

--------------------------------------------------------------------------
STAGE 2 -- THE RECAPITALIZATION
--------------------------------------------------------------------------

APPROXIMATELY $320 MILLION OF PETRO DEBT AND PREFERRED STOCK ARE REFINANCED

.    Existing issues will be either redeemed, exchanged, defeased or
tendered for, depending on issue.

.    Approximately $140 million of new Star equity will be raised through
the sale of Common Units.

.    Approximately $125 million of new debt will be issued.

--------------------------------------------------------------------------

--------------------------------------------------------------------------
21

- --------------------------------------------------------------------------------
STAR GAS PARTNERS, L.P
- --------------------------------------------------------------------------------

THE TRANSACTION

---------------------------------------------------------------------------

[GRAPH APPEARS HERE]

*  PETRO PUBLIC SHAREHOLDERS EXCHANGE FOR SENIOR SUBORDINATED; INSIDERS
EXCHANGE FOR A COMBINATION OF SENIOR SUBORDINATED AND/OR SUBORDINATED +
G.P. UNITS. THE MLP SELLS COMMON UNITS AND USES THE PROCEEDS TO
RECAPITALIZE AND REFINANCE.

---------------------------------------------------------------------------
22

- --------------------------------------------------------------------------------
STAR GAS PARTNERS, L.P
- --------------------------------------------------------------------------------

THE TRANSACTION

---------------------------------------------------------------------------

STAGE 1 -- THE EXCHANGE

CURRENT                                                  CONSIDERATION RECEIVED                   
--------------------------------------------------------       ----------------------------------------------------------  
SHARES                                                           UNITS   
PETRO SHAREHOLDER TYPE                           (000'S)                      TYPE OF MLP INTEREST                (000'S)  

Holders of Class A Only                           16,355         Senior Subordinated Units                          2,464  
Holders of Class A and C Shares                                                                                            
Shares Permitted To Be Exchanged                                                                                         
Into Senior Subordinated Units                 3,500         Senior Subordinated Units                            527  
Shares To Be Exchanged Into                                                                                              
Subordinated Units and GP Interest             5,904         Subordinated and General Partner Interest          1,296  
------                                                            -----  
Sub Total                                     9,404                                                                   
------                                                                   
TOTAL                                           25,759         TOTAL                                              4,287  
--------------------------------------------------------       ----------------------------------------------------------   

STAGE 2 -- THE RECAPITALIZATION
- --------------------------------------------------------------------------------

--------------------------------------------------------------------------------
UNITS OUTSTANDING AT MLP AFTER RECAPITALIZATION (000'S)           
--------------------------------------------------------------------------------
Common Units                                                                   

Currently Outstanding                                          3,832         
Newly Issued ($137.6 million)                                  6,116         
------         
Total                                                        9,947         
Senior Subordinated Units                                        2,991         
Subordinated Units and GP Interest                               1,296         
------         
TOTAL                                                       14,234         
-------------------------------------------------------------------------------- 

---------------------------------------------------------------------------
23

- --------------------------------------------------------------------------------
STAR GAS PARTNERS, L.P
- --------------------------------------------------------------------------------

PART IV

BENEFITS OF THE TRANSACTION

---------------------------------------------------------------------------
24

- --------------------------------------------------------------------------------
STAR GAS PARTNERS, L.P
- --------------------------------------------------------------------------------

BENEFITS OF THE TRANSACTION

---------------------------------------------------------------------------

AS A RESULT OF THE TRANSACTIONS, STAR HOLDERS WILL BENEFIT FROM THE
FOLLOWING:

. Increased earnings and distributions.

1997                                                               
------------------------------------------------------                                  

ACTUAL                      NORMALIZED                        1998 (1)        
------------------------------------------------------        ------------------------  
FROM           TO              FROM           TO                FROM           TO    
----------------------------------------------------------------------------------------------------------------------------  
Distributable Cash per unit                 $2.06         $2.19         $2.06         $2.65              $2.27         $2.93  
Distributions per unit                      $2.20         $2.30         $2.20         $2.30              $2.20         $2.30  
----------------------------------------------------------------------------------------------------------------------------  

. Increase MQD to $2.30 per unit.                             

. Higher total distribution coverage.                         

1997                                                            
------------------------------------------------------                                  

ACTUAL                    NORMALIZED                      1998 /(1)/           
------------------------------------------------------    ----------------------------  
From               TO           FROM           TO            FROM           TO         
-------------------------------------------------------------------------------------------     ----------------------------  
Coverage on Common Units               1.6x               1.4x         1.6x          1.7x           1.7x           1.9x       
Coverage on Total Units                0.9x               1.0x         0.9x          1.2x           1.0x           1.3x       
----------------------------------------------------------------------------------------------------------------------------  

. Larger size equity market capitalization.      
. A vehicle for growth in otherwise stagnant market.     

___________________
(1) Based on projected 1998 results. Assumes annually MQD of $2.20

---------------------------------------------------------------------------
25

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Star Gas Partners, L.P.
- -------------------------------------------------------------------------------

BENEFITS OF THE TRANSACTION

--------------------------------------------------------------------------

CHANGE IN DISTRIBUTIONS OF SELECTED MLPS SINCE IPO /(1)/

[GRAPH APPEARS HERE]

*  INVESTORS HAVE REWARDED INCREASED DISTRIBUTIONS WITH ATTRACTIVE
VALUATIONS.

______________________
(1)  As of 1/23/98.

--------------------------------------------------------------------------
26

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Star Gas Partners, L.P.
- -------------------------------------------------------------------------------

BENEFITS OF THE TRANSACTION

--------------------------------------------------------------------------

A MERGER WITH PETRO WILL RESPOND TO SEVERAL IMPORTANT INVESTOR ISSUES

--------------------------------------------------------------------------
Q:  How will the market value the mixed MLP?

A:  Growth and ability to make distributions are the key considerations for
valuing an MLP. The merger provides the size, business mix and
flexibility that investors are seeking. Several diversified MLPs exist
and perform favorably compared to their peers.
--------------------------------------------------------------------------
DIVERSIFIED MLPS
--------------------------------------------------------------------------

IMPLIED MARKET VALUE                               
DIVERSIFIED              IMPLIED         OF EQUITY          LTM DISTRIBUTION COVERAGE  
-----------------------------
LINES OF BUSINESS         YIELD /(1)/    (MILLIONS) /(1)/      COMMON UNITS  TOTAL UNITS  
-----------------------------------------------------------------------------------------------------------------------------

Genesis Energy                   Crude pipeline                    10.2%       $  215.9             0.8x            0.6x     
Crude marketing                                                                             

Kaneb Pipe Line                  Products pipeline                  7.7%       $  563.3              1.3            1.0      
Storage terminals                                                                           

Kinder Morgan                    Products pipeline                  6.0%       $  536.4              0.7            0.7      
Coal storage and transfer                                                                   
NGL fractionation                                                                           
Gas processing                                                                              

Leviathan Gas Pipeline           Gas pipeline                       6.7%       $  745.9              2.0            1.5      
Crude pipeline                                                                              
Oil & gas production                                                                        
-----------------------------------------------------------------------------------------------------------------------------

*   APPROXIMATELY 45% OF PIPELINE MLPS ARE DIVERSIFIED AND HAVE COMPARABLE
YIELDS RELATIVE TO PURE-PLAY MLPS.

__________________________
(1)  As of 1/23/98.

--------------------------------------------------------------------------
27

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Star Gas Partners, L.P.
- -------------------------------------------------------------------------------

BENEFITS OF THE TRANSACTION

---------------------------------------------------------------------------

INVESTOR ISSUES (CONT'D)

---------------------------------------------------------------------------

Q:  The propane industry has low annual growth (1%-2%) versus the heating
oil industry which is declining (2%-4%) each year. Why should Star
enter an industry that experiences attrition?

A:  While propane is a growth industry, there are several larger and better
capitalized companies that are actively taking advantage of industry
consolidation. As a result, average acquisition multiples have been bid
up to 7x EBITDA or higher. On the other hand, Petro is the dominant
player and leading consolidator in the heating oil market. As a result,
Petro has averaged 10 acquisitions each year since 1992 at an average
purchase multiple of approximately 4x EBITDA. As demonstrated below, an
acquisition at a 4x EBITDA multiple is profitable even taking into
account attrition:
---------------------------------------------------------------------------

ACQUISITION RATE OF RETURN
---------------------------------------------------------------------------

EBITDA PURCHASE         INTERNAL RATE OF
GROWTH RATE (ATTRITION)           MULTIPLE              RETURN (IRR)
-----------------------------------------------------------------------

(6.0%)                        4.0x                    15.6%
(4.0%)                        4.0x                    19.3%
-----------------------------------------------------------------------
(2.0%)                        4.0x                    22.3%
-----------------------------------------------------------------------
1.5%                         7.0x                    15.9%
-----------------------------------------------------------------------

---------------------------------------------------------------------------
28

- ------------------------------------------------------------------------------- 
Star Gas Partners, L.P.
- -------------------------------------------------------------------------------

BENEFITS OF THE TRANSACTION

--------------------------------------------------------------------------

INVESTOR ISSUES (CONT'D)

--------------------------------------------------------------------------
Q:   What initiatives is Petro taking to reverse its high attrition?
A:   Petro's new strategic focus includes:
-  Attracting new customers through brand imaging
-  Cross marketing to new and existing customers
-  Improving customer service
-  Creating segmented and unbundled pricing
-  Create deeper customer relationships through marketing related
services
--------------------------------------------------------------------------

*   ALTHOUGH THE BENEFITS OF THESE INITIATIVES HAVE BEGUN TO BE REALIZED,
THE IMPLIED VALUE HAS NOT YET BEEN FACTORED INTO PETRO'S STOCK PRICE.
THESE IMPROVEMENTS WILL SIGNIFICANTLY BENEFIT THE COMBINED ENTITY.

--------------------------------------------------------------------------
29

- ------------------------------------------------------------------------------- 
Star Gas Partners, L.P.
- -------------------------------------------------------------------------------

BENEFITS OF THE TRANSACTION

--------------------------------------------------------------------------

INVESTOR ISSUES (CONT'D)

--------------------------------------------------------------------------
Q:   Why would Petro be interested in a merger with Star Gas?

A:   Premium to market

-  At $3.15 per share, the exchange represents approximately a
20% premium to the market

Higher valuation multiples

-  MLPs typically trade at 10-11x EBITDA

Enhanced growth potential due to greater access to capital

-  Branding and internal marketing
-  Improved productivity through capital investment
-  Acquisitions

Lower overall cost of capital

-  New debt at +/- 8% vs. 12% existing debt
-  Equity capital with limited upside

Greater size and liquidity

-  Implied equity market value quintuples to over $325 million

Greater financial flexibility

-  Extend maturities through refinancing
-  Improved covenants due to investment grade rating

--------------------------------------------------------------------------

--------------------------------------------------------------------------
30

- --------------------------------------------------------------------------------
Star Gas Partners, L.P.
- --------------------------------------------------------------------------------

BENEFITS OF THE TRANSACTION

---------------------------------------------------------------------------

INVESTOR ISSUES (CONT'D)

---------------------------------------------------------------------------
Q:   What evidence is there that Petro's recent efforts to reduce costs and
manage attrition have been successful?
---------------------------------------------------------------------------
A:    

HEATING EQUIPMENT REPAIR AND                                                                               
MAINTENANCE                                                                                                
12 MONTHS 1996          12 MONTHS 1997          IMPROVEMENT   
----------------------  ----------------------  ------------------

Runouts (per 100 deliveries)                    0.99                    0.68                 31.3%      
Reworks                                         25.9%                   24.9%                 3.9%      
Incompletes                                      5.8%                    2.6%                55.2%      
Not-At-Homes /(1)/                               4.2%                    2.1%                50.0%      
Service Calls/8 Hours                           5.41                    5.24                (3.1)%      

OIL DELIVERY                                                                                               
Deliveries/8 Hours                              22.2                    23.9                  7.7%      
Gallons/Hour                                     569                     607                  6.7%      
----------------------------------------------------------------------------------------------------------- 

___________________________
(1)  Based on performance in the first six months of the year; 3Q and 4Q
data is not available.

---------------------------------------------------------------------------
31

- -------------------------------------------------------------------------------
Star Gas Partners, L.P.
- -------------------------------------------------------------------------------

PART V

ECONOMICS OF THE TRANSACTION

---------------------------------------------------------------------------
32

- ------------------------------------------------------------------------------- 
Star Gas Partners, L.P.
- -------------------------------------------------------------------------------

TRANSACTION ASSUMPTIONS

---------------------------------------------------------------------------

PETROLEUM HEAT & POWER

Base Case                                 Pessimistic Case
-----------------------------------------  ----------------------------------------
$3.5 Million Maint. CapEx                 $3.5 Million Maint. CapEx   
30-Year Weather                         30-Year Weather
$1.0 Million Annual Productivity Savings  $1.0 Million Annual Productivity Savings
5.0x Acquisition Multiple                 4.0x Acquisition Multiple
------------------------------------------ ----------------------------------------         
Attrition          Acquisitions           Attrition         Acquisitions

1998       4.0%            $50.0 Million             4.0%           $20.0 Million
1999       3.0              50.0                     4.0             20.0
2000       2.0              50.0                     4.0             20.0   
2001       2.0              50.0                     4.0             20.0

STAR GAS PARTNERS
---------------------------------------------------------------------------
All Cases
---------------------------------------------------------------------------
$5.0 Million in Acquisitions per Year at 7.0x EBITDA
2% Internal Growth
$2.0 Million Internal Growth CapEx per Year
$3.0 Million in Maintenance CapEx per Year
---------------------------------------------------------------------------

---------------------------------------------------------------------------
33

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Star Gas Partners, L.P.
- -------------------------------------------------------------------------------

ECONOMICS OF THE TRANSACTION

--------------------------------------------------------------------------

EFFECT OF TRANSACTION ON STAR UNITHOLDER DISTRIBUTIONS AND UNIT VALUE --
BASE CASE

------------------------------------------------------------------------------------------ 
CURRENT DISTRIBUTABLE CASH
-------------------------------------------------------------------------
ACTUAL 1997    NORMALIZED 1997      1998      1999      2000      2001
------------------------------------------------------------------------------------------

Earned                    $ 2.06            $ 2.06    $ 2.27    $ 2.43    $ 2.57    $ 2.72
Paid                        2.20              2.20      2.20      2.20      2.30      2.40
Yield                        9.5%              9.5%      9.5%      9.0%      8.5%      8.5%
Unit Value                $23.16            $23.16    $23.16    $24.44    $27.06    $28.24
------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------ 
PRO FORMA DISTRIBUTABLE CASH
-------------------------------------------------------------------------
ACTUAL 1997   NORMALIZED 1997      1998      1999      2000      2001
------------------------------------------------------------------------------------------ 

Earned                    $ 2.19            $ 2.65    $ 2.93    $ 3.17    $ 3.54    $ 3.90
Paid                        2.20              2.30      2.30      2.40      2.60      2.80
Yield                        9.5%              9.5%      9.0%      8.0%      7.5%      7.0%
Unit Value                $23.16            $24.21    $25.56    $30.00    $34.67    $40.00
------------------------------------------------------------------------------------------

---------------------------------------------------------------------------
34

- ------------------------------------------------------------------------------- 
Star Gas Partners, L.P.
- -------------------------------------------------------------------------------

ECONOMICS OF THE TRANSACTION

--------------------------------------------------------------------------

EFFECT OF TRANSACTION ON STAR UNITHOLDER DISTRIBUTIONS AND UNIT VALUE --
PESSIMISTIC CASE

---------------------------------------------------------------------------------------------------------- 
CURRENT DISTRIBUTABLE CASH
---------------------------------------------------------------------------------------
ACTUAL 1997 /(1)/  NORMALIZED 1997 /(1)/       1998      1999      2000      2001
---------------------------------------------------------------------------------------------------------- 

Earned                          $ 2.06                $ 2.06          $ 2.27    $ 2.43    $ 2.57    $ 2.72
Paid                              2.20                  2.20            2.20      2.20      2.30      2.40
Yield                              9.5%                  9.5%            9.5%      9.0%      8.5%      8.5%
Unit Value                      $23.16                $23.16          $23.16    $24.44    $27.06    $28.24
----------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------- 
PRO FORMA DISTRIBUTABLE CASH
--------------------------------------------------------------------------------------
ACTUAL 1997 /(1)/  NORMALIZED 1997 /(1)/       1998      1999      2000      2001
---------------------------------------------------------------------------------------------------------

Earned                          $ 2.19                $ 2.65          $ 2.74    $ 2.80    $ 2.89    $ 2.93
Paid                              2.20                  2.30            2.30      2.30      2.35      2.45
Yield                              9.5%                  9.5%            9.5%      9.0%      8.5%      8.5%
Unit Value                      $23.16                $24.21          $24.21    $25.56    $27.65    $28.82
---------------------------------------------------------------------------------------------------------

________________________________________
(1)  1997 is pro forma for acquisitions.

---------------------------------------------------------------------------
35

- ------------------------------------------------------------------------------- 
Star Gas Partners, L.P.
- -------------------------------------------------------------------------------

ECONOMICS OF THE TRANSACTION

---------------------------------------------------------------------------

EFFECT OF TRANSACTION ON STAR UNIT COVERAGE -- BASE CASE

-------------------------------------------------------------------------------------
CURRENT COVERAGE
-------------------------------------------------------------
ACTUAL 1997  NORMALIZED 1997  1998  1999  2000  2001
-------------------------------------------------------------------------------------

Coverage on Common Units         1.6x         1.6x         1.7x  1.8x  1.9x  2.1x
Coverage on Total Units          0.9          0.9          1.0   1.1   1.2   1.2
-------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------
PRO FORMA COVERAGE /(1)/
------------------------------------------------------------
ACTUAL 1997  NORMALIZED 1997  1998  1999  2000  2001
-------------------------------------------------------------------------------------

Coverage on Common Units         1.4x         1.7x         1.9x  2.1x  2.3x  2.6x
Coverage on Total Units          1.0          1.2          1.3   1.4   1.6   1.8
-------------------------------------------------------------------------------------

___________________________________
(1)  Based on $2.20 annual MQD.

---------------------------------------------------------------------------
36

- ------------------------------------------------------------------------------- 
Star Gas Partners, L.P.
- -------------------------------------------------------------------------------

ECONOMICS OF THE TRANSACTION

--------------------------------------------------------------------------

EFFECT OF TRANSACTION ON STAR UNIT COVERAGE -- PESSIMISTIC CASE

-------------------------------------------------------------------------------------
CURRENT COVERAGE
------------------------------------------------------------
ACTUAL 1997  NORMALIZED 1997  1998  1999  2000  2001
-------------------------------------------------------------------------------------

Coverage on Common Units         1.6x         1.6x         1.7x  1.8x  1.9x  2.1x
Coverage on Total Units          0.9          0.9          1.0   1.1   1.2   1.2
-------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------
PRO FORMA COVERAGE /(1)/
------------------------------------------------------------
ACTUAL 1997  NORMALIZED 1997  1998  1999  2000  2001
-------------------------------------------------------------------------------------

Coverage on Common Units         1.4x         1.7x         1.8x  1.8x  1.9x  1.9x
Coverage on Total Units          1.0          1.2          1.2   1.3   1.3   1.3
-------------------------------------------------------------------------------------

__________________________________
(1)  Based on $2.20 annual MQD.

---------------------------------------------------------------------------
37

- ------------------------------------------------------------------------------- 
Star Gate Partners, L.P.
- -------------------------------------------------------------------------------

PART VI

COMPARABLE MLP ANALYSIS

---------------------------------------------------------------------------
38

- --------------------------------------------------------------------------------
Star Gas Partners, L.P.
- --------------------------------------------------------------------------------

COMPARABLE MLP ANALYSIS

---------------------------------------------------------------------------
COMPARATIVE ANALYSIS OF SELECTED MLPS                                  

------------------------------------------------------------------------------------------------------------------------------ 
($ in millions, except per share data)              MARKET     IMPLIED                                                         
VALUE OF     MARKET          IMPLIED              INDICATED                 
CLOSING    PUBLIC     VALUE OF          MARKET             DISTRIBUTION    IMPLIED    
COMPANY                                 23-JAN-98   EQUITY   EQUITY/(1)/    CAPITALIZATION/(2)/       PER UNIT    YIELD/(3)/   
------------------------------------------------------------------------------------------------------------------------------ 

Pipelines                                                                                                                      
Buckeye Partners/(4)/                      $57.94  $  774.1      $  781.9            $1,005.7          $4.20          7.2%     
Kinder Morgan Energy Partners/(5)/          37.25     525.6         536.4               681.6           2.25          6.0      
Kaneb Pipe Line Partners/(6)/                         446.0         563.3               696.9                                  
Senior Preference Units                    35.31                                                       2.60          7.4      
Preference Units                           33.63                                                       2.60          7.7      
Lakehead Pipeline Partners                  45.75   1,019.8       1,223.2             1,511.1           3.12          6.8      
Leviathan Gas Pipeline Partners/(7)/        30.00     542.3         745.9               975.4           2.00          6.7      
Northern Border Partners/(8)/               33.19     747.7       1,400.6             1,785.0           2.30          6.9      
TEPPCO Partners/(9)/                        54.88     795.7         816.1             1,120.8           3.40          6.2      
------------------------------------------------------------------------------------------------------------------------------ 
PIPELINE MEAN                                                                                          $2.81          6.9%     
PIPELINE MEDIAN                                                                                         2.60          6.9      
------------------------------------------------------------------------------------------------------------------------------ 
Diversified                                                                                                                    
EOTT Energy Partners                       $18.63  $  186.3      $  357.9            $  460.1          $1.90         10.2%     
Genesis Energy                              19.63     169.3         215.9               198.4           2.00         10.2      
------------------------------------------------------------------------------------------------------------------------------ 
DIVERSIFIED MEAN                                                                                       $1.95         10.2%     
DIVERSIFIED MEDIAN                                                                                      1.95         10.2      
------------------------------------------------------------------------------------------------------------------------------ 
Propane                                                                                                                        
AmeriGas Partners                          $26.25  $  579.1      $1,120.8            $1,886.3          $2.20          8.4%     
Cornerstone Propane Partners                23.00     247.5         407.4               661.6           2.16          9.4      
Ferrellgas Partners                         22.13     325.3         706.5             1,246.3           2.00          9.0      
Heritage Propane Partners                   24.31     113.0         207.2               367.9           2.00          8.2      
National Propane Partners                  $21.94  $  147.0      $  256.7            $  395.5          $2.10          9.6      
Star Gas Partners                           23.50      90.0         149.3               238.3           2.20          9.4      
Suburban Propane Partners                   19.63     423.2         575.2             1,102.7           2.00         10.2      
------------------------------------------------------------------------------------------------------------------------------ 
PROPANE MEAN                                                                                           $2.09          9.2%     
PROPANE MEDIAN                                                                                          2.10          9.4      
------------------------------------------------------------------------------------------------------------------------------ 
Timber                                                                                                                         
Crown Pacific Partners, L.P                $25.94  $  553.3      $  717.4            $1,134.0          $2.15          8.3%     
Plum Creek Timber, L.P./(10)/               32.31   1,496.8       1,995.8             2,637.8           2.20          6.8      
U.S. Timberlands, L.P./(11)/                21.25     182.3         275.1               498.6           2.00          9.4      
------------------------------------------------------------------------------------------------------------------------------ 
TIMBER MEAN                                                                                            $2.12          8.2%     
TIMBER MEDIAN                                                                                           2.15          8.3      
------------------------------------------------------------------------------------------------------------------------------ 

------------------------------------------------------------------------------------------------------------------------------ 
LTM DISTRIBUTABLE CASH FLOW/                                                          
----------------------------                                                          
INDICATED          INDICATED                                                         
DISTRIBUTION        DISTRIBUTION     LTD/MARKET        EBITDA/     MARKET CAP/         
COMPANY                                TO PUBLIC UNITS     TO TOTAL UNITS  CAPITALIZATION   INTEREST EXP.    EBITDA            
------------------------------------------------------------------------------------------------------------------------------ 

Pipelines                                                                                                                      
Buckeye Partners/(4)/                      0.8x                0.8x           18.8%            4.0x           11.7x            
Kinder Morgan Energy Partners/(5)/         0.7                 0.7            19.2             3.1            17.2             
Kaneb Pipe Line Partners/(6)/                                                 19.8             5.7            10.8             
Senior Preference Units                   2.3                 1.0                                                             
Preference Units                          1.3                 1.0                                                             
Lakehead Pipeline Partners                 1.5                 1.2            30.6             3.8            10.3             
Leviathan Gas Pipeline Partners/(7)        2.0                 1.5            22.6             6.4            10.9             
Northern Border Partners/(8)/              1.3                 1.0            24.1             4.0            11.5             
TEPPCO Partners/(9)/                       1.4                 1.4            27.6             3.5             9.9             
------------------------------------------------------------------------------------------------------------------------------ 
PIPELINE MEAN                              1.4X                1.1X           23.2%            4.3X           11.8X            
PIPELINE MEDIAN                            1.4                 1.0            22.6             4.0            10.9             
------------------------------------------------------------------------------------------------------------------------------ 
Diversified                                                                                                                    
EOTT Energy Partners                       0.7x                0.4x            0.0%            4.3x           18.1x            
Genesis Energy                             0.8                 0.6             0.0              NM            12.0             
------------------------------------------------------------------------------------------------------------------------------ 
DIVERSIFIED MEAN                           0.8X                0.5X            0.0%            4.3X           15.0X            
DIVERSIFIED MEDIAN                         0.8                 0.5             0.0             4.3            15.0             
------------------------------------------------------------------------------------------------------------------------------ 
Propane                                                                                                                        
AmeriGas Partners                          2.0x                1.0x           36.3%            2.6x           11.0x            
Cornerstone Propane Partners               0.7                 0.5            38.1             2.1            16.8             
Ferrellgas Partners                        1.8                 0.8            39.5             2.4            11.3             
Heritage Propane Partners                  1.5                 0.8            44.0             2.3            12.4             
National Propane Partners                  1.1                 0.6            34.9             2.5            13.0             
Star Gas Partners                          1.4                 0.9            40.3             3.0            10.2             
Suburban Propane Partners                  0.8                 0.6            38.8             2.7            12.0             
------------------------------------------------------------------------------------------------------------------------------ 
PROPANE MEAN                               1.3X                0.7X           38.8%            2.5X           12.4X            
PROPANE MEDIAN                             1.4                 0.8            38.8             2.5            12.0             
------------------------------------------------------------------------------------------------------------------------------ 
Timber                                                                                                                         
Crown Pacific Partners, L.P                1.2x                0.9x           35.9%            2.9x           10.5x            
Plum Creek Timber, L.P./(10)/              1.8                 1.3            28.2             4.2            10.3             
U.S. Timberlands, L.P./(11)/               NM                  NM             45.1             1.2            17.3             
------------------------------------------------------------------------------------------------------------------------------ 
TIMBER MEAN                                1.5X                1.1X           36.4%            2.7X           12.7X            
TIMBER MEDIAN                              1.5                 1.1            35.9             2.9            10.5             
------------------------------------------------------------------------------------------------------------------------------

(1)  Implied Market Value of Equity implies value of total equity based on
value of public units.
(2)  Implied Market Capitalization equals Implied Market Value of Equity
plus net debt and other long-term liabilities.
(3)  Based on most recent distribution declared on an annualized basis.
(4)  Indicated Distribution per Unit reflects an increased Quarterly
Distribution of $1.05 as announced on October 23, 1997. The increased
distribution is payable November 28, 1997, to unitholders of record on
November 5, 1997.
(5)  Not pro forma for the announced merger with Santa Fe Pacific Pipeline.
Indicated Distribution per Unit reflects an increased Quarterly
Distribution of $0.5625 as announced on January 15, 1998 and payable
on February 17, 1998.
(6)  Indicated Distribution per Unit reflects an increased Quarterly
Distribution of $0.65 as announced on October 9, 1997. The increased
distribution is payable November 14, 1997, to unitholders of record on
October 31, 1997.
(7)  Indicated Distribution per Unit reflects an increased Quarterly
Distribution of $0.50 as announced on January 20, 1998. The increased
distribution is payable February 13, 1998, to all holders of record of
Preference Units and Common Units at the close of business on January
30, 1998.
(8)  Distributable Cash Flow is based upon income statement items adjusted
for approximate 30% minority interest. Implied Market Value of Equity,
Implied Market Capitalization and Market Cap/EBITDA are not adjusted.
Indicated Distribution per Unit reflects an increased Quarterly
Distribution of $0.575 as announced on January 15, 1998. The increased
distribution is payable February 13, 1998, to unitholders of record on
January 30, 1998.
(9)  Indicated Distribution per Unit reflects an increased Quarterly
Distribution of $0.85 as announced on January 16, 1998. The increased
distribution is payable February 6, 1998, to unitholders of record on
January 30, 1998.
(10) Implied Market Value of Equity and Implied Market Capitalization
include market value of GP interest based on its share of
distributions.
(11) Pro forma for the Initial Public Offering 11/13/97, the Weyerhauser
Acquisition, and for the refinancing of debt in connection with Ochoco
Acquisition. Not pro forma for any Ochoco Acquisition revenue.

---------------------------------------------------------------------------
39

- ------------------------------------------------------------------------------- 
Star Gas Partners, L. P.
- -------------------------------------------------------------------------------

EXHIBIT I

STEPS OF THE TRANSACTION AND TAX IMPLICATIONS

---------------------------------------------------------------------------
40

- -------------------------------------------------------------------------------
Star Gas Partners, L. P.
- -------------------------------------------------------------------------------

STEPS OF THE TRANSACTION AND TAX IMPLICATIONS

--------------------------------------------------------------------------

Steps of the Transaction 

.  STEP ONE: Star Gas Corp. merges into Petro. Petro obtains from Star Gas
--------
Corp. the GP units of MLP and OLP and MLP subordinated units. Petro
transfers the GP units to an LLC. The subordinated units are designated
Senior Subordinated Units.

.  STEP TWO: Petro transfers assets to MLP in exchange for additional
--------
Senior Subordinated Units so as to have a total number of Senior
Subordinated Units equal in value to the value of the Petro Class A
Common Stock held by the public.

.  STEP THREE: Petro exchanges all LLC shares for an equivalent value of
----------
Class C shares held by Petro insiders.

.  STEP FOUR: The Petro insiders transfer their remaining Class A and Class
---------
C Stock to the MLP in exchange for Junior Subordinated Units.

.  STEP FIVE: OLP organized Newco. MLP transfers to OLP and OLP transfer to
---------
Newco, all Petro shares owned by the MLP, as acquired by MLP from the
Petro insiders.

.  STEP SIX: Newco merges with and into Petro. Class A Shares owned by the
--------
public are changed into Senior Subordinated Units. Class A and Class C
shares owned by Newco are canceled. Newco shares owned by OLP are
changed into Class A Petro shares.

Corresponding Tax Implication                  

.  Tax free.                                  

.  Tax free.                                  

.  This triggers tax at Petro measured by the value of the LLC shares in
excess of Petro's basis in them and tax at the Petro insider level
measured by the value of the LLC shares in excess of their basis in the
Petro shares surrendered.

.  Tax free.                                     

.  Tax free.                                     

.  This step is tax free to Newco and OLP. Petro will recognize gain equal
to the value of the Senior Subordinated Units in excess of Petro's basis
in them. The public shareholders will recognize gain (or loss) measured
by the excess (or deficit) in value of the Senior Subordinated Units as
compared to their basis in the Petro Class A Common Stock.

---------------------------------------------------------------------------
41

PRELIMINARY REPORT TO
THE SPECIAL COMMITTEE OF GAS

A.G. EDWARDS & SONS, INC.
INVESTMENT BANKING

April 28, 1998

TABLE OF CONTENTS

Section
-------
Introduction....................................         I

Review of Events to Date........................        II

Summary of Transaction..........................       III

Summary Observations............................        IV

Preliminary Report to the Special Committee.....         V

INTRODUCTION

TRANSACTION     [_]  During 1997, Gas ("Gas" or the "Company") and Oil ("Oil")
PROPOSAL             discussed the idea of a possible business combination by
and between Gas and Oil. The series of proposed
transactions involved in such combination is referred to as
the "Transaction".

A.G. EDWARDS'   [_]  A.G. Edwards & Sons, Inc. ("A.G. Edwards") has been engaged
ENGAGEMENT           by the Special Committee (the "Special Committee") of the
Board of Directors of Gas (the "Board") to act as its
financial advisor with respect to the Transaction and to
issue to the Board an opinion as to the fairness, from a
financial point of view, to the common unitholders of Gas
who are not affiliated with Oil (the "Common Unitholders"),
of the Transaction (the "Fairness Opinion").

[_]  The preparation of a fairness opinion is not susceptible to
partial analyses or summary. In rendering its Fairness
Opinion, A.G. Edwards will apply its judgment to a variety
of complex analyses and assumptions. A.G. Edwards may give
various analyses more or less weight than other analyses,
and may deem various assumptions more or less probable than
other assumptions. The assumptions made and the judgments
applied by A.G. Edwards in rendering its opinion are not
readily susceptible to description beyond that set forth in
the written text of the Fairness Opinion itself.

Page 1

INTRODUCTION
(continued)

AS PART OF ITS  [_]  A review of the preliminary structure of the Transaction
ENGAGEMENT,          (See Tab III -"Summary of Transaction");
A.G. EDWARDS'
ACTIVITIES      [_]  A review of Gas' and Oil's historical financial statements
INCLUDED, BUT        and the financial projections of Gas and Oil (See         
WERE NOT             Appendices A and B -"Overview of Oil and Gas,"             
LIMITED TO, THE      respectively);                                             
FOLLOWING:
[_]  A review of certain market data of Gas' Common Units and  
Oil's Common Stock (See Appendices A and B -"Overview of
Oil and Gas," respectively);

[_]  An analysis of the pro forma financial statements of Gas
giving effect to the Transaction (as proposed) (See
Appendix C - "Pro Forma Ownership Analysis");

[_]  Conversations with PaineWebber regarding the nature and
extent of development of the terms of the Transaction;

[_]  An investigation regarding current operations and future
prospects of Gas and Oil, through interviews with members
of Gas' and Oil's management, respectively (See Appendices
A and B - "Overview of Oil and Gas," respectively);

[_]  A review of the industries in which Gas and Oil operate;

[_]  A review of the market data for stocks of public companies
in the same or similar lines of business to Gas (See
Appendix I - "Public Company Analysis");

[_]  Analyses of the Transaction using various valuation
methodologies; and

[_]  Other analyses which it deemed necessary.

Page 2

INTRODUCTION
(continued)

NATURE OF       [_]  A.G. Edwards relied upon and assumed, without independent
INFORMATION          verification, the accuracy and completeness of all
REVIEWED AND         financial and other information publicly available, or
PRESENTED            furnished to, or otherwise discussed with A.G. Edwards
including financial statements and financial projections,
as provided by management of Gas and Oil and Oil's
financial advisor. With respect to financial projections
and other information provided to or otherwise discussed
with A.G. Edwards, A.G. Edwards assumed and was advised by
the senior management of Gas and Oil, respectively, that
such projections and other information were reasonably
prepared on a basis that reflects the best currently
available estimates and judgments of the senior management
of Gas and Oil, respectively, as to the expected future
financial performance of Gas and Oil, in each case on a
stand-alone basis and after giving effect to the
Transaction. A.G. Edwards was not engaged to, and did not,
independently verify the information provided and performed
no audit of assets or liabilities and no independent
appraisal of assets or liabilities of either Gas or Oil.
A.G. Edwards has relied upon the assurances of the
management of Gas and Oil that they are not aware of any
facts that would make such information inaccurate or
misleading.

[_]  In performing its analyses, A.G. Edwards made numerous
assumptions with respect to the propane distribution
industry and the home heating oil distribution industry,
and general business and economic conditions which are
beyond the control of Gas and Oil. The analyses performed
by A.G. Edwards are not necessarily indicative of actual
values or actual future results, which may be significantly
more or less favorable than suggested by such analyses.
Such analyses were prepared solely as part of A.G. Edwards'
Preliminary Report to the Special Committee.

[_]  This presentation is for the private use of the Special
Committee and may not be distributed to any other parties
without A.G. Edwards' written permission.

Page 3

REVIEW OF EVENTS TO DATE

FEBRUARY 11     [_]  A.G. Edwards presents its qualifications to the Special
Committee and its legal counsel.

MARCH 23        [_]  Special Committee engaged A.G. Edwards.

MARCH 23         [_]  A.G. Edwards met with members of Gas' and Oil's management
and submitted preliminary data request list.

[_]  A.G. Edwards began due diligence with management and other
representatives of Gas and Oil.

-   Business
-   Financial 
-   Accounting
-   Other      

MARCH 30         [_]  A.G. Edwards received data related to its preliminary data
request list.

MARCH 30 - APRIL [_]  A.G. Edwards continued the due diligence process with
27                    respect to Gas and Oil.

APRIL 28         [_]  Special Committee meeting to discuss the Transaction.

Page 4

SUMMARY OF TRANSACTION
PRO FORMA GAS UNITS OUTSTANDING
(IN THOUSANDS)

TO SIMPLIFY     [_]  There are currently 6,355 Gas units outstanding comprised
THE COMPLEXITY       of 3,832 common units, 2,396 subordinated units and 127
OF THE STEPS         general partner ("GP") units. The subordinated units and GP
IN THE               units are assets of Oil.                                   
TRANSACTION,                                                                    
A.G. EDWARDS
PREPARED A 
SUMMARY OF ITS
UNDERSTANDING.

[_]  There are currently 26,563 shares of Oil common stock
outstanding, comprised of public shareholders and
"insiders." The public holds 17,160 Class A shares. The
"insiders" hold 9,404 shares which include 6,795 Class A
shares, 11 Class B shares and 2,598 Class C shares.

[_]  Each shareholder of Oil will receive a certain number of
units in Gas such that the implied consideration paid for
each Oil share is $3.15.

[_]  The publicly held 17,160 Class A shares will receive .1596
shares of newly created Senior Subordinated units (2,738
units in total) with an implied value of $19.74/unit. This
represents an implied purchase price of $3.15/share for an
implied total purchase price of $54.1 million.

[_]  The "insiders" of Oil, who hold a total of 9,404 shares
(comprised of A, B and C shares) will also receive
$3.15/share for a total of $29.6 million. The consideration
received by these shareholders will be funded by:

-   (1) the distribution of existing units of Gas which are
currently owned by Oil
[_] all of the 127 GP units owned by Oil will be
given as consideration at an implied value of
$21.28/unit, for a total of $2.7 million.
[_] 754 of the 2,396 Subordinated units owned by
Oil will be given as consideration at an
implied value of $16.33/unit, for a total of
$12.3 million.
-   (2) the distribution of newly-created units of Gas
[_] to fund the remaining $14.6 million of the
$29.6 million due to the Oil "insiders", Gas
will issue 559 newly-created Senior
Subordinated units and 168 newly-created GP
units. The implied values for these new units
are $19.74 and $21.28, respectively.

Page 5

Merger Premiums to Market Value Analysis
Mergers with Target Price Equal to or Less than $5 per Share
Announced and Completed 1/1/96-10/9/98

- ------------------------------------------------------------------------------------------------------------------------------------

Date      Date                                                                     
Announced Effective Target Name                    Target Business Description     Acquiror Name
- ------------------------------------------------------------------------------------------------------------------------------------

01/10/96  06/26/96  American Resource Corp         Gold mining company             REA Gold Corp                  
01/18/96  08/23/96  AMSERV Healthcare Inc          Pvd temp nursing employment     Star Multi Care Services Inc   
01/23/96  05/09/96  Portage Industries Corp        Mnfr extruded plastic sheets    Spartech Corp                  
02/05/96  09/30/96  Customedix Corp                Mnfr dental, medical products   CUS Acquisitions Inc           
02/13/96  07/12/96  Medical Innovations Inc        Pvd home health care services   Horizon/CMS Healthcare Corp    
02/15/96  04/29/96  LDI Corp                       Computer equip leasing svcs     NationsBank Corp, Charlotte, NC
02/28/96  07/11/96  Salton/Maxim Housewares Inc    Mnfr electric housewares, fans  Windmere Corp                  
03/13/96  09/27/96  DeSoto Inc                     Mnfr paints and detergents      Keystone Consolidated Inds Inc 
04/16/96  05/31/96  CIS Technologies Inc           Manufacture computers           National Data Corp             
04/22/96  06/04/96  Cornerstone Natural Gas Co     Natural gas distribution svcs   El Paso Field Svcs(El Paso)    
05/03/96  03/17/98  Homeowners Group Inc           Real estate, insurance agency   Cross Country Group Inc        
05/06/96  09/03/96  Transcisco Industries Inc      Mnfr, service railroad equip    Trinity Industries Inc         
05/07/96  09/03/96  NMR of America Inc             Pvd. medical equip leasing svcs Medical Resources Inc          
05/13/96  08/30/96  MDT Corp                       Mnfr sterility assurance equip  Getinge Industries AB          
05/15/96  09/10/96  Carlisle Plastics Inc          Mnfr, whl plastic prods, resins Tyco International Ltd         
06/03/96  01/09/97  Bio-Dental Technologies Corp   Provide dental research svcs    Zila Inc                       
06/10/96  07/22/96  SysteMed Inc                   Pvd medical services            Merck-Medco Managed Care Inc   
06/11/96  09/03/96  Computer Identics Corp         Manufacture bar code scanners   Robotic Vision Systems Inc     
06/17/96  10/07/96  Scanforms Inc                  Mnfr business forms             Big Flower Press Holdings Inc  
06/21/96  08/23/96  Computer Identics Corp         Information retrieval svcs      United Communications Group    
06/24/96  12/05/96  MEM Co                         Manufacture toiletries          Renaissance Cosmetics Inc      
07/31/96  11/13/96  Calgene Inc                    Own and operate greenhouse      Monsanto Co                    
08/13/96  02/27/97  LaTex Resources Inc            Oil and gas expln, prodn        Alliance Resources PLC         
09/10/96  01/03/97  GreenStone Industries Corp     Manufacture stationery          Louisiana-Pacific Corp         
09/11/96  03/04/97  Chempower Inc                  Insulation, asbestos abatement  American Eco Corp              
09/16/96  12/06/96  Proler International Corp      Whl scrap metals & metals       Schnitzer Steel Industries Inc 
09/26/96  01/24/97  General Physics Corp           Provide training services       National Patent Development    
10/02/96  12/27/96  Software Publishing Corp       Develop software                Allegro New Media              
10/03/96  11/12/97  Pittencrieff Communications    Pvd radiotelephone commun svcs  Nextel Communications Inc      
10/04/96  12/31/96  Pet Food Warehouse Inc         Own, op pet food stores         Petco Animal Supplies Inc      
10/30/96  12/20/96  Pacific Rehab & Sports Med     Own, op rehab hospital          Horizon/CMS Healthcare Corp    
11/05/96  03/14/97  Panatech Research &                                                                           
Development                    Manufacture semiconductors      Harbour Group Ltd              
11/25/96  02/28/97  American Studios Inc           Pvd photography services        PCA International Inc          
12/06/96  03/18/97  MaxServ Inc (Sears Roebuck)    Pvd technical info support svc  Sears Roebuck & Co             
12/09/96  02/28/97  Houston Biotechnology Inc      Mnfr monoclonal antibodies      Medarex Inc                    
01/24/97  07/02/97  INCSTAR Corp (Sorin                                                                           
Biomedical)                    Mnfr diagnostic substances      American Standard Inc          
01/28/97  05/21/97  Calgene Inc (Monsanto Co)      Own and operate greenhouse      Monsanto Co                    
01/30/97  08/12/97  AST Research Inc               Mnfr computers; dvlp software   Samsung electronic Co Ltd      
02/07/97  08/01/97  MS Financial (MS Diversified)  Pvd financial credit services   Search Financial Services Inc  
02/11/97  07/31/97  Serv-Tech Inc                  Maintenance and cleaning svcs   Philip Environmental Inc       
03/04/97  06/27/97  Audio King Corp                Own, op consumer electn stores  Ultimate electronic Inc        
04/15/97  06/30/97  Kurzweil Applied Intelligence  Electronic computing equip      Lernout & Hauspic speech       
04/30/97  07/25/97  Arden Industrial Products Inc  Whl fasteners                   Park-Ohio Industries Inc       
05/01/97  08/01/97  Cryenco Sciences Inc           Mnfr liquid gas storage tanks   Chart Industries Inc           
05/08/97  09/10/97  Imex Medical Systems Inc       Mnfr fetal diagnostic instr     Nicolet Biomedical Inc         
06/16/97  09/30/97  Frederick's of Hollywood, Inc  Women's clothing stores         Investor Group                 
06/24/97  07/25/97  Jillians Entertainment Corp    Own, op billiard clubs          JW Childs Equity Partners LP   
07/23/97  12/02/97  Rudy's Restaurant Group        Own and operate restaurants     Benihana Inc                   
08/01/97  09/26/97  Community Care of America Inc  Own, op nursing homes           Integrated Health Services Inc 
08/07/97  12/02/97  Magnetic Technologies Corp     Manufacture copiers, printers   SPS Technologies Inc           
08/14/97  12/31/97  Allied Capital Advisers Inc    Investment advisory svcs        Allied Capital Lending Corp    
09/02/97  12/03/97  Ground Round Restaurants       Own and operate restaurants     GRR Holdings LLC               
09/04/97  12/30/97  Cinergi Pictures Entertainment Pvd motion picture prodn svcs   Investor Group                 
09/26/97  09/26/97  Laclede Steel Co               Own, operate steel works        Birmingham Steel Corp          
10/10/97  01/07/98  Puro Water Group Inc           Whl bottled water               United States Filter Corp      
10/13/97  03/19/98  Integrated Brands Inc          Produce ice cream               Yogen Fuz World-Wide Inc       
11/03/97  02/25/98  Individual Inc                 Pvd on-line info retrieval svc  Desktop Data Inc               
11/04/97  01/12/98  ComputerVision Corp            Mnfr computers, peripherals     Parametric Technology Corp     
11/12/97  03/03/98  PureTec Corp                   Manufacture plastic products    Tekni-Plex Inc                 
11/24/97  01/07/98  General Host Corp              Own, op specialty retail stores Cypress Group LLC              
12/02/97  03/17/98  Staodyn Inc                    Mnfr electromedical equipment   Rehabilicare Inc               
12/12/97  02/13/98  Impact Systems Inc             Paper prodn control systems     Voith Sulzer Paper Technology  
12/12/97  09/10/98  Timber Lodge Steakhouse Inc    Own, op restaurants             Santa Barbara Restaurant Group 
12/15/97  02/24/98  MetroGolf Inc                  Own, op golf courses            Family Golf Centers Inc        
12/22/97  05/20/98  Artistic Greetings Inc         Mnfr personalized stationery    MDC Communications Corp        

- ------------------------------------------------------------------------------------------------------------------------------------
Value of         Enter-
Trans-           prise
Date      Date                                      Acquiror                                action           Value
Announced Effective Target Name                     Business Description                    ($ mil)         ($ mil)
- ------------------------------------------------------------------------------------------------------------------------------------

01/10/96  06/26/96  American Resource Corp           Gold mining company                      77.5           76.353 
01/18/96  08/23/96  AMSERV Healthcare Inc            Pvd home health care services             9.2            7.895 
01/23/96  05/09/96  Portage Industries Corp          Manufacture Plastic products             15.8           17,540 
02/05/96  09/30/96  Customedix Corp                  Investment company                        3.6           15,103 
02/13/96  07/12/96  Medical Innovations Inc          Pvd nursing care services                30.3           41,725 
02/15/96  04/29/96  LDI Corp                         Bank bldg co; pvd finl svcs              28.1          288,893 
02/28/96  07/11/96  Salton/Maxim Housewares Inc      Mnfr personal care appliances            21.1           53,442 
03/13/96  09/27/96  DeSoto Inc                       Manufacture steel wire                   36.1           40,529 
04/16/96  05/31/96  CIS Technologies Inc             Pvd homeowner membership svcs            99.3          112,471 
04/22/96  06/04/96  Cornerstone Natural Gas Co       Own, op diagnostic imaging ctrs          96.6           97,614 
05/03/96  03/17/98  Homeowners Group Inc             Pvd homeowner membership svcs            11.4           14,968 
05/06/96  09/03/96  Transcisco Industries Inc        Mnfr transp equip,parts                  44.7           51,126 
05/07/96  09/03/96  NMR of America Inc               Own,op diagnostic imaging ctrs           40.4           57,369 
05/13/96  08/30/96  MDT Corp                         Mnfr sterilizing equipment               70.3           69.457 
05/15/96  09/10/96  Carlisle Plastics Inc            Mnfr fire protection systems            122.4          273.282 
06/03/96  01/09/97  Bio-Dental Technologies Corp     Mnfr,whl pharmaceuticals                 40.3           48.477 
06/10/96  07/22/96  SysteMed Inc                     Health insurance company                 64.8           60,646 
06/11/96  09/03/96  Computer Identics Corp           Mnfr 2-D,3-D vision-based sys            42.0           40,881 
06/17/96  10/07/96  Scanforms Inc                    Pvd advertising,marketing svcs           27.5           15,661 
06/21/96  08/23/96  Computer Identics Corp           Publish newsletters                      12.0           11,548 
06/24/96  12/05/96  MEM Co                           Investor group                           38.2           29.577 
07/31/96  11/13/96  Calgene Inc                      Mnfr agro chems,manmade fibers           50.0          584,080 
08/13/96  02/27/97  LaTex Resources Inc              Oilo and gas exploration, prodn          27.1           44,759 
09/10/96  01/03/97  GreenStone Industries Corp       Mnfr lumber,plywood,pulp                 29.2           40,823 
09/11/96  03/04/97  Chempower Inc                    Pvd engineering services                 50.0           36,189 
09/16/96  12/06/96  Proler International Corp        Manufacture steel products               42.5           68,146 
09/26/96  01/24/97  General Physics Corp             Mnfr contact lenses                      261.           70,360 
10/02/96  12/27/96  Software Publishing Corp         Pvd software services                    25.2            8,786 
10/03/96  11/12/97  Pittencrieff Communications      Pvd cellular telephone svcs             158.4          159,860 
10/04/96  12/31/96  Pet Food Warehouse Inc           Own and operate pet stores               60.7           55,986 
10/30/96  12/20/96  Pacific Rehab & Sports Med       Pvd nursing care services                72.7           75,706 
11/05/96  03/14/97  Panatech Research &                                                                             
Development                      Mnfr steel cutting tools                 29.2           26,218 
11/25/96  02/28/97  American Studios Inc             Pvd photo processing services            66.3           67.650 
12/06/96  03/18/97  MaxServ Inc (Sears Roebuck)      Mnfr steel Department stores; finl svcs  46.0          87.263  
12/09/96  02/28/97  Houston Biotechnology Inc        Manufacture pharmaceutiCALS               8.6            8.700 
01/24/97  07/02/97  INCSTAR Corp (Sorin                                                                             
Biomedical)                      Transportation, building prod           106.3          102.865 
01/28/97  05/21/97  Calgene Inc (Monsanto Co)        Mnfr agro chems, manmade fibers         242.6          567.548 
01/30/97  08/12/97  AST Research Inc                 Mnfr consumer electronics               495.8          558.108 
02/07/97  08/01/97  MS Financial (MS Diversified)    Pvd business credit services             17.2          102.602 
02/11/97  07/31/97  Serv-Tech Inc                    Provide waste management svcs            73.4           54.956 
03/04/97  06/27/97  Audio King Corp                  Own, op radio, TV, electn stores          6.0           12.363 
04/15/97  06/30/97  Kurzweil Applied Intelligence    Mnfr speech tech products                51.3           50.852 
04/30/97  07/25/97  Arden Industrial Products Inc    Mnfr forged and machined parts           42.0           44.995 
05/01/97  08/01/97  Cryenco Sciences Inc             Mnfr process control instmnts            19.2           27.904 
05/08/97  09/10/97  Imex Medical Systems Inc         Investment company                        9.3           10.238 
06/16/97  09/30/97  Frederick's of Hollywood, Inc    Investor group                           69.4           57.007 
06/24/97  07/25/97  Jillians Entertainment Corp      Investment company                        4.7            7.007 
07/23/97  12/02/97  Rudy's Restaurant Group          Own and operate restaurants              18.8           18.936 
08/01/97  09/26/97  Community Care of America Inc    Pvd specialty healthcare svcs            94.0           89.996 
08/07/97  12/02/97  Magnetic Technologies Corp       Mnfr industrial fasteners                16.8           15.984 
08/14/97  12/31/97  Allied Capital Advisers Inc      Closed-end mgmt investment co            49.5           44.111 
09/02/97  12/03/97  Ground Round Restaurants         Investment company                       17.5           56.945 
09/04/97  12/30/97  Cinergi Pictures Entertainment   Investor group                           16.3           59.794 
09/26/97  09/26/97  Laclede Steel Co                 Manufacture steel, steel prod            15.0          131.767 
10/10/97  01/07/98  Puro Water Group Inc             Mnfr water treatment equip               25.7           30.186 
10/13/97  03/19/98  Integrated Brands Inc            Produce frozen yogurt                    46.8           51.274 
11/03/97  02/25/98  Individual Inc                   Pvd info retrieval svcs                  86.8           79.390 
11/04/97  01/12/98  ComputerVision Corp              Develop, wholesale software             250.3          460.128 
11/12/97  03/03/98  PureTec Corp                     Mnfr plastic                            324.6          281.484 
11/24/97  01/07/98  General Host Corp                Investment bank                         326.2          278.128 
12/02/97  03/17/98  Staodyn Inc                      Mnfr electromedical equip                22.5           22.867 
12/12/97  02/13/98  Impact Systems Inc               Provide paper tech dvlp svcs             28.6           28.467 
12/12/97  09/10/98  Timber Lodge Steakhouse Inc      Own, op fast food restaurants            30.4           30.925 
12/15/97  02/24/98  MetroGolf Inc                    Own and operate golf courses              6.6           18.428 
12/22/97  05/20/98  Artistic Greetings Inc           Provide marketing services               33.6           35.618 

- ------------------------------------------------------------------------------------------------------------------------------------
Premium
----------------------------------------------------------------------------------
Date      Date                                     1 Day Prior     1 Week Prior    4 Weeks Prior  3 Months Prior    1 Year Prior   
Announced Effective Target Name                   to Annc. Date   to Annc. Date    to Annc. Date  to Annc. Date     to Annc. Date 
- ------------------------------------------------------------------------------------------------------------------------------------

01/10/96  06/26/96  American Resource Corp         30.77             23.50           27.03                                   
01/18/96  08/23/96  AMSERV Healthcare Inc          14.56             27.29           20.59           (4.67)           20.42  
01/23/96  05/09/96  Portage Industries Corp        46.67             78.98           78.98          134.67           193.33  
02/05/96  09/30/96  Customedix Corp                22.58             26.67            5.56           19.00           (18.98) 
02/13/96  07/12/96  Medical Innovations Inc        13.85             18.40            5.71            5.71            37.67  
02/15/96  04/29/96  LDI Corp                       31.20             21.48           49.09           26.15             5.81  
02/28/96  07/11/96  Salton/Maxim Housewares Inc    (0.19)            12.84            3.81            1.65            (9.05) 
03/13/96  09/27/96  DeSoto Inc                     65.41             53.00           80.00          118.57            53.00  
04/16/96  05/31/96  CIS Technologies Inc           50.50             30.16           30.16           (5.57)           33.78  
04/22/96  06/04/96  Cornerstone Natural Gas Co     28.00             29.73          100.00          134.15           182.35  
05/03/96  03/17/98  Homeowners Group Inc           22.07             26.77           93.88          135.43            17.71  
05/06/96  09/03/96  Transcisco Industries Inc      15.56             36.84           28.40           57.58           271.43  
05/07/96  09/03/96  NMR of America Inc             41.43             86.79           90.39           98.08            37.56  
05/13/96  08/30/96  MDT Corp                       12.82             22.22            4.76           15.79            (6.38) 
05/15/96  09/10/96  Carlisle Plastics Inc          38.20             38.20           41.83           73.94            31.51  
06/03/96  01/09/97  Bio-Dental Technologies Corp   64.99             43.28          109.42          194.49            65.09  
06/10/96  07/22/96  SysteMed Inc                   (4.00)             4.35            9.09          (23.81)          (56.36) 
06/11/96  09/03/96  Computer Identics Corp         63.11             54.53           54.53           72.71            19.84  
06/17/96  10/07/96  Scanforms Inc                  61.40             61.40           58.62           70.37           130.00  
06/21/96  08/23/96  Computer Identics Corp         28.33             46.67           71.11          105.33           208.00  
06/24/96  12/05/96  MEM Co                         13.21             81.82           90.48           93.55           114.29  
07/31/96  11/13/96  Calgene Inc                    64.10             80.28           39.13           31.96            14.29  
08/13/96  02/27/97  LaTex Resources Inc           181.14            202.77          181.14          228.00           107.16  
09/10/96  01/03/97  GreenStone Industries Corp     33.33             52.73           58.49           42.37            50.00  
09/11/96  03/04/97  Chempower Inc                  48.06             48.06           45.88           50.30            65.33  
09/16/96  12/06/96  Proler International Corp     132.26            125.00          148.28           33.33             9.09  
09/26/96  01/24/97  General Physics Corp           16.57             31.61           36.00           23.64            45.71  
10/02/96  12/27/96  Software Publishing Corp       14.86             10.90           60.80          (88.09)                  
10/03/96  11/12/97  Pittencrieff Communications     8.95             14.40           30.74          (13.08)           29.14  
10/04/96  12/31/96  Pet Food Warehouse Inc         22.93             26.00           48.24           48.24            57.50  
10/30/96  12/20/96  Pacific Rehab & Sports Med     67.74             62.50           48.57           60.00             6.12  
11/05/96  03/14/97  Panatech Research &                                                                      
Development                    55.56             55.56           51.35                                   
11/25/96  02/28/97  American Studios Inc           90.48            110.53          166.67          (65.28)          (73.33) 
12/06/96  03/18/97  MaxServ Inc (Sears Roebuck)    19.23             67.57           55.00           67.57           129.63  
12/09/96  02/28/97  Houston Biotechnology Inc      52.00             62.13           52.00          (93.01)          (92.05) 
01/24/97  07/02/97  INCSTAR Corp (Sorin                                                                      
Biomedical)                    42.93             53.21           68.53                                   
01/28/97  05/21/97  Calgene Inc (Monsanto Co)      62.03             60.00           60.00           60.00            42.22  
01/30/97  08/12/97  AST Research Inc               16.76              8.00           20.00           23.43           (31.43) 
02/07/97  08/01/97  MS Financial (MS Diversified)  20.00             46.67           10.00            1.54           (70.67) 
02/11/97  07/31/97  Serv-Tech Inc                  32.00             60.00           88.57          129.57            12.34  
03/04/97  06/27/97  Audio King Corp                60.00             68.00           68.00           68.00           (18.05) 
04/15/97  06/30/97  Kurzweil Applied Intelligence  83.83             69.69           66.49           84.00            63.56  
04/30/97  07/25/97  Arden Industrial Products Inc  41.18             50.00           37.14           20.00            26.32  
05/01/97  08/01/97  Cryenco Sciences Inc           69.23             76.00           72.55           41.94           (26.67) 
05/08/97  09/10/97  Imex Medical Systems Inc        7.90              2.76            2.76          (30.32)          (32.50) 
06/16/97  09/30/97  Frederick's of Hollywood, Inc  48.85             44.47           25.95           93.75            85.07  
06/24/97  07/25/97  Jillians Entertainment Corp    14.29             77.78           45.46          220.00           166.67  
07/23/97  12/02/97  Rudy's Restaurant Group        50.94             70.21           72.04           60.00             5.26  
08/01/97  09/26/97  Community Care of America Inc  23.08             18.52           88.24           68.42           (48.39) 
08/07/97  12/02/97  Magnetic Technologies Corp     25.00             25.00           33.33           42.86            33.33  
08/14/97  12/31/97  Allied Capital Advisers Inc    10.41              4.68           10.41            8.97           (28.00) 
09/02/97  12/03/97  Ground Round Restaurants       10.00             10.00           (5.71)          14.78           (34.00) 
09/04/97  12/30/97  Cinergi Pictures Entertainment 26.90             24.75           56.60          236.00            26.00  
09/26/97  09/26/97  Laclede Steel Co              106.45            106.45          106.45          113.33            88.24  
10/10/97  01/07/98  Puro Water Group Inc           33.95             47.69           44.00           44.00                   
10/13/97  03/19/98  Integrated Brands Inc          69.94            106.35          167.50          501.33           381.07  
11/03/97  02/25/98  Individual Inc                  0.92             14.93           (7.02)          47.71            (6.00) 
11/04/97  01/12/98  ComputerVision Corp            28.31             69.92           18.63           14.33           (55.09) 
11/12/97  03/03/98  PureTec Corp                   28.74             34.94           31.77          143.48            69.70  
11/24/97  01/07/98  General Host Corp              60.00             62.96           79.59           51.72            77.69  
12/02/97  03/17/98  Staodyn Inc                    47.38             47.38           89.49          100.45           152.95  
12/12/97  02/13/98  Impact Systems Inc             57.14             49.15           44.26           69.23           109.52  
12/12/97  09/10/98  Timber Lodge Steakhouse Inc    74.13             74.13           81.19           94.32           139.43  
12/15/97  02/24/98  MetroGolf Inc                  20.00             20.00          (11.11)         (25.00)          (75.51) 
12/22/97  05/20/98  Artistic Greetings Inc         28.45             47.10           52.00           47.10            21.60  

Page F-10

SUMMARY OF GAS UNITS OUTSTANDING
PRE-FINANCING ASSUMPTIONS

- -----------------------------------------------------------------------------------------------------------------------
Distributed to Oil            Issued to Oil
--------------------        --------------------
Type of Units           Current         Public      Insiders        Public      Insiders       Retired        Pro Forma
- --------------          -------         ------      --------        ------      --------       -------        ---------

Common                    3,832              -             -             -             -             -            3,832    
Senior Subordinated           -              -             -         2,738           559             -            3,297 
Subordinated              2,396              -           754             -             -         1,642              754 
General Partner (a)         127              -           127             -           168             -              295
--------                                                                               --------- 
6,355                                                                                   8,178

___________________________________
(a)  The number of GP units issued reflect the assumption of a 6,587 common unit
equity offering to refinance certain of the assumed Oil debt.  Hence, the
number of GP units reflected in the pro forma column do not equal 2% of the
pro forma outstanding units shown above but do equal exactly 2% of the pro
forma units outstanding on a post financing basis.

Page 7

EQUITY PURCHASE PRICE CALCULATION
IMPLIED EQUITY VALUE OF OIL'S ASSETS
(units in thousands, $ in millions, except per unit amounts)
- --------------------------------------------------------------------------------

Purchase Price of Oil's Equity                      Purchase Price of Oil's Equity   
------------------------------         --------------------------------------------------------
Value of Securities               Equity Value of Oil's       Value of Oil's GP and      
Event                                     Paid to Oil Shareholders           Heating Oil Assets          Subordinated Units in Star 
- ------------------                  ------------------------------         ------------------------      -------------------------- 

Issuance of Senior Subordinated       
Units to Public Oil Shareholders             2,738  x  $19.74                       
------------------------------       
$54.1                               $54.1                                   -     

Distribution of General Partner  
Unit to Inside Oil Shareholders                127  x  $21.28                        
------------------------------
$2.7                                   -                                $2.7 

Distribution of Subordinated     
Units to Inside Oil Shareholders               754  x  $16.33                          
------------------------------   
$12.3                                 -                               $12.3  

Issuance of General Partner                    
Units to Inside Oil Shareholders               168  x  $21.28                       $3.6                                    -
------------------------------       
$3.6

Issuance of Senior Subordinated 
Units to Inside Oil Shareholders               559  x  $19.74 
------------------------------      
$11.0                             $11.0                                   -

Retire Subordinated Units                                                                                         1,642  x  $16.33
---------------------
($26.8)                             $26.8 

$41.8                              $41.8
-----------                              ------------------------------------
Total                                           $83.7                                                $83.7

Divided by 26.563 shares of Oil's Common stock = $3.15  per share

Page 8

SUMMARY OBSERVATIONS 

COMPARATIVE STOCK 
PRICE PERFORMANCE  [_] A.G. Edwards has compared the historical prices of Gas'
and Oil's common unit/stock to an index of selected
companies. (See Appendix E - "Exchange Ratio Analysis.")

[_] While Gas' unit price has remained relatively flat over
the last two years, in line with the comparable index,
Oil's stock price has declined significantly over this
period.

COMPARATIVE STOCK PRICE PERFORMANCE                                         
----------------------------------------------------------------------------
Premium of Current Price to Price                       
-----------------------------------------------------------------------------
Current     2 Years     1 Year   180 Days   60 Days   30 Days
Price (b)     Prior       Prior    Prior      Prior     Prior 
-----------------------------------------------------------------------------

Gas             21.94         5.1%        1.4%    -2.0%     -6.2%      -0.3%   
Oil              1.63       -76.8%      -45.8%   -48.1%    -35.0%      -0.9%  
Composite (a)   21.96        -2.2%        6.4%    -5.4%     -4.4%       1.3%  

(a) Composite index includes the following companies: APU,
CNO, HPG, EGP, NPL, SPH.
(b) As of 4/22/98

[Gas Graph appears here]         [Oil Graph appears here]

Page 9

SUMMARY OBSERVATIONS
(continued)

PREMIUM PAID ANALYSIS         [_]  A.G. Edwards calculated the implied equity
purchase price of Oil and compared the premium to
Oil's current and historical prices. These
premiums were compared to premiums paid in "Merger
of Equals" transactions. (See Appendix D -"Premium
Paid Analysis.")

-------------------------------------------------------------------------

Mergers of Equals
------------------------- 
Oil     Median    Adj. Mean(a) 
---     ------   ------------- 

Premium to stock price one day prior      93.8%       9.3%           10.1%
Premium to stock price one week prior     97.6%      10.0%            8.0%
Premium to stock price one month prior   101.6%       6.5%            6.5% 

______________________
(a) Adjusted mean excludes highest and lowest data
points.

Page 10

SUMMARY OBSERVATIONS
(continued)

EXCHANGE RATIO ANALYSIS       [_]  A.G. Edwards reviewed the historical prices 
of Gas' and Oil's common unit/stock and the 
implied exchange ratio and compared them to 
the proposed Exchange Ratio of 6.96x, which 
represents the proposed Oil price of 
$3.15/share and Gas price of $21.94/unit. 
(See Appendix E - "Exchange Ratio Analysis.")

[_]  Due to the price decline of Oil's common 
stock over the past year, the current 
exchange ratio, based upon the current 
unit/share prices of Gas and Oil ($21.938 
and $1.625, respectively, as of April 22, 
1998), represents a premium of 93.8% to the 
current market price of Oil.

[_]  Relative to current prices, the exchange 
ratio at $3.15 is low, however, it is in 
line with the average prices of the 
companies' equity over the past two years.

[GRAPH APPEARS HERE]

Page 11

SUMMARY OBSERVATIONS
(continued)

TRANSACTION MULTIPLE ANALYSIS      [_]  A.G. Edwards calculated the implied
transaction multiple paid for Oil on a
firm valuation basis, including costs
and certain adjustments associated with
the Transaction, and arrived at the
following multiples:

EBITDA              Multiple
------              --------
1997 Adjusted              9.1x  
Adjusted 1998 Budget      10.2x  
1999 Projected             7.6x   

(See Appendix F - "Transaction Multiple
Analysis.")

[_]  A.G. Edwards calculated the implied
transaction multiple paid for Oil's
existing heating oil business, excluding
the valuation attributable to
consolidation opportunities, and arrived
at the following multiples:

EBITDA              Multiple
------              --------
1997 Adjusted              6.1x
Adjusted 1998 Budget       6.9x
1999 Projected             5.1x

(See Appendix F - "Transaction Multiple
Analysis.")

[_]  Oil has historically paid EBITDA
multiples averaging 4.5x, with a range
of 2.7x to 6.5x, for its acquisitions.

[_]  Gas has historically paid EBITDA
multiples averaging 7.0x, with a range
of 5.1x to 7.3x, for its acquisitions.

Page 12

SUMMARY OBSERVATIONS
(continued)

RELATIVE CONTRIBUTION ANALYSIS     [_]  A.G. Edwards reviewed and compared the 
relative contribution of Gas and Oil
to the pro forma combined equity based 
upon 1996, 1997, 1998E and 1999E 
EBITDA. (See Appendix G - "Relative 
Contribution Analysis") Other measures 
of relative contribution analysis were 
non-meaningful.

[_]  For Gas' contribution of approximately 
34% of the combined entity's EBITDA(a), 
it will receive approximately 37% of 
the implied firm value.

[GRAPHS APPEAR HERE]

_____________________________________________
(a)  For purposes of its analysis, A.G.
Edwards converted Oil's historical
December 31st fiscal year-end to a
September 30th fiscal year-end for
comparison purposes. Oil's projections
are based on a December 31st calendar
year end. Other measures of relative
contribution analysis are non-
meaningful.
(b)  Includes only heating oil EBITDA for
Oil.
(c)  Firm value for all of Oil.
(d)  Implied firm value of only Oil's heating
oil assets.

Page 13

Summary Observations
(continued)

Accretion/Dilution Analysis

[_]  A.G. Edwards reviewed the distributable cash
flow per unit and the related accretion, common
unit coverage and total unit coverage on a pro
forma basis (See Appendix H -
"Accretion/Dilution Analysis").

[_]  For the purpose of this analysis, A.G. Edwards
had PaineWebber run its pro forma financial
model for six scenarios to determine the
sensitivity of certain assumptions.

Base Case                
-----------------------------     
4.1% Attrition                     
Gas      $0.01 Margin growth                

Stand-alone  $30.0mm at 4.75x Acquisitions      
-----------  -----------------------------    

DCF per unit                                    
1998E (a)           $1.270         $1.570  
1998N (b)            1.930          2.190  
1999P                2.250          3.200  

Accretion/Dilution                              
1998E (a)                            23.6% 
1998N (b)                            13.5% 
1999P                                42.2% 

Common unit coverage                            
1998E (a)             0.94x          0.99x 
1998N (b)             1.42           1.38  
1999P                 1.66           1.93  

Total unit coverage                             
1998E (a)             0.58x          0.71x 
1998N (b)             0.88           0.99  
1999P                 1.02           1.39  

Sensitivity Cases                 
-----------------------------------------------------

Attrition        Margin Growth      Acquisitions 
---------------     ----------------    -------------
6.00%     2.00%     $0.000    $0.015    $50mm at 5.75
-----     -----     ------    ------    -------------

DCF per unit            
1998E (a)                         $1.570    $1.570    $1.570    $1.570         $1.570  
1998N (b)                          2.190     2.190     2.190     2.190          2.190  
1999P                              3.080     3.330     2.910     3.350          3.480  

Aceration/Dilution
1998E (a)                           23.6%     23.6%     23.6%     23.6%          23.6% 
1998N (b)                           13.5%     13.5%     13.5%     13.5%          13.5% 
1999P                               36.9%     48.0%     29.3%     48.9%          54.7% 

Common Unit Coverage
1998E (a)                           0.99x     0.99x     0.99x     0.99x          0.99x 
1998N (b)                           1.38      1.38      1.38      1.38           1.38  
1999P                               1.86      2.01      1.76      2.02           2.10   

Total Unit Coverage
1998E (a)                           0.71x     0.71x     0.71x     0.71x          0.71x  
1998N (b)                           0.99      0.99      0.99      0.99           0.99   
1999P                               1.34      1.45      1.26      1.45           1.51   

High Case
----------------------------
4.1% Attrition               
$0.015 Margin growth          
$50mm at 5.75x Acquisitions 

DCT per unit                                         
1998E (a)                               $1.570  
1998N (b)                                2.190  
1999P                                    3.640  

Accretion/Dilution                                   
1998E (a)                                 23.6% 
1998N (b)                                 13.5% 
1999P                                     61.8% 

Common unit coverage                                 
1998E (a)                                 0.99x 
1998N (b)                                 1.38  
1999P                                     2.20  

Total unit coverage                                  
1998E (a)                                 0.71x 
1998N (b)                                 0.99  
1999P                                     1.58   

__________________
(a) 1998 estimate assumes no acquisitions for either
company, and is adjusted to reflect actual results
through 3/31/98 .

(b)  1998 budgeted.
Page 14

Summary Observations
(continued)

Public Company Analysis

[_]  A.G. Edwards compared certain financial and market information of Gas on
both a stand-alone and pro forma basis to that of certain public master
limited partnerships (See Appendix I -- Public Company Analysis").

Public Comparable Companies (a)

- --------------------------------------------------------------------------------------------------------------- 
Public              Public    
Pro forma          Company             Company   
Gas               Gas              Medians             Ranges     
- --------------------------------------------------------------------------------------------------------------- 

Yield                                        10.0%           10.5%               9.6%             8.5% to 10.6%
Firm value/LTM EBITDA                        12.7x (b)       10.8x (b)          12.5x             9.8x to 16.7x  
Firm value/1998 normalized EBITDA             8.7x (c)        7.9x (c)          11.5x            10.3x to 13.7x   
Equity Market Cap/LTM DCF                    18.0x (d)       14.0x (d)          15.7x             9.4x to 25.5x
Equity Market Cap/1998 normalized DCF         9.7x (e)        7.5x (e)          13.9x            11.6x to 16.9x   
LTM common unit coverage                      0.9x (f)        1.0x (f)           1.4x             0.6x to 1.5x
1998E common unit coverage                    1.7x (g)        1.8x (g)           1.4x             0.9x to 1.9x  
LTM total unit coverage                       0.6x (h)        0.7x (h)           0.7x             0.4x to 1.0x
1998E total unit coverage                     1.0x (i)        1.3x (i)           0.7x             0.7x to 1.0x
- --------------------------------------------------------------------------------------------------------------- 

(a)  Public comparable companies include: APU, CNO, FGP, HPG, CNL and SPH       
(b)  Firm value/adjusted 1998 budget EBITDA.
(c)  Firm value/1999 estimated EBITDA.
(d)  Equity market cup/adjusted 1998 budget EBITDA.
(e)  Equity market cap/1999 estimated DCF.
(f)  Adjusted 1998 budget.
(g)  1999 estimates.
(h)  Adjusted 1998 budget.
(i)  1999 estimates.

Page 15

Summary Observations
(continued)

DISCOUNTED CASH
FLOW ANALYSIS       [_]  A.G. Edwards calculated the implied present value of
estimated unlevered free cash flows for Gas on both a
stand-alone and pro forma basis (See Appendix J --
"Discounted Cash Flow Analysis").

[_]  Key assumptions used in the analysis were:

-    Oil maintaining a flat 4.1% attrition rate;
relatively no margin improvement; and completing
$30 million in acquisitions each year at a 4.75x
EBITDA multiple.

-    A 7.9% weighted average cost of capital for both
cases. (See Appendix B, page 24 and Appendix K,
page 57).

-    A 10.2x terminal EBITDA multiple, representing the
current year normalized EBITDA.

DISCOUNTED CASH FLOW
--------------------------------------------------------------------------------------------
Net Present     Original        Equity value
Present     Current         Value      Common units/      to Original
($ in thousands)     Value    Net Debt (a)    of Equity   Total units (b)  Common Units (c)
--------------------------------------------------------------------------------------------

Pro Forma           $970,827   ($297,334)     $673,493        26.0%           $174,793
Gas Stand-alone     $329,620   ($102,956)     $226,664        60.3%           $136,669 
----------

Increase in value to original common unit holders:       $ 38,124
==========

____________________________________________________
(a) Represent total projected debt less cash as of 9/30/98.
(b) Total units include common, subordinated and GP units.
(c) Current market value of common units is $84,065.

Page 16

SUMMARY OBSERVATIONS
(continued)

POTENTIAL 
QUALITATIVE
ADVANTAGES AND
DISADVANTAGES TO
GAS UNITHOLDERS

Advantages                         Disadvantages
----------                         -------------

.   Geographic diversification      .   Market perception of heating oil

.   Product diversification         .   Impact of attrition on growth

.   Critical mass                   .   MQD reserves & coverage
-acquisition programs
-economies of scale             .   Institutional ownership
-investor profile
-cross marketing                .   Potential for NYSE listing

.   Market liquidity

Page 17

PRELIMINARY REPORT TO GAS' SPECIAL COMMITTEE

[_]  A.G. Edwards has initiated a full diligence review of
Oil and has updated its earlier reviews of Gas,
including: visits to corporate headquarters; meetings
with senior operations and financial officers; review
of financial statements, projections, documents and
information; evaluation and revision of alternative
modeling of the Transaction with Oil's financial
advisor; visit to Long Island calling center and
meeting with Oil's former consultant and now Vice
President; meeting with A.G. Edwards' equity research
analyst covering MLP's; and other relevant inquiries
regarding operations, acquisitions, financings and
other matters.

[_]  A.G. Edwards preliminary diligence and work has
resulted in certain tentative conclusions and
observations regarding Oil and Gas which differ from
its original expectations and perceptions, including:

-  the anemic heating season in first quarter of
calendar 1998 had a greater adverse impact on Gas
than on Oil;

-  Oil has made strides to implement key portions of
Oil's plan and the McKinsey report, including
corporate identification, customer communications
and implementation of a service culture,
regionalization, cross marketing arrangements and
rationalization of the management team;

-  although the El Nino affect distorted the first
quarter of 1998, Oil's attrition was moderated and
its pricing strategy was enhanced; and

-  Gas has demonstrated an ability to make propane
acquisitions on a tuck-in and market expansion
basis, and has already agreed to acquire a heating
oil business.

Page 18

PRELIMINARY REPORT TO GAS' SPECIAL COMMITTEE
(continued)

[_]  Although A.G. Edwards does not presently have an
adequate basis to form any opinion regarding the
Transaction, A.G. Edwards does recommend that the
Special Committee and its advisors proceed with its
careful consideration and evaluation of the proposed
Transaction.

[_]  A.G. Edwards requests that Joel Swanson, Esq. and Baker
& Botts, LLP consult with Oil's attorneys regarding the
proposed resolution of the myriad of legal issues
involving tax, partnership and corporate compliance and
the timing of the documentation of the Transaction in
terms of definitive agreements, proxy statements and
the like.

[_]  A.G. Edwards perceives Gas as taking appropriate steps
to assure procedural fairness of the Transaction
including the appointment of the Special Committee, the
engagement of counsel and financial advisor and the
approval of the Transaction by the majority of
Unitholders. The Special Committee should consider
whether Oil should be obligated to take parallel action
to assure procedural fairness.

Page 19

PRELIMINARY REPORT TO GAS' SPECIAL COMMITTEE
(continued)

[_]  A.G. Edwards suggests that the Special Committee's
consideration of substantive fairness to the Common
Unitholders should include an evaluation by the Special
Committee and its advisors of:

-  whether Gas' partnership agreement should be amended
to raise the future required minimum quarterly
distribution ("MQD") for common unitholders and, if
so, by how much and for what period(s);

-  whether the $3.15 exchange ratio should be lowered
and, if so, by how much;

-  whether the definitive agreements should be drafted
consistent with the PaineWebber models so that any
excess funds expended by Oil for debt refinancings
and the Transaction fees in general should
automatically reduce the aggregate consideration
paid by Gas for the acquisition of Oil by an equal
amount;

-  whether cash balances should be set aside for (a)
the funding of any unearned MQD to be paid to the
new unitholders, (b) the funding of Gas' surplus
balance to account for the addition of new
outstanding units, and (c) the funding of any off-
balance sheet liabilities, such as pension or tax;

-  whether cash payments should be required for the
issuance of new general partner interests and, if
so, by how much; and

-  such other issues suggested by the members of the
Special Committee and its counsel.

[_]  A.G. Edwards recommends that the Special Committee
communicate suggested revisions of the Transaction to
management of Oil for their consideration.

Page 20

Appendices to

PRELIMINARY REPORT TO
THE SPECIAL COMMITTEE OF GAS

A.G. EDWARDS & SONS, INC.
INVESTMENT BANKING 

April 28, 1998

TABLE OF CONTENTS

Appendices
----------

Overview of Oil......................................       A

Overview of Gas......................................       B

Pro Forma Ownership Analysis.........................       C

Premium Paid Analysis................................       D

Exchange Ratio Analysis..............................       E

Transaction Multiple Analysis........................       F

Relative Contribution Analysis.......................       G

Accretion/Dilution Analysis..........................       H

Public Company Analysis..............................       I

Discounted Cash Flow Analysis........................       J

Capital Structure Analysis...........................       K

PaineWebber Models as of 4/24/98.....................       L

OVERVIEW OF OIL

[_]  Oil is the largest retail distributor of home heating oil in the United
States, serving approximately 350,000 customers in the Northeast and Mid-
Atlantic states, including the metropolitan areas of Baltimore, Boston, New
York City and Washington, D.C.

[_]  Since 1979 Oil has been the principal consolidator in the industry, having
acquired 188 retail heating oil distributors. As a result of these
acquisitions, heating oil volume sold has increased from 59.4 million
gallons in 1980 to 410.3 million gallons in 1997.

[_]  Despite Oil's size, its customer base represents only approximately 5% of
the residential home heating oil customers in the Northeast, uniquely
positioning the company to continue its strategy of growth through
acquisitions.

[_]  Oil's strongest competitive advantage is clearly its size, particularly in
relation to its competitors. Oil's size provides it significant
opportunities not afforded to most of the industry's small, local, family-
owned businesses. These opportunities include attracting and retaining a
professional management team, accessing and maintaining the latest
developments in computer and communications technology, and achieving
significant operating and marketing efficiencies.

[_]  Oil's primary goals currently include: reducing operating costs and
increasing profitability; reducing customer attrition through a focus on
attracting new customers (better structured, upgraded sales force, brand
image, cross marketing agreements) and retaining existing customers
(improving service and having all employees function as salespeople); and,
given the financial wherewithal, exploit its ability to further consolidate
the home heating oil market.

Page 1

Overview of Oil
Summary Financial Analysis
($ in thousands, except per share data)

- --------------------------------------------------------------------------------------------------------------------
State of Incorporation:     Minnesota                             Market Price (4/22/98):               $1.625   
Headquarters:               Stamford, CT                          52-Week High - Low:             $3.875 - 1.438
Auditors:                   KPMG Peat Marwick LLP                 Shares Outstanding:                   26,563   (a) 
Primary Exchange:           NASDAQ                                Most Recent Fiscal Year End:         12/31/97
Primary Area of Focus:      Northeast and Mid-Atlantic U.S.

Selected Data
- --------------------------------------------------------------------------------------------------------------------
Total                       Net Loss            Loss             Distributable      DCF        Acquisition
Year        Revenues    EBITDA (c)       to Common          per Share          Cash Flow (d)    per Share        CapEx.
- -----------------------------------------------------------------------------------------------------------------------------------

1994       $ 546,677    $ 55,387         ($7,776)          ($0.36)             $ 28,020          $ 1.29          $ 26,411
1995         609,507      56,753         (26,742)           (1.06)               14,461            0.57            26,438
1996         608,161      42,070         (30,704)           (1.20)                6,158            0.24            28,493
1997         548,141      36,010         (27,543)           (1.06)                  842            0.03            16,252 
Proj- 1998 (e)                 38,500
Proj- 1999 (e)                 51,657

- --------------------------------------------------------------------------
BOOK CAPITALIZATION
- --------------------

(12/31/97)
----------- 
Total Debt (b)                                             $  331,004  
Total Stockholders' Equity                                   (177,033)
-----------
TOTAL                                                 $  153,971 
===========

ESTIMATED FIRM VALUE
- --------------------
Market Value of Total Debt (b)                             $  314,473 
Market Value of Common (f)                                     43,347
-----------
TOTAL                                                 $  357,819
===========

Less: Cash and Equivalents (g)                                 11,740 
NET FIRM VALUE                                        $  346,079
=========== 

MULTIPLE ANALYSIS
- -----------------
CURRENT

Net Firm Value/ 97A EBITDA:                                       9.6X
Net Firm Value/ 98E EBITDA:                                       9.0 
Net Firm Value/ 99E EBITDA:                                       6.7

PROPOSED $3.15 PRICE
Net Firm Value/ 97A EBITDA:                                      11.1X
Net Firm Value/ 98E EBITDA:                                      10.3 
Net Firm Value/ 99E EBITDA:                                       7.7

- --------------------------------------------------------------------------

- ------------------------------------------
(a)  Includes Class A, B and C shares.
(b)  Includes debt and redeemable and exchangeable preferred stock.
(c)  EBITDA is defined as gross profit less SG&A expenses and direct delivery 
expense.
(d)  Represents EBITDA less interest expense, maintenance capital expenditures, 
and cash taxes.
(e)  Source: management's projections; 1998 EBITDA is before acquisitions, 
adjusted for actual 1Q results. See pages 9 to 13.
(f)  Calculated based on (Class A + Class C* market price) + [(Class B* 
($17.50+$0.2763)]
(g)  Includes balance in the cash collateral account which is required by the 
company's credit agreement.

Page 2

OVERVIEW OF OIL
SELECTED FINANCIAL DATA
($ IN THOUSANDS)

====================================================================================================================
HISTORICAL YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------
1993       %      1994(a)      %       1995(a)    %        1996       %       
- --------------------------------------------------------------------------------------------------------------------

Net sales                           $538,526  100.0%   $546,677   100.0%   $609,507  100.0%    $608,161   100.0%  
% Growth                                                   1.5%               11.5%               -0.2%          
Cost of sales                        366,810   68.1%   $362,981    66.4%    387,825   63.6%     427,388    03.3   
---------------     ---------------     --------------      ---------------
Gross profit                         171,717   31.9%    183,696    33.6%    221,682   36.4%     180,773    29.7%  
SG&A expenses                         93,379   17.3%     95,314    17.4%    128,295   21.0%     105,601    17.4%  
Direct delivery expense               29,902    5.6%     32,995     6.0%     36,634    6.0%      33,102     5.4%  
Restructuring charges                      -                  -                   -               1,150     0.2%  
Corporate identity expenses                -                  -                   -               2,659     0.4%  
Pension curtailment expense                -                  -                   -                 557     0.1%  
Amortization of customer lists        23,183    4.3%     19,748    3.6%      20,527    3.4%      18,611     3.1%  
Depreciation of plant and equipment    5,933    1.1%      6,469    1.2%      12,374    2.0%       6,574     1.1%  
Amortization of deferred charges       5,548    1.0%      6,177    1.1%       6,142    1.0%       4,760     0.8%  
Provision for supplemental benefits      264    0.0%        373    0.1%       1,407    0.2%         873     0.1%  
---------------     --------------      --------------      ---------------
Operating income (loss)               13,509    2.5%     22,619    4.1%      16,303    2.7%       6,886     1.1%  
Interest expense, net                (20,508)  -3.8%    (23,766)  -4.3%     (38,792)  -6.4%     (32,412)   -5.3%  
Other income (expense)                  (165)   0.0%        109    0.0%         218    0.0%       1,842     0.3%  
---------------    ---------------     ---------------     ----------------   
Loss before income taxes, equity                                                                                  
interest and extraordinary item     (7,164)  -1.3%     (1,038)  -0.2%     (22,271)  -3.7%     (23,684)   -3.9%  
Income taxes                             400    0.1%        600    0.1%         500    0.1%         500     0.1%  
---------------    ---------------     ---------------     ----------------   
Loss before equity interest and                                                                                   
extraordinary item                  (7,564)  -1.4%     (1,638)  -0.3%     (22,771)  -3.7%     (24,184)   -4.0%  
Share of income (loss) of Gas              -    0.0%     (1,973)  -0.4%         728    0.1%       2,283     0.4%  
---------------    ---------------     ---------------     ----------------   
Extraordinary item-loss on early                                                                                  
extinguishment of debt                (867)  -0.2%       (655)  -0.1%      (1,436)  -0.2%      (6,414)   -1.1%  
---------------    --------------      ---------------     ----------------   
Net loss                              (8,431)  -1.6%     (4,266)  -0.8%     (23,479)  -3.9%     (28,315)   -4.7%  
Preferred stock dividends             (3,367)  -0.6%     (3,510)  -0.6%      (3,263)  -0.5%      (2,389)   -0.4%  
---------------    ---------------     ---------------     ----------------   
Net loss to common                  ($11,798)  -2.2%    ($7,776)  -1.4%    ($26,742)  -4.4%    ($30,704)   -5.0%  
========  =====    ========   ====     ========   ====     ========    ====   
Net loss per share                    ($0.55)            ($0.36)             ($1.06)             ($1.20)          
========           ========            ========            ========           
Weighted average shares                                                                                           
outstanding(b)                      21,538             21,745              25,309              25,581           

EBITDA(c)                            $48,437    9.0%    $55,387   10.1%     $56,753    9.3%     $42,070     6.9%  
Adjusted net loss to common          (10,931)  -2.0%(d)  (7,121)  -1.3%(e)  (25,306)  -4.2%(f)  (22,583)   -3.7%(g)  

Adjusted net loss per share           ($0.51)            ($0.33)             ($1.00)             ($0.88)          
========           ========            ========            ========           
Acquisition capital expenditures     $15,399            $26,411             $26,438             $28,493           
Maintenance capital expenditures(i)    3,000              3,000               3,000               3,000           
EBITDA/total assets                     18.9%              13.9%               15.9%               15.3%          
Distributable cash flow               24,528             28,020              14,461               6,158           

1997     %
---------------

Net sales                                       $548,141  100.0%
% Growth                                           -9.9%       
Cost of sales                                    379,748   69.3%
---------------
Gross profit                                     168,393   30.7% 
SG&A expenses                                    102,377   18.7%
Direct delivery expense                           30,006    5.5%
Restructuring charges                              2,850    0.5%
Corporate identity expenses                        4,136    0.8%
Pension curtailment expense                          654    0.1%
Amortization of customer lists                    17,903    3.3%
Depreciation of plant and equipment                7,204    1.3%
Amortization of deferred charges                   4,639    0.8%
Provision for supplemental benefits                  565    0.1%
---------------
Operating income (loss)                           (1,941)   4.0%
Interest expense, net                            (31,668)  -5.8%
Other income (expense)                            11,445    2.1%
--------------- 
Loss before income taxes, equity                                
interest and extraordinary item                (22,164)  -4.0%
Income taxes                                         500    0.1%
--------------- 
Loss before equity interest and                           
extraordinary item                             (22,664)  -4.1%
Share of income (loss) of Gas                       (235)   0.0%
--------------- 
Extraordinary item-loss on early                    
extinguishment of debt                               -        
---------------
Net loss                                         (22,899) -4.2%
Preferred stock dividends                         (4,644) -0.8%
-------------- 
Net loss to common                              ($27,543) -5.0%
========  ==== 
Net loss per share                                ($1.06)      
========
Weighted average shares                                   
outstanding(b)                                  26,039       

EBITDA(c)                                        $36,010   6.6%   
Adjusted net loss to common                      (35,439) -6.5%(b) 

Adjusted net loss per share                       ($1.36)      
========       
Acquisition capital expenditures                 $16,252       
Maintenance capital expenditures(i)                3,000       
EBITDA/total assets                                 14.5%      
Distributable cash flow                              842        

__________________________________________________
(a) Gas operations consolidated into OIL.
(b) Weighted shares do not include Class B shares.
(c) Calculated as gross profit minus SG&A expense and direct delivery expense.
(d) Excludes $867 for early extinguishment of debt.
(e) Excludes $655 for early extinguishment of debt.
(f) Excludes $1,436 for early extinguishment of debt.
(g) Excludes $6,414 for early extinguishment of debt.
(h) Excludes $11,400 gals on sale of TLC.
(i) Management's estimates.

Page 3

OVERVIEW OF OIL
MARKET PRICE ANALYSIS

PRICE AND VOLUME
12/15/95 - 4/22/98

[GRAPH APPEARS HERE]

Page 4

OVERVIEW OF OIL
CLASS A COMMON STOCK TRADING HISTORY - VOLUME DISTRIBUTION
1995 - 1998 (a)

- ------------------------------------------------------------------------------------------------------------------------------------
1995                 1996                1997              1998 (a)
--------------------  -------------------  ------------------  --------------------
Price Per Share        Volume        %     Volume          %     Volume        %     Volume         %
----------------------  --------------------  -------------------  ------------------  --------------------

Greater Than  $9,400
9.200   9,400        600  100.00%   
9.000   9,200          0   99.99%
8.800   9,000     49,200   99.99%
8.600   8,800      6,800   99.41%
8.400   8,600     67,500   99.33%
8.200   8,400    289,100   98.54%
8.000   8,200    161,500   95.13%       1,600   100.00%
7.800   8,000    873,500   93.22%      47,400    99.96%
7.600   7,800    245,800   82.92%     236,200    98.87%
7.400   7,600    193,300   80.02%     185,000    93.44%
7.200   7,400  1,154,800   77.74%     822,300    89.19%
7.000   7,200  5,190,500   64.12%   1,507,100    70.28%
6.800   7,000    246,000    2.90%     815,300    35.63%
6.600   6.800                         498,500    16.88%
6.400   6.600                         129,300     5.42%    417,300  100.00%
6.200   6.400                          37,600     2.45%    526,900   96.34% 
6.000   6.200                          44,100     1.58%    417,700   91.72% 
5.800   6.000                          24,700     0.57%    110,200   88.06% 
5.600   5.800                                              868,000   87.09% 
5.400   5.600                                              143,300   79.48% 
5.200   5.400                                               92,600   78.22% 
5.000   5.200                                              940,500   77.41%  
4.800   5.000                                              142,200   69.16% 
4.600   4.800                                               20,200   67.92%
4.400   4.600                                               13,900   67.74%
4.200   4.400                                                 -      67.62%
4.000   4.200                                                 -      67.62%
3.800   4.000                                              117,100   67.62%
3.600   3.800                                              370,600   66.59%
3.400   3.600                                              250,900   63.34% 
3.200   3.400                                            1,236,200   61.14%
--------------------------------------------------------------------------------------------------------
PROPOSED EXCHANGE PRICE           3.000   3.200                                            1,652,500   50,30%    
--------------------------------------------------------------------------------------------------------
2.800   3.000                                            2,785,300    35.1%    130,000   100.00%
2.600   2.800                                              788,500   11.39%    249,100    96.12%
2.400   2.600                                              430,100    4.47%    270,800    88.69%
2.200   2.400                                               79,800    0.70%  1,044,100    80.61%
2.000   2.200                                                                  357,500    49.45%
1.800   2.000                                                                  311,500    38.78%
--------------------------------------------------------------------------------------------------------
CURRENT PRICE                     1.600   1.800                                                                  277,900    29.48%
--------------------------------------------------------------------------------------------------------
1.400   1.600                                                                  710,000    21.19%
Less Than  $1.400 

----------           ----------          -----------          ----------
Total Stock for Period                   8,478,600            4,349,500           11,403,800           3,350,900     
Cumulative % of Total Traded                         30.74%                15.77%             41.34%                12.15%
% Traded of Current Stock Out (b)                    35.39%                18.16%             47.61%                13.99% 
% Traded of Current Float (c)                        70.15%                35.99%             94.36%                27.73%
Wtd. Average Stock Price                     $7.31                $7.07                $3.90               $2.09

- ---------------------------------------------------------------------
1995 - 1998 (a)     
--------------------
Price Per Share        Volume        %  
----------------------  --------------------

Greater Than  $9,400
9.200   9,400        600  100.00%  
9.000   9,200        -    100.00%
8.800   9,000     49,200  100.00%
8.600   8,800      6,800   99.82%
8.400   8,600     67,500   99.79%
8.200   8,400    289,100   99.55%
8.000   8,200    163,100   98.50%  
7.800   8,000    920,900   97.91%  
7.600   7,800    482,000   94.57%  
7.400   7,600    378,300   92.82%  
7.200   7,400  1,977,100   91.45%  
7.000   7,200  6,697,600   84.29%  
6.800   7,000  1,061,700   60.00%  
6.600   6.800    498,500   56.15%  
6.400   6.600    546,600   54.35%        
6.200   6.400    564,500   52.37%                
6.000   6.200    461,800   50.32%                
5.800   6.000    134,900   48.64%         
5.600   5.800    868,000   48.16%         
5.400   5.600    143,300   45.01%         
5.200   5.400     92,600   44.49%                
5.000   5.200    940,500   44.15%                
4.800   5.000    142,200   40.74%                
4.600   4.800     20,200   40.23%         
4.400   4.600     13,900   40.15%           
4.200   4.400        -     40.10%          
4.000   4.200        -     40.10%      
3.800   4.000    117,100   40.10%
3.600   3.800    370,600   39.68%               
3.400   3.600    250,900   38.34%                 
3.200   3.400  1,236,200   37.43%                  
-----------------------------------------
PROPOSED EXCHANGE PRICE           3.000   3.200  1,652,500   32.94%                 
-----------------------------------------
2.800   3.000  2,915,300   26.95%                 
2.600   2.800  1,037,600   16.38%                 
2.400   2.600    700,900   12.62%               
2.200   2.400  1,123,900   10.08%                 
2.000   2.200    357,500    6.01%                
1,800   2.000    311,500    4.71%              
-----------------------------------------
CURRENT PRICE                     1,600   1,800    277,000    3.58%              
-----------------------------------------
1,400   1,600    710,000    2.57%              
Less Than  $1,400 

-----------
Total Stock for Period                  27,582,800
Cumulative % of Total Traded                        100.00%  
% Traded of Current Stock Out (b)                   115.15%  
% Traded of Current Float (c)                       228.23%  
Wtd. Average Stock Price                     $5.13           

__________________
(a) Through April 22, 1998.
(b) Based on 23,954,560 Class A shares outstanding
(c) Based on 12,085,729 Class A shares by institutional and retail public 
holders.

Page 5

OVERVIEW OF OIL
SHAREHOLDER ANALYSIS (a)

================================================================================
Class A                        % Of Total
Institutions (b)                 Shrs. Held     % Of Total      Voting Power 
- ------------------------------   ----------     ----------      ------------ 

Dimensional Fund Adv.              621,000        2.6%              1.2%    
CNA Financial Group                410,900        1.7%              0.8%    
Barclays Bank plc                  353,178        1.5%              0.7%    
Deltec Asset Mgmt.                 250,810        1.0%              0.5%    
Frank Russell Company              236,386        1.0%              0.5%    
Wellington Management              224,905        0.9%              0.5%    
Vanguard Group                     215,500        0.9%              0.4%    
Fleming Overseas                   202,611        0.8%              0.4%    
Bear, Stearns & Co.                167,231        0.7%              0.3%    
Fidelity Management                118,700        0.5%              0.2%    
Mellon Bank                        115,243        0.5%              0.2%    
Northern Trust                      85,611        0.4%              0.2%    
ANB Investment Mgmt.                51,100        0.2%              0.1%    
Prudential Insurance                47,300        0.2%              0.1%    
World Asset Management              23,937        0.1%              0.0%    
IBM Retirement Funds                16,300        0.1%              0.0%    
Miss Pub-Dom Eq                      4,600        0.0%              0.0%    
DLJ Corp.                            3,086        0.0%              0.0%    
Beck, Mack & Oliver                  3,000        0.0%              0.0%    
Legg Mason                           2,000        0.0%              0.0%     
----------     ----------      ------------  
All Institutions (c)             3,153,398       13.2%              6.3%   

Class A                 Class C              
Directors And Officers (C)       Title                                  Shrs. Held  % Of Total  Shrs. Held  % Of Total     
- -----------------------------    -------------------------------------  ----------  ----------  ----------  ----------       

Audrey L. Sevin                  Director and Secretary of Oil and Gas  1,876,863      7.8%       477,716      18.4%     
Irik P. Sevin                    Chairman, CEO and Director of Oil        740,438      3.1%       201,641       7.8%     
Phillip Ean Cohen                Director of Oil                          679,262      2.8%       113,423       4.4%     
Thomas J. Edelman                Director of Oil and Gas                  653,312      2.7%       129,019       5.0%     
Vincent De Palma                 VP and GM of New York Region               5,000      0.0%             -       0.0%     
Hanseatic Corporation (d) (e)                                           1,777,279      7.4%       298,717      11.5%     
Tortosa (d)                                                                     -      0.0%       298,717      11.5%     
Wolfgang Traber (e)              Director of Oil and Gas                        -      0.0%         9,038       0.3%     
Paul Biddelman (e)               Director of Oil and Gas                    2,386      0.0%             -       0.0%     
----------  ----------  ----------  ----------   
Total Directors & Officers Holdings                                     5,734.540     23.9%     1,528,271      58.8%     

Class A                 Class C                
5% Beneficial Owners                                                    Shrs. Held  % Of Total  Shrs. Held  % Of Total 
- -----------------------------                                           ----------  ----------  ----------  ----------     
Schneider Capital                                                        4,388,920    18.3%             -       0.0%    
Richard O'Connell                                                        1,128,745     4.7%       302,461      11.6%    
Barcel Corporation                                                         616,626     2.6%       151,231       5.8%    
----------  ----------  ----------  ----------     
Total 5% Beneficial Holdings                                             6,134,291    25.6%       453,692      17.5%    

Total       % Of Total 
Directors And Officers (C)            Voting Power   Voting Power 
- -----------------------------         -----------    ------------      

Audrey L. Sevin                        6,654,023        13.3%                      
Irik P. Sevin                          2,756,848         5.5%                      
Phillip Ean Cohen                      1,813,492         3.6%                      
Thomas J. Edelman                      1,943,502         3.9%                       
Vincent De Palma                           5,000         0.0%   
Hanseatic Corporation (d) (e)          4,764,449         9.5%   
Tortosa (d)                            2,987,170         6.0%   
Wolfgang Traber (e)                       90,380         0.2%   
Paul Biddelman (e)                         2,386         0.0%    
-----------    ------------     
Total Directors & Officers Holdings   21,017,250        42.1%   

Total       % Of Total 
5% Beneficial Owners                  Voting Power   Voting Power   
- -----------------------------         -----------    ------------    
Schneider Capital                      4,388,920         8.8%   
Richard O'Connell                      4,153,355         8.3%
Barcel Corporation                     2,128,936         4.3%   
-----------    ------------                                          
Total 5% Beneficial Holdings          10,671,211        21.4%     

- --------------------------------------------------------------------------------------------------------------------
% Of                   % Of          Total       % Of Total 
Summary                                   Class A       Total      Class C      Total      Voting Power   Voting Power  
- -------                                 ----------     ---------  ----------  ----------   ------------   ------------   

Insider Holdings                                                                                               
Directors and Officers as a Group       5,734,540       23.9%     1,528,271     58.8%      21,017,250        42.1%     
5% Beneficial Owners                    6,134,291       25.6%       453,692     17.5%      10,671,211        21.4%  
----------     ---------  ----------  ----------   ------------   ------------   
11,868,831       49.5%     1,981,963     76.3%      31,688,461        63.5%  

Public Holdings                                                                                                      
Institutional                           3,153,398       13.2%                               3,153,398         6.3%  
Retail                                  8,932,331 (f)   37.3%                               8,932,331        17.9%  
----------     ---------                           ------------   ------------     
12,085,729       50.5%                              12,085,729        24.2%  

Other Holdings                                                       615,556     23.7%       6,155,560        12.3%  

----------  ----------   ------------   ------------   
615,556     23.7%       6,155,560        12.3%  

Total                                   23,954,560      100.0%     2,597,519    100.0%      49,929,750       100.0%  
====================================================================================================================

____________________________
(a)  Based on shares outstanding, most recently available data as of 4/23/98 and
does not include options to purchase and Class B shares. 
(b)  Source: Vickers Stock Research Corporation, Bloomberg and Oil's Proxy.
(c)  Does not include 5% beneficial ownership institutions. 
(d)  Hanseatic Corporation holds shared voting power in Tortosa.
(e)  Mr. Traber and Mr. Biddelman are executive officers of Hanseatic
Corporation. 
(f)  AGE has 29,412 Class A shares in its system.

Page 6

OVERVIEW OF OIL
RESEARCH COVERAGE    

WHILE OIL HAD DECENT                         RESEARCH COVERAGE             DATE PUBLISHED                 ESTIMATES UPDATED    
-----------------             --------------                 -----------------    

COVERAGE IN 1996, THERE                                                                                                         
HAVE NOT BEEN ANY                              Published Research Reports                                                       
REPORTS PUBLISHED                               Bear Stearns                      9/5/96                         10/18/96       
RECENTLY.                                       DLJ                               8/2/96                            --          
PaineWebber                      7/16/96                         11/11/97       

Additional Research                                                              
Jefferies - Hold                                                                

EARNINGS ESTIMATES          NUMBER OF ESTIMATES     MEAN 1998     MEAN 1999       
------------------          -------------------     ---------     ---------       

IBES                                 1                $0.70           NA          
Nelson                               1                $0.70           NA          

Page 7

OVERVIEW OF OIL
DISCOUNTED CASH FLOW ANALYSIS
WEIGHTED AVERAGE COST OF CAPITAL DERIVATION
($ IN MILLIONS)

- ------------------------------------------------------------------------------------------------------------------------------------
Total                                   Implied   Total     Total
Market         Unit        Total        Market    Debt/    Debt as %     Un-
Levered     Val. Debt     Price at      Units       Value of  Total     of Total    levered
Comparable Company                   Beta (a)    (Bk = Mkt)    (4/22/98)    Ont. (Mh)     Equity   Equity    Capital       Beta
- ------------------------------------------------------------------------------------------------------------------------------------

AmeriGas Partners, L.P.                0.48        $777.8       $25.938       41.9       $1,108.6   70.2%     41.2%       0.282
Cornerstone Propane Partners, L.P.     0.40         235.8        22.688       19.7          455.7   51.7%     34.1%       0.264
Ferrellgas Partners, L.P.              0.38         537.2        20.875       31.3          666.6   80.6%     44.6%       0.210
Heritage Propane Partners, L.P.        0.43         176.9        23.125        8.4          197.8   89.4%     47.2%       0.227
National Propane Partners, L.P.        0.34         147.4        20.313       11.2          232.9   63.3%     38.8%       0.208
Star Gas Partners, L.P.                0.33          96.0        21.938        6.2          139.4   68.9%     40.8%       0.195
Suburban Propane Partners, L.P.        0.36         428.2        18.813       28.7          551.4   77.6%     43.7%       0.203

-----------------------------------------------
Comparable group's average                                                           Oil's capitalization--at market
unlevered beta:                                                  0.23               Total debt (b)                 $314.5  87.9%
Oil's debt-to-equity ratio:                                       725.5%              Common equity                    43.3  12.1%
Oil's debt as a percent of total                                                                                     ------  -----
capital:                                                         87.9%                                             $357.8  100.0%
Comparable group's beta relevered                                                    -----------------------------------------------
for Oil's capital structure:                                    1.874
=====
Oil's capitalization - at market
Total debt(b)                           $314.5      87.9%
Common equity                             43.3      12.1%
-----     -----
$357.8     100.0%

Derivation of Weighted Average Cost of Capital:                                                   Market Risk Premium Range (e)
- ----------------------------------------------                                                    -----------------------------

11.3%     12.3%       13.3%
Oil's theoretical levered beta(d):                                           1.874
Assumed % of equity in Oil's capital
structure:                                                                  21.1%
Risk-free rate of return(c):                                                   5.7%
Oil's cost of equity range (at
various market risk premiums):                                                                    26.9%   28.7%         30.6%
====    ====          ====
Oil's assumed tax rate:                                                        0.0%
Assumed % of debt in capital 
structure(b):                                                               87.9%
Oil's estimated cost of debt(f):                                              11.2%
Oil's estimated after-tax cost of debt:                                       11.2%                 11.2%   11.2%         11.2%
====    ====          ====
Oil's weighted average cost of capital
range(g):                                                                                         13.1%   13.3%         13.6%
====    ====          ====

- ------------
(a) Source: Bloomberg. (143 week (maximum weekly time period allowed, or the
number of weeks available, which may be less than 143) adjusted beta
relative to the S&P 500 index.
(b) Includes preferred stock; not net of cash.
(c) Ten-year Treasury rate on April 22, 1998.
(d) Bloomberg's reported beta for Oil is .63.
(e) Ibhotson Associates 1997. Total returns for small company stocks of 17.7% 
minus the risk-free rate.
(f) Based on Oil's current debt structure.
(g) Calculation based upon use of the Capital Asset Pricing Model (CAPM).

OVERVIEW OF OIL 
EBITDA RECONCILIATION: 1997 (a)

---------------------------------------------------------------------------
OIL     
---     

1997 Actual EBITDA                                                     $36,010 

NORMALIZING ADJUSTMENTS:                                                       

Weather was 3.8% warmer than 30-year normal                                    

3.8% of 1997 budgeted retail gallons             13,482 gallons              

Gross profit margin                                 $0.4545                  

Delivery and garage cost savings                   ($0.0814)                 
---------                 

Net impact per gallon                               $0.3731                  

$ impact                                                               5,030 

Insurance reserve                                                        2,000 
------- 

1997 Adjusted EBITDA                                                         $43,040 
=======  

- ------------------------------------------------------------------------------
(a) Management's assumptions.

Page 9

OVERVIEW OF OIL
EBITDA RECONCILIATION: 1997 - 1998 (a)
(continued)

-----------------------------------------------------------------------------
OIL 
--- 

1997 Adjusted EBITDA                                                              $43,040  

Volume Adjustments for 1998                                                             

Sale of TLC Division in 1997                   (16,926) gallons                      

Attrition in 1998 (4.1%)                       (17,375)                              

1997 Acquisitions                                9,828                               
-------                                      
(24,473) gallons                      
@                                  
$0.1700/gallon (b)            (4,159) 
Gross Profit Margin Increase        $0.006 per gallon on 395,086 gallons (c)     2,371  
Inflation                                                                       (3,662) 

Operating Cost Reductions (d)                                                    5,850  
-------  

1998 EBITDA Budget                                                                $43,440  
=======  

-----------------------------------------------------------------------------
(a) Management's assumptions.                                             
(b) Represents the average gross profit per gallon ($.4700 per gallon) offset
by $.30 per gallon reduction in operating expenses.   
(c) Actual gross profit margin increase achieved in first quarter of 1998 was
$5.9 million (156 million gallons @ $0.037/gallon).   
(d) Represents already accomplished reductions in branch, regional and    
corporate expenses in excess of normal indexing related to volume     
reductions as well as 1% productivity improvements.                   

Page 10

OVERVIEW OF OIL
EBITDA RECONCILIATION: 1998 (a)
(continued)

-----------------------------------------------------------------------
OIL    
---    

1998 EBITDA Budget                                                  
$43,440  

Normalized Acquisition Growth                                       
$30,000 of acquisitions at 4.75x multiple                  6,315   
-------   

1998 EBITDA Normalized                                     $49,755  
=======
1998 EBITDA Budget                                         $43,440  

Actual Differential between first three months                      
of Fiscal 1998 vs. Budget                                  (9,318)     

Revised margin improvement and cost savings                         
estimates based on first three months of                           
Fiscal 1998 vs. Budget.                                     4,378   
-----  

Adjusted 1998 EBITDA Budget                                $38,500  
=======   

----------------------------------------------------------------------
(a) Management's assumptions.

Page 11

OVERVIEW OF OIL
EBITDA RECONCILIATION: 1998-1999 (a)
(continued)

-----------------------------------------------------------------------
OIL
---

1998 EBITDA Normalized                                     $49,755 

Internal Attrition (4.1%) and other adjustments             (4,413) 

Normalized Acquisition Growth                                
$30,000 of acquisitions at 4.75x multiple                  6,315    
------- 

1999 Projection                                            $51,657
=======

-----------------------------------------------------------------------
(a) Management's assumptions.

Page 12

OVERVIEW OF OIL
EBITDA SUMMARY

--------------------------------------------------------------
OIL
--- 

1997 Actual                                   $36,010 
1997 Adjusted                                  43,040 

1998 Budget                                   $43,440 
1998 Normalized                                49,755 

Adjusted 1998 Budget                          $38,500

1999E                                         $51,657 

--------------------------------------------------------------

Page 13

OVERVIEW OF OIL
ACQUISITION HISTORY

--------------------------------------------------------------------------------------------
Date                                                      EBITDA     Acquired    Cost per            
Acquired  Company             Purchase Price     EBITDA    Multiple    Gallonage    Gallon              
--------  -------             --------------     ------    --------    ---------    ------                      

1/26/93   Houck Service         $   663.9       $  245.0     2.7x          807.2    $0.823             
1/28/93   Harris and Gans         1,607.9          475.0     3.4x        2,599.6     0.619             
5/28/93   Goodrich                2,397.7          672.0     3.6x        4,156.0     0.577             
6/4/93    Warren                  2,965.0          712.0     4.2x       14,448.3     0.205             
6/23/93   Savin                   1,655.4          403.0     4.1x        2,769.0     0.598             
6/25/93   Baylis and Baylis         989.3          251.0     3.9x        1,224.7     0.808             
7/28/93   Agway                   1,660.6          315.0     5.3x        2,708.5     0.613             
9/28/93   Garden State            1,015.2          312.0     3.3x        1,408.0     0.721             
9/29/93   Essex                     866.3          234.0     3.7x        2,649.4     0.327              

1993 Totals                  $  13,821       $  3,619     3.8x         32,771    $0.422         
---------       --------    ------      --------    ------ 

1/7/94    Petrilla Oil          $   189.5       $   53.4     3.5x          329.0    $0.576         
3/8/94    Rettig                  1,813.0          466.0     3.9x        4,930.0     0.368         
6/30/94   Deblois Oil            15,374.6        2,909.0     5.3x       19,869.0     0.774         
7/26/94   Herbert Fuel            5,133.0          882.0     5.8x        6,103.0     0.841         
7/28/94   Trico Fuel              3,126.3          930.0     3.4x        4,091.0     0.764         
9/1/94    Sickley                 1,261.4          355.0     3.6x        1,702.0     0.741         
9/13/94   Sinkler                 4,880.0          948.0     5.1x        7,433.0     0.657         
12/1/94   Ryan                    2,954.3          528.0     5.6x        4,804.0     0.615         
12/2/94   Fowler                    182.8           37.4     4.9x          354.0     0,516          

1994 Totals                  $  34,915       $  7,109     4.9x         49,615    $0.704
---------       --------    ------      --------    ------ 

3/30/95   Reliable Oil          $ 6,065.6       $1,183.0     5.1x       10,102.2    $0.600   
5/24/95   Rosetta (Waldman)       3,413.2          684.0     5.0x        5,153.6     0.662   
5/24/95   Rosetta (Price)           789.4          153.0     5.2x        1,309.5     0.603   
7/27/95   Slocum                    643.8          198.0     3.3x          742.6     0.867   
8/23/95   Contex                  1,856.8          448.0     4.1x        2,503.2     0.742   
8/31/95   Rackliffe                 546.2          139.0     3.9x          904.0     0.604   
9/1/95    A-One                   5,184.2        1,164.0     4.5x        5,900.0     0.879   
9/11/95   Reading Merchants       4,260.0          656.0     6.5x        3,613.0     1.179   
10/25/95  Franklin Fuel             293.5           76.0     3.9x          445.0     0,660   
11/17/95  Home Fuel               2,158.9          430.0     5.0x        6,072.3     0.356   
12/19/95  Texaco                  3,854.8        1,071.0     3.6x        5,845.1     0.659    

1995 Totals                  $  29,066       $  6,202     4.7x         42,590    $0.682
---------       --------    ------      --------    ------ 

Page 14

OVERVIEW OF OIL
ACQUISITION HISTORY
(continued)

---------------------------------------------------------------------------------------------
Date                                                      EBITDA      Acquired     Cost per                   
Acquired   Company           Purchase Price     EBITDA     Multiple     Gallonage     Gallon                    
--------   -------           --------------     ------     --------     ---------     ------                    

1/11/96    Garrison            $ 5,242.5       $1,154.0     4.5x         6,017.0     $0.871                      
1/19/96    Cibro                 4,367.6        1,087.0     4.0x         6,200.0      0.704                      
2/1/96     Seaman                7,133.7        1,552.0     4.6x         7,522.0      0.948                      
4/1/96     McDowell              2,723.5          669.0     4.1x         2,675.0      1.018                      
9/11/96    Flynn                 1,038.0          232.0     4.5x         1,316.0      0.789                      
9/24/96    Farren                  263.6           69.0     3.8x           481.0      0.548                      
10/18/96   Bergen                3,202.5          718.0     4.5x         5,933.0      0.540                      
10/18/96   Hightstown              233.5           62.0     3.8x           500.0      0.467                      
10/31/96   Hy-Test                 813.4          177.0     4.6x         1,468.0      0.554                      
12/18/96   Dexter                  331.9           99.0     3.4x           796.0      0.417                      
12/26/96   Sherman                 492.5          103.0     4.8x           564.0      0.873                      
12/27/96   Malco                   369.2           97.0     3.8x           988.0      0.374                      
12/30/96   Grasso                  422.9          116.0     3.6x         1,212.0      0.349                       

1996 Totals                $  26,635       $  6,135     4.3x          35,672     $0.747
---------       --------    ------        -------     ------ 

1/15/97    Oils Inc            $   747.6       $  188.0     4.0x         1,189.0     $0.629        
4/14/97    Mugullian Fuel        2,801.9          638.0     4.4x         3,000.0      0.934        
5/14/97    Alderfer Heating        401.1          111.0     3.6x           787.0      0.510        
6/26/97    Bellomo               1,488.8          443.0     3.4x         1,657.0      0.898        
7/10/97    Good                    521.4          117.0     4.5x         1,200.0      0.434        
8/29/97    Oil Burner            2,633.1          603.0     4.4x         3,500.0      0.752        
9/10/97    Romary                2,252.5          545.0     4.1x         2,348.0      0.959        
9/29/97    T. W. Perry           1,619.3          439.0     3.7x         2,118.0      0.765        
10/1/97    MiliBrook               527.5          112.0     4.7x           908.0      0.581        
11/24/97   Shreve                1,457.0          300.0     4.9x         2,425.0      0.601        
12/18/97   Genovese              1,010.8          281.0     3.6x               -          -         

1997 Totals                $  15,461       $  3,777     4.1x          19,132     $0.808
---------       --------    ------        -------     ------ 

5 Year Totals                  $ 119,898       $ 26,842     4.5x        $179,780     $0.667
=========       ========    ======       ========     ======

Page 15

OVERVIEW OF OIL
MARGIN ANALYSIS
(VOLUME IN GALLONS; GALLONS AND $ IN THOUSANDS, EXCEPT MARGINS)

====================================================================================================================================

Fiscal Years Ended December 31,      
----------------------------------------------------------------------------------
1993                1994                1995                1996          1997     
--------            --------            --------            --------      --------

RETAIL (b)                                                                                                    
Volume                                       355,347             360,207             343,759             375,121       338,478 
Margin                                      $ 0.4883            $ 0.5030            $ 0.5027            $ 0.4993      $ 0.5196  
--------            --------            --------            --------      --------
Gross profit                                $173,501            $181,202            $172,811            $187,290      $175,867  

COMMERCIAL                                                                                               
Volume                                        81,515              79,514              75,476              81,020        71,813
Margin                                      $ 0.2301            $ 0.2416            $ 0.2458            $ 0.2471      $ 0.2452  
--------            --------            --------            --------      --------
Gross profit                                $ 18,755            $ 19,214            $ 18,554            $ 20,018      $ 17,607  

PROPANE                                                                                                   
Volume                                         6,625               7,435               5,538                   -             -
Margin                                      $ 0.5352            $ 0.5730            $ 0.5805            $ 0.0000      $ 0.0000  
--------            --------            --------            --------      --------
Gross profit                                $  3,546            $  4,260            $  3,215                   -             -

OTHER PETROLEUM PRODUCTS            
Volume                                        36,406              35,709              31,228              32,026        29,855
Margin                                      $ 0.1424            $ 0.1417            $ 0.1481            $ 0.1401      $ 0.1424
--------            --------            --------            --------      --------
Gross profit                                $  5,183            $  5,061            $  4,624            $  4,487      $  4,251    

TOTAL PETROLEUM PRODUCTS                                                                                                       
Volume                                       479,893             482,865             456,001             488,167       440,146   
Margin                                      $ 0.4188            $ 0.4344            $ 0.4368            $ 0.4339      $ 0.4492   
--------            --------            --------            --------      --------
Gross profit                                $200,985            $209,737            $199,204            $211,795      $197,725   
--------            --------            --------            --------      --------

DISCOUNTS                                    $  1,294            $  1,200            $    944            $  1,084      $    802
--------            --------            --------            --------      --------

Net service loss                             ($34,243)           ($37,941)           ($33,822)           ($37,386)     ($35,184)
Net installation income                         3,681               4,944               4,364               5,280         5,050 
--------            --------            --------            --------      --------
Gross profit (loss)                         ($30,562)           ($32,997)           ($29,458)           ($32,106)     ($30,134)   
--------            --------            --------            --------      --------

Gas Gross Profit                                    -            $  5,756            $ 50,992                   -             - 

Total Gross Profit                           $171,717            $183,696            $221,682            $180,773      $168,393
========            ========            ========            ========      ========

Projected Years Ended December 31, (a)
----------------------------------------------------------------------------------
1998                1999                2000                2001          2002  
--------            --------            --------            --------      --------

RETAIL (b)                   
Volume                                       362,070             376,560             390,457             403,784       416,564
Margin                                      $ 0.5220            $ 0.5220            $ 0.5220            $ 0.5220      $ 0.5220 
--------            --------            --------            --------      --------
Gross profit                                $189,001            $196,564            $203,819            $210,775      $217,446 

COMMERCIAL                                                                                            
Volume                                        71,547              75,948              80,168              84,215        88,096
Margin                                      $ 0.2502            $ 0.2502            $ 0.2502            $ 0.2502      $ 0.2502
--------            --------            --------            --------      --------
Gross profit                                $ 17,901            $ 19,002            $ 20,058            $ 21,071      $ 22,042

PROPANE                                                                              
Volume                                             -                   -                   -                   -             -    
Margin                                      $  0.000            $  0.000            $  0.000            $  0.000      $  0.000
--------            --------            --------            --------      --------
Gross profit                                        -                   -                   -                   -             -    

OTHER PETROLEUM PRODUCTS                                                                       
Volume                                        29,038              27,847              26,706              25,611        24,561
Margin                                      $ 0.1379            $ 0.1379            $ 0.1379            $ 0.1379      $ 0.1379
--------            --------            --------            --------      --------
Gross profit                                $  4,004            $  3,840            $  3,683            $  3,532      $  3,387

TOTAL PETROLEUM PRODUCTS                                                                       
Volume                                       462,655             480,355             497,331             513,610       529,221
Margin                                      $ 0.4559            $ 0.4568            $ 0.4576            $ 0.4583      $ 0.4589
--------            --------            --------            --------      --------
Gross profit                                $210,906            $219,407            $227,559            $235,378      $242,875 
--------            --------            --------            --------      --------

DISCOUNTS                                    $    841                   -                   -                   -             -
--------            --------            --------            --------      --------

Net service loss                              (33,135)           ($34,526)           ($35,803)           ($36,972)     ($38,038)
Net installation income                         5,627               6,610               7,612               8,632         9,668
--------            --------            --------            --------      --------
Gross profit (loss)                         ($27,508)           ($27,916)           ($28,191)           ($28,340)     ($28,370)
--------            --------            --------            --------      --------

Gas Gross Profit                                    -                   -                   -                   -             -

Total Gross Profit                          $ 184,239            $191,491            $199,368            $207,037      $214,505  
=========            ========            ========            ========      ======== 

______________________________________________________________________________
(a) Assumes 4.1% steady attrition, 0% margin improvement, and $30 million in 
acquistions at 4.?5 multiple.                                              
(b) Includes protected ????? volumes                                            

Page 16

OVERVIEW OF OIL
ATTRITION ANALYSIS

- ------------------------------------------------------------------------------------------------------------------------------------

Average Accounts             Absolute Account Losses         Loss Rate                Gains         Net Attrition Rate
----------------------------    ---------------------------  -------------------     ------------------  ------------------
Base Business,                   Base Business,                                                          Base 
Year    Total    excl. Acquisitions     Total   excl. Acquisitions    Total       Base       Accounts     %       Total   Business
- ------   -----    ------------------     -----   ------------------   ------     --------    --------    -----    ------  ----------

1993   391,454       352,576           70,127        56,459          17.9%       16.0%        47,090    12.0%     -5.9%    -4.0%
1994   386,235       354,786           57,442        46,386          14.9%       13.1%        35,380     9.2%     -5.7%    -3.9%
1995   381,842       344,342           59,550        46,366          15.6%       13.5%        34,516     9.0%     -6.6%    -4.5%
1996   386,398       354,471           60,084        48,860          15.5%       13.8%        39,192    10.1%     -5.4%    -3.7%
1997   366,421       342,738           60,907        52,581          16.6%       15.3%        39,561    10.8%     -5.8%    -4.5%

- ------------------------------------------------------------------------------------------------------------------------------------
Mean    382,470       349,783           61,622        50,130          16.1%       14.3%        39,148    10.2%     -5.9%    -4.1%
- ------------------------------------------------------------------------------------------------------------------------------------

Page 17

OVERVIEW OF GAS
SUMMARY FINANCIAL ANALYSIS
($ in thousands, except per unit data)

- -------------------------------------------------------------------------------------------------------------
State of Incorporation:    Delaware               Market Price (4/22/98):                       $21,938      
Headquarters:              Stanford, CT           52- Week High-Low                       $24,750 - 19,000   
Auditors:                  KPMG Peat Marwick LLP  Common, Sub, And GP Units Outstanding:          6,355      
Primary Exchange:          NASDAQ                 Most Recent Fiscal Year End:                  9/30/97      
Primary Area of Focus:     Midwest, Northeast US                                                             

Selected Data
- -----------------------------------------------------------------------------------------------------------  
Total                        Net     Earnings    Distributable   Distributable              
Year       Revenues      EDITDA (a)     Income    Per Unit      Cash Flow        CF/Unit       CapEx.    
- ----------     --------     ----------      ------    --------    ------------    -------------  ----------  

1996       $119,634       $19,870       $2,593     $0.49        $10,361           $1.97       $5,332     
1997        135,159        19,703        1,972      0.37          9,612            1.82        5,279     
Proj. 1998 (b)  121,024        18,279       (1,321)    (0.21)         7,737            1.22        4,551     
Proj. 1999 (b)  156,296        26,730        3,691      0.54         14,317            2.09        5,071     

- ----------------------------------------------------
Book Capitalization   
------------------- 
(12/31/97)
---------- 

Total Debt                           $  96,600        
Total Partners' Capital                 71,883
---------  
Total                              $ 167,883
=========

Estimated Firm Value
-------------------- 
Total Debt                           $  96,000
Implied Market Val.  of Equity (c)     139,411
---------             
Total                              $ 235,411
---------             

Less: Cash and Equivalents               3,452
---------
Net Firm Value                       $ 231,959
=========

Multiple Analysis     
-----------------

Net Firm Value/97A EDITDA:                  11.8x 
Net Firm Value/98E EDITDA:                  12.7
Net Firm Value/99E EDITDA:                   8.7  

1997A Common Unit coverage                   1.5x
1998E Common Unit coverage                   0.9
1999E Common Unit coverage                   1.5

1997A Total Distribution coverage            0.8x
1999E Total Distribution coverage            0.6
1999E Total Distribution coverage            1.0
- ----------------------------------------------------

________________________________________________________________________________
(a)  EBITDA is defined as gross profit less operating expenses.
(b)  Source: management's projections; 1998 EBITDA is before acquisitions, 
adjusted for actual 1Q results. See pages 25 to 26.
(c)  Implied equity value equals common, subordinated, and GP units, 
multiplied by the market price of common units.

Page 18

OVERVIEW OF GAS
SELECTED FINANCIAL DATA
($ in thousands)

- -------------------------------------------------------------------------------------------------------------------------- 
Historical Years Ended September 30,                         
-------------------------------------------------------------------------------------------     
1996      %             1997       %                1997 (a)        %        

Sales                                   $119,634   100.0%       $135,159   100.0%              $149,766      100.0%     
% Growth                                   17.0%                   13.0%                          25.2% (c)            
Cost of sales                             58,557    48.9%         72,211    53.4%                80,370       53.7%     
-----------------       -----------------              --------------------     
Gross profit                              61,077    51.1%         62,948    46.6%                69,396       46.3%     
Operating expenses                        41,207    34.4%         43,245    32.0% (d)            46,408       31.0%     
Net (loss) on sales of assets               (260)   -0.2%           (295)   -0.2%                  (265)      -0.2%     
Depreciation and amortization              9,808     8.2%         10,405     7.7%                11,495        7.7%     
-----------------       -----------------              --------------------     
Operating income                           9,802     8.2%          9,003     6.7%                11,228        7.5%     
Interest expense, net                      7,124     6.0%          6,966     5.2%                 7,766        5.2%     
-----------------       -----------------              --------------------     
Income (loss) before income taxes          2,678     2.2%          2,037     1.5%                 3,462        2.3%     
Income taxes                                  85     0.1%             25     0.0%                    25        0.0%     
General Partners' interest                     -     0.0%             40     0.0%                    69        0.0%     
-----------------       -----------------              --------------------     
Net income                              $  2,593     2.2%       $  1,972     1.5%              $  3,368        2.2%     
=================       =================              ====================     
Net income per limited partner                                                                                          
unit                                   $   0.49                $   0.37                       $   0.54                 
=========               =========                      ==========               
Weighted average L.P. units                                                                                             
outstanding                               5,271                   5,271                          6,228                 

EBITDA (e)                              $ 19,870    16.6%       $ 19,703    14.6%              $ 22,988       15.3%     

Capital expenditures                    $  5,332                $  5,279                       $  5,579                 
Maintenance capital expenditures           2,300                   3,100                          3,400                 
Distributable cash flow                   10,361                   9,612                         11,797                 
Distributable cash flow per unit        $   1.97                $   1.82                       $   1.89                 
Common distribution coverage                1.8x                     1.5x                           1.4x                
Total distribution coverage                 0.9x                     0.8x                           0.8X                
EBITDA/total assets                        12.7%                    13.4%                          12.8%                
Net income / partners' capital              4.2%                     3.8%                           4.7%                 

- -------------------------------------------------------------------------------------------- 
Projected Years Ending September 30, 
-----------------------------------------------------
1998 (b)      %          1999 (b)     %    
- -------------------------------------------------------------------------------------------- 

Sales                                         $121,024   100.0%        $156,296   100.0% 
% Growth                                        -19.2%                    29.1%         
Cost of sales                                   58,041    48.0%          77,391    49.5% 
-----------------        ----------------- 
Gross profit                                    62,983    52.0%          78,905    50.5% 
Operating expenses                              44,704    36.9%          52,175    33.4% 
Net (loss) on sales of assets                              0.0%               -     0.0% 
Depreciation and amortization                   11,768     9.7%          13,900     8.9% 
-----------------        ----------------- 
Operating income                                 6,511     5.4%          12,830     8.2% 
Interest expense, net                            7,807     6.5%           9,114     5.8% 
-----------------        ----------------- 
Income (loss) before income taxes               (1,296)   -1.1%           3,716     2.4% 
Income taxes                                        25     0.0%              25     0.0% 
General Partners' interest                           -     0.0%               -     0.0% 
-----------------        ----------------- 
Net income                                   ($  1,321)   -1.1%        $  3,691     2.4% 
=================        ================= 
Net income per limited partner                                                           
unit                                        ($   0.21)                $   0.54          
=========                =========         
Weighted average L.P. units                                                              
outstanding                                     6,355                    6,840          

EBITDA (e)                                    $ 18,279    15.1%        $ 26,730    17.1% 

Capital expenditures                          $  4,551                 $  5,071          
Maintenance capital expenditures              $  2,710                 $  3,274          
Distributable cash flow                          7,737                   14,317          
Distributable cash flow per unit              $   1.22                 $   2.09          
Common distribution coverage                       0.9x                     1.5x         
Total distribution coverage                        0.6x                     1.0x         
EBITDA/total assets                               10.4%                    15.1%         
Net income / partners'capital                     -2.1%                     6.8%          

________________________________
(a)  Proforma for December 16, 1997 common unit offering and the acquisition of
Pearl Gas Co. 
(b)  Projected figures per Management. 
(c)  Growth over 1996. 
(d)  Includes $350 in special project expenses. 
(e)  Excludes loss from sale of assets.

Page 19

OVERVIEW OF GAS
MARKET PRICE ANALYSIS

PRICE AND VOLUME
12/15/95 - 4/22/98

[CHART APPEARS HERE]

Page 20

OVERVIEW OF GAS
COMMON UNIT TRADING HISTORY - VOLUME DISTRIBUTION
1995-1998 (A)

- ------------------------------------------------------------------------------------------------------------------------------------
Dec. 15-31 1995           1996                   1997                   1998 (a)
-------------------  --------------------  --------------------    ---------------------
Price Per Share       Volume           %    Volume         %      Volume           %      Volume         %
---------------------      -------------------  --------------------  --------------------    ---------------------

Greater than  $24.600
24.400   24.600                              32,400    100.00%            
24.200   24.400                              55,300     99.34%     26,000     100.00%      75,500     100.00%
24.000   24.200                              27,200     98.20%     25,800      99.24%         -        96.47%
23.800   24.000                             436,500     97.65%     38,400      98.49%         -        96.47%
23.600   23.800                             119,200     88.71%      3,000      97.37%     131,200      96.47%
23.400   23.600                              79,500     86.27%     56,900      97.28%      85,600      90.32%
23.200   23.400                             105,000     84.64%    194,500      95.62%     173,700      86.31%
23.000   23.200                             396,900     82.49%    148,000      89.94%      51,400      78.18%
22.800   23.000                             229,200     74.36%    102,100      85.62%      36,200      75.77%
22.600   22.800                              96,100     69.67%    184,500      82.64%      42,700      74.08%
22.400   22.600                             273,800     67.70%    145,500      77.26%     148,600      72.08%
22.200   22.400       33,400    100.00%     430,500     62.09%    128,000      73.01%     603,100      65.12%
22.000   22.200      762,000     95.80%     510,900     53.28%    217,500      69.27%     205,600      36.89%
-------------------------------------------------------------------------------------------------------------------
Current Price        21.800   22.000                             400,400     42.82%    411,600      62.92%     299,800      27.26%
-------------------------------------------------------------------------------------------------------------------
21.600   21.800                             422,600     34.62%    302,200      50.91%     155,300      13.22%
21.400   21.600                             259,400     25.96%    290,200      42.09%     127,100       5.95%
21.200   21.400                             214,300     20.65%    372,800      33.62%
21.000   21.200                             388,000     16.26%    499,100      22.74%
20.800   21.000                             110,900      8.32%    108,000       8.17%
20.600   20.800                             137,500      6.05%     34,300       5.01%
20.400   20.600                              41,900      3.23%     16,000       4.01%
20.200   20.400                              62,800      2.38%     46,500       3.55%
20.000   20.200                              53,200      1.09%     22,000       2.19%
19.800   20.000                                                    24,400       1.55%
19.600   19.800                                                    28,600       0.83%
Less Than  $19.600     
-------              ---------             ---------               ---------
Total Units for Period                    795,400              4,883,500             3,425,900               2,135,800
Cumulative % of Total Traded                           7.08%                 43.45%                 30.48%                  19.00%
% Traded of Current Units Out. (b)                    20.76%                127.45%                 89.41%                  55.74%
Wtd. Average Unit Price                    $22.11                 $22.25                $21.89                  $22.47

- -----------------------------------------------------------------
1995-1998 (a)                                     
---------------------
Price Per Share          Volume           %
---------------------        ---------------------

Greater than  $24.600           
24.400   24.600           32,400     100.00%
24.200   24.400          156,800      99.71%  
24.000   24.200           53,000      98.32%
23.800   24.000          474,900      97.85%
23.600   23.800          253,400      93.62%
23.400   23.600          222,000      91.37%
23.200   23.400          473,200      89.39% 
23.000   23.200          596,300      85.18%
22.800   23.000          367,500      79.88%
22.600   22.800          323,300      76.61%
22.400   22.600          567,900      73.73%
22.200   22.400        1,195,000      68.68% 
22.000   22.200        1,696,000      58.05%  
--------------------------------------------------
Current Price        21.800   22.000        1,111,800      42.96%  
--------------------------------------------------
21.600   21.800          880,100      33.07%
21.400   21.600          676,700      25.24%
21.200   21.400          587,100      19.22%
21.000   21.200          887,100      14.00%
20.800   21.000          218,900       6.10%
20.600   20.800          171,800       4.16%  
20.400   20.600           57,900       2.63%
20.200   20.400          109,300       2.11% 
20.000   20.200           75,200       1.14%   
19.800   20.000           24,400       0.47%
19.600   19.800           28,600       0.25%
Less Than  $19.600  
----------
Total Units for Period                     11,240,600  
Cumulative % of Total Traded                              100.00%
% Traded of Current Units Out. (b)                        293.36%  
Wtd. Average Unit Price                        $22.17

________________________________________
(a)  Through April 22, 1998.
(b)  Based on 3,831,727 common units outstanding.

Page 21

OVERVIEW OF GAS
UNITHOLDER ANALYSIS (a)

- -----------------------------------------------------------------------------------------------------------------------------------
COMMON                                                                                              
INSTITUTIONS (b)           UNITS HELD     % OF TOTAL                                                                                
- ----------------------     ----------     ----------                                                                                

Bear, Stearns & Co.          47,700            1.2%                                                                                 
PaineWebber Group            38,750            1.0%                                                                                 
Graver Bokhof                28,400            0.7%                                                                                 
DLJ Corp.                    24,331            0.6%                                                                                 
Orion Capital Corp.          16,000            0.4%                                                                                 
Advest Group, Inc.           10,900            0.3%                                                                                 

CIBC Oppenheimer              1,000            0.0%                                                                                 
Legg Mason Wood Walker          500            0.0%                                                                               
U.S. Trust Co. NY               500            0.0%                                                                               
Cullen/Frost Bankers            300            0.0%                                                                               
-------         ------                                                                                
All Institutions            168,381            4.4%                                                                               

- ----------------------------------------------------------------------------------------------
COMMON                  SUBORDINATED
DIRECTORS AND OFFICERS                   TITLE                                 UNITS HELD   % OF TOTAL    UNITS HELD     % OF TOTAL 
- ----------------------                   ----                                  ----------   ----------   ------------    ----------
10,400        0.3%               -          0.0%
Wolfgang Traber                          Gas Director and Oil Director               525        0.0%               -          0.0%
Richard F. Ambury                        V.P. of Finance                       ---------       ----       ----------     -------- 
Total Directors & Officers Holdings                                               10,925        0.3%               -          0.0%  

Common                  Subordinated     
General Partner                                                                Units Held   % of Total    Units Held     % of Total 
- --------------------                                                           -----------  ----------    -----------    ----------
OIL                                                                               60,727        1.6%       2,396,078       100.0%  

- -------------------------------------------------------------------------------------------------
SUMMARY
- -------
Common          % of     Subordinated        % of 
INSIDER HOLDINGS                              Units          Total       Units           total 
------          -----    ------------       -----
Directors and Officers as a Group            10,925           0.3%              -         0.0%
General Partner                              60,727           1.6%      2,396,078       100.0%
------         ------    -----------       -----   
71,652           1.9%      2,396,078       100.0%  

PUBLIC HOLDINGS
Institutional                               168,381           4.4% 
Retail                                    3,591,694 (c)      93.7%
-------------         ------   
3,760,075          98.1%   

TOTAL UNITS OUTSTANDING                    3,831,727         100.0%      2,396,078       100.0% 
- ---------------------------------------------------------------------------------------------------

- ------------------                          
(a) Based on units outstanding and most recently available data as of 4/23/98.
(b) Source: Vickers Stock Research Corporation and Bloomberg. 
(c) AGE has 226,060 Common Units in its system.

Page 22

OVERVIEW OF GAS
RESEARCH COVERAGE

Gas has ongoing          Research Coverage                 Date Published                      Estimates Updated
research coverage by     -----------------                 --------------                      -----------------
two firms.                                                                                                              
Published Research Reports          
A.G. Edwards - Buy                  1/5/98                               4/8/98
PaineWebber - Attractive           12/30/97                              2/5/98          
Lehman                              2/7/96                              11/4/96

Earnings Estimates             Number of Estimates       Mean 1998        Mean 1999
------------------             -------------------       ---------        ---------

IBES                                     2                 $0.82            $0.85
Nelson                                   2                 $0.52            $0.88
Zacks                                    2                 $0.48            $0.88

Page 23

OVERVIEW OF GAS
DISCOUNTED CASH FLOW ANALYSIS
WEIGHTED AVERAGE COST OF CAPITAL DERIVATION
($ IN MILLIONS)

- ------------------------------------------------------------------------------------------------------------------------------------

Total                                Implied     Total        Total       
Market       Unit         Total       Market     Debt/      Debt as %     Un- 
Levered    Val. Debt    Price at       Units      Value of    Total       of Total   Levered 
Comparable Company                    Beta (a)   (Bk = Mkt)   (4/22/98)    Out. (Mil)    Equity     Equity       Capital     Beta 
- ------------------------------------------------------------------------------------------------------------------------------------

AmeriGas Partners, L.P.                 0.48       $777.8     $  25.938        41.9     $1,108.6      70.2%     41.2%        0.282 
Cornerstone Propane Partners, L.P.      0.40        235.8        22.688        19.7        455.7      51.7%     34.1%        0.264
Ferrellgas Partners, L.P.               0.38        537.2        20.875        31.3        666.6      80.6%     44.6%        0.210
Heritage Propane Partners, L.P.         0.43        176.9        23.125         8.4        197.8      89.4%     47.2%        0.227
National Propane Partners, L.P.         0.34        147.4        20.313        11.2        232.9      63.3%     38.8%        0.208
Star Gas Partners, L.P.                 0.33         96.0        21.938         6.2        139.4      68.9%     40.8%        0.195 
Suburban Propane Partners, L.P.         0.36        428.2        18.813        28.7        551.4      77.6%     43.7%        0.203

--------------------------------------------------------
Gas' capitalization - at market (b)                   
Comparable group's average unlevered beta:                         0.23       Total debt                          $ 96.0    40.8% 
Gas' debt - to - equity ratio (b):                                 68.9%      Common equity                        139.4    59.2% 
------   -----  
Gas' debt as a percent of total capital (b):                       40.8%                                          $235.4   100.0% 
--------------------------------------------------------
Comparable group's beta relevered for Gas' capital structure:     0.329                                          
=====   

DERIVATION OF WEIGHTED AVERAGE COST OF CAPITAL:
- ----------------------------------------------- 
MARKET RISK PREMIUM RANGE (d)
---------------------------------
11.3%       12.3%        13.3%
--------------------------------- 
Gas' theoretical levered beta:                                                0.329 
Assumed % of equity in Gas' Capital structure (b):                             59.2% 
Risk - free rate of return (c):                                                 5.7%  
Gas' cost of equity range (at various market risk premiums):                                       9.4%        9.7%        10.1%
====        ====        =====
Gas' assumed tax rate:                                                         35.0% 
Assumed % of debt in capital structure (b):                                    40.8% 
Gas' estimated cost of debt (e):                                                7.9%  
Gas' estimated after - tax cost of debt:                                        5.2%               5.2%        5.2%         5.2% 

---------------------------------   
Gas' weighted average cost of capital range (f):                                                   7.7%        7.9%         8.1%
---------------------------------   

- ---------------------------
(a) Source: Bloomberg. 143 week (maximum weekly time period allowed, or the
number of weeks available, which may be less than 143) adjusted beta
relative to the S&P 500 index.
(b) Market value of debt is assumed to be equal to the book value; debt is not
net of cash.
(c) Ten - year Treasury rate on April 22, 1998.
(d) Ibbotson Associates 1997. Total returns for small company stocks of 17.7%
minus the risk-free rate.
(e) Based on Gas' current debt structure.
(f) Calculation based upon use of the Capital Asset Pricing Model (CAPM).

Page 24

OVERVIEW OF GAS
EBITDA RECONCILIATION: 1997 (a)
($ IN THOUSANDS)

-------------------------------------------------------------------------
GAS
--- 
1997 Actual EBITDA                                           $19,703 (b)

NORMALIZING ADJUSTMENTS:

Weather
Residential - 1,125 gallons @ 0.7106 margin                    799
Commercial - 277 gallons @ 0.4459 margin                       124

Margin
Residential - 50,832 gallons @ (0.7106 - 0.6995)              (564) 
Commercial - 19,864 gallons @ (0.4454 - 0.4348)               (220)
Wholesale - 38,404 gallons @ (0.0975 - 0.0675)              (1,152)

Compensation                                                     (56)

Elimination of strategic expense                                 902 (c)

Pearl Gas EBITDA                                               3,012

Pearl Gas acquisition adjustments                                273 (d)
-------   

1997 Adjusted EBITDA                                         $22,821
=======   

-----------------
(a)  Management's assumptions.
(b)  Not pro forma for Pearl Gas acquisition.
(c)  Certain expenses including the exploration of strategic
alternatives by Morgan Stanley.
(d)  Certain cost savings, primarily salary and benefit expenses of
certain selling shareholders.

Page 25

OVERVIEW OF GAS
EBITDA RECONCILIATION: 1997-1999 (a)
($ IN THOUSANDS)
(continued)

-----------------------------------------------------------------------------
GAS   
---   

1998 EBITDA Budget                                                  $22,781  

Actual Differential between first six months                         (4,502)
of Fiscal 1998 vs. Budget                                          -------  

Adjusted 1998 EBITDA Budget                                         $18,279  
======= 

1998 EBITDA Budget                                                  $22,781 

Internal Growth of 1.7%                                                 379  

Acquisition Growth                                                           
$20 million of acquisitions at 7x multiple                                 
completed on 9/30/98                                               2,857 
$10 million of acquisitions at 7x multiple                                 
completed on 4/1/99                                                  713  
------- 

1999 EBITDA Projection                                              $26,730  
=======  

-----------------------------------------------------------------------------
(a) Management's assumptions.

Page 26

OVERVIEW OF GAS
ACQUISITION HISTORY
($ IN THOUSANDS)

-----------------------------------------------------------------------------
DATE                                                                           EBITDA         ACQUIRED      COST PER       
ACQUIRED            COMPANY                 PURCHASE PRICE        EBITDA        MULTIPLE       GALLONAGE       GALLON        
--------            -------                 --------------        ------        --------       ---------       ------        

6/15/94             Loveland                  $   700.0          $ 127.0           5.5x           433.0         $1.616       

11/24/94            Baystate                    1,450.0            209.0           6.9x           768.7         $1.886       

9/12/95             Debolt                        950.0            151.0           6.3x           852.3         $1.115       

3/22/96             Bob While L.P. Gas/         1,500.0            263.0           5.7x           897.7         $1.671       
Mitchell Bottle Gas                                                                                      

7/22/96             Fuzzy Moore                   850.0            147.0           5.8x           454.3         $1.871       

10/22/97            Pearl Gas Co.              24,126.0          3,288.0           7.3x        14,000.0         $1.723       

2/20/98             Tri-County Gas                550.0            108.0           5.1x           319.7         $1.720       
---------          -------                       --------         

4 YEAR TOTALS                                 $  30,126          $ 4,293           7.Ox          17,726         $1.700       
=========          =======        =======        ========         ======      

Pending             Como                       15,500.0          2,450.0           6.3x                                     

Pending             Tioga                       4,100.0            625.0           6.6x                                      

Page 27

OVERVIEW OF GAS
MARGIN ANALYSIS
(VOLUME IN GALLONS; GALLONS AND $ IN THOUSANDS, EXCEPT MARGINS)

- --------------------------------------------------------------------------------------------------------------------
FISCAL YEARS ENDED SEPTEMBER 30,
-------------------------------------------------------------------------------------
1993           1994          1995          1996            1997            1997                 
----------      --------      --------      --------      -----------       --------
Stand alone       Pro Forma              
Weather               

Residential                                                                                                                       
Volume                            44,590        48,430        45,235        54,336          49,707          50,832               
Margin                          $ 0.6902      $ 0.6861      $ 0.6677      $ 0.6592       $  0.7106        $ 0.7106               
----------      --------      --------      --------       ---------        -------- 
Gross profit                    $ 30,777      $ 33,228      $ 30,203      $ 35,818       $  35,322        $ 36,121               

Commercial                            
Volume                            17,617        19,875        18,831        21,194          19,587          19,864
Margin                          $ 0.4614      $ 0.4611      $ 0.4271      $ 0.4202       $  0.4459        $ 0.4459               
----------      --------      --------      --------       ---------        -------- 
Gross profit                    $  8,129      $  9,164      $  8,043      $  8,906       $   8,734        $  8,858               

Agriculture                                                                                                                       
Volume                            23,291        16,053        15,080        12,567          17,338          17,338               
Margin                          $ 0.2349      $ 0.2630      $ 0,2357      $ 0.2556       $  0.2694        $ 0.2694               
----------      --------      --------      --------       ---------        -------- 
Gross profit                    $  5,471      $  4,222      $  3,554      $  3,212       $   4,671        $  4,671               

Motor fuel & Other                                                                                                                
Volume                             7,581         8,060         8,056         8,197           8,024           8,024               
Margin                          $ 0.4922      $ 0.5359      $ 0.5271      $ 0.5215       $  0.5765        $ 0.5765               
----------      --------      --------      --------       ---------        --------               
Gross profit                    $  3,731      $  4.319      $  4,246      $  4,275       $   4,626        $  4,626               

Wholesale                                                                                                                         
Volume                            51,493        45,318        38,941        39,025          38,404          38,404               
Margin                          $ 0.0619      $ 0.0680      $ 0.0568      $ 0.0704       $  0.0975        $ 0.0975               
----------      --------      --------      --------       ---------        --------               
Gross profit                    $  3,189      $  3,082      $  2,212      $  2,747       $   3,743        $  3,743               

Total Propane                                                                                                                     
Volume                           144,572       137,736       126,143       135,319         133,060         134,462               
Margin                          $ 0.3548      $ 0.3922      $ 0.3826      $ 0.4061       $  0.4291        $ 0.4315               
----------      --------      --------      --------       ---------        --------  
Total propane gross profit      $ 51,297      $ 54,015      $ 48,258      $ 54,958       $  57,096        $ 58,019               
----------      --------      --------      --------       ---------        --------  
Appliances/other                                                                                                                  
Revenue                         $  9,237      $  9,454      $  7,536      $  8,269       $   8,043        $  8,043 
Cost                               3,232         3,187         1,935         2,150           2,191           2,191    
----------      --------      --------      --------       ---------        --------    
Gross profit                    $  6,005      $  6,267      $  5,601      $  6,119       $   5,852        $  5,852 

TOTAL GROSS PROFIT               $ 57,302      $ 60,282      $ 53,859      $ 61,077       $  62,948        $ 63,871 
==========      ========      ========      ========       =========        ========    

- ------------------------------------------------------------------------------------------
FISCAL YEARS ENDED SEPTEMBER 30,                     
-----------------------------------------------------------
1997                  1998               1998         
--------------------        ----------       --------------
Pro Forma Pearl and          Budget            Adjusted       
Weather                                for actual      

Residential                                                                                  
Volume                                62,630                 63,614            56,037                           
Margin                              $ 0.6554               $ 0.6436          $ 0.6585                 
----------               --------          -------- 
Gross profit                        $ 41,049               $ 40,945          $ 36,898                 

Commercial                                                                                             
Volume                                20,936                 20,521            19,126             
Margin                              $ 0.4399               $ 0.4278          $ 0.4431                 
----------               --------          --------
Gross profit                        $  9,209               $  8,779          $  8,474                 

Agriculture                                                                                            
Volume                                18,275                 16,615            18,224                 
Margin                              $ 0.2678               $ 0.2633          $ 0.2537                 
----------               --------          --------
Gross profit                        $  4,895               $  4,375          $  4,624                 

Motor fuel & other                                                                                     
Volume                                 8,391                  8,381             8,298                 
Margin                              $ 0.5926               $ 0.5845          $ 0.5924                 
----------               --------          --------
Gross profit                        $  4,973               $  4,899          $  4,916                 

Wholesale                                                                                              
Volume                                38,532                 40,597            32,474                 
Margin                              $ 0.0972               $ 0.0674          $ 0.0604                 
----------               --------          --------
Gross profit                        $  3,744               $  2,738          $  1,961                 

Total propane                                                                                          
Volume                               148,764                149,728           134,159                 
Margin                              $ 0.4293               $ 0.4123          $ 0.4239                 
----------               --------          --------
Total propane gross profit          $ 63,870               $ 61,735          $ 56,874                  

Appliances/other                                                                                                                    

Revenue                              $  8,760               $  8,694          $  8,509                                     
Cost                                   2,303                  2,298             2,399
----------               --------          --------
Gross profit                        $  6,457               $  6,396          $  6,110 

TOTAL GROSS PROFIT                   $ 70,327               $ 68,130          $ 62,983
==========               ========          ========

Page 28

PRO FORMA OWNERSHIP ANALYSIS
GAS
CURRENT OWNERSHIP AND ORGANIZATION

[CHART APPEARS HERE]

Page 29

PRO FORMA OWNERSHIP ANALYSIS
EFFECTIVE OWNERSHIP OF GAS - CURRENT

CURRENTLY, THE DIRECTORS 
AND OFFICERS OF OIL 
EFFECTIVELY CONTROL 100% 
OF OIL (IN TERMS OF                      [CHART APPEARS HERE]
VOTING RIGHTS), 100% OF 
GAS' GP INTEREST, AND 
CONTROL 39% OF GAS'
LIMITED PARTNERSHIP UNITS.

Page 30

SUMMARY OF TRANSACTION
PRO FORMA GAS UNITS OUTSTANDING
(IN THOUSANDS)

TO SIMPLIFY THE              [_]   There are currently 6,355 Gas units 
COMPLEXITY OF THE STEPS            outstanding comprised of 3,832 common units, 
IN THE TRANSACTION,                2,396 subordinated units and 127 general 
A.G. EDWARDS PREPARED              partner ("GP") units. The subordinated units 
A SUMMARY OF ITS                   and GP units are assets of Oil.
UNDERSTANDING.
[_]   There are currently 26,563 shares of Oil
common stock outstanding, comprised of public
shareholders and "insiders." The public holds
17,160 Class A shares. The "insiders" hold
9,404 shares which include 6,795 Class A
shares, 11 Class B shares and 2,598 Class C
shares.

[_]   Each shareholder of Oil will receive a
certain number of units in Gas such that the
implied consideration paid for each Oil share
is $3.15. 

[_]   The publicly held 17,160 Class A shares will
receive .1596 shares of newly created Senior
Subordinated units (2,738 units in total)
with an implied value of $19.74/unit. This
represents an implied purchase price of
$3.15/share for an implied total purchase
price of $54.1 million.

[_]   The "insiders" of Oil, who hold a total of
9,404 shares (comprised of A, B and C shares)
will also receive $3.15/share for a total of
$29.6 million. The consideration received by
these shareholders will be funded by:

-    (1)  the distribution of existing units
of Gas which are currently owned by
Oil

[_]  all of the 127 GP units owned
by Oil will be given as
consideration at an implied
value of $21.28/unit, for a
total of $2.7 million.

[_]  754 of the 2,396 Subordinated
units owned by Oil will be
given as consideration at an
implied value of $16.33/unit,
for a total of $12.3 million.

-    (2)  the distribution of newly-created
units of Gas

[_]  to fund the remaining $14.6
million of the $29.6 million
due to the Oil "insiders", Gas
will issue 559 newly-created
Senior Subordinated units and
168 newly-created GP units.
The implied values for these
new units are $19.74 and
$21.28, respectively.

Page 31

SUMMARY OF TRANSACTION
PRO FORMA GAS UNITS OUTSTANDING
(IN THOUSANDS)
(continued)

[_]   Of the 2,396 Subordinated units and 127 GP
units owned by Oil, only 1,642 Subordinated
units will not have been used as
consideration paid to the "inside" Oil
shareholders. Hence, these 1,642 Subordinated
units will be retired by Gas. A.G. Edwards
has assumed that the implied value of these
units are $16.33/unit for a total retired
value of approximately $26.8 million.

Page 32

SUMMARY OF GAS UNITS OUTSTANDING
PRE-FINANCING ASSUMPTIONS

------------------------------------------------------------------------------------------------
Distributed to Oil      Issued to Oil                          
------------------   -----------------                         
Type of Units             Current   Public    Insiders   Public   Insiders   Retired   Pro Forma   
-------------             -------   ------    --------   ------   --------   -------   ---------    

Common                     3,832         -           -        -          -         -       3,832    

Senior Subordinated            -         -           -    2,738        559         -       3,297

Subordinated               2,396         -         754        -          -     1,642         754

General Partner (a)          127         -         127        -        168         -         295
------                                                       ---------    
6,355                                                           8,178

________________________
(a)  The number of GP units issued reflect the assumption of a 6,587 common
unit equity offering to refinance certain of the assumed Oil debt.
Hence, the number of GP units reflected in the pro forma column do not
equal 2% of the pro forma outstanding units shown above but do equal
exactly 2% of the pro forma units outstanding on a post financing
basis.

Page 33

EQUITY PURCHASE PRICE CALCULATION
IMPLIED EQUITY VALUE OF OIL'S ASSETS
(units in thousands, $ in millions, except per unit amounts)

- --------------------------------------------------------------------------------------------------------------------------------

Purchase Price of Oil's Equity                     Purchase Price of Oil's Equity             
------------------------------      --------------------------------------------------------  

Value of Securities                Equity Value of Oil's       Value of Oil's GP and     
Event                                  Paid of Oil Shareholders               Heating Oil Assets      Subordinated Units in Star   
- ---------------------------------   ------------------------------     --------------------------    ---------------------------  

Issuance of Senior Subordinated
Units to Public Oil Shareholders         2,738   x   $19.74                                                              
-------------------  
$54.1                              $54.1                              -

Distribution of General Partner
Units to Inside Oil Shareholders           127   x   $21.28 
-------------------
$2.7                                   -                           $2.7 

Distribution of Subordinated
Units of Inside Oil Shareholders           754   x   $16.33 
-------------------
$12.3                                  -                          $12.3

Issuance of General Partner
Units to Inside Oil Shareholders           168   x   $21.28 
-------------------
$3.6                                $3.6                              -

Issuance of Senior Subordinated
Units to Inside Oil Shareholders           559   x   $19.74 
-------------------
$11.0                              $11.0                              -

Retire Subordinated Units                                                                                    1,642   x   $16.33  
-------------------  
($26.8)                           $26.8

$41.8                            $41.8
-----                                 ---------------------------------
Total                                          $83.7                                                $83.7

Divided by 26,563 shares of Oil's 
Common Stock=                                  $3.15 per share

Page 34

PREMIUM PAID ANALYSIS

- --------------------------------------------------------------------------------
Dollars
STOCK PRICE PREMIUM ANALYSIS (a)                in thousands  Notes
- -----------------------------------------------        ------------  ------

Equity purchase price of Oil                                $83,673    $3.15 share price x 26,563 shares.

Premium to stock price one day prior                           93.8%   $1.625 close on April 22, 1998. 
Premium to stock price one month prior                        101.6%
Premium to stock price three months prior                      26.0%   
Premium to stock price six months prior                         0.8%  

PURCHASE PRICE
- ------------------------------------------------

Equity purchase price of heating oil assets                $ 41,847    See appendix F, page 40.

Debt assumption value (b)                                   349,587
-------- 
Aggregate purchase price of heating oil assets             $391,434
========

MULTIPLES                                                                             Notes                     
- ---------------------------------------------               -----------------------  -----------------------------------------------
Multiples                                                      
-----------------------   

1997 Revenue                                     $548,141                0.71 x       As a multiple of aggregate transaction value.
1997 EBITDA (c)                                    36,010               10.87         As a multiple of aggregate transaction value. 
1997 EBIT (d)                                       6,264               62.49         As a multiple of aggregate transaction value.
1997 Net loss to common shares (d)               ($19,338)                 NM         As a multiple of equity value.               
Equity (e)                                       (117,033)                 NM         As a multiple of equity value.               

1997 Adjusted EBITDA (c)                           43,040                9.09 x       As a multiple of aggregate transaction value.
1998 EBITDA budget (c)                             43,440                9.01         As a multiple of aggregate transaction value.
Adj. 1998 EBITDA budget (c)                        38,500               10.17         As a multiple of aggregate transaction value.
1999P EBITDA (c)                                   51,657                7.58         As a multiple of aggregate transaction value.

______________________________________________
(a) Updated through April 22, 1998.
(b) Includes cost of debt at assumed redemption value, preferred stock at
assumed redemption value, transaction fees, and certain off-balance sheet
liabilities, net of excess cash. See appendix F, page 40.
(c) Calculated as gross profit minus SG&A expense and direct delivery expense.
See appendix D, pages 9 through 13.
(d) Excludes restructuring charge, pension curtailment expense, provision for
supplemental benefits and corporate identity expenses.
(e) As of 12/31/97.

Page 35

MERGERS OF EQUALS PREMIUM ANALYSIS(a) 
$100 MILLION AND GREATER 
1/1/94 - 4/22/98

- ----------------------------------------------------------------------------------------------------------------------------------- 

Exchange    Exchange
Value of                 Ratio      Ratio
Date          Date                                                                  Transaction   Exchange     1 Day      1 Week 
Annc'd      Effective     Target Name                    Acquiror Name                 ($ mil)      Ratio       Prior      Prior  
- ------------------------------------------------------------------------------------------------------------------------------------

12/23/97     03/27/98     United Meridian Corp           Ocean Energy Inc               1,331.7     0.556       0.645      0.565  
09/02/97     12/19/97     Doubletree Corp                Promus Hotel Corp              2,207.6     1.081       1.288      1.133  
08/25/97     12/17/97     Mosinee Paper Corp             Wausau Paper Mills Co            497.1     1.400       1.211      1.238  
07/10/97     12/31/97     Reading & Bates Corp           Falcon Drilling Co             2,587.0     0.590       0.506      0.485  
06/30/97     12/23/97     Rykoff-Sexton Inc              JP Foodservice Inc             1,404.3     0.840       0.652      0.668  
05/27/97     12/18/97     HFS Inc                        CUC International Inc         11,342.9     2.403       2.268      2.443  
05/12/97     09/09/97     Smith's Food & Drug Centers    Fred Meyer(Kohlberg Kravis)    2,018.0     1.050       0.955      0.878  
05/06/97     07/22/97     BW/IP Inc                      Durco International Inc          530.7     0.697       0.737      0.657  
10/01/96     04/01/97     Health Systems International   Foundation Health Corp         1,277.4     0.769       0.838      0.770  
08/02/96     11/07/96     Colonial Data Technologies     US Order Inc                     186.5     1.000       0.792      0.800  
07/18/96     02/12/97     ROC Communities Inc            Chateau Properties Inc           288.6     1.042       0.984      1.040  
04/22/96     08/15/97     NYNEX Corp                     Bell Atlantic Corp            21,345.5     0.768       0.815      0.835  
06/13/95     10/27/95     First Financial Management     First Data Corp                5,757.5     1.586       1.349      1.300  
03/02/95     06/28/95     Abbey Healthcare Group Inc.    Homedco Group Inc.               658.7     0.700       0.641      0.664  
08/30/94     03/15/95     Lockheed Corp                  Martin Marietta Corp           5,204.1     1.630       1.368      1.321  

- --------------------------------------------------------------------------------------------------------------------------------
Exchange     Acq/      Acq/       Premium  
Ratio      Target    Target     Exchange  
Date         Date                                                                  4 Weeks     Equity     Total      1 Day    
Annc'd     Effective   Target Name                     Acquiror Name                 Prior      Mkt Cap   Mkt Cap     Prior     
- --------------------------------------------------------------------------------------------------------------------------------

12/23/97    03/27/98   United Meridian Corp            Ocean Energy Inc              0.557       0.97      1.13       -13.9%   
09/02/97    12/19/97   Doubletree Corp                 Promus Hotel Corp             1.153       1.13      0.96       -16.1%     
08/25/97    12/17/97   Mosinee Paper Corp              Wausau Paper Mills Co         1.419       1.94      1.88        15.6%     
07/10/97    12/31/97   Reading & Bates Corp            Falcon Drilling Co            0.535       2.26      2.12        16.5%     
06/30/97    12/23/97   Rykoff-Sexton Inc               JP Foodservice Inc            0.671       1.19      0.82        28.9%     
05/27/97    12/18/97   HFS Inc                         CUC International Inc         2.765       1.06      0.89         5.9%     
05/12/97    09/09/97   Smith's Food & Drug Centers     Fred Meyer(Kohlberg Kravis)   0.891       1.92      0.89         9.9%     
05/06/97    07/22/97   BWAP Inc                        Durco International Inc       0.714       1.47      1.32         5.4%     
10/01/96    04/01/97   Health Systems International    Foundation Health Corp        0.824       1.58      1.28         8.2%     
08/02/96    11/07/96   Colonial Data Technologies      US Order Inc                  0.990       1.28      1.46        26.3%     
07/18/96    02/12/97   ROC Communities Inc             Chateau Properties Inc        1.039       0.47      0.76         5.9%     
04/22/96    08/15/97   NYNEX Corp                      Bell Atlantic Corp            0.790       1.20      1.04         5.8%     
06/13/95    10/27/95   First Financial Management      First Data Corp               1.263       1.39      1.39        17.5%     
03/02/95    06/28/95   Abbey Healthcare Group Inc.     Homedco Group Inc.            0.658       1.59      1.24         9.3%     
08/30/94    03/15/95   Lockheed Corp                   Martin Marietta Corp          1.360       1.16      1.17        19.2%   

- -----------------------------------------------------------------------------------------------------------------
Premium    Premium               
Exchange   Exchange              
Date         Date                                                                            1 Week    4 Weeks               
Annc'd     Effective     Target Name                      Acquiror Name                       Prior      Prior                
- -----------------------------------------------------------------------------------------------------------------           

12/23/97    03/27/98     United Meridian Corp             Ocean Energy Inc                    -1.7%      -0.2%                
09/02/97    12/19/97     Doubletree Corp                  Promus Hotel Corp                   -4.6%      -6.2%                
08/25/97    12/17/97     Mosinee Paper Corp               Wausau Paper Mills Co               13.1%      -1.3%                
07/10/97    12/31/97     Reading & Bates Corp             Falcon Drilling Co                  21.6%      10.3%                
06/30/97    12/23/97     Rykoff-Sexton Inc                JP Foodservice Inc                  25.7%      25.1%                
05/27/97    12/18/97     HFS Inc                          CUC International Inc               -1.6%     -13.1%                
05/12/97    09/09/97     Smith's Food & Drug Centers      Fred Meyer(Kohlberg Kravis)         19.6%      17.9%                
05/06/97    07/22/97     BWAP Inc                         Durco International Inc             -6.2%       2.4%                
10/01/96    04/01/97     Health Systems International     Foundation Health Corp               0.1%       6.6%                
08/02/96    11/07/96     Colonial Data Technologies       US Order Inc                        25.0%       1.0%                
07/18/96    02/12/97     ROC Communities Inc              Chateau Properties Inc               0.2%       0.2%                
04/22/96    08/15/97     NYNEX Corp                       Bell Atlantic Corp                   8.0%       2.8%                
06/13/95    10/27/95     First Financial Management       First Data Corp                     22.0%      25.6%                
03/02/95    06/28/95     Abbey Healthcare Group Inc.      Homedco Group Inc.                   5.5%       6.4%                
08/30/94    03/15/95     Lockheed Corp                    Martin Marietta Corp                23.4%      19.9%                 

Premium    Premium       Premium   
Exchange    Exchange      Exchange  
1 Day       1 Week       4 Weeks   
Prior       Prior         Prior    
- ----------------------------------------------
MEAN             9.6%       10.0%        6.5%
MEDIAN           9.3%        8.0%        2.8%
ADJ. MEAN (B)   10.1%       10.0%        6.5%
- ----------------------------------------------

- --------------------------------------------------------------------------------
(a)  "Merger of Equals" is defined as a merger of two companies of similar
market cap size. It does not imply any similarity of business between the
target and acquiror, nor does it imply any change of control of either 
company post-merger.  Excludes financial institutions.
(b)  Adjusted Mean excludes highest and lowest data points 
Source: Securities Data Company, Inc. and Bloomberg

Page 36

Merger of Equals Premium Analysis (a)

[Chart appears here]

------------------
(a)  "Merger of Equals" is defined as a merger of two companies of
similar market cap size.  It does not imply any similarity   
of business between the target and acquiror, nor does it
imply any change of control of either company post-merger.
Excludes financial institutions. 

Page 37

Exchange Ratio Analysis

Relative to current
prices, the exchange               Gas Unit Price/Oil Stock Price
ratio at $3.15 is low,                    12/15/95 - 4/22/98
however, it is in line
with the average prices
of the companies' equity
over the past two years.                [Chart appears here]

Factset: Daily
(a) Represents the current price of Gas divided by 
the current price of Oil.
(b) Represents the current price of Gas divided by 
the proposed $3.15 price per share of Oil.
(c) Represents Gas' average price for the period
divided by Oil's average price for the period.

Page 38

Exchange Ratio Analysis
Comparative Stock Price Performance

While Gas' unit price
has remained relatively                    Indexed Stock Price Performance
flat, Oil's stock price                            12/15/95 - 4/22/98
has declined
significantly in the past
year.                                             [Chart appears here]

Premium of Current Price to Price
---------------------------------
Current   2 Years  1 Year    180 Days   60 Days   30 Days
Price (b)   Prior    Prior      Prior     Prior     Prior
---------------------------------------------------------
Gas             21.94      5.1%     1.4%      -2.0%     -6.2%     -0.3%
Oil              1.63    -76.8%   -45.8%     -48.1%    -35.0%      0.9%
Composite (a)   21.96     -2.2%     6.4%      -5.4%     -4.4%      1.3%

(a) Composite index includes the following companies: APU, CNO, HPG, FGP,
NPL, SPH.
(b) As of 4/22/98 

Page 39

TRANSACTION MULTIPLE ANALYSIS 
FIRM VALUATION

- ------------------------------------------------------------------------------------------------------------------------------------

Equity Purchase Price of Heating Oil Assets                            $  41,847,360

+   Cost of Debt at Redemption Value                                   290,992,000 

+   Cost of Preferred stock at Redemption Value                         34,375,000

+   Transaction Fees                                                    17,743,000
349,587,000
+   Off-Balance Sheet Pension and Tax Liability                          8,500,000

-   Excess Cash

Oil's cash balance at 9/30/98            13,005,000
Required cash on hand                      (500,000)
"Unearned MQD" (a)                       (2,497,025)
Additional Surplus (b)                   (7,984,975)             2,023,000 

-------------
Firm Value                                                             $ 391,434,360
=============

________________________________________________________________________________
(a)  Comprised of total new units multiplied by the quarterly distribution
payable immediately following the transaction of $0.575 plus the original
units multiplied by the incremental distribution required by the higher
distribution of $0.025, all divided by two for the assumption of a mid-
quarter closing.
(b)  Assumes an additional Surplus of $0.95 per new unit is set aside.

TRANSACTION MULTIPLE ANALYSIS
TRANSACTION MULTIPLES FOR FIRM VALUATION

================================================================================
EBITDA
------------------------------------------
Purchase Price              Year                   Amount         Multiple Paid
- --------------      --------------------      ----------------  ----------------

$391,434,360        1997 Adjusted               $43,040,000           9.1x

$391,434,360        Adjusted 1998 Budget        $38,500,000          10.2x

$391,434,360        1999 Projected              $51,657,000           7.6x

Page 41

TRANSACTION MULTIPLE ANALYSIS 
DISTRIBUTION OF VALUE

- --------------------------------------------------------------------------------
OIL

1997 Adjusted      EBITDA
EBITDA        Multiple    Purchase Price
- --------------   ----------  ----------------

$43,040,000       9.1x       $391,434,360

ABILITY TO FURTHER CONSOLIDATE HEATING OIL INDUSTRY                      CORE BUSINESS                               
- ---------------------------------------------------                      -------------                               
Acquisition                                          EBITDA                   $ 43,040,000       
EBITDA           Multiple          Purchase Price                   EBITDA Decline Rate              7.75% (a)  
- --------------     -------------      -----------------                                           

$6,315,789           4.75x            $ 30,000,000                     WACC                             7.85% (b)  

Decline Rate                                    7.75% (a)                                                            
WACC                                            7.85% (b)                                                            
Perpetuity                              $ 40,477,946                                                                 
Purchase Price                          $ 30,000,000                                                                 
--------------                                                                 
Net Present Value of                                                                                                 
the Heating Oil Acq.                   $ 10,477,946                                                                 

Value in perpetuity of Ability to                                                                                    
--------------                                             -------------       
Consolidate Heating Oil Industry      $133,425,382                     Value Of Core Business   $275,843,712       
==============                                             =============        

- ---------------------------------------------------------------------------
Implied Total Valuation                                      $409,269,094

% of Valuation attributable to core business                         67.4%

% of Valuation attributable to consolidation opportunities           32.6%
- ---------------------------------------------------------------------------

(a) A.G. Edwards' estimate of the decline rate of EBITDA based on a 4.1%
attrition rate. 
(b) See page 57.

Page 42

TRANSACTION MULTIPLE ANALYSIS
TRANSACTION MULTIPLES FOR EXISTING HEATING OIL BUSINESS

================================================================================
Revised                           EBITDA
----------------------------------------
Purchase Price (a)              Year                Amount         Multiple Paid
- ------------------     ---------------------   ----------------    -------------

$263,823,260           1997 Adjusted           $43,040,000            6.1x

$263,823,260           Adjusted 1998 Budget    $38,500,000            6.9x

$263,823,260           1999 Projected          $51,657,000            5.1x

- --------------------------------------------------------------------------------
(a)  Represents A.G. Edwards' estimate of the portion of the $391 million price
being paid for Oil's heating oil business that can be attributable to its
core business. Calculation: $391 million x 67.4%. See page 42.

Page 43

RELATIVE CONTRIBUTION ANALYSIS (a)
($ IN THOUSANDS)

Gas' EBITDA
Contribution

96-97    35.4%                      [CHART APPEARS HERE]
98-99    33.3%
96-99    34.3%

For Gas' contribution                 IMPLIED FIRM VALUE   
of approximately 34%                     APRIL 22, 1998
of the combined entity's 
EBITDA, it will receive               IMPLIED FIRM VALUE (TRANSACTION)
approximately 37% of the                 APRIL 22, 1998
implied firm value.

[CHART APPEARS HERE]

__________________
(a)  For purposes of its analysis, A.G. Edwards converted Oil's historical 
December 31st fiscal year-end to a September 30th fiscal year-end for
comparison purposes. Oil's projections are based on a December 31st
calendar year end. Other measures of relative contribution analysis are 
non-meaningful.
(b)  Includes only heating oil EBITDA for Oil.
(c)  Firm value for all of Oil.
(d)  Implied firm value of only Oil's heating oil assets.

Page 44

ACCRETION/DILUTION ANALYSIS
VARIATIONS IN ATTRITION RATES, MARGIN GROWTH RATES, AND ACQUISITION ASSUMPTIONS

====================================================================================================================================
4.1% Attrition   
Gas        $0.01 Margin growth                         Attrition                Margin Growth
---------------------      ---------------------
Stand-alone    $30.0mm at 4.75x Acquisitions            6.00%      2.00%          $0.000     $0.015
-------------   -------------------------------       ---------    --------      ---------   ---------      

--------
DCF per unit
1998E (a)           $1.270              $1.570                            $1.570     $1.570         $1.570     $1.570
1998N (b)            1.930               2.190                             2.190      2.190          2.190      2.190
1999P                2.250               3.200                             3.080      3.330          2.910      3.350

Accretion/Dilution                                                                                                        
1998E (a)                                 23.6%                             23.6%      23.6%          23.6%      23.6%
1998N (b)                                 13.5%                             13.5%      13.5%          13.5%      13.5%
1999P                                     42.2%                             36.9%      48.0%          29.3%      48.9%

Common unit coverage                                                                                                       
1998E (a)             0.94x               0.99x                             0.99x      0.99x          0.99x      0.99x
1998N (b)             1.42                1.38                              1.38       1.38           1.38       1.38 
1999P                 1.66                1.93                              1.86       2.01           1.76       2.02 

Total unit coverage                                                                                                        
1998E (a)             0.58x               0.71x                             0.71x      0.71x          0.71x      0.71x
1998N (b)             0.88                0.99                              0.99       0.99           0.99       0.99 
1999P                 1.02                1.39                              1.34       1.45           1.26       1.45 
--------

4.1% Attrition   
Acquisitions      $0.015 Margin growth             
------------                                      
$50mm at 5.75x     $50.0mm at 5.75x Acquisitions   
--------------     ------------------------------- 

DCF per unit                                         
1998E (a)                   $1.570                   $1.570      
1998N (b)                    2.190                    2.190          
1999P                        3.480                    3.640          

Accretion/Dilution                                                  
1998E (a)                     23.6%                    23.6%   
1998N (b)                     13.5%                    13.5%   
1999P                         54.7%                    61.8%   

Common unit coverage                                                
1998E (a)                     0.99x                    0.99x   
1998N (b)                     1.38                     1.38    
1999P                         2.10                     2.20    

Total unit coverage                                                
1998E (a)                     0.71x                    0.71x  
1998N (b)                     0.99                     0.99   
1999P                         1.51                     1.58    

- ---------------------------------------------------
(a) 1998 estimate assumes no acquisitions for either company, and is adjusted to
reflect actual results through 3/31/98.
(b) 1998 budgeted. 

Page 45

PUBLIC COMPANY ANALYSIS

[_]  A.G. Edwards compared certain financial and market information of Gas on a
historical and pro forma basis to that of certain public master limited
partnerships which A.G. Edwards deemed relevant for the purposes of this
analysis. A.G. Edwards reviewed the trading multiples from a total of 6
public propane master limited partnerships.

[_]  The selected propane master limited partnerships are as follows: 
- AmeriGas Partners, L.P.                - Heritage Propane Partners, L.P.
- Cornerstone Propane Partners, L.P.     - National Propane Partners, L.P.
- Ferrellgas Partners, L.P.              - Suburban Propane Partners, L.P.

[_]  No company used in the analysis is identical to Gas.

PUBLIC COMPARABLE COMPANIES (A)

- ---------------------------------------------------------------------------------------------------------
PUBLIC          PUBLIC                   
PRO FORMA       COMPANY        COMPANY
GAS              GAS          MEDIANS         RANGES
- ---------------------------------------------------------------------------------------------------------

Yield                                       10.0%         10.5%            9.6%          8.5% to 10.6%
Firm value/LTM EBITDA                       12.7x (b)     10.8x (b)       12.5x          9.8x to 16.7x
Firm value/1998 normalized EBITDA            8.7x (c)      7.9x (c)       11.5x         10.3x to 13.7x
Equity Market Cap/LTM DCF                   18.0x (d)     14.0x (d)       15.7x          9.4x to 25.5x
Equity Market Cap/1998 normalized DCF        9.7x (e)      7.5x (e)       13.9x         11.6x to 16.9x
LTM common unit coverage                     O.9x (f)      l.Ox (f)        1.4x          0.6x to  1.5x
1998E common unit coverage                   1.7x (g)      1.8x (g)        1.4x          0.9x to  1.9x
LTM total unit coverage                      0.6x (h)      0.7x (h)        0.7x          0.4x to  l.Ox
1998E total unit coverage                    l.Ox (i)      1.3x (i)        0.7x          0.7x to  l.Ox
- ---------------------------------------------------------------------------------------------------------

(a) Public comparable companies include: APU, CNO,    (f) Adjusted 1998 budget.
FGP, HPG, CNL and SPH.                            (g) 1999 estimates.
(b) Firm value/adjusted 1998 budget EBITDA.           (h) Adjusted 1998 budget.
(c) Firm value/1999 estimated EBITDA.                 (i) 1999 estimates.
(d) Equity market cap/adjusted 1998 budget EBITDA.
(e) Equity market cap/1999 estimated DCF.

Page 46

PUBLIC COMPANY ANALYSIS
($ IN MILLIONS, EXCEPT PER UNIT DATA)

- ------------------------------------------------------------------------------------------------------------------------------------
Closing       Implied     Implied                             Common

Price On    Market Value   Firm     Distribution               Units/
Company                                   Ticker       (4/22/98)    Of Equity      Value      Per Unit    Yield     Total Units
- ------------------------------------------------------------------------------------------------------------------------------------

Gas                                 (a)               $21.938        $  139.4     $  232.0     $  2.20      10.0%        60.3%

AmeriGas Partners, L.P.                    APU         25.938         1,108.6      1,867.2        2.20       8.5%        52.8%
Cornerstone Propane Partners, L.P.  (d)    CNO         22.688           455.7        671.7        2.16       9.5%        66.5% 
Ferrellgas Partners, L.P.           (e)    FGP         20.875           666.6      1,192.3        2.00       9.6%        47.0%
Heritage Propane Partners, L.P.            HPG         23.125           197.8        371.8        2.00       8.6%        55.8%
National Propane Partners, L.P.            NPL         20.313           232.9        375.6        2.10      10.3%        59.6%
Suburban Propane Partners, L.P.     (f)    SPH         18.813           551.4        942.0        2.00      10.6%        75.1%

- ------------------------------------------------------------------------------------------------------------------------------------
Mean                                                                                                         9.5%        59.5%
Median                                                                                                       9.6%        57.7%
====================================================================================================================================

PRO FORMA                                             $ 21.938       $ 323.9 (g)  $  621.2 (h) $  2.30      10.5%        70.6%

- ------------------------------------------------------------------------------------------------------------------------------------
LTM Distributable Cash Flow/                         FY98E Distributable Cash Flow/
----------------------------------                  --------------------------------
Distribution To     Distribution         FY98E      Distribution To    Distribution
Company                                     Common Units        To Total Units     DCF/Unit     Common Units       To Total Units
- ------------------------------------------------------------------------------------------------------------------------------------

Gas                                 (a)      0.9x (b)             0.6x (b)           $2.25 (c)       1.7x (c)           1.0x (c)

AmeriGas Partners, L.P.                      1.5x                 0.8x                2.14           1.9x               1.0x
Cornerstone Propane Partners, L.P.  (d)      0.6x                 0.4x                1.47           1.1x               0.7x
Ferrellgas Partners, L.P.           (e)      1.4x                 0.7x                1.34           1.4x               0.7x
Heritage Propane Partners, L.P.              1.3x                 0.8x                2.01           1.8x               1.0x
National Propane Partners, L.P.              0.9x                 0.5x                1.60           1.3x               0.8x
Suburban Propane Partners, L.P.     (f)      1.4x                 1.0x                1.41           0.9x               0.7x

- ------------------------------------------------------------------------------------------------------------------------------------
Mean                                         1.2x                 0.7x                               1.4x               0.8x
Median                                       1.4x                 0.7x                               1.4x               0.7x
====================================================================================================================================

PRO FORMA                                    1.0x (b)             0.7x                2.91 (c)       1.8x (c)           1.3x (c)

____________________________________
1998 estimates per A.G. Edwards' research, except for Gas, Oil, and Pro Forma.
Implied Firm Value equals common, subordinated and GP units, mulitiplied by the
market price of common units plus debt, less cash.
(a) Pro forma for the Pearl Gas acquisition and the common unit offering. Fiscal
1997 maintenance capital expenditure used as LTM figure.
(b) For Gas and Pro forma only, LTM DCF figures are adjusted 1998 budget, DCF 
estimates.
(c) For Gas and Pro forma only, FY98E DCF figures are 1999 DCF estimates.
(d) Financial information pro forma for common unit offering. Maintenance 
capital expenditures assumed to be 8% of EBITDA due to lack of disclosure.
(e) Maintenance capital expenditure assumed to be 8% of EBITDA due to lack of 
disclosure.
(f) Financial figures exclude $5.1 million gain from sale of minority interest.
(g) 14,764 units at $21.9375.
(h) $323.3 in equity plus $308.316 pro forma debt (see page 56), less $10.982 
cash.

Page 47

PUBLIC COMPANY ANALYSIS

- -------------------------------------------------------------------------------------------------------------------------
Long Term        LTM       Firm Value/ Firm Value/     Equity        Equity 
Debt/         EBITDA/       LTM         1998E     Market Cap/   Market Cap/  
Firm Value     Int. Exp.     EBITDA       EBITDA      LTM DCF      1998E DCF
- -------------------------------------------------------------------------------------------------------------------------

Gas                                     41.4%       2.3x (a)    12.7x (a)     8.7x (b)     18.0x (c)      9.7x (d)

Amerigas Partners, L.P.                 37.3%       2.2x        12.6x        12.1x         15.5x         14.1x
Cornerstone Propane Partners, L.P.      35.1%       2.1x        16.7x        13.7x         25.5x         16.9x
Ferrellgas Partners, L.P.               41.5%       2.1x        12.5x        12.0x         15.8x         15.9x
Heritage Propane Partners, L.P.         46.0%       2.6x        10.9x        10.6x         15.7x         11.6x
National Propane Partners, L.P.         36.8%       3.2x        16.3x        11.0x         18.0x         13.0x
Suburban Propane Partners, L.P.         45.5%       2.9x         9.8x        10.3x          9.4x         13.6x

- -------------------------------------------------------------------------------------------------------------------------
Mean                                    40.4%       2.5x        13.1x        11.6x         16.6x         14.2x
Median                                  39.4%       2.4x        12.5x        11.5x         15.7x         13.9x
- -------------------------------------------------------------------------------------------------------------------------

Pro Forma                               49.6%       2.1x (a)    10.8x (a)     7.9x (b)     14.0x (c)      7.5x (d)

- -------------------------------------------------------------
EBITDA is defined as net income (loss) before extraordinary items plus interest,
income taxes, depreciation and amortization, impairment expense, and other non-
recurring and non-operating items.
(a) For Gas and Pro Forma only, LTM EBITDA figures are adjusted 1998 budget
estimates.
(b) For Gas and Pro Forma only, 1998E EBITDA figures are 1999 estimates.
(c) For Gas and Pro Forma only, LTM DCF figures are adjusted 1998 budget DCF
estimates.   
(d) For Gas and Pro Forma only, 1998E DCF figures are 1999 DCF estimates.

PUBLIC COMPANY DESCRIPTIONS

AMERIGAS PARTNERS, LP.        AmeriGas Partners operates the largest retail
propane distribution business in the U.S., serving
approximately 968,000 residential, commercial,
industrial, agricultural, and motor-fuel customers
in 45 states. AmeriGas Partners also sells 
propane-related supplies and equipment, including
home appliances. The company owns or leases a
fleet of about 385 transport trucks, 680 railroad
tank cars, and 2,300 bobtail and rack trucks. It
also owns or leases propane-storage facilities in
Arizona and Rhode Island. AmeriGas Propane, a
wholly owned subsidiary of UGI Corp., owns 58% of
AmeriGas Partners.

[GRAPH APPEARS HERE]

CORNERSTONE PROPANE           Cornerstone Propane Partners, L.P. distributes
PARTNERS, L.P.                propane for residential, commercial, industrial,
agricultural and other retail uses; markets and
distributes propane and natural gas liquids;
services propane heating systems and appliances;
and sells propane-related supplies, appliances and
other equipment. It is the fifth largest retail
marketer of propane in the U.S. in terms of
volume. The partnership's operations are
concentrated in the east coast, south-central and
west coast regions of the U.S.

[GRAPH APPEARS HERE]
Page 49

PUBLIC COMPANY DESCRIPTIONS 
(continued)                  

FERRELLGAS PARTNERS, L.P.     Ferrellgas is the second largest U.S. distributor
of propane serving more than 800,000 residential
and commercial customers. The company also engages
in propane/natural gas trading, wholesale propane
marketing, and chemical feedstock marketing. It
markets its products primarily in the Midwest, the
Great Lakes area, and the Southeast. With a
delivery fleet of approximately 4,000 vehicles,
Ferrellgas sells almost 700 million gallons of
fuel annually to its retail customers, which
represents about 8% of all retail propane bought
in the U.S. The company has acquired more than 100
companies in 11 years.

[GRAPH APPEARS HERE]

HERITAGE PROPANE              Heritage Propane Partners distributes propane to
PARTNERS, LP.                 more than 220,000 residential, commercial,
industrial, and agricultural customers. The
propane is used primarily for heating, drying,
cooking, as fuel for engines, as a cutting gas for
mining operations, and for curing tobacco. The
company's retail operations distribute propane to
customers in 23 states in the western,
southeastern, and northeastern U.S. The company
also distributes wholesale propane and sells,
installs, and repairs propane-related equipment.
Heritage has acquired 40 retail propane operations
since 1989, bringing annual propane sales to over
125 million gallons.

[GRAPH APPEARS HERE]

Page 50

PUBLIC COMPANY DESCRIPTIONS
(continued)

NATIONAL PROPANE              National Propane L.P. markets propane on a retail
PARTNERS, L.P.                basis to residential, commercial, industrial and
agricultural customers and dealers in 25 states;
and also sells propane-related supplies and
equipment, including home and commercial
appliances. It is the sixth largest retail
marketer of propane in the U.S. in terms of
volume, supplying approximately 250,000 active
retail and wholesale customers in 25 states
through 166 service centers located in 24 states.
Operations are concentrated in the Midwest,
Northeast, Southeast and Southwest regions of the
U.S.

[GRAPH APPEARS HERE]

SUBURBAN PROPANE              Suburban Propane Partners markets and distributes
PARTNERS, L.P.                propane to residential, commercial, industrial and
agricultural customers through a retail
distribution network consisting of 352 district
locations in 41 states. The company, the third
largest retail marketer of propane in the U.S.,
serves over 730,000 active customers primarily
located in the east and west coast regions of the
country. Suburban Propane also sells, installs and
services equipment related to its propane
distribution business, including heating and
cooking appliances and, at some locations, propane
fuel systems.

[GRAPH APPEARS HERE]

Page 51

DISCOUNTED CASH FLOW ANALYSIS 
GAS - STAND ALONE 
($ IN THOUSANDS)

-----------------------------------------------------------------------------------------------------------------------------------

INCOME STATEMENT SUMMARY (a):                         1998         1999          2000         2001        2002         Terminal
---------   ----------    ----------   ----------  ----------   -----------------

EBITDA                                              18,279        26,730       28,541       30,361      32,188         
% increase                                                        46.2%         6.8%         6.4%        6.0%

Net income                                          (1,321)        3,691        3,554        3,779       4,198

CASH FLOW SUMMARY:
- ------------------ 

After-tax EBI                                                     12,805       13,582       14,527      15,474   

Depreciation and amortization                                     13,900       14,934       15,809      16,689   

Maintenance capital expenditures                                  (3,274)      (3,395)      (3,694)     (3,816)  

Working capital increases                                           (500)        (500)        (500)       (500)  
----------    ----------   ----------  ----------  
Net operating cash flow (free cash flow)                          22,931       24,621       26,142      27,847    

--------------
Weighted average cost of capital (b)              7.9%
--------------

--------------
Terminal EBITDA multiple (c)                     10.2x
--------------

Discount factor (d)                                              0.9629        0.8927       0.8276      0.7673          0.7388

Terminal value (e)                                                                                                    $328,318

--------------
Present value                                $329,620           $22,079       $21,979      $21,635     $21,367        $242,560
--------------       ----------    ----------   ----------  ----------    ----------------

Current net debt (f)                        ($102,956)
--------------

Net present value of equity                  $226,664
==============  

Common units/Total units (g)                     60.3%
--------------
Equity value to common units (h)             $136,669
--------------
- ------------------------------------------------------------------------------------------------------------------------------------

(a) Based on management projections.
(b) Based on comparable companies' WACC. See Weighted Average Cost of Capital
analysis.
(c) Gas' current firm value of $232.0 million/$22.781 million normalized 1998
EBITDA = 10.2x, which represents a multiple of current year normalized
EBITDA.
(d) Discount factor calculated using half-year convention.
(e) Terminal value calculated using EBITDA multiple.  
(f) Represents  total projected debt less cash as of 9/30/98.
(g) Total units include common, subordinated and GP units.
(h) Current market value of common units is 3,832 units * $21.938 unit price =
$84,065
Page 52

DISCOUNTED CASH FLOW ANALYSIS
GAS - PRO FORMA PAINEWEBBER MODEL (a)
($ IN THOUSANDS)

====================================================================================================================
INCOME STATEMENT SUMMARY (b):                            1998       1999      2000       2001      2002    Terminal  
- -----------------------------                         ---------   --------  -------    --------  -------- ----------

EBITDA                                                  57,629     78,887    83,412     87,919    92,408             
% increase                                                         36.9%      5.7%       5.4%      5.1%            
Net income                                             (11,497)     4,970     2,830      3,156     5,021             

CASH FLOW SUMMARY:                                                                                                   
- ------------------                                                                                                   
After-tax EBI                                                      33,584    33,532     34,781    35,995                  
Depreciation and amortization                                      44,778    49,354     52,613    55,888                   
Maintenance capital expenditures                                   (6,774)   (6,895)    (7,194)   (7,316)                    
Working capital increases (c)                                       8,982    (1,000)    (1,000)   (1,000)                   
--------  --------    -------   -------                     
Net operating cash flow (free cash flow)                           80,570    74,991     79,200    83,567

---------
Weighted average cost of capital (d)             7.9%
---------
---------
Terminal EBITDA multiple (e)                    10.2x
--------- 
Discount factor (f)                                                0.9629    0.8928     0.8278    0.7675     0.7390
Terminal value (g)                                                                                         $942,562
---------
Present value                               $970,827              $77,581   $66,952    $65,561   $64,139   $696,595
---------             --------  --------    -------   -------  ---------
Less net debt (h)                          ($297,334)
--------- 
Net present value of equity                 $673,493
=========
Original common units/Total units (i)           26.0%

---------
Equity value to common units (j)            $174,793  
---------
- --------------------------------------------------------------------------------------------------------------------

(a) Scenario assumes 4.1% steady attrition, 0% margin improvement, and $30 
million in acquisitions at 4.75 multiple.
(b) Based on management projections.
(c) A.G Edwards' assumption.
(d) Based on comparable companies' WACC. See Weighted Average Cost of Capital 
analysis.
(e) Gas' current firm value of $232.0 million/$22.781 million normalized 1998
EBITDA = 10.2x, which represents a multiple of current year normalized
EBITDA.
(f) Terminal value calculated using half-year convention.
(g) Discount factor calculated using EBITDA multiple.
(h) Represents total proforma projected debt less cash as of 9/30/98.
(i) Total units include common, newly issued common, senior subordinated, 
subordinated and GP units.
(j) Current market value of common units is 3,832 units * $21,938 unit 
price=$84,065

Page 53

Capital Structure Analysis
Oil
($ in millions)

- ---------------------------------------------------------------------------------------------------------------------------
12/31/97                          4/22/98
Book Value        Coupon         Market Price        Market Value
------------      --------       --------------      --------------

Debt:
Credit Agreement
Working Capital facility                            $3.000            7.75%                    NA                 $3.0
Acquisition facility                                 0.000            7.75%                    NA                  0.0
Notes payable
Notes payable for fuel oil dealer purchases, etc.   16.798       8.0%-10.0%                    NA                 16.8
11.85%, 12.17%, 12.18% Senior Notes                 60.000           11.96%                    NA                 60.0
14.1% Subordinated and Senior                        8.300           14.10%                    NA                  8.3
10.125% Subordinated                                50.000           10.13%                92.13%                 46.1
9.375% Subordinated Debentures                      75.000            9.38%                87.00%                 65.3
12.25% Subordinated Debentures                      81.250           12.25%                96.50%                 78.4

Total Debt                                        $294.348                                                      $277.8
Effective Cost of Debt                                                                                            11.0%

Preferred Stock:
Redeemable preferred stock                               $8.334           14.34%                    NA                  8.3
12.875% Exchangeable preferred stock                     30.000           12.88%                    NA                 30.0
Adjustment to balance sheet                              (1.678)                                    NA                 (1.7)

Total Preferred Stock                                $36.7                                                       $36.7
Effective Cost of Preferred Stock                                                                                 13.2%
Total Debt and Preferred Stock                           $331.0                                                      $314.5
Effective Cost of Debt and Preferred Stock                                                                        11.2%

12/31/97                          4/22/98
Shares Out.                      Market Price        Market Value
-------------                    --------------      --------------
Equity:
Common stock
Class A                                         23,954,560                              $1.625                   $38.9
Class B                                             11,228                              17.776 (a)                 0.2
Class C                                          2,597,519                                  NA (b)                 4.2

Total Equity                                                                                                         $43.3
Effective Cost of Equity                                                                                              28.7%

Total Capitalization                                                                                                 $357.8
WACC                                                                                                              13.3%
Less: Cash                                                                                                        11.7

Net Capitalization                                                                                                   $346.1

Net Market           Market Value
% of Ownership                  Value of Gas          of Interest
----------------                --------------        --------------
Less:

Interest in Gas                                           40.7%                            $231.959                   $94.3

Total Value of Oil Without Interest in Gas                                                                           $263.5

- -------------------------
(a) Class B market price is calculated as: $17.50+$0.2763.
(b) Market price is assumed to equal that of the Class A
shares, since the Class C shares do not trade.

Page 54

Capital Structure Analysis 
Gas
($ in millions)

- ------------------------------------------------------------------------------------------------------------------------------------

12/31/97                       4/22/98
Book Value      Coupon        Market Price         Market Value 
----------      ------      ---------------       --------------  
DEBT:

Credit Agreement
Working Capital facility              $ 0.000          None       Not applicable        Not applicable
Acquisition facility                    0.000          None       Not applicable        Not applicable
Notes payable
8.04% First Mortgage Notes             85.000          8.04%            NA                       $85.0
7.17% First Mortgage Notes (a)         11.000          7.17%            NA                        11.0

Total Debt                                                                                 $96.0
Effective Cost Of Debt                                                                       7.9%
After-tax Cost Of Debt                                                                       5.2%    

12/31/97                       4/22/98 
Shares Out.                   Market Price         Market Value 
-----------                   ------------         ------------

EQUITY:

Common units                            3,831,727                       $21.938                 $ 84.1
Subordinated units                      2,396,078                          NA       (b)           52.6
General Partner                                                                                    2.8 (c)

Total Equity                                                                            $139.4
Effective cost of equity                                                                   9.7%

Total Capitalization                                                                            $235.4
WACC                                                                                       7.9%
Less: Cash                                                                              $  3.5

Net Capitalization                                                                              $232.0
- ------------------------------------------------------------------------------------------------------------------------------------

(a) The 7.17% First Mortgage Notes were placed 1/26/98; proceeds were used to
repay the acquisition facility.
(b) Market price assumed to equal common units.
(c) Implied 2% general partner interest.

Page 55

Capital Structure Analysis
Gas - Pro Forma as of 9/30/98
($ In Thousands)

- ------------------------------------------------------------------------------------------------------------------------------------

Pro Forma
Gas                Oil              Adjustments             Gas
------------       ------------      ------------------      -----------      
Debt:

8.04% First Mortgage Notes                  $85,000                   $0                     $0         $85,000
8.25% WC Revolver                             7,457                  -                      -             7,457
7.17% First Mortgage Notes                   11,000                  -                      -            11,000

11.96% Senior Notes                             -                 60,000                (60,000)            - 
14.10% Senior Notes                             -                  3,100                 (3,100)            -
14.10% Subordinated Notes                       -                  3,100                 (3,100)            -
10.13% Sub Notes & Sr Notes                     -                 50,000                (50,000)            -
9.38% Sub Notes & Sr Notes                     -                 75,000                (75,000)            -
12.25% Sub Notes & Sr Notes                     -                 81,250                (81,250)            -
8.00% Existing Acq Notes Payable               -                 13,859                    -            13,859

8.46% Exchange Debt                            -                    -                   66,000          66,000
8.50% New Debt                                 -                    -                  125,000         125,000

------------       ------------      ------------------      -----------
Total Debt                                 $103,457             $286,309               ($81,450)       $308,316 

Weighted average cost of Debt                                                                               8.3%

Preferred Stock:              
14.33% Preferred Stock                           $0               $4,167                ($4,167)             $0
12.88% Preferred Stock                          -                 30,000                (30,000)            -
------------       ------------      ------------------      -----------
-                 34,167                (34,167)            -    
Common Equity                               $56,368             $210,015               $123,378        ($30,268) 
- ------------------------------------------------------------------------------------------------------------------------------------

Page 56

Discounted Cash Flow Analysis
Pro Forma Weighted Average Cost Of Capital Derivation
($ in millions)

- ------------------------------------------------------------------------------------------------------------------------------------

Total                             Implied     Total     Total
Market        Unit      Total      Market     Debt/     Debt as %    Un-
Levered      Val. Debt    Price at    Units     Value of    Total     Of Total   levered
Comparable Company                        Beta (a)    (Bk = Mkt)  (4/22/98)  Out. (Mil)   Equity    Equity     Capital     Beta
- ------------------------------------------------------------------------------------------------------------------------------------

AmeriGas Partners, L.P.                   0.52       $  777.8   $   25.938      41.9     $1,108.6     70.2%      41.2%    0.306
Cornerstone Propane Partners, L.P.        0.41          235.8       22.688      19.7        455.7     51.7%      34.1%    0.270
Ferrellgas Partners, L.P.                 0.39          537.2       20.875      31.3        666.6     80.6%      44.6%    0.216
Heritage Propane Partners, L.P.           0.44          176.9       23.125       8.4        197.8     89.4%      47.2%    0.232
National Propane Partners, L.P.           0.34          147.4       20.313      11.2        232.9     63.3%      38.8%    0.208
Star Gas Partners, L.P.                   0.34           96.0       21.938       6.2        139.4     68.9%      40.8%    0.201
Suburban Propane Partners, L.P.           0.38          428.2       18.813      28.7        551.4     77.6%      43.7%    0.214

Comparable group's average unlevered beta:                            0.23
Pro forma debt - to - equity ratio (b):                              95.2%
Pro forma debt as a percent of total capital (b):                    48.8% 
Comparable group's beta relevered for Pro forma capital structure:   0.368
=====

- -----------------------------------------------------------------------------
Pro forma capitalization - at market (b)           $308.3          48.8%
Total debt                                        323.9          51.2%
--------        -------
Common Equity                                    $632.2        100.00% 
- -----------------------------------------------------------------------------

DERIVATION OF WEIGHTED AVERAGE COST OF CAPITAL :                         
- -------------------------------------------------

Market Risk Premium Range (d)       
-------------------------------------------

11.3%       12.3%        13.3%       
-------------------------------------------
Pro forma theoretical levered beta:                                     0.368                                               
Assumed % of equity in Pro forma capital structure (b):                 51.2%                                               
Risk - free rate of return (c):                                          5.7%                                               
Pro forma cost of equity range (at various market risk premiums):                              9.8%       10.2%        10.6% 
=====      =====        ===== 
Pro forma assumed tax rate:                                             35.0%                                               
Assumed % of debt in capital structure (b):                             48.8%                                               
Pro forma estimated cost of debt (e):                                    8.3%                                               
Pro forma estimated after - tax cost of debt:                            5.4%                  5.4%        5.4%         5.4% 

------------------------------------------- 
Pro forma weighted average cost of capital range (f):                                          7.7%        7.9%         8.0%        
-------------------------------------------

- -----------------------------------------------------
(a) Source: Bloomberg. 143 week (maximum weekly time period allowed, or the
number of weeks available, which may be less than 143) adjusted beta 
relative to the S&P 500 index.
(b) Market value of long-term debt is assumed to be equal to the book value.
(c) Ten - year Treasury rate on April 22, 1998.
(d) Ibbotson Associates 1997. Total returns for small company stocks of 17.7%
minus the risk-free rate.
(e) Based on Pro forma current debt structure.
(f) Calculation based upon use of the Capital Asset Pricing Model (CAPM).

Page 57

COMPARISON OF CAPITAL STRUCTURES AND COSTS OF CAPITAL
($ IN MILLIONS)

- ----------------------------------------------------------------------------------------------------------------
AMERIGAS PARTNERS,   CORNERSTONE PROPANE    FERRELLGAS PARTNERS,
L.P.            Partners, L.P.               L.P.
------------------   -------------------    --------------------
Capital     Cost      Capital      Cost     Capital        Cost
-------    -------   ---------   -------    -------      -------

DEBT:
Working capital/Revolving credit facility    $   28.0     6.44%    $ 24.2       7.76%   $   84.6       8.40%
Acquisition facility                             37.0     6.32%                                                 
Term loan                                                                                   50.0       8.40%    
Senior Notes                                    100.0    10.13%     220.0       7.53%      200.0      10.00%    
160.0       9.38%    

First Mortgage Notes                                                                                            
Series A                                    222.8    10.53%                                                 
Series B                                    211.6    10.07%                                                 
Series C                                    110.0     8.83%                                                 
Purchase contract obligations                                        12.0       7.50%                           
Notes payable on noncompete agreements                                                      14.6       6.05%    
Other, including capital leases                   9.4       NA                                                  
TOTAL DEBT PER MOST RECENT 10K              718.7               256.2                  509.1                
TOTAL DEBT 12/31/97                         777.8     9.56%     235.8       7.55%      537.2       9.27%    

MINORITY INTEREST                            $    5.1              $  0.0               $    2.0                

EQUITY:                                                                                                         
TOTAL EQUITY                                 $1,108.6     9.75%    $455.7       9.41%   $  666.6       9.93%     

TOTAL CAPITALIZATION                         $1,891.6      8.29%   $691.5       7.88%   $1,205.8       8.19%    
Less: Cash                                   24.4                19.8                   13.5                
NET CAPITALIZATION                           $1,867.2              $671.7               $1,192.3                

FINANCIAL RATIOS:                                                                                               
Bank debt/total debt                            8.36%               10.26%                 25.05%               
Total debt/total cap                           41.12%               34.10%                 44.55%               
Common/total units                             52.77%               66.48%                 46.97%               

- ----------------------------------------------------------------------------------------------------------------
HERITAGE PROPANE        NATIONAL PROPANE       SUBURBAN PROPANE
Partners, L.P.          Partners, L.P.         Partners, L.P.
-------------------     ------------------    --------------------
Capital       Cost      Capital     Cost       Capital      Cost
--------     ------     --------   -------    ---------    -------

DEBT:
Working capital/Revolving credit facility     $ 12.3         7.59%     $  8.5      7.95%     $  0.0
Acquisition facility                            25.0         7.38%       12.0      7.35%     $  0.0
Term loan                                     
Senior Notes                                   120.0         8.55%                            425.0        7.54%
3.5        8.00%

First Mortgage Notes                                                     125.0     8.54% 
Series A                                  
Series B                                  
Series C                                  
Purchase contract obligations                 
Notes payable on noncompete agreements           3.3         8.00%         1.9    8.00%
Other, including capital leases                  1.0
TOTAL DEBT PER MOST RECENT 10K             161.5                     147.4                428.5                                
TOTAL DEBT 12/31/97                        176.9         8.23%       147.4    8.40%       428.2        7.54%

MINORITY INTEREST                             $  0.0                   $   0.0               $  0.0

EQUITY:                                       
TOTAL EQUITY                                  $197.8        10.10%     $ 232.9    9.62%      $551.4        9.88%   

TOTAL CAPITALIZATION                          $374.6         7.86%     $ 380.2    8.01%      $979.6        7.71%  
Less: Cash                                   2.8                       4.6                 37.6
NET CAPITALIZATION                            $371.8                   $ 375.6               $942.0

FINANCIAL RATIOS:                             
Bank debt/total debt                           21.06%                    13.91%                0.00%
Total debt/total cap                           47.21%                    38.76%               43.71%
Common/total units                             55.82%                    59.65%               75.06% 

Page 58

AMERIGAS PARTNERS, L.P.
DISCOUNTED CASH FLOW ANALYSIS
WEIGHTED AVERAGE COST OF CAPITAL DERIVATION
($ in millions)

- ------------------------------------------------------------------------------------------------------------------------------------

Total                               Implied      Total     Total
Market        Unit       Total       Market      Debt/   Debt as %      Un-
Levered     Val. Debt    Price at     Units      Value of     Total    of Total    Levered
Comparable Company                     Beta (a)    (Bk = Mkt)  (4/22/98)   Out. (Mil)    Equity     Equity    Capital      Beta
- ------------------------------------------------------------------------------------------------------------------------------------

AmeriGas Partners, L.P.                 0.48        $777.8     $ 25.938      41.9       $1,108.6    70.2%     41.2%        0.282
Cornerstone Propane Partners, L.P.      0.40         235.8       22.688      19.7          455.7    51.7%     34.1%        0.264
Ferrellgas Partners, L.P.               0.38         537.2       20.875      31.3          666.6    80.6%     44.6%        0.210
Heritage Propane Partners, L.P.         0.43         176.9       23.125       8.4          197.8    89.4%     47.2%        0.227
National Propane Partners, L.P.         0.34         147.4       20.313      11.2          232.9    63.3%     38.8%        0.208
Star Gas Partners, L.P.                 0.33          96.0       21.938       6.2          139.4    68.9%     40.8%        0.195
Suburban Propane Partners, L.P.         0.36         428.2       18.813      28.7          551.4    77.6%     43.7%        0.203

Comparable group's average unlevered beta:            0.23      ------------------------------------------------------------   
AmeriGas' debt-to-equity ratio(b):                    70.2%                                                                       
AmeriGas' debt as a percent of total capital (b):     41.2%     AmeriGas' capitalization-at market (b)                         
Comparable group's beta relevered for Amerigas'                  Total debt                                 $777.8     41.2%   
capital structure:                                  0.331       Common equity                             1,108.6     58.8%   
======                                               --------    ------   
$1,886.5    100.0%   
------------------------------------------------------------    

Derivation Of Weighted Average Cost Of Capital :                                     Market Risk Premium Range (d)               
- ------------------------------------------------                                --------------------------------------------     

AmeriGas' theoretical levered beta:                               0.331              11.3%         12.3%         13.3%           
Assumed % of equity in Amerigas' capital structure (b):            58.8%        --------------------------------------------     
Risk-free rate of return (c):                                       5.7%                                                          
AmeriGas' cost of equity range (at various market risk premiums):                     9.4%          9.7%         10.1%            
AmeriGas' assumed tax rate:                                        35.0%             =====         =====         =====            
Assumed % of debt in capital structure (b):                        41.2%                                                          
AmeriGas' estimated cost of debt (e):                               9.6%                                                         
AmeriGas' estimated after-tax cost of debt:                         6.2%              6.2%          6.2%          6.2%        
--------------------------------------------  
AmeriGas' weighted average cost of capital range (f):                                 8.1%          8.3%          8.5%        
____________________________________________________________                    --------------------------------------------  

(a) Source: Bloomberg. 143 week (maximum weekly time period allowed, or the
number of weeks available, which may be less than 143) adjusted beta
relative to the S&P 500 index.
(b) Market value of long-term debt is assumed to be equal to the book value.
(c) Ten-year Treasury rate on April 22, 1998.
(d) Ibbotson Associates 1997. Total returns for small company stocks of 17.7%
minus the risk-free rate.
(e) Based on AmeriGas' current debt structure.
(f) Calculation based upon use of the Capital Asset Pricing Model (CAPM).

Page 59

CORNERSTONE PROPANE PARTNERS, L.P. 
DISCOUNTED CASH FLOW ANALYSIS 
WEIGHTED AVERAGE COST OF CAPITAL DERIVATION
($ IN MILLIONS)

===============================================================================================================================
Total                              Implied    Total      Total  
Market       Unit        Total      Market    Debt/    Debt as %
Levered     Val. Debt   Price at      Units     Value of   Total    of Total   Unlevered
Comparable Company                    Beta (a)    (Bk = Mkt)   (4/22/98)   Out. (Mil)   Equity    Equity    Capital      Beta  
- -------------------------------------------------------------------------------------------------------------------------------

AmeriGas Partners, L.P.                  0.48      $777.8      $25.938        41.9     $1,108.6    70.2%      41.2%      0.282 
Cornerstone Propane Partners, L.P.       0.40       235.8       22.688        19.7        455.7    51.7%      34.1%      0.264 
Ferrellgas Partners, L.P.                0.38       537.2       20.875        31.3        666.6    80.6%      44.6%      0.210 
Heritage Propane Partners, L.P.          0.43       176.9       23.125         8.4        197.8    89.4%      47.2%      0.227 
National Propane Partners, L.P.          0.34       147.4       20.313        11.2        232.9    63.3%      38.8%      0.208 
Star Gas Partners, L.P.                  0.33        96.0       21.938         6.2        139.4    68.9%      40.8%      0.195 
Suburban Propane Partners, L.P.          0.36       428.2       18.813        28.7        551.4    77.6%      43.7%      0.203 

--------------------------------------------------

Cornerstone's capitalization - at market (b)
Comparable group's average unlevered beta:                        0.23              Total debt                   $235.8        34.1%
Cornerstone's debt - to - equity ratio (b):                       51.7%             Common equity                 455.7        65.9%
------       ------
Cornerstone's debt as a percent of total capital (b):             34.1%                                        
Comparable group's beta relevered for Cornerstone's                                                              $691.5       100.0%
capital structure:                                               0.303            
=====            --------------------------------------------------

DERIVATION OF WEIGHTED AVERAGE COST OF CAPITAL:                                               Market Risk Premium Range (d) 
- -----------------------------------------------                                        ------------------------------------------

11.3%          12.3%           13.3%
------------------------------------------
Cornerstone's theoretical levered beta:                                   0.303     
Assumed % of equity in Cornerstone's capital structure (b):                65.9%
Risk - free rate of return (c):                                             5.7%
Cornerstone's cost of equity range (at various market risk premiums):                      9.1%           9.4%            9.7%
====           ====            ====
Cornerstone's assumed tax rate:                                            35.0%
Assumed % of debt in capital structure (b):                                34.1%
Cornerstone's estimated cost of debt (e):                                   7.6%
Cornerstone's estimated after - tax cost of debt:                           4.9%
4.9%           4.9%            4.9%
Cornerstone's weighted average cost of capital range (f):
------------------------------------------
7.7%           7.9%            8.1%
------------------------------------------

____________________________
(a)  Source: Bloomberg. 143 week (maximum weekly time period allowed, or the
number of weeks available, which may be less than 143) adjusted beta
relative to the S&P 500 index.
(b)  Market value of long-term debt is assumed to be equal to the book value.
(c)  Ten - year Treasury rate on April 22, 1998.
(d)  Ibbotson Associates 1997. Total returns for small company stocks of 17.7%
minus the risk-free rate.
(e)  Based on Cornerstone's current debt structure.
(f)  Calculation based upon use of the Capital Asset Pricing Model (CAPM).

Page 60

Ferrellgas Partners, L.P.
Discounted Cash Flow Analysis
Weighted Average Cost of Capital Derivation
($ in millions)
- --------------------------------------------------------------------------------

Total                               Implied      Total      Total     
Market         Unit       Total      Market       Debt/    Debt as %    Un-
Levered   Val, Debt     Price at     Units     Value of      Total    Of Total   Levered
Comparable Company                     Beta (a)  (Bk = Mkt)   (4/22/98)   Out. (Mil)   Equity      Equity    Capital     Beta 
- ----------------------------------------------------------------------------------------------------------------------------------

AmeriGas Partners, L.P.                 0.48     $ 777.8       $25.938      41.9      $1,108.6     70.2%        41.2%      0.282
Cornerstone Propane Partners, L.P.      0.40       235.8        22.688      19.7         455.7     51.7%        34.1%      0.264
Ferrellgas Partners, L.P.               0.38       537.2        20.875      31.3         666.6     80.6%        44.6%      0.210
Heritage Propane Partners, L.P.         0.43       176.9        23.125       8.4         197.8     89.4%        47.2%      0.227
National Propane Partners, L.P.         0.34       147.4        20.313      11.2         232.9     63.3%        38.8%      0.208
Star Gas Partners, L.P.                 0.33        96.0        21.938       6.2         139.4     68.9%        40.8%      0.195
Suburban Propane Partners, L.P.         0.36       428.2        18.813      28.7         551.4     77.6%        43.7%      0.203

--------------------------------------------- 
Ferrellgas 'capitalization - 
at Market (b)                        

Comparable group's average unlevered beta:                                  0.23      Total debt               $537.2      44.6%   
Ferrellgas' debt - to - equity ratio (b):                                   80.6%     Common equity             666.6      55.4%   
Ferrellgas' debt as a percent of total capital (b):                         44.6%                            ---------    -------   
Comparable group's beta relevered for Ferrell gas' capital structure:      0.346                             $1,203.8     100.0%   
=========   --------------------------------------------- 

Derivation Of Weighted Average Cost Of Capital :                                              Market Risk Premium Range (d)        
- ------------------------------------------------                                         --------------------------------------    

11.3%      12.3%      13.3%          
Ferrellgas' theoretical levered beta:                                   0.346            --------------------------------------    
Assumed % of equity in Ferrell gas' capital structure (b):               55.4%                                             
Risk - free rate of return (c):                                           5.7%                                             
Ferrellgas' cost of equity range (at various market risk premiums):                            9.6%       9.9%      10.3% 
Ferrellgas' assumed tax rate:                                            35.0%                 ====       ====      =====          
Assumed % of debt in capital structure (b):                              44.6%                                                    
Ferrellgas' estimated cost of debt (e):                                   9.3%                                                  
Ferrellgas' estimated after - tax cost of debt:                           6.0%                 6.0%       6.0%       6.0%        
--------------------------------------
Ferrellgas' weighted average cost of capital range (f):                                        8.0%       8.2%       8.4%        
- -------------------------------------                                                    --------------------------------------   

(a) Source: Bloomberg. 143 week (maximum weekly time period allowed, or the   
number of weeks available, which may be less than 143) adjusted beta      
relative to the S&P 500 index.                                            

(b)  Market value of long-term debt is assumed to be equal to the book value.  

(c)  Ten - year Treasury rate on April 22, 1998.                               

(d)  Ibbotson Associates 1997. Total returns for small company stocks of 17.7% 
minus the risk-free rate.                                                 

(e)  Based on Ferrellgas' current debt structure.                             61

(f)  Calculation based upon use of the Capital Asset Pricing Model (CAPM).    

HERITAGE PROPANE PARTNERS, L.P.
DISCOUNTED CASH FLOW ANALYSIS
WEIGHTED AVERAGE COST OF CAPITAL DERIVATION
($ IN MILLIONS)

====================================================================================================================================
TotaL                                Implied    Total     Total
Market        Unit        TotaL       Market    Debt/    Debt as %     Un-
Levered   Val. Debt    Price at      Units     Value of    Total    of Total   Levered
Comparable Company                            Beta (a)  (Bk = Mkt)   (4/22/98)   Out. (Mil)    Equity    Equity    Capital      Beta
- ------------------------------------------------------------------------------------------------------------------------------------

AmeriGas Partners, L.P.                           0.48      $777.8     $25.938        41.9   $1,108.6     70.2%      41.2%     0.282
Cornerstone Propane Partners, L.P.                0.40       235.8      22.688        19.7      455.7     51.7%      34.1%     0.264
Ferrellgas Partners, L.P.                         0.38       537.2      20.875        31.3      666.6     80.6%      44.6%     0.210
Heritage Propane Partners, L.P.                   0.43       176.9      23.125         8.4      197.8     89.4%      47.2%     0.227
National Propane Partners, L.P.                   0.34       147.4      20.313        11.2      232.9     63.3%      38.8%     0.208
Star Gas Partners, L.P.                           0.33        96.0      21.938         6.2      139.4     68.9%      40.8%     0.195
Suburban Propane Partners, L.P.                   0.36       428.2      18.813        28.7      551.4     77.6%      43.7%     0.203

------------------------------------------------ 

Heritage's Capitalization - at market (b)      
Comparable group's average unlevered beta:                               0.23          Total debt                   $176.9    47.2%
Heritage's debt - to - equity ratio(b):                                  89.4%         Common Equity                 197.8    52.8%
-------   ------
Heritage's debt as a percent of total capital (b):                       47.2%                                      $374.6   100.0%
Comparable group's beta relevered for Heritage's capital structure:      0.359     ------------------------------------------------ 
=====    

DERIVATION OF WEIGHTED AVERAGE COST OF CAPITAL :                                                    MARKET RISK PREMIUM RANGE (d)
- ------------------------------------------------                                                 ----------------------------------

11.3%       12.3%       13.3%
---------------------------------- 
Heritage's theoretical levered beta:                                                    0.359       
Assumed % of equity in Heritage's capital structure (b):                                 52.8%                                    
Risk - free rate of return (c):                                                           5.7%       
Heritage's cost of equity range (at various market risk premiums):                                   9.7%       10.1%       10.5% 
====       =====       =====
Heritage's assumed tax rate:                                                             35.0%        
Assumed % of debt in capital structure (b):                                              47.2%
Heritage's estimated cost of debt (e):                                                    8.2%
Heritage's estimated after - tax cost of debt:                                            5.4%       5.4%        5.4%        5.4%

----------------------------------
Heritage's weighted average cost of capital range (f):                                                7.7%       7.9%        8.0%
---------------------------------- 

__________________________________________________________
(a) Source: Bloomberg. 143 week (maximum weekly time period allowed, or the
number of weeks available, which may be less than 143) adjusted beta
relative to the S&P 500 index.

(b) Market value of long-term debt is assumed to be equal to the book value.

(c) Ten - year Treasury rate on April  22, 1998.

(d) Ibbotson Associates 1997. Total returns for small company stocks of 17.7%
minus the risk-free rate.

(e) Based on Heritage's current debt structure.

(f) Calculation based upon use of the Capital Asset Pricing Model (CAPM).

Page 62

National Propane Partners,L.P.
Discounted Cash Flow Analysis
Weighted Average Cost of Capital Derivation
($ in millions)

- ------------------------------------------------------------------------------------------------------------------------------------

Total                              Implied      Total    Total
Market       Unit         Total      Market      Debt/   Debt as %     Un-
Levered    Val.Debt     Price at      Units     Value of     Total    of Total   levered
Comparable Company                         Beta (a)  (Bk = Mkt)   (4/22/98)    Out. (Mil)   Equity      Equity   Capital     Beta
- ------------------------------------------------------------------------------------------------------------------------------------

AmeriGas Partners, L.P.                    0.48       $777.8      $  25.938        41.9     $1,108.6      70.2%    41.2%     0.282
Cornerstone Propane Partners, L.P.         0.40        235.8         22.688        19.7        455.7      51.7%    34.1%     0.264
Ferrellgas Partners, L.P.                  0.38        537.2         20.875        31.3        666.6      80.6%    44.6%     0.210
Heritage Propane Partners, L.P.            0.43        176.9         23.125         8.4        197.8      89.4%    47.2%     0.227
National Propane Partners, L.P.            0.34        147.4         20.313        11.2        232.9      63.3%    38.8%     0.208
Star Gas Partners, L.P.                    0.33         96.0         21.938         6.2        139.4      68.9%    40.8%     0.195
Suburban Propane Partners, L.P.            0.36        428.2         18.813        28.7        551.4      77.6%    43.7%     0.203

--------------------------------------------------------

National's capitalization - at market (b)
Comparable group's average unlevered beta:                           0.23    Total debt                               $147.4   38.8%
National's debt - to - equity ratio (b):                             63.3%   Common equity                             232.9   61.2
------  -----
National's debt as a percent of total capital (b):                   38.8%                                            $380.2  100.0%
--------------------------------------------------------
Comparable group's beta relevered for National's capital structure: 0.320 
=====

Derivation of Weighted Average Cost of Capital:                                       Market Risk Premium Range (d) 
- ------------------------------------------------                                     ---------------------------------
11.3%       12.3%     13.3%
---------------------------------
National's theoretical levered beta:                                   0.320
Assumed % of equity in National's capital structure (b):                61.2%
Risk - free rate of return (c):                                          5.7% 
National's cost of equity range (at various market risk premiums):                       9.3%         9.6%      9.9%
===          ===       ===
National's assumed tax rate:                                            35.0%  
Assumed % of debt in capital structure (b):                             38.8%  
National's estimated cost of debt (e):                                   8.4%  
National's estimated after - tax cost of debt:                           5.5%            5.5%         5.5%      5.5%

--------------------------------- 
National's weighted average cost of capital range (f):                                   7.8%         8.0%      8.2%
---------------------------------

______________________________
(a) Source: Bloomberg. 143 week (maximum weekly time period allowed, or the
number of weeks available, which may be less than 143) adjusted beta
relative to the S&P 500 index.
(b) Market value of long-term debt is assumed to be equal to the book value.
(c) Ten - year Treasury rate on April 22, 1998.
(d) lbbotson Associates 1997. Total returns for small company stocks of 17.7%
minus the risk-free rate.
(e) Based on National's current debt structure.
(f) Calculation based upon use of the Capital Asset Pricing Model (CAPM).

Page 63

SUBURBAN PROPANE PARTNERS, L.P.
DISCOUNTED CASH FLOW ANALYSIS
WEIGHTED AVERAGE COST OF CAPITAL DERIVATION
($ IN MILLIONS)

- ------------------------------------------------------------------------------------------------------------------------------------

TOTAL                             IMPLIED       TOTAL      TOTAL
MARKET       UNIT        TOTAL     MARKET       DEBT/     DEBT AS %      UN-
LEVERED    VAL. DEBT   PRICE AT      UNITS    VALUE OF      TOTAL     OF TOTAL    LEVERED
COMPARABLE COMPANY                    BETA (A)   (BK = MKT) (4/22/98)    OUT. (IL)   EQUITY       EQUITY     CAPITAL      BETA
- --------------------------------------------------------------------------------------------------------------------------------- 

AmeriGas Partners, L.P.                 0.48      $777.8    $  25.938      41.9     $1,108.6       70.2%      41.2%       0.282
Cornerstone Propane Partners, L.P.      0.40       235.8       22.688      19.7        455.7       51.7%      34.1%       0.264
Ferrellgas Partners, L.P.               0.38       537.2       20.875      31.3        666.6       80.6%      44.6%       0.210
Heritage Propane Partners, L.P.         0.43       176.9       23.125       8.4        197.8       89.4%      47.2%       0.227
National Propane Partners, L.P.         0.34       147.4       20.313      11.2        232.9       63.3%      38.8%       0.208
Star Gas Partners, L.P.                 0.33        96.0       21.938       6.2        139.4       68.9%      40.8%       0.195
Suburban Propane Partners, L.P.         0.36       428.2       18.813      28.7        551.4       77.6%      43.7%       0.203

-------------------------------------------------------

Suburban's capitalization - at market (d) 
Comparable group's average unlevered beta:                            0.23    Total debt                              $428.2  43.7%
Suburban's debt - to - equity ratio (b):                              77.6%   Common equity                            551.4  56.3%
------ ----- 
Suburban's debt as a percent of total capital (b):                    43.7%                                           $979.6 100.0% 
-------------------------------------------------------

Comparable group's beta relevered for Suburban's capital structure:  0.342    
=====

DERIVATION OF WEIGHTED AVERAGE COST OF CAPITAL :                                         MARKET RISK PREMIUM RANGE (d)
- ------------------------------------------------                                      ----------------------------------  
11.3%        12.3%        13.3%
---------------------------------- 
Suburban's theoretical levered beta:                                  0.342 
Assumed % of equity in Suburban's capital structure (b):               56.3% 
Risk - free rate of return (c):                                         5.7%  
Suburban's cost of equity range (at various market risk premiums):                       9.5%         9.9%        10.2%   
====         ====        =====
Suburban's assumed tax rate:                                           35.0% 
Assumed % of debt in capital structure (b):                            43.7% 
Suburban's estimated cost of debt (e):                                  7.5%  
Suburban's estimated after - tax cost of debt:                          4.9%             4.9%         4.9%         4.9%
---------------------------------- 
Suburban's weighted average cost of capital range (f):                                   7.5%         7.7%         7.9%
---------------------------------- 

__________________________________
(a) Source: Bloomberg. 143 week (maximum weekly time period allowed, or the
number of weeks available, which may be less than 143) adjusted beta
relative to the S&P 500 index.
(b) Market value of long-term debt is assumed to be equal to the book value.
(c) Ten - year Treasury rate on April 22, 1998.
(d) Ibbotson Associates 1997. Total returns for small company stocks of 17.7%
minus the risk-free rate.
(e) Based on Suburban's current debt structure.
(f) Calculation based upon use of the Capital Asset Pricing Model (CAPM).

Page 64

PROJECT HEAT
- ------------------------------------------------------------------------------------------------------------------------------------
Transaction Summary and Assumptions
(in thousands except per share and per unit data)                                  Scenario III:   Worst Case    

EQUITY RESTRUCTURING                                                               CALCULATION OF SUB GP UNITS OFFERED 
- --------------------------------------------------------------------------         -------------------------------------------------
Petro                               
-----------------------                     
Public         Insiders                     
--------      ---------                     

Securities Offered                                 Sr Sub         Sub & GP         Value of Sub/GP Units to be  
Incentive Rights                                       76%            24%           To be Coverial                   $18,597
Value Offered                                      $ 3.15         $ 3.15           Less: Value of GP                   6,284
-------------   
Current Market                                     $ 1.63         $ 1.63                                              12,313
Premium in Market                                    93.8%          98.6%          Remaider at $16.33                    754
Required Yeild w/out PV of Incentive Rights          11.5%          14.0%
Value of Security w/out PV of Incent. Rights      $ 19.13        $ 15.71
Assumed Value of Incentive Rights                 $  0.61        $  0.61
Value of Security Offered                         $ 19.74        $ 16.33           PRESENT VALUE OF INCENTIVE RIGHTS
Security Offered per Share                           0.16           0.19           Discount Rate                          25%
Total Shares                                       17,160          9,404           PV of Cash Flows 1997-2005          1,478
Insiders to Receive Sr.Sub                          3,500         (3,500)          PV of Terminal Value        4x      1,189
-------------     
Shares to be Converted                             20,660          5,904           Total PV of Incentive Rights        2,667   
Units Offered                                       3,296            754                 
Current Sub/GP                                                         0           Value of Incentive Rights 
Value of GP/Unit                                                 $ 21.28            per Ut                           $  0.61

DEBT RESTRUCTURING 
- ------------------------------------------------------------------------------------------------------------------------------------
Projected 
12/31/97
Privates                                                         Principal       Strategy     Price 
-----------    ----------    -------    

11.96% Sr Notes                                                 60,000        Exchange     110.0% 
14.10% Sr Notes                                                  3,100       Neg.Tender    110.0% 
14.10% Sub Notes                                                 3,100       Neg.Tender    110.0% 
14.33% Pfd Stock                                                 4,167       Neg.Tender    105.0%
Publics:
10.13% Sub Notes & Sr Notes                                     50,000       Neg.Tender    100.0% 
9.38% Sub Notes & Sr Notes                                     75,000         Tender      100.0%  
12.25% Sub Notes & Sr Notes                                     81,250         Tender      105.0%
12.88% Pfd Stock                                                30,000         Tender      100.0%  

FINANCING SUMMARY
- ------------------------------------------------------------------------------------------------------------------------------------
Amount           Rate         Unit Price  
----------       --------     -------------- 

New Common Raised                                               $145,728                      $   22.13
New Debt Raised                                                  125,000           8.50%     

UNITS OUTSTANDING
- ------------------------------------------------------------------------------------------------------------------------------------
Current                   Pro Forma
--------------------       ---------------------- 
Units          %          Units             %
--------     -------       --------     ---------  

Existing Common                                                       3,832       60.3%         3,832         26.0%
New Common                                                                0        0.0%         6,587         44.6% 
Common to Petro Shareholders                                              0        0.0%             0          0.0%
Sr Sub to Petro Shareholders                                              0        0.0%         3,296         22.3%
Existing Sub                                                          2,396       37.7%           754          5.1%  
Implied GP                                                              127        2.0%           295          2.0% 
--------     -------       --------     ---------          
Total Units                                        6,355      100.0%        14,764        100.0%
--------     -------       --------     ---------          

SUMMARY CASH FLOW AND COVERAGE ANALYSIS
- ------------------------------------------------------------------------------------------------------------------------------------
($ on per Unit data)
Estimated    Normalized                      Projected
----------------------------------------------
1998          1998          1999        2000        2001        2002 
--------     ---------      --------    ---------   ---------   ----------

STAR STAND ALONE
EBITDA                                                  $18,629      $ 22,781       $26,730     $ 28,541    $ 30,361    $ 32,188
Interest Expense                                        (7,807)       (7,807)       (9,114)     (10,028)    (10,748)    (11,276)
Maintenance CapEx                                       (2,710)       (2,710)       (3,274)      (3,395)     (3,694)     (3,816)
Taxes                                                      (25)          (25)          (25)         (25)        (25)        (25)
--------     ---------      --------    ---------   ---------   ----------
Distributable Cash Flow                                 $ 8,087      $ 12,239       $14,317     $ 15,093    $ 15,894    $ 17,071
========     =========      ========    =========   =========   ==========
DCF per common Unit                                     $  2.11      $   3.19       $  3.74     $   3.94    $   4.15    $   4.46
DCF/Common Unit MQD                                        0.94 x        1.42   x      1.66 x       1.75 x      1.85 x      1.98
DCF per Total Unit                                      $  1.27      $   1.93       $  2.25     $   2.38    $   2.50    $   2.69
DCF/Total MQD                                              0.58 x        0.88   x      1.02 x       1.08 x      1.14 x      1.22

Indicated Distribution per Common Unit                  $  2.20      $   2.20       $  2.20     $   2.20    $   2.20    $   2.20

Star Pro Forma
EBITDA                                                                 
Star                                                   $18,629      $ 22,781       $26,730     $ 28,541    $ 30,361    $ 32,188
Petro                                                   38,500        43,440        51,657       54,371      57,058      59,720
Synergies                                                  500           500           500          500         500         500
--------     ---------      --------    ---------   ---------   ----------
Total                                                    57,629        66,721        78,887     $ 83,412      87,919      92,408
--------     ---------      --------    ---------   ---------   ----------
Interest Expense                                          (27,697)      (27,697)      (28,649)     (30,737)    (31,660)    (31,009)
Maintenance CapEx                                          (6,210)       (6,210)       (6,774)      (6,895)     (7,194)     (7,316)
Taxes                                                        (525)         (525)         (525)        (525)       (525)       (525)
--------     ---------      --------    ---------   ---------   ----------
Distributable Cash Flow                                 $23,197      $ 32,289       $42,939     $ 45,255    $ 48,540    $ 53,558
========     =========      ========    =========   =========   ==========
DCF per Common Unit                                       $  2.23      $   3.10       $  4.12     $   4.34    $   4.66    $   5.14
DCF per Total Unit                                           1.57          2.19          2.91         3.07        3.29        3.63

Indicated Distribution per Common Unit                  $  2.20      $   2.20       $  2.30     $   2.40    $   2.60    $   2.80 

Pro Forma Coverage Ratios                                    
MQD Coverage                                               
Common Unit                                               0.99 x        1.38 x        1.84 x       1.93 x      2.08 x      2.29 x
Senior Subordinated Unit                                  0.75          1.05          1.39         1.47        1.58        1.74
Total Unit                                                0.71          0.99          1.32         1.39        1.49        1.65

Indicated Distribution Coverage                             
Common Unit                                               0.99 x        1.38 x        1.76 x       1.77 x      1.76 x      1.80 x
Senior Subordinated Units                                 0.75          1.05          1.33         1.35        1.33        1.37
Total Unit                                                0.71          0.99          1.26         1.28        1.26        1.30

Aceration/Dilution
DCF per Unit - Star Stand Alone                          $  1.27      $   1.93       $  2.25     $   2.38    $   2.50    $   2.69
DCF per Unit - Pro Forma                                    1.57          2.19          2.91         3.07        3.29        3.63

Pro Forma Credit Analysis                                      
EBITDA Interest                                            2.08 x        2.41 x        2.75 x       2.71 x      2.78 x      2.98 x
LT Debt/EBITDA                                             5.22          4.51          4.17         4.32        4.01        3.71

PROJECT
- --------------------------------------------------------------------------------
TRANSACTION SUMMARY AND ASSUMPTIONS
(in thousands except per share and per unit

OPERATING ASSUMPTIONS                                         
- -------------------------------------------------------       
Petro    Star        
--------  ------       

Normalized Maintenance CapEx            $3,500   $2,710       
Maintenance CapEx Life                  15 yrs   15 yrs       
Growth CapEx Life                       15 yrs   15 yrs       
Life of Existing Depreciation           15 yrs   15 yrs        
Interest Income Rate                      3.5%     3.5%       
Marginal Tax Percent                     30.0%    33.0%       
Deferred Tax Percent                               0.0%       
Minimum Cash Balance                             $1,000       
Initial Incremental Cash Req'd for                            
Distributions                                    $5,000       
Consolidation Savings                              $500       
Annual Bank Fees                          $692      $94       
Current Stock Price                      $1.63   $22.13       

ACQUISITION ASSUMPTIONS                                           
------------------------------------------------------------------
Petro     Multiple        1998        1999       2000         2001        2002     
-----    ----------     -------     -------     -------     -------     -------    

Amount         4.75x    $15,000     $30,000     $30,000     $30,000     $30,000    
Timing                    End         Mid         Mid         Mid         Mid        
% EBITDA                    0.0%       50.0%       50.0%       50.0%       50.0%   
% Attrition     4.1%                                                               
Star                                                                                 
Amount         7.00x    $20,000     $10,000     $10,000     $10,000     $10,000    
Timing                    End         Mid         Mid         Mid         Mid        
0.0%       50.0%       50.0%       50.0%       50.0%    
% EBITDA                                                                 

Amount         7.00x                $5,000                               
Timing                              Reg                                  
% EBITDA                              100.0%                              

NEW SECURITY ASSUMPTIONS
- -------------------------------------------------------------------------------------------------------------------

New MLP Equity                               New Star Debt                      Advisory Fees
- --------------------------------------       --------------------------------   -----------------------------------

Gross Proceeds            $145,728           Gross Proceeds         $125,000    Fairness Opinion             $1,000
Common Units to Public       6,587           Gross Spread %              1.0%   Financial Advisory           $2,500
Gross Spread %                 5.0%          Gross Spread $         $  1,250    Debt Tender Fee     0.26%    $  507   
Gross Spread $            $  7,286           Coupon                     8.50%    
Offering Price/Share      $  22.13  
(current market price) 

EXCHANGE ASSUMPTIONS
- ------------------------------------------------------------------------------
Gets New Units of:
----------------------------
Shareholders of:                    Dividend       Common     5x Sub     Sub
- ----------------------------------------------    --------  ---------  -------

Public Class A Shares      17,160     $0.30           -       2,738       -
Insider Class A Shares      6,795     $0.30           -         -        754
Insider Class B Shares         11     $0.30           -           2       -
Insider Class C Shares      2,598     $0.30           -         556       -
-------                 --------  ---------  -------
26,563                     -       3,296      754

TRANSACTION COSTS SUMMARY                                         SOURCES AND USES OF FUNDS
- ------------------------------------------------------------      ------------------------------------------------------------------

New MLP Equity                                    $ 7,286       Sources              $  2,023   Uses:
New Star Debt                                       1,250       Excess Cash on Hand   125,000   Repay Debt Principal     $212,450
Fairness Opinion                                    1,000       New Star Debt         145,728   Redeem Preferred           34,167
Financial Advisory                                  2,500       New MLP Equity              0   Premium on Redemption/     
Solicitation Fees on Exchange of Outsider Petro                 Cash Balance                    Exchange/Defeasance         4,891
Debt                                                 507
Exchange of 11.96% Notes                              300                                       Transaction Fees           17,743
Prefunding of Liabilities   3,500 
Legal Fees                                          1,000                           ---------                            ---------
$272,751                            $272,751
Printing                                            2,500                           =========                            =========
Accounting Fees                                       250
Other:
Environmetal                                       350    
Rating Agencies                                    100
Roadshow                                           200
Asset Appraisal                                    250
Solicitation expenses                              100
Other Bank Fees                                    150
--------  
$17,743
========

TRANSACTION SUMMARY AND ASSUMPTION
(in thousands except per share and per unit data)           Scenario III:  Worst Case

RECAPITALIZATION ASSUMPTIONS
- -----------------------------------------------------------------------------------------------------------------------------
(D)efease                       
(T)ender                        
(R)edeem         Principal      
(E)xchange           as of        Maturity Period    Coupon/         Sinking Fund Payment       
-------------------                ------------------------
Petro Instruments:                 (N)othing        9/30/98          m/d           yr   Dividend        Payment    Year Start   
- ----------------------------       --------------   ------------   ---------  --------  ------------  ----------  ------------   

11.96% Sr Notes                         e              $ 60,000 v      1-Oct         0       11.960%     $    0             0      
14.10% Sr Notes                         t                 3,100 v     15-Jan      2001       14.100%      1,050          1997      
14.10% Sub Notes                        t                 3,100 v     15-Jan      2001       14.100%      1,050          1997      
10.13% Sub Notes & Sr Notes             t                50,000 v      1-Apr      2003       10.110%          -                    
9.38% Sub Notes & Sr Notes             t                75,000 v      1-Feb      2006        9.375%          -                    
12.25% Sub Notes & Sr Notes             t                81,250 v      1-Feb      2005       12.250%          -                    
8.00% Acq. & Other Notes Payable       n                13,859 v                    0        8.000%          -             0      
8.25% Existing Credit Facility         n                     0 v                 1998        8.250%          -                    
0.00% Other Notes                      n                     0 v         NA        NA        0.000%          0            NA      
------------                                                                   
$286,309                                                                    
Pfrd Stock:                                                                                                                        
- -----------                                                                                                                        
14.33% Pfd Stock                        t                 4,167 v      1-Aug      1999       14.330%      4,167          1997      
12.88% Pfd Stock                        t                30,000 v     15-Feb      2009       12.875%          0                    
0.00%                                   n                     0                               0.000%                               
------------                                                                   
$ 34,167                                                                    
------------                                                                   
Total Petro                                       $320,476                                                                    
------------                                                                   

Star Instruments:                                                                                                                  
- ----------------------------                                                                                                       
8.04% 1st Mortgage Notes                n                85,000 v         NA        NA        8.040%          -             0      
8.25% WC Revolver                       n                     0           NA        NA        8.250%          -            NA      
7.50% Acquisition Facility              n                     0 v         NA        NA        7.500%          -            NA      
8.50% New Debt                          n               125,000 v         NA        NA        8.500%          0            NA      
7.17% Pearl Notes                       n                11,000           NA        NA        7.170%          0            NA       
------------                        
$210,000                         
------------                        
Total Combined                                    $530,476                         
============                        

% Red/     Red/Exchg   Defeasance    Red/Exchg/Defease    Exchanged
-------------------  
Petro Instruments:                Exchanged      Price       Price       Value     Premium    Int Rate   Security Type
- ----------------------------     -----------  -----------  ----------   --------- ---------  ----------  -------------    

11.96% Sr Notes                        100.0%       110.0%               $66,000   $     0         8.5%  Sr Notes
14.10% Sr Notes                        100.0%       110.0%                 3,410       310               Sr Notes
14.10% Sub Notes                       100.0%       110.0%                 3,410       310               Sub Notes
10.13% Sub Notes & Sr Notes            100.0%       100.0%    106.2%      50,000         -               Sub Notes & Sr Notes
9.38% Sub Notes & Sr Notes            100.0%       100.0%    108.2%      75,000         -               Sub Notes & Sr Notes 
12.25% Sub Notes & Sr Notes            100.0%       105.0%    116.2%      85,313     4,063               Sub Notes & Sr Notes 
8.00% Acq. & Other Notes Payable        0.0%       100.0%                     -         -               Acq. & Other Notes Payable
8.25% Existing Credit Facility          0.0%       100.0%                     -         -               Existing Credit Facility
0.00% Other Notes                       0.0%         0.0%                     -         -        11.0%  Other Notes
---------      
$  4,683
Pfrd Stock:                                                                
- -----------                                                                
14.33% Pfd Stock                       100.0%       105.0%                 4,375       208               Pfd Stock
12.88% Pfd Stock                       100.0%       100.0%                30,000         -               Pfd Stock
0.00%                                                                          -         -         
--------- 
$   208
--------- 
Total Petro                                                                   $ 4,891
---------  

Star Instruments:                                                          
- ----------------------------                                               
8.04% 1st Mortgage Notes                 0.0%         0.0%                     -         -               1st Mortgage Notes 
8.25% WC Revolver                        0.0%         0.0%                     -         -               WC Revolver
7.50% Acquisition Facility               0.0%         0.0%                     -         -               Acquisition Facility
8.50% New Debt                           0.0%         0.0%                     -         -               Now Debt
7.17% Pearl Notes                        0.0%         0.0%                     -         -               Pearl Notes
---------  
$     0
---------  
Total Combined                                                                $ 4,891
---------

Star Stand Alone Distribution Assumptions                                  
- --------------------------------------------------------------------------------

Marginal Interest In:
------------------------
Distribution     Public         GP
------------     ------       --------

Minimum Quarterly Distribution                  $2.20          98%           2%
First Target Distribution                       $2.42          98%           2%
Second Target Distribution                      $2.84          85%          15%
Third Target Distribution                       $3.70          75%          25%
Thereafter                                         NM          50%          50%

Target Distribution Level                       $2.20  
Annual Distribution Increase                    $0.00  

Standard Distribution Structure ("S")     ------------ 
or Target ("T")                               t       
------------           

- --------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------------------
Marginal Interest In                      Incentive Rights
------------------------               ------------------------ 
Distribution     Public         GP      Incen. Rt.      GP         Sr. Sub.
------------     ------       --------  ----------   ----------  ------------ 

Minimum Quarterly Distribution                  $2.20          98%           2%           0%          24%           76% 
First Target Distribution                       $2.42          98%           2%           0%          24%           76% 
Second Target Distribution                      $2.84          85%           2%          13%          24%           76% 
Third Target Distribution                       $3.70          75%           2%          23%          24%           76% 
Thereafter                                         NM          50%           2%          48%          24%           76% 

1998           1999         2000         2001        2002      Thereafter
------------     ------       --------  ----------   ----------  ------------ 
Annual Indicated Distribution Increase          $0.00       $0.10          $0.10       $0.20       $0.20        $0.05
Target Indicated Distribution Level             $2.20       $2.30          $2.40       $2.60       $2.80

Standard Distribution Structure ("S")             ------------ 
or Target ("T")                                       t       
------------                           
- ------------------------------------------------------------------------------------------------------------------------

3 of 18

PROJECT HEAT                                      
================================================================================
PRO FORMA OPENING BALANCE SHEET        

(in thousands except per share and per unit data)       SCENARIO III: WORST CASE

OPENING BALANCE SHEET                                         STAR GAS                                    PETRO
-------------------------------------      -------------------------------------
12/31/97    ADJUSTMENTS     9/30/98        12/31/97    ADJUSTMENTS     9/30/98    
----------  -------------  ----------      ----------  -------------  ----------

Assets:
Cash                                         $  3,452      ($ 2,951)    $    501        $  2,390      $10,615      $ 13,005
Other Current Assets                           18,537        (3,142)      15,395         102,734      (43,030)       59,704
----------                 ----------      ----------                 ----------
Total Current Assets                         21,989                     15,895         105,124                     72,709

PP&E and Intangibles, Net                     108,809        (3,995)     104,814         124,804         -          107,763
Investments in Unconsolidated Affiliates         -             -            -              7,535       (7,122)          413
Other Assets                                   48,653        (2,115)      46,338          10,385          (19)       10,364
----------                 ----------      ----------                 ----------
Total Assets                                179,451                    167,248         247,846                    191,269
==========                 ==========      ==========                 ==========

Liabilities:                                                                                                
Current Liabilities                            11,514        (4,143)       7,371          92,688         -           70,110
8.25% Existing Credit Facility                   -            7,457        7,457          21,500      (21,500)         -
Long Term Debt                                 96,000          -          96,000         278,378        7,931       286,309
Total Preferred Stock                            -             -            -             34,167         -           34,167
Other Liabilities                                  54            (3)          51          10,745          (47)       10,698
----------                 ----------      ----------                 ----------
Total Liabilities                           107,568                    110,879         437,478                    401,284

Common Shareholder's/Partner's Equity             71,883       (15,515)      56,368        (189,632)     (20,383)     (210,015)
----------                 ----------      ----------                 ---------- 
Total Liabilities and Equity               $179,451                   $167,248        $247,846                   $191,269
==========                 ==========      ==========                 ========== 

check                                -                          -               -

PRO FORMA
MERGER            STAR GAS
ADJUSTMENTS         9/30/98
-----------       ----------- 

ASSETS:
Cash                                         ($  2,023)         $ 10,982
Other Current Assets                              -               75,099
-----------       ----------- 
Total Current Assets                          (2,023)           86,081

PP&E and Intangibles, Net                         -              212,597
Investments in Unconsolidated Affiliates          (413)             -
Other Assets                                      -               56,902
-----------       ----------- 
Total Assets                                  (2,436)          355,580

LIABILITIES:                                
Current Liabilities                               -               77,481
8.25% Existing Credit Facility                    -                7,437
Long Term Debt                                 (81,450)          300,859
Total Preferred Stock                          (34,167)             -
Other Liabilities                              (10,698)               51
-----------       ----------- 
Total Liabilities                           (126,315)          385,848

Common Shareholder's/Partner's Equity             123,378           (30,268)
-----------       ----------- 
Total Liabilities and Equity               ($  2,937)         $355,580
===========

check                                -                  -

PRO FORMA CAPITAL STRUCTURE                                   STAR GAS                                    PETRO
-------------------------------------      -------------------------------------
12/31/97    ADJUSTMENTS     9/30/98        12/31/97    ADJUSTMENTS     9/30/98    
----------  -------------  ----------      ----------  -------------  ---------- 

Debt:
8.04% 1st Mortgage Notes                        $ 85,000                   $ 85,000        $      0       $     0     $      0
8.25% WC Revolver                                   -          7,437          7,457            -             -            -
7.50% Acquisition Facility                          -                          -               -             -            -
7.17% Pearl Notes                                 11,000                     11,000            -             -            -     

11.96% Sr Notes                                     -                          -             60,000          -          60,000
14.10% Sr Notes                                     -                          -              4,150        (1,050)       3,100
14.10% Sub Notes                                    -                          -              4,150        (1,050)       3,100
10.13% Sub Notes & Sr Notes                         -                          -             50,000          -          50,000
9.38% Sub Notes & Sr Notes                          -                          -             75,000          -          75,000
12.25% Sub Notes & Sr Notes                         -                          -             81,250          -          81,250
0.00% Other Notes                                   -                          -                  0          -               0
8.00% Arg. & Other Notes Payable                    -                          -             16,798        (2,939)      13,859
8.25% Existing Credit Facility                      -                          -                  0          -               0

8.46% Exchanged Debt                                -                          -               -             -            -
8.50% New Debt                                      -                          -               -             -            -
----------                 ----------      ----------                 ----------  
Total Debt                                   96,000                    103,457         291,348                    286,309
----------                 ----------      ----------                 ----------  

Preferred Stock:
14.33% Pfd Stock                                    -                          -              4,167          -           4,167
12.88% Pfd Stock                                    -                          -             30,000          -          30,000
----------                 ----------      ----------                 ----------  
Total Preferred                                -                          -             34,167                     34,167
----------                 ----------      ----------                 ----------  

Common Shareholder's/Partner's Equity             71,883                     56,368        (189,632)      (20,383)    (210,015)
----------                 ----------      ----------                 ----------  

Total Capital                           $167,883                   $159,825        $135,883                   $110,461
==========                 ==========      ==========                 ========== 

PRO FORMA
MERGER            STAR GAS
ADJUSTMENTS         9/30/98
-----------       -----------  

Debt:
8.04% 1st Mortgage Notes                            $      0          $ 85,000
8.25% WC Revolver                                       -                7,457
7.50% Acquisition Facility                              -                 -
7.17% Pearl Notes                                       -               11,000

11.96% Sr Notes                                      (60,000)             -
14.10% Sr Notes                                       (3,100)             -
14.10% Sub Notes                                      (3,100)             -
10.13% Sub Notes & Sr Notes                          (50,000)             -
9.38% Sub Notes & Sr Notes                           (75,000)             -
12.25% Sub Notes & Sr Notes                          (81,250)             -
0.00% Other Notes                                       -                 -
8.00% Arg. & Other Notes Payable                        -               13,859
8.25% Existing Credit Facility                          -                 -

8.46% Exchanged Debt                                  66,000            66,000
8.50% New Debt                                       125,000           125,000

Total Debt                                      (81,450)          308,316       (123,543.00)
-----------   
Preferred Stock:
14.33% Pfd Stock                                      (4,167)             -
12.88% Pfd Stock                                     (30,000)             -
-----------       -----------   
Total Preferred                                 (34,167)             -
-----------

Common Shareholder's/Partner's Equity                123,378           (30,268)
-----------    

Total Capital                                                 $278,048
===========    

4 of 18

PROJECT HEAT
====================================================================================================================================
(In thousands except per share and per unit data)

SCENARIO III: WORST CASE 
STAR GAS STAND ALONE INCOME STATEMENT                                                       
Estimated Normalized                             Projected                      
----------------------------------------------------------------------
1998       1998       1999        2000      2001     2002      2003      2004     2005 
---------  --------  ---------  --------- --------- ---------  --------- -------- ---------

EBITDA                                     $18,629   $22,781    $26,730    $28,541   $30,361   $32,188    $34,125  $36,178  $38,356
Depreciation and Amortization           11,629    11,629     12,768     15,111    16,137    17,178     18,229   19,291   20,364
---------  --------  ---------  --------- ---------  --------   --------  -------  -------

EBIT                                         7,000    11,152     13,962     13,430    14,224    15,010     15,896   16,887   17,992
Interest Expense                        (7,807)   (7,807)    (9,114)   (10,028)  (10,748)  (11,276)    (9,858) (10,217) (10,452)
Interest Income                             18        18         35         35        35        35         35       35       35
Other Income                                 -         -          -          -         -         -          -        -        -
---------  --------  ---------  --------- ---------  --------   --------  -------  -------

Income Before Taxes                           (789)    3,363      4,883      3,437     3,511     3,769      6,073    6,705    7,575 
Current Income Taxes                       (25)      (25)       (25)       (25)      (25)      (25)       (25)     (25)     (25)
Deferred Income Taxes                        -         -          -          -         -         -          -        -        -
---------   -------  ---------  --------- ---------  --------   --------  -------- -------

Net Income Available To Common               ($814)   $3,338     $4,858     $3,412    $3,486    $3,744     $6,048   $6,680   $7,550
==========   =======  =========  =========  ========  ========   ========  =======  =======

STAR GAS STAND ALONE UNITS OUTSTANDING

Common Units
Beginning Balance                        3,832     3,832      3,832      4,317     4,317     4,517      4,717    4,717    4,717
Issuance                                    0         0        485          0       200       200          0        0        0
Buyback                                     0         0          0          0         0         0          0        0        0
----------   -------  ---------  ---------  --------  --------   --------  -------- -------
Ending Balance                           3,832     3,832      4,317      4,317     4,517     4,717      4,717    4,717    4,717
----------   -------  ---------  ---------  --------  --------   --------  -------- -------

Subordinated Units
Beginning Balance                        2,396     2,396      2,396      2,396     2,396     2,396      2,396    2,396    2,396
Issuance                                    0         0          0          0         0         0          0        0        0
Buyback                                     0         0          0          0         0         0          0        0        0
----------   -------  ---------  ---------  --------  --------   --------  -------  -------
Ending Balance                           2,396     2,396      2,396      2,396     2,396     2,396      2,396    2,396    2,396
----------   -------  ---------  ---------  --------  --------   --------  -------  -------

GP Implied Units
Beginning Balance                          127       127        127        127       127       127        127      127      127
Issuance                                    0         0          0          0         0         0          0        0        0
Buyback                                     0         0          0          0         0         0          0        0        0
----------   -------  ---------  ---------  --------  --------   --------  -------  -------
Ending Balance                             127       127        127        127       127       127        127      127      127
----------   -------  ---------  ---------  --------  --------   --------  -------  -------

Total Units                           6,355     6,355      6,840      6,840     7,040     7,240      7,240    7,240    7,240
==========   =======  =========  =========  ========  ========   ========  =======  =======

5 of 18

PROJECT HEAT
================================================================================
(in thousands except per share and per unit data)

Scenario III:   Worst Case  Estimated                              Projected
--------------------------------------------------------------- 
1998     1999     2000      2001     2002     2003      2004      2005
------   ------   ------    ------   ------   ------    ------    ------

STAR GAS STAND ALONE BALANCE SHEET

Assets:
Cash                                                  $    501 $  1,000 $  1,000  $  1,000 $  1,000 $  1,000 $  1,000 $  1,000
Other Current Assets                                    15,395   18,600   19,317    20,037   20,760   21,526   22,339   23,200
-------- -------- --------  -------- -------- -------- -------- --------
Total Current Assets                                   15,895   19,600   20,317    21,037   21,760   22,526   23,339   24,200

PP&E and Intangibles, Net                              104,814  112,117  112,225   111,632  110,148  107,768  104,484  100,291
Other Assets                                           46,538   46,538   46,538    46,538   46,538   46,538   46,538   46,538
-------- -------- --------  -------- -------- -------- -------- --------
Total Assets                                          167,248  178,255  179,080   179,207  178,446  176,832  174,361  171,029
======== ======== ========  ======== ======== ======== ======== ========

Liabilities:
Current Liabilities                                      7,371   10,576   11,293    12,013    12,736   13,502   14,315   15,176
Total Debt                                             103,457  109,651  120,328   125,805  130,133  135,685  139,702  141,910
Other Liabilities                                           51       51       51        51       51       51       51       51
-------- -------- --------  -------- -------- -------- -------- --------
Total Liabilities                                     110,879  120,279  131,672   137,869  102,920  149,239  154,068  157,167

Partner's Equity                                             56,368   57,976   47,407    41,338   35,526   27,593   20,293   13,862
-------- -------- --------  -------- -------- -------- -------- --------
Total Liabilities and Equity                         $167,248 $178,255 $179,080  $179,207 $178,446 $176,832 $174,361 $171,029
======== ======== ========  ======== ======== ======== ======== ========
Check                             -        -        -         -        -        -        -        -

STAR GAS STAND ALONE CASH FLOW STATEMENT

Net Income                                                        $  4,858 $  3,412  $  3,486 $  3,744 $  6,048 $  6,680 $  7,550
Depreciation and Amortization                                    12,768   15,111    16,137   17,178   18,229   19,291   20,364
Deferred Taxes                                                        -        -         -        -        -        -        -
Other Income                                                          -        -         -        -        -        -        -
Other Asset/Liabilities                                               -        -         -        -        -        -        -
Change in Working Capital                                            (0)       -        (0)      (0)       0       (0)      (0)
-------- --------  -------- -------- -------- -------- --------
Cash from Operations                                                17,626   18,523    19,623   20,922   24,277   25,971   27,914
-------- --------  -------- -------- -------- -------- --------

Maintenance CapEx                                                 (3,274)  (3,395)   (3,694)  (3,816)  (3,942)  (4,072)  (4,206)
Internal Growth CapEx                                             (1,797)  (1,824)   (1,850)  (1,878)  (1,906)  (1,935)  (1,965)
External Growth CapEx                                            (15,000) (10,000)  (10,000) (10,000) (10,000) (10,000) (10,000)
-------- --------  -------- -------- -------- -------- --------
Cash from Investments                                               (20,071) (15,219)  (15,544) (15,694) (15,848) (16,007) (16,171)
-------- --------  -------- -------- -------- -------- --------

Acquisition Borrowing                                            16,797   11,824    11,850   11,878   11,906   11,935   11,965
Remaining Distributions to Repay Debt                              (336)  (1,112)   (1,913)  (3,090)  (6,319)  (7,884)  (9,692)
Amortization of Mortgage Notes                                        -        -         -        -        -        -        -
Borrowing to Repay Existing Debt                                      -        -         -        -        -        -        -
Borrowing for Changes in WC                                           0        -         0        0       (0)       0        0
Borrowing to Pay Full MQD                                             -        -         -        -        -        -        -
Change in Equity                                                 10,731        -     4,425    4,425        -        -        -
Distributions                                                   (13,981) (13,981)  (13,981) (13,981) (13,981) (13,981) (13,981)
-------- --------  -------- -------- -------- -------- --------
Cash from Financing                                               13,211   (3,269)      381     (768)  (8,393)  (9,929) (11,708)
-------- --------  -------- -------- -------- -------- --------

Net Cash Flow                                                       10,766       35     4,460    4,460       35       35       35
Initial Cash Balance                                                   501    1,000     1,000    1,000    1,000    1,000    1,000
-------- --------  -------- -------- -------- -------- --------
Cash Available for Paydown of WC Revolver and Acq. Facility         11,266    1,035     5,460    5,460    1,035    1,035    1,035

Minimum Cash Balance                                                 1,000    1,000     1,000    1,000    1,000    1,000    1,000

Borrowing/(Paydown) on WC Revolver and Acq. Facility               (10,266)     (35)   (4,460)  (4,460)     (35)     (35)     (35)
-------- --------  -------- -------- -------- -------- --------

Net Change in Cash                                                     499        -         -        -        -        -        -
-------- --------  -------- -------- -------- -------- --------

Ending Cash Balance                                               $  1,000 $  1,000  $  1,000 $  1,000 $  1,000 $  1,000 $  1,000
======== ========  ======== ======== ======== ======== ========

6 of 18

PROJECT HEAT                                           
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands except per share and per unit data)                                                                                   
Scenario III:  Worst Case
Estimated  Normalized                        Projected
-------------------------------------------------------------
1998         1998         1999         2000         2001         2002         2003  
----         ----         ----         ----         ----         ----         ----

Star Gas Stand Alone EBITDA Calculation       
(see Tab 3; cases)         
- ------------------------------------------------------------------------------------------------------------------------------------
Year 1       Year 2       Year 3       Year 4       Year 5     Year 6
EBITDA Growth Rate                                                22.3%       1.7%         1.7%         1.7%         1.7%     1.7%
- ------------------------------------------------------------------------------------------------------------------------------------
Base EBITDA:                  Timing
End       1998          
Mid       1999          
Mid       2000     
Mid       2001     
Mid       2002
Mid       2003
Mid       2004
Mid       2005                       
-------      -------      -------      -------      -------      -------    ---------
Total EBITDA                                   $18,629      $22,781      $26,730      $28,541      $30,361      $32,188    $34,125
=======      =======      =======      =======      =======      =======    =========

Star Gas Stand Alone Depreciation Calculation

Existing Depreciation                          $11,629      $11,629      $11,629      $11,629      $11,629      $11,629    $ 11,629 

Maintenance CapEx:            1998      2,710       $0           $0      $   181      $   181      $   181      $   181    $    181
Annual Growth: 3.3%      1999      3,274                                109          218          218          218         218
2000      3,395                                             113          226          226         226
2001      3,694                                                          123          246         246
2002      3,816                                                                       127         254 
2003      3,942                                                                                   131
2004      4,072
2005      4,206       

Internal Growth CapEx:        1998      1,841        -            -          123          123          123          123         123
Annual Growth: 1.5%      1999      1,797                                 60          120          120          120         120
2000      1,824                                              61          122          122         122
2001      1,850                                                           63          123         123 
2002      1,878                                                                        63         125
2003      1,906                                                                                    64
2004      1,935
2005      1,965

External Growth CapEx:        1998     20,000       -            -           -          1,333        1,333        1,333       1,333
Annual Growth 0.0%       1999     15,000                                667        1,000        1,000        1,000       1,000
2000     10,000                                             333          667          667         667
2001     10,000                                                          333          667         667
2002     10,000                                                                       333         667
2003     10,000                                                                                   333
2004     10,000                                                                                       
2005     10,000  
-------      -------      -------      -------      -------      -------    --------
Total Depreciation                             $11,629      $11,629      $12,768      $15,111      $16,137      $17,178    $ 18,229 
=======      =======      =======      =======      =======      =======    ========

PROJECT HEAT                                           
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands except per share and per unit data)                                                                                   

Scenario III:  Worst Case 
Estimated  Normalized                              Projected
---------------------------------------------------------
2004      2005
--------  -------- 

Star Gas Stand Alone EBITDA Calculation       
(see Tab 3; cases)         
- ------------------------------------------------------------------------------------------------------------------------------------
EBITDA Growth Rate                                                                             Year 7       Year 8
1.7%         1.7%
- ------------------------------------------------------------------------------------------------------------------------------------
Base EBITDA:                  Timing
End       1998          
Mid       1999          
Mid       2000     
Mid       2001                         
Mid       2002
Mid       2003
Mid       2004
Mid       2005                                                  --------     -------- 
$36,178      $38,356
========     ======== 
Total EBITDA 

Star Gas Stand Alone Depreciation Calculation

Building Depreciation                                                                            $11,629      $11,629   

Maintenance CapEx:            1998      2,710                                                    $   181      $   181
Annual Growth: 3.3%      1999      3,274                                                        218          218
2000      3,395                                                        226          226 
2001      3,694                                                        246          246 
2002      3,816                                                        254          254 
2003      3,942                                                        263          263 
2004      4,072                                                        136          271 
2005      4,206                                                                     140   

Internal Growth CapEx:        1998      1,841                                                        123          123 
Annual Growth: 1.5%      1999      1,797                                                        120          120 
2000      1,824                                                        122          122 
2001      1,850                                                        123          123
2002      1,878                                                        125          125 
2003      1,906                                                        127          127
2004      1,935                                                         65          129 
2005      1,965                                                                      65 
`
External Growth CapEx:        1998     20,000                                                      1,333        1,333
Annual Growth 0.0%       1999     15,000                                                      1,000        1,000
2000     10,000                                                        667          667 
2001     10,000                                                        667          667
2002     10,000                                                        667          667  
2003     10,000                                                        667          667 
2004     10,000                                                        333          667         
2005     10,000                                                                     333
-------     -------
Total Depreciation                                                                               $19,291      $20,364
========     =======

7 of 18

Project Heat
- -----------------------------------------------------------------------------------------------------------------------------------
Star Gas Stand Alone Debt Schedule
(In thousands except per share and per unit share)        Scenario III: Worst Case

Estimated    Normalized                   Projected
-----------------------------------------
1998         1998         1999       2000       2001        2002         
--------      -------     -------     ------     ------      ------    

8.04% 1st Mortgage Notes 
Beginning Balance                                     $85,000       $85,000      $85,000   $85,000      $85,000     $85,000   
Borrowing                                                  0             0            0         0            0           0  
Amortization                                               0             0            0         0            0           0  
---------     ---------   ---------- ---------   ----------  ----------   
Ending Balance                                         85,000        85,000       85,000    85,000       85,000      85,000     

Interest Payment                              8.04%     6,834         6,134        6,834     6,834        6,834       6,834   
Make-Whole Payment                                          0             0            0         0            0           0 

7.17% Pearl Notes                                                            
Beginning Balance                                          $0            $0      $11,000   $11,000      $11,000     $11,000     
Borrowing                                             11,000        11,000            0         0            0           0 
Amortization                                               0             0            0         0            0           0    
---------     ---------   ---------- ---------   ----------  ----------   
Ending Balance                                         11,000        11,000       11,000    11,000       11,000      11.000

Interest Payment                              7.17%       613           613          789       789          789         789 
% of year Pearl Notes Outstanding                        77.7%         77.7%           0         0            0           0

8.25% WC Revolver                                                              
Beginning Balance                                          -             -        $7,457    $7,457       $7,457      $7,457 
Borrowing for Change in WC                                -             -             0         0            0           0 
Borrowing to Pay Full MQD                              5,894         1,742           -         -            -          -
Borrowing/(Payment)                                    1,563         5,715            0         0            0           0  
---------     ---------   ---------- ---------   ----------  ----------   
Ending Balance                                          7,457         7,457        7,457     7,457        7,457       7,457

Effective Avg WC Balance                                3,729         3,729        3,729     3,729        3,729       3,729  
Interest Payment                              8.25%       308           308          308       308          308         308   

7.50% Acquisition Facility                                                                                          
Beginning Balance                                          -             -            $0   $ 6,194      $16,871     $22,348 
External Acquisitions                                 20,000        20,000       10,000    10,000       10,000      10,000   
External Acquisitions at Beginning of 1999                -             -         5,000        -            -           -   
Internal Acquisitions                                  1,841         1,841        1,797     1,824        1,850       1,878     
Borrowings to Repay Existing Debt                         -             -            -         -            -           -   
Payment                                                   -             -       (10,266)      (35)      (4,460)     (4,460) 
Remaining Distributions to Repay Debt                     -             -          (336)   (1,112)      (1,913)     (3,090)   
---------     ---------   ---------- ---------   ----------  ----------   
Ending Balance                                              0             0        6,194    16,871       22,348      26,676

Interest Payment                              7.50%        69            69          420       865        1,471       1,838

Total Debt                                                                                       
Beginning Balance                                     $85,000       $85,000     $103,457  $109,651     $120,328    $125,805
Amortization of Mortgage Notes                            -             -            -         -            -           - 
Borrowing for Pearl Notes                             11,000        11,000           -         -            -           -
Borrowing for Changes in WC                               -             -             0        -             0           0
Borrowing  to Pay Full MQD                             5,894         1,742           -         -            -           -   
Acquisition Borrowing                                 21,841        21,841       16,797    11,824       11,850      11,878
Borrowing to Repay Existing Debt                          -             -            -         -            -           -
Remaining Distributions to Repay Debt                     -             -          (336)   (1,112)      (1,913)     (3,090) 
Borrowing/(Payment) on WC Revolver and 
Acq. Facility                                          1,563         5,715      (10,266)      (35)      (4,460)     (4,460) 
---------     ---------   ---------- ---------   ----------  ----------     
Ending Balance                                       $125,298      $125,298     $109,651  $120,328     $125,805    $130,133
=========     =========   ========== =========   ==========  ==========    

Interest Expense                                         
Interest Expense                                       $7,824        $7,824       $8,350    $8,795       $9,401      $9,769   
Bank Fee                                                   94            94           94        94           94          94   
---------       ------ --    ------  -  ---------  -------       ---------
Total Interest Payment                              $7,807        $7,807       $9,114   $10,028      $10,748     $11,276 
========        ========     ======== ==========     =========  ========== 

2003          2004         2005
----------    ----------   ---------- 

8.04% 1st Mortgage Notes 
Beginning Balance                                     $85,000       $85,000      $85,000              
Borrowing                                                  0             0            0              
Amortization                                               0             0            0              
---------     ---------   ----------   
Ending Balance                                         85,000        85,000       85,000               

Interest Payment                                        6,834         6,834        6,834              
Make-Whole Payment                                          0             0            0              

7.17% Pearl Notes                                                                                        
Beginning Balance                                     $11,000       $11,000      $11,000              
Borrowing                                                  0             0            0               
Amortization                                               0             0            0              
---------     ---------   ----------   
Ending Balance                                         11,000        11,000       11,000              

Interest Payment                                          789           789          789              
% of year Pearl Notes Outstanding                           0             0            0              

8.25% WC Revolver                                                                                        
Beginning Balance                                      $7,457        $7,457       $7,457              
Borrowing for Change in WC                                (0)            0            0              
Borrowing to Pay Full MQD                                 -             -            -               
Borrowing(Payment)                                         0             0            0              
---------     ---------   ----------   
Ending Balance                                          7,457         7,457        7,457              

Effective Avg WC Balance                                   3,729         3,729        3,729               
Interest Payment                                             308           308          308              

7.50% Acquisition Facility                                                                               
Beginning Balance                                     $26,676       $32,228      $36,245              
External Acquisitions                                 10,000        10,000       10,000                   
External Acquisitions at Beginning of 1999                -             -            -                      
Internal Acquisitions                                  1,906         1,935        1,965              
Borrowings to Repay Existing Debt                         -             -            -               
Payment                                                  (35)          (35)         (35)             
Remaining Distributions to Repay Debt                 (6,319)       (7,884)      (9,692)              
---------     ---------   ----------   
Ending Balance                                         32,228        36,245       38,483              

Interest Payment                                        1,834         2,193        2,427               

Total Debt
Beginning Balance                                    $130,133      $135,685     $139,702                 
Amortization of Mortgage Notes                                                                          
-             -            -                  
Borrowing for Pearl Notes                                 -             -            -                  
Borrowing for Changes in WC                               (0)            0            0                 
Borrowing  to Pay Full MQD                                -             -            -                  
Acquisition Borrowing                                 11,906        11,935       11,965                 
Borrowing to Repay Existing Debt                          -             -            -                  
Remaining Distributions to Repay Debt                 (6,319)       (7,884)      (9,692)                
Borrowing/(Payment) on WC Revolver and                                                                  
Acq. Facility                                            (35)          (35)         (35)                
---------     ---------   ----------   
Ending Balance                                       $135,685      $139,702     $141,940                 
=========     =========   ==========   

Interest Expense                                                                                            
Interest Expense                                       $9,764       $10,123      $10,358                 
Bank Fee                                                   94            94           94                 
---------     ---------   ----------   
Total Interest Payment                              $9,858       $10,217      $10,452                  
=========     =========   ==========   

PAINEWEBBER INCORPORATED                           For discussion purposes only

8 of 18

PROJECT HEAT
====================================================================================================================================
STAR GAS STAND ALONE SCHEDULE OF ACTUAL DISTRIBUTIONS       Scenario III: Worst Case
(in thousands except per share and per unit data)

Estimated     Normalized                         Projected
---------------------------------------------------
ASSUMES REVISED TARGET DISTRIBUTION STRUCTURE        1998           1998        1999        2000      2001       2002      2003
----------    ----------   ----------  --------- ---------- --------- ---------- 

Distributable Cash                                  
- ------------------                             
Cash from Operations                                $10,815       $14,967      $17,626    $18,523   $19,623    $20,922   $24,277 
Maintenance CapEx                               (2,710)       (2,710)      (3,274)    (3,395)   (3,694)    (3,816)   (3,942)
Other                                              (18)          (18)         (35)       (35)      (35)       (35)      (35)
----------   -----------    ---------  ---------  ---------  --------- ---------- 
Total MLP Distributable Cash Flow                     8,087        12,239       14,317     15,093    15,894     17,071    20,300
Distributable Cash Flow/Unit                        $  1.27       $  1.93      $  2.25     $ 2.38   $  2.50    $  2.69   $  3.19

Structure                                      
- ---------                                      
Common Unit Ending Balance                            3,832         3,832        3,832      3,832     3,832      3,832     3,832 
Subordinated Units                                    2,396         2,396        2,396      2,396     2,396      2,396     2,396 
General Partner Interest Unit Equivalent                127           127          127        127       127        127       127 
----------   -----------    ---------  ---------  ---------  --------- ---------- 
Total Units Outstanding                               6,355         6,355        6,355      6,355     6,355      6,355     6,355 

Distribution Levels                            
- -------------------                            
MQD                                                 $  2.20       $  2.20      $  2.20    $  2.20   $  2.20    $  2.20   $  2.20
First Target                                        $  2.42       $  2.42      $  2.42    $  2.42   $  2.42    $  2.42   $  2.42
Second Target                                       $  2.84       $  2.84      $  2.84    $  2.84   $  2.84    $  2.84   $  2.84
Third Target                                        $  3.70       $  3.70      $  3.70    $  3.70   $  3.70    $  3.70   $  3.70
Indicated Cash Distribution                         $  2.20       $  2.20      $  2.20    $  2.20   $  2.20    $  2.20   $  2.20 

Distribution of MQD                            
- -------------------                            
Cash Available                                        8,087        12,239       14,317     15,093    15,394     17,071     20,300
Cash Borrowed to Pay Full MQD                         5,894         1,742            0          0         0          0          0
Allocation to:                                                                                                            
Common Units                                     8,430         8,430        8,430      8,430     8,430      8,430      8,430
Subordinated Units                               5,271         5,271        5,271      5,271     5,271      5,271      5,271
General Partner Interest                           280           280          280        280       280        280        280

First Target Distribution                      
- -------------------------                      
Cash Available                                            0             0          336      1,112     1,913      3,090      6,319

Cash Required for Target Distribution                0             0        1,398      1,398     1,398      1,398      1,398
Cash Required for Indicated Distribution             0             0            0          0         0          0          0
Actual Cash Distributed                              0             0            0          0         0          0          0

Allocation to:                                 
Common Units                                         0             0            0          0         0          0         0
Subordinated Units                                   0             0            0          0         0          0         0
General Partner Interest                             0             0            0          0         0          0         0

Second Target Distribution                     
- --------------------------                     
Cash Available                                            0             0            0          0         0          0         0

Cash Required for Target Distribution                0             0            0          0         0          0         0
Cash Required for Indicated Distribution             0             0            0          0         0          0         0
Actual Cash Distributed                              0             0            0          0         0          0         0

Allocation to:                                 
Common Units                                         0             0            0          0         0          0          0
Subordinated Units                                   0             0            0          0         0          0          0
General Partner Interest                             0             0            0          0         0          0          0
Incentive Distribution                               0             0            0          0         0          0          0

Third Target Distribution                      
- -------------------------                      
Cash Available                                            0             0            0          0         0          0          0

Cash Required for Target Distribution                0             0            0          0         0          0          0
Cash Required for Indicated Distribution             0             0            0          0         0          0          0
Actual Cash Distributed                              0             0            0          0         0          0          0

Allocation to:                                            
Common Units                                         0             0            0          0         0          0          0
Subordinated Units                                   0             0            0          0         0          0          0
General Partner Interest                             0             0            0          0         0          0          0
Incentive Distribution                                   

Projected
------------------------------
Assumes Revised Target Distribution Structure                   2004             2005         
------------    --------------                        

Distributable Cash                                                                            
- ------------------                                                                            
Cash from Operations                                          $25,971           $27,914       
Maintenance CapEx                                         (4,072)           (4,206)      
Other                                                        (35)              (35)      
----------         -----------     
Total MLP Distributable Cash Flow                              21,864            23,673       
Distributable Cash Flow/Unit                                    $3.44           $  3.73       

Structure                                                                                     
- ---------                                                                                     
Common Unit Ending Balance                                      3,832             3,832       
Subordinated Units                                              2,396             2,396       
General Partner Interest limit Equivalent                         127               127       
----------         -----------     
Total Units Outstanding                                         6,355             6,355       

Distribution Levels                                                                           
- -------------------                                                                           
MQD                                                           $  2.20           $  2.20       
First Target                                                  $  2.42           $  2.42       
Second Target                                                 $  2.84           $  2.84       
Third Target                                                  $  3.70           $  3.70       
Indicated Cash Distribution                                   $  2.20           $  2.20       

Distribution of MQD                                                                           
- -------------------                                                                           
Cash Available                                                 21,864            23,673        
Cash Borrowed to Pay Full MQD                                       0                 0        
Allocation to:                                                                                
Common Units                                               8,430             8,430        
Subordinated Units                                         5,271             5,271        
General Partner Interest                                     280               280        

First Target Distribution                                                                     
- -------------------------                                                                     
Cash Available                                                  7,884             9,692        

Cash Required for Target Distribution                      1,398             1,398        
Cash Required for Indicated Distribution                       0                 0        
Actual Cash Distributed                                        0                 0        

Allocation to:                                                                                
Common Units                                                   0                 0        
Subordinated Units                                             0                 0        
General Partner Interest                                       0                 0        

Second Target Distribution                                                                    
- --------------------------                                                                    
Cash Available                                                      0                 0        

Cash Required for Target Distribution                          0                 0        
Cash Required for Indicated Distribution                       0                 0        
Actual Cash Distributed                                        0                 0        

Allocation to:                                                                                
Common Units                                                   0                 0        
Subordinated Units                                             0                 0        
General Partner Interest                                       0                 0        
Incentive Distribution                                         0                 0        

Third Target Distribution                                                                     
- -------------------------                                                                     
Cash Available                                                      0                 0        

Cash Required for Target Distribution                          0                 0        
Cash Required for Indicated Distribution                       0                 0        
Actual Cash Distributed                                        0                 0        

Allocation to:                                                                                
Common Units                                                   0                 0        
Subordinated Units                                             0                 0        
General Partner Interest                                       0                 0        
Incentive Distribution                                         0                 0         

PROJECT HEAT                                                               
====================================================================================================================================
STAR GAS STAND ALONE SCHEDULE OF ACTUAL DISTRIBUTIONS (CONT'D)        SCENARIO III:  WORST CASE

(in thousands except per share and per unit data)

ESTIMATED   NORMALIZED                                 PROJECTED
--------------------------------------------------------------------
1998        1998        1999      2000      2001      2002      2003      2004      2005
---------   ----------   --------  --------  --------  --------  --------  --------  -------- 

Remaining Distribution
- ----------------------
Cash Available                                0            0          0         0         0         0         0         0         0
Allocation to:                                                                                                                    
Common Units                             0            0          0         0         0         0         0         0         0
Subordinated Units                       0            0          0         0         0         0         0         0         0
General Partner Interest                 0            0          0         0         0         0         0         0         0
Incentive Distribution                   0            0          0         0         0         0         0         0         0
Repay Indebtedness                       0            0        336     1,112     1,913     3,090     6,319     7,884     9,692

Total Distributions
- -------------------
Common Units                              8,430        8,430      8,430     8,430     8,430     8,430     8,430     8,430     8,430
Subordinated Units                        5,271        5,271      5,271     5,271     5,271     5,271     5,271     5,271     5,271
General Partner Interest                    280          280        280       280       280       280       280       280       280
Incentive Distributions                       0            0          0         0         0         0         0         0         0
---------   ----------   --------  --------  --------  --------  --------  --------  -------- 
Total Distributions                $13,981      $13,981    $13,981   $13,981   $13,981   $13,981   $13,981   $13,981   $13,981 
=========   ==========   ========  ========  ========  ========  ========  ========  ======== 

Total Distributions Per Unit
- ----------------------------
Common Unit                               $2.20        $2.20      $2.20     $2.20     $2.20     $2.20     $2.20     $2.20     $2.20
Subordinated Unit                          2.20         2.20       2.20      2.20      2.20      2.20      2.20      2.20      2.20
GP Unit                                    2.20         2.20       2.20      2.20      2.20      2.20      2.20      2.20      2.20 

10 of 18

PROJECT HEAT
- -----------------------------------------------------------------------------
(in thousands except per share and per unit data)    Scenario III: Worst Case

Projected
Estimated Normalized ______________________________________________________________
1998     1998       1999     2000     2001     2002     2003    2004     2005
-----------------------------------------------------------------------------------   
Petro EBITDA Calculation
- ---------------------------------------------------------------------------------------------------------------------------------
Year 1     Year 2   Year 3   Year 4   Year 5   Year 6   Year 7   Year 8
EBITDA Growth Rate                                       (4.1)%     (4.1)%   (4.1)%   (4.1)%   (4.1)%   (4.1)%   (4.1)%   (4.1)%   
- ---------------------------------------------------------------------------------------------------------------------------------

Base EBITDA:           Timing
Acquisitions:           End     1998    $15,000
Mid     1999     30,000
Mid     2000     30,000
Mid     2001     30,000
Mid     2002     30,000
Mid     2003     30,000
Mid     2004     30,000
Mid     2005     30,000
-------  --------  --------  -------  -------  -------  -------  -------  -------
Total EBITDA                                    $38,500  $43.440    $51,657  $54,371  $57,058  $59,720  $62,506  $65,422  $68,475
=======  ========  ========  =======  =======  =======  =======  =======  =======

Petro Depreciation Calculation

Existing Depreciation                           $29,660  $29,660    $29,660  $29,660  $29,660  $29,660  $29,660  $29,660  $29,660

Maintenance CapEx:              1998     $3,500       -        -        233      233      233      233      233      233      233
Annual Growth:0.0%            1999      3,500                         117      233      233      233      233      233      233
2000      3,500                                  117      233      233      233      233      233
2001      3,500                                           117      233      233      233      233
2002      3,500                                                    117      233      233      233
2003      3,500                                                             117      233      233
2004      3,500                                                                      117      233
2005      3,500                                                                               117

Internal Growth CapEx:          1998         $0       -        -          -        -        -        -        -        -        -
Annual Growth: 0.0%           1999          0                           -        -        -        -        -        -        -
2000          0                                    -        -        -        -        -        -
2001          0                                             -        -        -        -        -
2002          0                                                      -        -        -        -
2003          0                                                               -        -        -
2004          0                                                                        -        -
2005          0                                                                                 -

External Growth CapEx:          1998    $15,000       -        -      1,000    1,000    1,000    1,000    1,000    1,000    1,000
Annual Growth:  0.0%          1999     30,000                       1,000    2,000    2,000    2,000    2,000    2,000    2,000
2000     30,000                                1,000    2,000    2,000    2,000    2,000    2,000
2001     30,000                                         1,000    2,000    2,000    2,000    2,000
2002     30,000                                                  1,000    2,000    2,000    2,000
2003     30,000                                                           1,000    2,000    2,000
2004     30,000                                                                    1,000    2,000
2005     30,000                                                                             1,000

-------  -------    -------  -------  -------  -------  -------  -------  ------- 
Total Depreciation                              $29,660  $29,660    $32,010  $34,243  $36,477  $38,710  $40,943  $43,177  $45,410 
=======  =======    =======  =======  =======  =======  =======  =======  ======= 

PaineWebber Incorporated                                     11 of 18                                  For Discussion Purposes Only

Project Heat  
- --------------------------------------------------------------------------------
(in thousands except per share and per unit data)

Scenario III: Worst Case
Star Pro Forma Income Statement

Projected
Estimated Normalized  ----------------------------------------------------------------------
1998       1998     1999       2000      2001      2002      2003      2004       2005
--------- ----------  -------   -------   -------   -------   --------   --------   --------

Combined EBITDA                         $57,129    $66,221   $78,387   $82,912   $87,419   $91,908   $96,631    $101,601   $106,830
Consolidated Savings                      500        500       500       500       500       500       500         500        500
-------    -------   -------   -------   -------   -------   --------   --------   --------

Pro Forma EBITDA                         57,629     66,721    78,887    83,412    87,919    92,408     97,131    102,101    107,330
Depreciation and Amortization          41,289     41,289    44,778    49,354    52,613    55,888     59,173     62,468     65,774
-------    -------   -------   -------   -------   -------   --------   --------   --------

EBIT                                     16,340     25,432    34,109    34,058    35,306    36,520     37,959     39,633     41,556
Interest Expense                      (27,697)   (27,697)  (28,649)  (30,737)  (31,660)  (31,009)   (30,126)   (28,881)       -
Interest Income                           384        384        35        35        35        35         35         35         35
Other Income                              -          -         -         -         -         -          -          -          -

EBT                                     (10,972)    (1,880)    5,495     3,355     3,681     5,546      7,867     10,787     41,591
-------    -------   -------   -------   -------   -------   --------   --------   --------
Current Income Tax                       (525)      (525)      (525)    (525)     (525)     (525)      (525)      525)      (525)
Deferred Income Taxes                     -          -         -         -         -         -          -          -          -
-------    -------   -------   -------   -------   -------   --------   --------   --------

Net Income Available to Common         ($11,497)  ($ 2,405)  $ 4,970   $ 2,830   $ 3,156   $ 5,021   $  7,342   $ 10,262   $ 41,066
=======    =======   =======   =======   =======   =======   ========   ========   ========

Star Pro Forma Units Outstanding

Common Units
Beginning Balance                                 10,418    10,418    10,418    10,418    10,418     10,418     10,418     10,418
Issuance                                           -         -         -         -         -          -          -          -
Buyback                                            -         -         -         -         -          -          -          -
-------   -------   -------   -------   -------   --------   --------   --------
Ending Balance                         10,418     10,418    10,418    10,418    10,418    10,418     10,418     10,418     10,418

SR Subordinated Units
Beginning Balance                         -        3,296     3,296     3,296     3,296     3,296      3,296      3,296      3,296
Issuance                                           -         -         -         -         -          -          -          -
Buyback                                            -         -         -         -         -          -          -          -
-------   -------   -------   -------   -------   --------   --------   --------
Ending Balance                          3,296      3,296     3,296     3,296     3,296     3,296      3,296      3,296      3,296

Subordinated Units                        
Beginning Balance                                    754       754       754       754       754        754        754        754
Issuance                                           -         -         -         -         -          -          -          -
Buyback                                            -         -         -         -         -          -          -          -
-------   -------   -------   -------   -------   --------   --------   --------
Ending Balance                            754        754       754       754       754       754        754        754        754

GP Implied Units                          
Beginning Balance                                    295       295       295       295       295        295        295        295
Issuance                                           -         -         -         -         -          -          -          -
Buyback                                            -         -         -         -         -          -          -          -
-------   -------   -------   -------   -------   --------   --------   --------
Ending Balance                            295        295       295       295       295       295        295        295        295
-------    -------   -------   -------   -------   -------   --------   --------   --------

Total                              14,764     14,764    14,764    14,764    14,764    14,764    14,764      14,764     14,764
=======    =======   =======   =======   =======   =======   ========   ========   ========

PaineWebber Incorporated           12 of 18         For Discussion Purposes Only

Project Heat  
- --------------------------------------------------------------------------------
(in thousands except per share and per unit data)

Star Pro Forma Balance Sheet                      Scenario III: Worst Case

Projected
Estimated  --------------------------------------------------------------------------
1998       1999       2000       2001       2002       2003       2004       2005
--------   --------   --------   --------   --------   --------   --------   --------

Assets:
Cash                                      $ 10,982   $  1,000   $  1,000   $  1,000   $  1,000   $  1,000   $  1,000   $  1,000
Other Current Assets                        75,099    103,680    109,763    115,823    121,858    128,209    134,890    141,921
--------   --------   --------   --------   --------   --------   --------   --------
Total Current Assets                       86,081    104,680    110,763    116,823    122,858    129,209    135,890    142,921

PP&E and Intangibles, Net                  212,597    221,390    220,754    217,185    210,491    200,667    187,707    171,604
Other Assets                                56,902     56,902     56,902     56,902     56,902     56,902     56,902     56,902
--------   --------   --------   --------   --------   --------   --------   --------
Total Assets                              355,580    382,972    388,420    390,910    390,252    386,778    380,499    371,427
========   ========   ========   ========   ========   ========   ========   ========

Liabilities:
Current Liabilities                         77,481    106,062    112,146    118,205    124,240    130,591    137,272    144,303
8.25% Existing Credit Facility               7,457      7,457      7,457     47,422     87,387    127,352    167,317    207,282
Total LT Debt                              300,859    328,657    360,624    352,726    343,243    329,181    310,029    257,894
Other Liabilities                               51         51         51         51         51         51         51         51
--------   --------   --------   --------   --------   --------   --------   --------
Total Liabilities                         385,848    442,227    480,278    518,405    554,922    587,175    614,669    609,530

Preferred Stock                                   -          -          -          -          -          -          -          -
Common Shareholder's Equity                 (30,268)   (59,255)   (91,858)  (127,494)  (164,669)  (200,397)  (234,170)  (238,103)
--------   --------   --------   --------   --------   --------   --------   --------
Total Liabilities and Equity             $355,580   $382,972   $388,420   $390,910   $390,252   $386,778   $380,499   $371,427
========   ========   ========   ========   ========   ========   ========   ========
Check               -          -          -         (0)         0         (0)         0         (0)

Star Pro Forma Cash Flow Statement
Net Income                                            $  4,970   $  2,830   $  3,156   $  5,021   $  7,342  $  10,262   $ 41,066
Depreciation and Amortization                          44,778     49,354     52,613     55,888     59,173     62,468     65,774
Deferred Taxes                                              -          -          -          -          -          -          -
Other Assets/Liabilities                                    -          -          -          -          -          -          -
Change in Non-Cash Working Capital                          -          -          -          -          -          0          -
--------   --------   --------   --------   --------   --------   --------
Cash from Operations                                    49,748     52,185     55,769     60,909     66,515     72,730    106,840 

Maintenance CapEx                                      (6,774)    (6,895)    (7,194)    (7,316)    (7,442)    (7,572)    (7,706)
Internal Growth CapEx                                  (1,797)    (1,824)    (1,850)    (1,878)    (1,906)    (1,935)    (1,965)
External Growth CapEx                                 (45,000)   (40,000)   (40,000)   (40,000)   (40,000)   (40,000)   (40,000)
--------   --------   --------   --------   --------   --------   --------
Cash from Investments                                  (53,571)   (48,719)   (49,044)   (49,194)   (49,348)   (49,507)   (49,671)

Acquisition Borrowing                                  46,797     46,824      1,850      1,878      1,906      1,935      1,965
Remaining Distributions to Repay Debt                  (8,982)    (9,822)    (9,748)   (11,362)   (15,968)   (21,088)   (54,099)
Amortization of Existing Debt                          (5,478)    (8,141)       (60)       (60)      (120)         -          -
Borrowing to Repay Existing Debt                        5,478      8,141         60         60        120          -          -
Borrowing for Changes in WC                                 -          -          -          -          -         (0)         -
Change in Common Equity                                     -          -          -          -          -          -          -
Distributions                                         (33,957)   (35,433)   (38,792)   (42,196)   (43,070)   (44,035)   (44,999)
--------   --------   --------   --------   --------   --------   --------
Cash from Financing                                      3,858      1,569    (46,690)   (51,680)   (57,132)   (63,188)   (97,134)

Net Cash Flow                                               35      5,035    (39,965)   (39,965)   (39,965)   (39,965)   (39,965)
Initial Cash Balance                                    10,982      1,000      1,000      1,000      1,000      1,000      1,000
--------   --------   --------   --------   --------   --------   --------
Cash Available for Paydown on 
WC Revolver and Acq. Facility                          11,017      6,035    (38,965)   (38,965)   (38,965)   (38,965)   (38,965)

Minimum Cash Balance                                     1,000      1,000      1,000      1,000      1,000      1,000      1,000

Borrowing/(Paydown) on         
WC Revolver and Acq. Facility                         (10,017)    (5,035)    39,965     39,965     39,965     39,965     39,965 
--------   --------   --------   --------   --------   --------   --------
Ending Cash Balance                                      1,000      1,000      1,000      1,000      1,000      1,000      1,000

Net Change in Cash                                     ($9,982)        $0        ($0)        $0        ($0)        $0        ($0)
========   ========   ========   ========   ========   ========   ========

13 of 18

Project Heat  
- --------------------------------------------------------------------------------
(in thousands except per share and per unit data)

Star Pro Forma Income Statement
Projected
Estimated Normalized  -----------------------------------------------------------------------
1998       1998     1999       2000      2001      2002      2003       2004       2005
--------- ----------  -------   -------   -------   -------   -------    --------   ---------

Scenario III: Worst Case
8.04% 1st Mortgage Notes
Beginning Balance                      $85,000    $85,000   $85,000   $85,000   $85,000   $85,000   $85,000     $85,000    $85,000
Borrowing                                   -          -         -         -         -         -         -           -          -
Amortization                                -          -         -         -         -         -         -           -          - 
-------    -------   -------   -------   -------   -------   -------    --------   --------
Ending Balance                          85,000     85,000    85,000    85,000    85,000    85,000    85,000      85,000     85,000
Interest Payment           8.04%         6,834      6,834     6,834     6,834     6,834     6,834     6,834       6,834      6,834

7.17% Pearl Notes       
Beginning Balance                       11,000     11,000    11,000    11,000    11,000    11,000    11,000      11,000     11,000
Borrowing                                   -          -         -         -         -         -         -           -          -
Amortization                                -          -         -         -         -         -         -           -          - 
-------    -------   -------   -------   -------   -------   -------    --------   --------
Ending Balance                          11,000     11,000    11,000    11,000    11,000    11,000    11,000      11,000     11,000
Interest Payment           7.17%           789        789       789       789       789       789       789         789        789

0.00% Other Notes       
Beginning Balance                            -          -         -         -         -         -         -           -          -
Borrowing                                   -          -         -         -         -         -         -           -          -
Amortization                                -          -         -         -         -         -         -           -          - 
-------    -------   -------   -------   -------   -------   -------    --------   --------
Ending Balance                               -          -         -         -         -         -         -           -          -
Interest Payment           0.00%             -          -         -         -         -         -         -           -          -

8.50% New Debt           
Beginning Balance                      125,000    125,000   125,000   130,478   138,619   138,679   138,739     138,859    138,859
Borrowing                                   -          -     5,478     8,141        60       120       120           -          -
Amortization                                -          -         -         -         -         -         -           -          - 
-------    -------   -------   -------   -------   -------   -------    --------   --------
Ending Balance                         125,000    125,000   130,478   138,619   138,679   138,739   138,859     138,859    138,859
Interest Payment           8.50%        10,625     10,625    10,858    11,437    11,785    11.790    11,798      11,803     11,803

Exchange of 8.46% 
Senior Notes
Beginning Balance                            -          -    66,000    66,000    66,000    66,000    66,000      66,000     66,000
Borrowing                              66,000     66,000         -         -         -         -         -           -          -
Amortization                                -          -         -         -         -         -         -           -          - 
-------    -------   -------   -------   -------   -------   -------    --------   --------
Ending Balance                          66,000     66,000    66,000    66,000    66,000    66,000    66,000      66,000     66,000
Interest Payment           8.46%         5,584      5,584     5,584     5,584     5,584     5,584     5,584       5,584      5,584

8.00% Acq. & Other 
Notes Payable
Beginning Balance                       16,798     16,798    13,859     8,381       240       180       120           -          -
Borrowing                                   -          -         -         -         -         -         -           -          -
Amortization                           (2,939)    (2,939)   (5,478)   (8,141)      (60)      (60)     (120)          -          - 
-------    -------   -------   -------   -------   -------   -------    --------   --------
Ending Balance                          13,859     13,859     8,381       240       180       120         -           -          -
Interest Payment           8.00%         1,226      1,226       890       345        17        12         5           -          -

8.25% WC Revolver  
Beginning Balance                            -          -     7,457     7,457     7,457    47,422    87,387     127,352    167,317
Borrowing for Change in WC                  -          -         -         -         -         -         -          (0)         -
Borrowing/(Payment)                         -          -         -         -    39,965    39,965    39,965      39,965     39,965 
-------    -------   -------   -------   -------   -------   -------    --------   --------
Ending Balance                               -      7,457     7,457     7,457    47,422    87,387   127,352     167,317    207,282

Effective Avg WC Balance                23,600     23,600    21,500    21,500    21,500    21,500    21,500      21,500     21,500
Interest Payment           8.25%         1,947      1,947     1,774     1,774     1,774     1,774     1,774       1,774      1,774 

7.50% Acquisition Facility 
Beginning Balance                            -          -         -    27,798    59,765    51,867    42,384      28,322      9,170
External Acquisitions                                       40,000    45,000                                         -          -
External Acquisitions at
Beginning of 1999                          -          -     5,000         -         -         -         -           -          - 
Internal Acquisitions                      -          -     1,797     1,824     1,850     1,878     1,906       1,935      1,965 
Payment                                    -          -   (10,017)   (5,035)        -         -         -           -          -
Remaining Distributions 
to Repay Debt                             -          -    (8,982)   (9,822)   (9,748)  (11,362)  (15,968)    (21,088)   (54,099)
-------    -------   -------   -------   -------   -------   -------    --------   --------
Ending Balance                               -          -    27,798    59,765    51,867    42,384    28,322       9,170    (42,965)

Interest Payment           7.50%            $0         $0    $1,230    $3,284    $4,186    $3,534    $2,651      $1,406    ($1,267)

14 of 18

PROJECT HEAT                                         
- ------------------------------------------------------------------------------------------------------------------------------------
(in thousands except per share and per unit data)        Scenario III    Worst Case
Estimated    Normalized              Projected
----------------------------------
STAR PRO FORMA DEBT SCHEDULE (CONT'D)                                       199?         1998        1999       2000        2001
---------    ----------  ---------  ----------  -----------

TOTAL PRO FORMA DEBT
Beginning Balance                                                     $237,798     $237,798    $308,316   $336,114    $368,081
Amortization of Existing Debt                                          (2,939)      (2,939)     (5,478)    (8,141)        (60) 
Borrowing for Changes in WC                                               -            -           -          -           -  
Acquisition Borrowing                                                     -            -        46,797     46,824       1,850  
Borrowing to Repay Existing Debt                                          -            -         5,478      8,141          60
Remaining Distributions to Repay Debt                                     -            -        (8,982)    (9,822)     (9,748)
Borrowings/(Payment) on WC Revolver and Acq. Facility                     -            -       (10,017)    (5,035)     39,965
---------    ----------  ---------  ----------  -----------
Ending Balance                                                         234,859      234,859     336,114    368,081     400,148

Interest Expense                                                        27,005       27,005      27,957     30,045      30,968
Chase Fees                                                                 692          692         692        692         692   
---------    ----------  ---------  ----------  -----------
Total Interest Payment                                              27,697       27,697      28,649     30,737      31,660
=========    ==========  =========  ==========  ===========

----------------------------------------------
STAR PRO FORMA DEBT SCHEDULE (CONT'D)                                      2002         2003        2004       2005
---------    ----------  ---------  ----------  

TOTAL PRO FORMA DEBT
Beginning Balance                                                     $400,148     $430,630    $456,533   $477,346 
Amortization of Existing Debt                                             (60)        (120)        -          -
Borrowing for Changes in WC                                               -            -            (O)       -  
Acquisition Borrowing                                                   1,878        1,906       1,935      1,965
Borrowing to Repay Existing Debt                                           60          120         -          -
Remaining Distributions to Repay Debt                                 (11,362)     (15,968)    (21,088)   (54,099)
Borrowing/(Payment) on WC Revolver and Acq. Facility                   39,965       39,965      39,965     39,965  
---------    ----------  ---------  ----------  
Ending Balance                                                         430,630      456,533     477,346    465,176

Interest Expense                                                        30,317       29,434      28,189     25,516
C???? Fees                                                                 692          692         692        692         
---------    ----------  ---------  ---------- 
Total Interest Payment                                              31,009       30,126      28,881   $ 26,208 
=========    ==========  =========  ==========  

15 of 18

Project Heat  
- --------------------------------------------------------------------------------
(in thousands except per share and per unit data)

Scenario III: Worst Case
Star Pro Forma Distribution Schedule of Actual Distributions

Estimated Normalized                       Projected
----------------------------------------------------------------------
1998       1998     1999       2000      2001      2002      2003       2004       2005
--------- ----------  -------   -------   -------   -------   --------   --------   --------

Distributable Cash
- ------------------
Cash from Operations
(excl chg in WC)                       $29,792    $38,884   $49,748   $52,185   $55,769   $60,909    $66,515    $72,730   $106,840
Maintenance CapEx                      (6,210)    (6,210)   (6,774)   (6,895)   (7,194)   (7,316)    (7,442)    (7,572)    (7,706)
Other                                    (384)      (384)      (35)      (35)      (35)      (35)       (35)       (35)       (35)
--------    -------   -------   -------   -------   -------   --------   --------   --------
Total MLP Distributable
Cash Flow                               23,197     32,289    42,939    45,255    48,540    53,558     59,038     65,123     99,099

Distributable Cash Flow / Unit            $1.57      $2.19     $2.91     $3.07     $3.29     $3.63      $4.00      $4.41      $6.71

Structure
- ---------
Common Unit Ending Balance               10,418     10,418     10,418   10,418    10,418    10,418    10,418      10,418     10,418
SR Subordinated Units                     3,296      3,296      3,296    3,296     3,296     3,296     3,296       3,296      3,296
Subordinated Units                          754        754        754      754       754       754       754         754        754
General Partner Interest Unit
Equivalent                                 295        295        295      295       295       295       295         295        295
--------    -------   -------   -------   -------   -------   --------   --------   --------
Total Units Outstanding                  14,764     14,764     14,764   14,764    14,764    14,764    14,764      14,764     14,764

Distribution Levels                       $2.20      $2.20      $2.20    $2.20     $2.20     $2.20     $2.20       $2.20      $2.20
- -------------------
MQD                                       $2.20      $2.20      $2.20    $2.20     $2.20     $2.20     $2.20       $2.20      $2.20
First Target                              $2.42      $2.42      $2.42    $2.42     $2.42     $2.42     $2.42       $2.42      $2.42
Second Target                             $2.84      $2.84      $2.84    $2.84     $2.84     $2.84     $2.84       $2.84      $2.84
Third Target                              $3.70      $3.70      $3.70    $3.70     $3.70     $3.70     $3.70       $3.70      $3.70

Indicated Cash Distribution               $2.20      $2.20      $2.30    $2.40     $2.60     $2.80     $2.85       $2.90      $2.95

Distribution of MQD
- -------------------
Cash Available                           23,197     32,289     42,939   45,255    48,540    53,558    59,038      65,123     99,099
Allocation to:
Common Units                         22,733     22,920     22,920   22,920    22,920    22,920    22,920      22,920     22,920
SR Subordinated Units                     0      7,251      7,251    7,251     7,251     7,251     7,251       7,251      7,251
Subordinated Units                        0      1,472      1,659    1,659     1,659     1,659     1,659       1,659      1,659
General Partner Interest                464        646        650      650       650       650       650         650        650

First Target Distribution
- -------------------------
Cash Available                                0          0     10,458   12,775    16,060    21,078    26,558      32,643     66,619

Cash Required for
Target Distribution                      0          0      3,248    3,248     3,248     3,248     3,248       3,248      3,248
Cash Required for
Indicated Distribution                   0          0      1,476    2,953     5,905     8,858     9,596      10,335     11,073
Actual Cash Distributed                   0          0      1,476    2,953     3,248     3,248     3,248       3,248      3,248
Allocation to:
Common Units                              0          0      1,042    2,084     2,292     2,292     2,292       2,292      2,292
SR Subordinated Units                     0          0        330      659       725       725       725         725        725
Subordinated Units                        0          0         75      151       166       166       166         166        166
General Partner Interest                  0          0         30       59        65        65        65          65         65

Total Distributions to:
Common Units                              0          0      1,042    2,084     2,292     2,292     2,292       2,292      2,292
SR Subordinated Units                     0          0        330      659       725       725       725         725        725
Subordinated Units                        0          0         75      151       166       166       166         166        166
General Partner Interest                  0          0         30       59        65        65        65          65         65

PaineWebber Incorporated                                        16 of 18                                For Discussion Purposes Only

Project Heat
================================================================================
(In thousands except per share and per unit data)

Star Gas Pro Forma Schedule of Actual Distributions (cont'd)           Scenario III:  Worst Case

Projected 
Estimated  Normalized   ------------------------------------------------------------------
1998       1998        1999      2000      2001      2002      2003      2004      2005
---------  ----------   ------    ------    ------    ------    ------    ------    ------

Second Target Distribution     
- --------------------------
Cash Available                                  0           0        0         0    12,812    17,830    23,310    29,395    63,370
Cash Required for Target Distribution          0           0        0         0     7,149     7,149     7,149     7,149     7,149 
Cash Required for Indicated Distribution       0           0        0         0     3,064     6,468     7,319     8,170     9,022 
Actual Cash Distributed                        0           0        0         0     3,064     6,468     7,149     7,149     7,149
Allocation to:                                   
Common Units                                   0           0        0         0     1,875     3,959     4,376     4,376     4,376
Sr. Subordinated Units                         0           0        0         0       593     1,252     1,384     1,384     1,384
Subordinated Units                             0           0        0         0       136       287       317       317       317
General Partner Interest                       0           0        0         0        61       129       143       143       143
Incentive Right                                0           0        0         0       398       841       929       929       929
Incentive Right to GP Interest             0           0        0         0        96       203       224       224       224
Incentive Right to Sr. Sub Units           0           0        0         0       302       638       705       705       705

Total Distributions to:
Common Units                               0           0        0         0     1,875     3,959     4,376     4,376     4,376
Sr. Subordinated Units                     0           0        0         0       895     1,890     2,089     2,089     2,089
Subordinated Units                         0           0        0         0       136       287       317       317       317
General Partner Interest                   0           0        0         0       157       332       367       367       367

Third Target Distribution
- -------------------------
Cash Available                                  0           0        0         0         0         0    16,161    22,245    56,221
Cash Required for Target Distribution        0           0        0         0         0         0    16,591    16,591    16,591
Cash Required for Indicated Distribution     0           0        0         0         0         0       193     1,157     2,122
Actual Cash Distribution                     0           0        0         0         0         0       193     1,157     2,122
Allocation to:
Common Units                                 0           0        0         0         0         0       104       625     1,146
Sr. Subordinated Units                       0           0        0         0         0         0        33       198       363
Subordinated Units                           0           0        0         0         0         0         8        45        83
General Partner Interest                     0           0        0         0         0         0         4        23        42
Incentive Right                              0           0        0         0         0         0        44       266       488
Incentive Right to GP Interest             0           0        0         0         0         0        11        64       118
Incentive Right to Sr. Sub Units           0           0        0         0         0         0        34       202       370
Total Distribution to:
Common Units                               0           0        0         0         0         0       104       625     1,146
Sr. Subordinated Units                     0           0        0         0         0         0        67       400       733
Subordinated Units                         0           0        0         0         0         0         8        45        83
General Partner Interest                   0           0        0         0         0         0        15        87       160

Remaining Distribution
- ----------------------
Cash Available                                  0           0        0         0         0         0         0         0         0
Cash Required for Indicated Distribution       0           0        0         0         0         0         0         0         0
Actual Cash Distributed                        0           0        0         0         0         0         0         0         0
Allocation to:
Common Units                                   0           0        0         0         0         0         0         0         0
Sr. Subordinated Units                         0           0        0         0         0         0         0         0         0
Subordinated Units                             0           0        0         0         0         0         0         0         0
General Partner Interest                       0           0        0         0         0         0         0         0         0
Incentive Right                                0           0        0         0         0         0         0         0         0
Incentive Right to GP Interest             0           0        0         0         0         0         0         0         0
Incentive Right to Sr.Sub Units            0           0        0         0         0         0         0         0         0
Repay Indebtedness                             0           0    8,982     9,822     9,748    11,362    15,968    21,088    54,099

Total Distributions to:
Common Units                               0           0        0         0         0         0         0         0         0
Sr. Subordinated Units                     0           0        0         0         0         0         0         0         0
Subordinated Units                         0           0        0         0         0         0         0         0         0
General Partner Interest                   0           0        0         0         0         0         0         0         0

17 of 18

PROJECT HEAT                                    
- ------------------------------------------------------------------------------------------------------------------------------------
(in thousands except per share and per unit data)              
STAR GAS PRO FORMA SCHEDULE OF ACTUAL DISTRIBUTIONS (CONT'D)  Scenario III: Worst Case

Estimated   Normalized                           Projected
--------------------------------------------------------
1998         1998           1999       2000       2001        2002        2003
---------   ----------     ---------  ---------  ----------  ----------  ----------

Total Distributions
- -------------------
Common Units                                     $ 22,733     $ 22,920      $ 23,962   $ 25,004   $ 27,088    $ 29,171    $ 29,692
S R Subordinated Units                                  0        7,251         7,581      7,910      8,872       9,867      10,132
Subordinated Units                                      0        1,472         1,734     1,810      1,961       2,112       2,149
General Partner Interest                              464          646           679        709        872       1,047       1,097
--------     --------      --------   --------   --------    --------    ----------
Total Distributions                           $ 23,197     $ 32,289      $ 33,957   $ 35,433   $ 38,792    $ 42,196    $ 43,070
========     ========      ========   ========   ========    ========    ==========

Total Distributions Per Unit
- ----------------------------
Common Units                                     $   2.18     $   2.20      $   2.30   $   2.40   $   2.60    $   2.80    $   2.85
S R Subordinated Units                               0.00         2.20          2.30       2.40       2.69        2.99        3.07
Subordinated & GP Units                              0.44         2.02          2.30       2.40       2.70        3.01        3.09

Total Incentive Distributions        NPV
------------
To GP Interest                   $  357      $      0     $      0      $      0   $      0   $     96    $    203    $    235
To Sr. Sub Units                  1,121           -            -             -          -          302         638         739
-------------   --------     --------      --------   --------   --------    --------    ----------
Sub-Total                      1,478           -            -             -          -          398         841         974  
Present Value of                               -            -             -          -           -           -           -  
Terminal Value               1,189  
------------- 
Total                 $2,667                                                                                         

----------------------
2004         2005
---------   ----------

Total Distributions
- -------------------
Common Units                                     $ 30,213    $ 30,734
S R Subordinated Units                             10,465      10,798
Subordinated Units                                  2,187       2,225
General Partner Interest                            1,169       1,242
--------     --------      
Total Distributions                           $ 44,035    $ 44,999
========     ========      

Total Distributions Per Unit
- ----------------------------
Common Units                                     $   2.90    $   2.95         
S R Subordinated Units                               3.18        3.28
Subordinated & GP Units                              3.20        3.30

Total Incentive Distributions        

To GP Interest                               $    289    $    342        
To Sr. Sub Units                                  907       1,075
--------     --------
Sub-Total                                    1,196       1,417
Present Value of  
Terminal Value                                -        5,670  

Total                                                                                                                

18 of 18

Project Heat
- --------------------------------------------------------------------------------
Transaction Summary and Assumptions
(In thousands except per share and per unit data)       Scenario I:  Base Case

EQUITY RESTRUCTURING                                                           CALCULATION OF SUB/GP UNITS OFFERED
- ----------------------------------------------------------------------------   --------------------------------------------
Petro
-------------------------
Public       Insiders
----------   ------------

Securities Offered                                   Sr Sub       Sub & GP     Value of Sub/GP Units to be
Incentive Rights                                        76%            24%      To Be Converted                     $18,597
Value Offered                                         $3.15          $3.15     Less: Value of GP                      6,284
---------------------
Current Market                                        $1.63          $1.63                                           12,313
Premium to Market                                     93.8%          93.8%     Remainder at $16.33                      754
Required Yield w/out PV of Incent. Rights             11.5%          14.0%                                
Value of Security w/out PV of Incent. Rights         $19.13         $15.71                                
Assumed Value of Incentive Rights                     $0.61          $0.61                                
Value of Security Offered                            $19.74        $16.33      PRESENT VALUE OF INCENTIVE RIGHTS
Security Offered per Share                             0.16          0.19      Discount Rate                            25%
Total Shares                                         17,160         9,404      PV of Cash Flows 1997-2005             1,478
Insiders to Receive Sr. Sub.                          3,500        (3,500)     PV of Terminal Value  4x               1,189
--------------------
Shares to Be Converted                               20,660         5,904      Total PV of Incentive Rights           2,667
Units Offered                                         3,296           754
Current Sub/GP                                                          0      Value of Incentive Rights per Unit     $0.61
Value of GP/Unit                                                   $21.28

DEBT RESTRUCTURING
- ---------------------------------------------------------------------------------------------------------
Projected
12/31/97
Privates:                                                      Principal         Strategy      Price
-------------     -----------   ---------

11.96% Sr Notes                                                 60,000       Exchange        110.0%
14.10% Sr Notes                                                  3,100      Neg. Tender      110.0%
14.10% Sub Notes                                                 3,100      Neg. Tender      110.0%
14.33% Pfd Stock                                                 4,167      Neg. Tender      105.0%

Publics:
10.13% Sub Notes & Sr Notes                                     50,000      Neg. Tender      100.0%
9.38% Sub Notes & Sr Notes                                      75,000        Tender         100.0%
12.25% Sub Notes & Sr Notes                                     81,250        Tender         105.0%
12.88% Pfd Stock                                                30,000        Tender         100.0%

FINANCING SUMMARY
- ---------------------------------------------------------------------------------------------------------

Amount           Rate       Unit Price
-------------     -----------   ----------

New Common Raised                                               $145,728                         $22.13
New Debt Raised                                                  125,000            8.50%

UNITS OUTSTANDING
- --------------------------------------------------------------------------------------------------------------------------
Current                        Pro Forma
-----------------------------   -----------------------------
Privates:                                                         Units             %             Units             %     
-------------     -----------   -------------     -----------

Existing Common                                                     3,832           60.3%           3,832           26.0%
New Common                                                              0            0.0%           6,587           44.6%
Common to Petro Shareholders                                            0            0.0%               0            0.0%
Sr Sub to Petro Shareholders                                            0            0.0%           3,296           22.3%
Existing Sub                                                        2,396           37.7%             754            5.1%
Implied GP                                                            127            2.0%             295            2.0%
-------------     -----------   -------------     -----------
Total Units                         6,355          100.0%          14,764          100.0%
=============     ===========   =============     ===========

SUMMARY CASH FLOW AND COVERAGE ANALYSIS
- ----------------------------------------------------------------------------------------------------                                
($ on per Unit basis)                                                                                                               

Estimated     Normalized                          Projected
---------------------------------------------------  
1998           1998         1999           2000          2001          2002     
-----------     ----------    ----------    ----------    ----------    ----------   

Star Stand Alone                                                                                                          
EBITDA                                $18,629        $22,781       $26,730       $28,541       $30,361       $32,188    
Interest Expense                     (7,807)        (7,807)       (9,114)      (10,028)      (10,748)      (11,276)   
Maintenance CapEx                    (2,710)        (2,710)       (3,274)       (3,395)       (3,694)       (3,816)   
Taxes                                   (25)           (25)          (25)          (25)          (25)          (25)   
-----------     ----------    ----------    ----------    ----------    ----------   
Distributable Cash Flow                $8,087        $12,239       $14,317       $15,093       $15,894       $17,071    
===========     ==========    ==========    ==========    ==========    ==========   

DCF per Common Unit                     $2.11          $3.19         $3.74         $3.94         $4.15         $4.46    
DCF / Common unit MQD                    0.94 x         1.42 x        1.66 x        1.75 x        1.85 x        1.98 x

DCF per Total Unit                      $1.27          $1.93         $2.25         $2.38         $2.50         $2.69    
DCF / Total MQD                          0.58 x         0.88 x        1.02 x        1.08 x        1.14 x        1.22 x

Indicated Distribution
per Common Unit                        $2.20          $2.20         $2.20         $2.20         $2.20         $2.20    

Star Pro Forma                                                                                                            
EBITDA                                                                                                                  
Star                                $18,629        $22,781        $26,730      $28,541       $30,361       $32,188    
Petro                                38,500         43,440         55,798       62,665        69,509        76,324    
Synergies                               500            500            500          500           500           500    
-----------     ----------    ----------    ----------    ----------    ----------   
Total                                  57,629         66,721         83,028       91,706       100,370       109,012    
-----------     ----------    ----------    ----------    ----------    ----------   

Interest Expense                      (27,697)       (27,697)       (28,488)     (30,079)      (30,142)      (28,240)   
Maintenance CapEx                      (6,210)        (6,210)        (6,774)      (6,895)       (7,194)       (7,316)   
Taxes                                    (525)          (525)          (525)        (525)         (525)         (525)
-----------     ----------    ----------    ----------    ----------    ----------   
Distributable Cash Flow             $23,197        $32,289        $47,241      $54,207       $62,509       $72,931    
===========     ==========    ==========    ==========    ==========    ==========   

DCF per Common Unit                     $2.23          $3.10          $4.53        $5.20         $6.00         $7.00    
DCF per Total Unit                       1.57           2.19           3.20         3.67          4.23          4.94

Indicated Distribution
per Common Unit                        $2.20          $2.20          $2.30        $2.40         $2.60         $2.80    

Pro Forma Coverage Ratios
MQD Coverage
------------
Common Unit                            0.99 x         1.38 x        2.02 x        2.32 x        2.67 x        3.12 x
Senior Subordinated Unit               0.75           1.05          1.53          1.76          2.03          2.37
Total Unit                             0.71           0.99          1.45          1.67          1.92          2.25

Indicated Distribution Coverage
-------------------------------
Common Unit                            0.99 x         1.38 x        1.93 x        2.12 x        2.26 x        2.45 x
Senior Subordinated Unit               0.75           1.05          1.47          1.61          1.72          1.86
Total Unit                             0.71           0.99          1.39          1.53          1.63          1.76

Accretion/Dilution
DCF per Unit - Star Stand Alone         $1.27          $1.93          $2.25        $2.38         $2.50         $2.69    
DCF per Unit - Pro Forma                 1.57           2.19           3.20         3.67          4.23          4.94    

Pro Forma Credit Analysis
EBITDA/Interest                          2.08 x         2.41 x        2.91 x        3.05 x        3.33 x        3.86 x
LT Debt/EBITDA                           5.22           4.51          3.91          3.79          3.24          2.72

PaineWebber Incorporated                                         1 of 18                                For Discussion Purposes Only

PROJECT HEAT
- -----------------------------------------------------------------------------------------------------------------------------------
Transaction Summary and Assumptions                 
(in thousands except per share and per unit data)   Scenario I: Base Case

OPERATING ASSUMPTIONS                                            ACQUISITION ASSUMPTIONS   
- ----------------------------------------------------             ------------------------------------------------------------------

Petro          Star           
-------        ------             Petro      Multiple   1998      1999     2000     2001     2002
Normalized Maintenance CapEx   $3,500         $2,710             -----      --------   ----      ----     ----     ----     ----
Maintenance CapEx Life         15 yrs         15 yrs              Amount      4.75x   $15,000   $30,000  $30,000  $30,000  $30,000
Growth CapEx Life              15 yrs         15 yrs              Timing              End       Mid       Mid     Mid      Mid
Life of Existing Depreciation  15 yrs         15 yrs              %EBITDA             0.0%      50.0%     50.0%   50.0%    50.0%
Interest Income Rate             3.5%           3.5%              %Attrition   4.1%             
Marginal Tax Rate               33.0%          33.0%             Star        
Deferred Tax Percent                            0.0%             ----        
Minimum Cash Balance                          $1,000              Amount       7.00x  $20,000   $10,000  $10,000  $10,000  $10,000
Initial Incremental Cash                                          Timing              End       Mid       Mid     Mid      Mid 
Req'd for Distributions                      $5,000              %EBITDA             0.0%      50.0%     50.0%   50.0%    50.0%
Consolidation Savings                           $500                        
Annual Bank Fees                $692             $94              Amount       7.00x            $5,000
Current Stock Price            $1.63          $22.13              Timing                        Beg
%EBITDA                       100.0%

NEW SECURITY ASSUMPTIONS
- --------------------------------------------------------------------------------------------------------------------------

New MLP Equity                                    New Star Debt                      Advisory Fees
- ------------------------------------------        ------------------------------     -------------------------------------
Gross Proceeds                    $145,728        Gross Proceeds      $125,000       Fairness Opinion               $1,000
Common Units to Public               6,587        Gross Spread %          1.0%       Financial Advisory             $2,500
Gross Spread %                        5.0%        Gross Spread $        $1,250       Debt Tender Fee       0.26%      $507    
Gross Spread $                      $7,286        Coupon                 8.50%       
Offering Price/Share                $22.13                            
(current market price)                          

EXCHANGE ASSUMPTIONS                                                                                                                
- ------------------------------------------------------------------------------------------------
Gets New Units of:
--------------------------------------
Shareholders of:                        Dividend            Common       Sr Sub          Sub    
- --------------------------------------------------        ----------   -----------   -----------

Public Class A Shares         17,160         $0.30               -        2,738              -  
Insider Class A Shares         6,795         $0.30               -            -            754  
Insider Class B Shares            11         $0.30               -            2              -                                    
Insider Class C Shares         2,598         $0.30               -          556              -  
--------      --------        ----------   -----------   -----------
26,563                             -        3,296            754

TRANSACTION COSTS SUMMARY                                 SOURCES AND USES OF FUNDS                                          
- ----------------------------------------------------      -------------------------------------------------------------------------

New MLP Equity                       $7,286             Sources:                             Uses:                       
New Star Debt                         1,250             Excess Cash on Hand     $2,023       Repay Debt Principal        $212,450
Fairness Opinion                      1,000             New Star Debt          125,000       Redeem Preferred              34,167
Financial Advisory                    2,500             New MLP Equity         145,728       Premium on Redemption/              
Solicitation Fees on Exchange              
of Outsider Petro Debt                 507             Cash Balance                 0        Exchange/Defeasance           4,891
Exchange of 11.96% Notes                300                                                  Transaction Fees              17,743
Legal Fees                            2,500                                                  Prefunding of Liabilities      3,500
Printing                              1,000                                   --------                                   --------
Accounting Fees                         250                                   $272,751                                   $272,751 
Other:                                                                        ========                                   ========
Environmental                          350
Rating Agencies                        100
Roadshow                               200
Asset Appraisal                        250
Solicitation expenses                  100
Other Bank Fees                        150
--------
$17,743
========

PaineWebber Incorporated                                       2 of 18

- --------------------------------------------------------------------------------
TRANSACTION SUMMARY AND ASSUMPTIONS
(In thousands except per share and per unit data)                  
Scenario I: Base Case

RECAPITALIZATION ASSUMPTIONS
- ------------------------------------------------------------------------------------------------------------------------
(D)efease
(T)ender
(R)edeem      Principal     Maturity Period                      Sinking Fund Payment
(E)xchange       as of      ------------------    Coupon/      ----------------------------
Petro Instruments:            (N)othing      9/30/98        m/d       yr       Dividend       Payment       Year Start
- --------------------------   -----------   -----------   --------  --------   ----------    -----------   --------------

11.96% Sr Notes                  e          $ 60,000 v    1-Oct         0      11.960%            $0              0
14.10% Sr Notes                  t             3,100 v   15-Jan      2001      14.100%         1,050           1997
14.10% Sub Notes                 t             3,100 v   15-Jan      2001      14.100%         1,050           1997
10.13% Sub Notes & Sr Notes      t            50,000 v    1-Apr      2003      10.130%             -               
9.38% Sub Notes & Sr Notes       t            75,000 v    1-Feb      2006       9.375%             -               
12.25% Sub Notes & Sr Notes      t            81,250 v    1-Feb      2005      12.250%             -                
8.00% Acq. & Other Notes 
Payable                         n            13,859 v                  0       8.000%             -              0
8.25% Existing Credit Facility   n                 0 v               1998       8.250%             -              
0.00% Other Notes                n                 0 v       NA        NA       0.000%             0             NA
-----------
$286,309

Pfrd. Stock:
- --------------------------
14.33% Pfd Stock                 t             4,167 v    1-Aug      1999      14.330%         4,167           1997
12.88% Pfd Stock                 t            30,000 v   15-Feb      2009      12.875%             0                
0.00%                            n                 0                            0.000%             0                
-----------                                
$ 34,167
-----------
Total Petro                           $320,476

Star Instruments:
- --------------------------
8.04% 1st Mortgage Notes        n            85,000 v       NA        NA       8.040%             -               0
8.25% WC Revolver               n                 0         NA        NA       8.250%             -              NA
7.50% Acquisition Facility      n                 0 v       NA        NA       7.500%             -              NA    
8.50% New Debt                  n           125,000 v       NA        NA       8.500%             0              NA    
7.17% Pearl Notes               n            11,000         NA        NA       7.170%             0              NA
-----------                                
$210,000
-----------
Total Combined                        $530,476

Red/Exchg/Defease 
% Red/       Red/Exchg    Defeasance    ----------------------    Exchanged 
Petro Instruments:            Exchanged       Price         Price        Value       Premium      Int Rate        Security Type
- --------------------------   -----------   -----------   -----------   ---------   ----------   ------------   --------------------

11.96% Sr Notes                 100.0%        110.0%                     $66,000          $0         8.5%       Sr Notes
14.10% Sr Notes                 100.0%        110.0%                       3,410         310                    Sr Notes
14.10% Sub Notes                100.0%        110.0%                       3,410         310                    Sub Notes
10.13% Sub Notes & Sr Notes     100.0%        100.0%       106.2%         50,000           -                    Sub Notes & Sr Notes
9.38% Sub Notes & Sr Notes      100.0%        100.0%       108.2%         75,000           -                    Sub Notes & Sr Notes
12.25% Sub Notes & Sr Notes     100.0%        105.0%       116.2%         85,313       4,063                    Sub Notes & Sr Notes
8.00% Acq. & Other Notes         
Payable                          0.0%        100.0%                           -            -                   Acq. & Other Notes
Payable
8.25% Existing Credit Facility    0.0%        100.0%                           -            -                   Existing Credit 
Facility
0.00% Other Notes                 0.0%          0.0%                           -            -        11.0%      Other Notes  
-----------
$4,683  

Pfrd. Stock:
- --------------------------
14.33% Pfd Stock                100.0%        105.0%                       4,375          208                   Pfd Stock    
12.88% Pfd Stock                100.0%        100.0%                      30,000            -                   Pfd Stock
0.00%                                                                          -            -                           
-----------                            -----------   
$ 34,167                                     $208 
-----------
Total Petro                                                                      $4,891

Star Instruments:
- --------------------------
8.04% 1st Mortgage Notes          0.0%           0.0%                          -            -                  1st Mortgage Notes
8.25% WC Revolver                 0.0%           0.0%                          -            -                  WC Revolver
7.50% Acquisition Facility        0.0%           0.0%                          -            -                  Acquisition Facility 
8.50% New Debt                    0.0%           0.0%                          -            -                  New Debt  
7.17% Pearl Notes                 0.0%           0.0%                          -            -                  Pearl Notes
-----------
$0
-----------
Total Combined                                                                   $4,891

Star Stand Alone Distribution Assumptions
- -------------------------------------------------------------------------------
Marginal Interest In
--------------------
Distribution      Public       GP
------------    ---------   --------

Minimum Quarterly Distribution                 $2.20          98%         2%   
First Target Distribution                      $2.42          98%         2%
Second Target Distribution/(1)/                $2.84          85%        15%  
Third Target Distribution/(1)/                 $3.70          75%        25% 
Thereafter                                        NM          50%        50%

Target Distribution Level                      $2.20 
Annual Distribution Increase                   $0.00 

Standard Distribution Structure ("S") or Target ("T")        t

- --------------------------------------------------------------------------------

Star Pro Forma Distribution Assumptions
- --------------------------------------------------------------------------------------------------------------------------------
Marginal Interest In                      Incentive Rights
-----------------------------    ----------------------------------
Distribution     Public      GP    Incen. Rt.         GP              Sr. Sub.
------------    --------   ------  ----------    ------------     -----------------       

Minimum Quarterly Distribution          $2.20          98%       2%         0%             24%               76%
First Target Distribution               $2.42          98%       2%         0%             24%               76%    
Second Target Distribution/(1)/         $2.84          85%       2%        13%             24%               76%
Third Target Distribution/(1)/          $3.70          75%       2%        23%             24%               76%
Thereafter                                 NM          50%       2%        48%             24%               76% 

1998         1999       2000        2001           2002            Thereafter
------------  ----------  ---------  ----------    ------------    -------------------    
Annual Indicated Dist. Increase        $0.00         $0.10      $0.10       $0.20         $0.20              $0.05       
Target Indicated Dist. Level           $2.20         $2.30      $2.40       $2.60         $2.80          

Standard Distribution Structure ("S") or Target ("T")   t

- -------------------------------------------------------------------------------------------------------------

3 of 18

PaineWebber Incorporated                                For Discussion
Purposes Only

PROJECT HEAT                                      
================================================================================
PRO FORMA OPENING BALANCE SHEET         

(in thousands except per share and per unit data)       Scenario I: Base Case 

OPENING BALANCE SHEET                                         STAR GAS                                    PETRO
-------------------------------------      -------------------------------------
12/31/97    ADJUSTMENTS     9/30/98        12/31/97    ADJUSTMENTS     9/30/98    
----------  -------------  ----------      ----------  -------------  ----------

Assets:
Cash                                         $  3,452      ($ 2,951)    $    501        $  2,390      $10,615      $ 13,005
Other Current Assets                           18,537        (3,142)      15,395         102,734      (43,030)       59,704
----------                 ----------      ----------                 ----------
Total Current Assets                         21,989                     15,895         105,124                     72,709

PP&E and Intangibles, Net                     108,809        (3,995)     104,814         124,804         -          107,783
Investments in Unconsolidated Affiliates         -             -            -              7,535       (7,122)          413
Other Assets                                   48,653        (2,115)      46,538          10,383          (19)       10,364
----------                 ----------      ----------                 ----------
Total Assets                                179,451                    167,248         247,846                    191,269
==========                 ==========      ==========                 ==========

Liabilities:                                                                                                
Current Liabilities                            11,514        (4,143)       7,371          92,688         -           70,110
8.25% Existing Credit Facility                   -            7,457        7,457          21,500      (21,500)         -
Long Term Debt                                 96,000          -          96,000         278,378        7,931       286,309
Total Preferred Stock                            -             -            -             34,167         -           34,167
Other Liabilities                                  54            (3)          51          10,745          (47)       10,698
----------                 ----------      ----------                 ----------
Total Liabilities                           107,568                    110,879         437,478                    401,284

Common Shareholder's/Partner's Equity             71,883       (15,515)      56,368        (189,632)     (20,383)     (210,015)
----------                 ----------      ----------                 ---------- 
Total Liabilities and Equity               $179,451                   $167,248        $247,846                   $191,269
==========                 ==========      ==========                 ========== 

check                                -                          -               -

PRO FORMA
MERGER            STAR GAS
ADJUSTMENTS         9/30/98
-----------       ----------- 

ASSETS:
Cash                                         ($  2,023)         $ 10,982
Order Current Assets                              -               75,099
-----------       ----------- 
Total Current Assets                          (2,023)           86,081

PP&B and Intangibles, Net                         -              212,597
Investments in Unconsolidated Affiliates          (413)             -
Other Assets                                      -               56,902
-----------       ----------- 
Total Assets                                  (2,436)          355,580

LIABILITIES:                                
Current Liabilities                               -               77,481
8.25% Existing Credit Facility                    -                7,457
Long Term Debt                                 (81,450)          300,859
Total Preferred Stock                          (34,167)             -
Other Liabilities                              (10,698)               51
-----------       ----------- 
Total Liabilities                           (126,315)          385,848

Commerce Shareholder's/Partner's Equity           123,378           (30,268)
-----------       ----------- 
Total Liabilities and Equity               ($  2,937)         $355,580
===========

check                                                   -

PRO FORMA CAPITAL STRUCTURE                                   STAR GAS                                    PETRO
-------------------------------------      -------------------------------------
12/31/97    ADJUSTMENTS     9/30/98        12/31/97    ADJUSTMENTS     9/30/98    
----------  -------------  ----------      ----------  -------------  ---------- 

Debt:
8.04% 1st Mortgage Notes                        $ 85,000                   $ 85,000        $      0       $     0     $      0
8.25% WC Revolver                                   -          7,457          7,457            -             -            -
7.50% Acquisition Facility                          -                          -               -             -            -
7.17% Pearl Notes                                 11,000                     11,000            -             -            -     

11.96% Sr Notes                                     -                          -             60,000          -          60,000
14.10% Sr Notes                                     -                          -              4,150        (1,050)       3,100
14.10% Sub Notes                                    -                          -              4,150        (1,050)       3,100
10.13% Sub Notes & Sr Notes                         -                          -             50,000          -          50,000
9.38% Sub Notes & Sr Notes                          -                          -             75,000          -          75,000
12.25% Sub Notes & Sr Notes                         -                          -             81,250          -          81,250
0.00% Other Notes                                   -                          -                  0          -               0
8.00% Acg. & Other Notes Payable                    -                          -             16,798        (2,939)      13,859
8.25% Existing Credit Facility                      -                          -                  0          -               0

8.46% Exchanged Debt                                -                          -               -             -            -
8.50% New Debt                                      -                          -               -             -            -
----------                 ----------      ----------                 ----------  
Total Debt                                   96,000                    103,457         291,348                    286,309
----------                 ----------      ----------                 ----------  

Preferred Stock:
14.33% Pfd Stock                                    -                          -              4,167          -           4,167
12.88% Pfd Stock                                    -                          -             30,000          -          30,000
----------                 ----------      ----------                 ----------  
Total Preferred                                -                          -             34,167                     34,167
----------                 ----------      ----------                 ----------  

Common Shareholder's/Partner's Equity             71,883                     56,368        (189,632)      (20,383)    (210,015)
----------                 ----------      ----------                 ----------  

Total Capital                           $167,883                   $159,825        $135,883                   $110,461
==========                 ==========      ==========                 ========== 

PRO FORMA
MERGER            STAR GAS
ADJUSTMENTS         9/30/98
-----------       -----------  

Debt:
8.04% 1st Mortgage Notes                            $      0          $ 85,000
8.25% WC Revolver                                       -                7,457
7.50% Acquisition Facility                              -                 -
7.17% Pearl Notes                                       -               11,000

11.96% Sr Notes                                      (60,000)             -
14.10% Sr Notes                                       (3,100)             -
14.10% Sub Notes                                      (3,100)             -
10.13% Sub Notes & Sr Notes                          (50,000)             -
9.38% Sub Notes & Sr Notes                           (75,000)             -
12.25% Sub Notes & Sr Notes                          (81,250)             -
0.00% Other Notes                                       -                 -
8.00% Acq. & Other Notes Payable                        -               13,859
8.25% Existing Credit Facility                          -                 -

8.46% Exchanged Debt                                  66,000            66,000
8.50% New Debt                                       125,000           125,000
-----------       -----------   
Total Debt                                      (81,450)          308,316       (123,543,00)
-----------
Preferred Stock:
14.33% Pfd Stock                                      (4,167)             -
12.88% Pf\ Stock                                     (30,000)             -
-----------       -----------   
Total Preferred                                 (34,167)             -

Common Shareholder's/Partner's Equity                123,378           (30,268)
-----------    

Total Capital                                                 $278,048
===========    

4 of 18

PROJECT HEAT
- -------------------------------------------------------------------------------------------------------------------------------
(in thousands except per share and per unit data)

Scenario 1:  Base Case

STAR GAS STAND ALONE INCOME STATEMENT

Estimated   Normalized                                Projected                              
--------------------------------------------------------------------
1998         1998        1999      2000      2001      2002      2003      2004      2005  
---------   ----------   --------  --------  --------  --------  --------  --------  -------- 

EBITDA                             $ 18,629     $ 22,781   $ 26,730  $ 28,541  $ 30,361  $ 32,188  $ 34,125  $ 36,178  $ 38,356 
Depreciation and Amortization      11,629       11,629     12,768    15,111    16,137    17,178    1?,229    19,291    20,364
---------   ----------   --------  --------  --------  --------  --------  --------  --------  

EBIT                                  7,000       11,152     13,962    13,430    14,224    15,010    15,896    16,887    17,992
Interest Response                  (7,807)      (7,807)    (9,114)  (10,028)  (10,748)  (11,276)   (9,858)  (10,217)  (10,452)
Interest Income                        18           18         35        35        35        35        35        35        35
Other Income                            -            -          -         -         -         -         -         -         -
---------   ----------   --------  --------  --------  --------  --------  --------  --------   

Income Before Taxes                    (789)       3,363      4,883     3,437     3,511     3,769     6,073     6,705     7,575
Current Income Taxes                  (25)         (25)       (25)      (25)      (25)      (25)      (25)      (25)      (25)
Deferred Income Taxes                   -            -          -         -         -         -         -         -         -
---------   ----------   --------  --------  --------  --------  --------  --------  --------    
Net Income Available to Common        ($814)    $  3,338   $  4,858  $  3,412  $  3,486  $  3,744  $  6,048  $  6,680  $  7,550
=========   ==========   ========  ========  ========  ========  ========  ========  ======== 

STAR GAS STAND ALONE UNITS 
Outstanding

Common Units
Beginning Balance                   3,832        3,832      3,832     4,317     4,317     4,517     4,717     4,717     4,717
Insurance                              0            0        485         0       200       200         0         0         0
Buyback                                0            0          0         0         0         0         0         0         0
---------   ----------   --------  --------  --------  --------  --------  --------  --------
Ending Balance                      3,832        3,832      4,317     4,317     4,517     4,717     4,717     4,717     4,717   
---------   ----------   --------  --------  --------  --------  --------  --------  --------    

Subordinated Units                                                                                                            
Beginning Balance                   2,396        2,396      2,396     2,396     2,396     2,396     2,396     2,396     2,396
Insurance                              0            0          0         0         0         0         0         0         0
Buyback                                0            0          0         0         0         0         0         0         0
---------   ----------   --------  --------  --------  --------  --------  --------  --------   
Ending Balance                      2,396        2,396      2,396     2,396     2,396     2,396     2,396     2,396     2,396
---------   ----------   --------  --------  --------  --------  --------  --------  --------    

GP Implied Units                                                                                                              
Beginning Balance                     127          127        127       127       127       127       127       127       127
Insurance                              0            0          0         0         0         0         0         0         0
Buyback                                0            0          0         0         0         0         0         0         0
---------   ----------   --------  --------  --------  --------  --------  --------  --------
Ending Balance                        127          127        127       127       127       127       127       127       127
---------   ----------   --------  --------  --------  --------  --------  --------  --------

Total Units                      6,355        6,355      6,840     6,840     7,040     7,240     7,240     7,240     7,240
=========   ==========   ========  ========  ========  ========  ========  ========  ========

PaineWebber Incorporated                        For discussion purposes only

5 of 18

PROJECT HEAT
================================================================================
(in thousands except per share and per unit data)

Scenario 1: Base Case  Estimated                            Projected
----------------------------------------------------------------
1998     1999     2000      2001     2002     2003      2004       2005
--------  ------   -------   ------  -------  -------   -------    -------

STAR GAS STAND ALONE BALANCE SHEET

Assets:
Cash                                                   $    501 $  1,000 $  1,000  $  1,000  $ 1,000  $ 1,000  $ 1,000  $ 1,000
Other Current Assets                                     15,395   18,600   19,317    20,037   20,760   21,526   22,339   23,200
--------- -------- --------  --------  -------  -------  -------  -------
Total Current Assets                                    15,895   19,600   20,317    21,037   21,760   22,526   23,339   24,200

PP&E and Intangibles, Net                               104,814  112,117  112,225   111,632  110,148  107,768  104,484  100,291
Other Assets                                             46,538   46,538   46,538    46,538   46,538   46,538   46,538   46,538
--------- --------  -------   -------  -------  -------  -------  -------
Total Assets                                           167,248  178,255  179,080   179,207  178,446  176,832  174,361  171,029
========= ========  =======   =======  =======  =======  =======  =======

Liabilities:
Current Liabilities                                       7,371   10,576   11,293    12,013   12,736   13,502   14,315   15,176
Total Debt                                              103,457  109,651  120,328   125,205  130,133  135,685  139,702  141,910
Other Liabilities                                            51       51       51        51       51       51       51       51
--------- -------- --------  -------- --------  -------  -------  -------
Total Liabilities                                      110,879  120,279  131,672   137,869  142,920  149,239  154,068  157,167

Partner's Equity                                            56,368   57,976   47,407    41,338   35,526   27,593   20,293   13,862
--------- -------- --------  -------- -------- -------- -------- --------
Total Liabilities and Equity                         $ 167,248 $178,255 $179,082  $179,207 $178,446 $176,832 $174,361 $171,029
========= ======== ========  ======== ======== ======== ======== ========
Check                              -        -        -         -        -        -        -        -

STAR GAS STAND ALONE CASH FLOW STATEMENT

Net Income                                                           $  4,858 $  3,412  $  3,486 $  3,744 $  6,048 $  6,680 $  7,550
Depreciation and Amortization                                     12,768   15,111    16,137   17,178   18,229   19,291   20,364
Deferred Taxes                                                         -        -         -        -        -        -        -
Other Income                                                           -        -         -        -        -        -        -
Other Asset/Liabilities                                                -        -         -        -        -        -        -
Change in Working Capital                                            (0)       -        (0)      (0)       0       (0)      (0)
-------- --------  -------- --------  -------  -------  -------
Cash from Operations                                                   17,626   18,523    19,623   20,922   24,277   25,971   27,914
-------- --------  -------- --------  -------  -------  -------

Maintenance CapEx                                                 (3,274) (3,395)   (3,694)  (3,816)  (3,942)  (4,072)  (4,206)
Internal Growth CapEx                                             (1,797) (1,824)   (1,850)  (1,878)  (1,906)  (1,935)  (1,965)
External Growth CapEx                                            (15,000)(10,000)  (10,000) (10,000) (10,000) (10,000) (10,000)
-------- --------  -------- --------  -------  -------  -------
Cash from Investments                                                 (20,071)(15,219)  (15,544) (15,694) (15,848) (16,007) (16,171)
-------- --------  -------- --------  -------  -------  -------

Acquisition Borrowing                                             16,797   11,824    11,850   11,878   11,906   11,935  11,965
Remaining Distributions to Repay Debt                               (336)  (1,112)   (1,913)  (3,090)  (6,319)  (7,884) (9,692)
Amortization of Mortgage Notes                                         -        -         -        -        -        -       -
Borrowing to Repay Existing Debt                                       -        -         -        -        -        -       -
Borrowing for Changes in WC                                            0        -         0        0       (0)       0       0
Borrowing to Pay Full MQD                                              -        -         -        -        -        -       -
Change in Equity                                                  10,731        -     4,425    4,425        -        -       -
Distributions                                                    (13,981) (13,981)  (13,981) (13,981) (13,981) (13,981)(13,981)
-------- --------  -------- --------  -------  -------  -------
Cash from Financing                                                   13,211    (3,269)      381     (768)  (8,393)  (9,929)(11,708)
-------- --------  -------- --------  -------  -------  -------

Net Cash Flow                                                          10,766       35     4,460   4,460        35       35       35
Initial Cash Balance                                                      501    1,000     1,000   1,000     1,000    1,000    1,000
-------- --------  -------- --------  -------  -------  -------
Cash Available for Paydown on WC Revolver and Acq. Facility            11,266    1,035     5,460   5,460     1,035    1,035    1,035

Minimum Cash Balance                                                    1,000    1,000     1,000   1,000     1,000    1,000    1,000

Borrowing (Paydown) on WC Revolver and Acq. Facility                  (10,266)     (35)   (4,460) (4,460)     (35)     (35)     (35)
-------- --------  -------- --------  -------  -------  -------

Net Change in Cash                                                        499        -         -        -        -        -        0
-------- --------  -------- --------  -------  -------  -------

Ending Cash Balance                                                  $  1,000 $  1,000  $  1,000 $  1,000  $ 1,000  $ 1,000  $ 1,000
======== ========  ======== ========  =======  =======  =======

6 of 18

Project Heat
- --------------------------------------------------------------------------------
(in thousands except per share and per unit data)

Scenario I: Base Case                                          Projected
Estimated  Normalized -------------------------------------------------------------------------
1998       1998      1999       2000       2001        2002      2003       2004       2005
-------    -------   -------    -------    -------    -------    -------    -------    -------
Star Gas Stand Alone                                              
EBITDA Calculation                                                
(See Tab 3: Cases)                                                
- ------------------------------------------------------------------------------------------------------------------------------------
Year 1     Year 2    Year 3     Year 4     Year 5     Year 6      Year 7    Year 8
EBITDA Growth Rate                                22.3%      1.7%      1.7%       1.7%       1.7%       1.7%        17%       1.7%
- ------------------------------------------------------------------------------------------------------------------------------------

Base EBITDA    Timing                                                                                       
End   1998                                                                                 
Mid   1999                                                                                 
Mid   2000                                                                                 
Mid   2001                                                                                 
Mid   2002                                                                                 
Mid   2003                                                                                 
Mid   2004                                                                                 
Mid   2005                                                                                 
-------    -------   -------    -------    -------    -------    -------    -------    -------
Total EBITDA                        $18,629    $22,781   $26,730    $28,541    $30,361    $32,188    $34,125    $36,178    $38,356
=======    =======   =======    =======    =======    =======    =======    =======    =======

Star Gas Stand Alone                                                                                          
Depreciation Calulation                                                                                       

Existing Depreciation                 $11,629    $11,629   $11,629    $11,629    $11,629    $11,629    $11,629    $11,629    $11.629

Maintenenance CapEx:     1998   2,710      $0         $0      $181       $181       $181       $181       $181       $181       $181
Annual Growth: 3.3%    1999   3,274                          109        218        218        218        218        218        218
2000   3,395                                     113        226        226        226        226        226
2001   3,694                                                123        246        246        246        246
2002   3,816                                                           127        254        254        254
2003   3,942                                                                      131        263        263
2004   4,072                                                                                 136        271
2005   4,206                                                                                            140

Internal Growth CapEx:   1998   1,841       -          -       123        123        123        123        123        123        123
Annual Growth: 1.5%    1999   1,797                           60        120        120        120        120        120        120
2000   1,824                                      61        122        122        122        122        122
2001   1,850                                                 62        123        123        123        123
2002   1,878                                                            63        125        125        125
2003   1,906                                                                       64        127        127
2004   1,935                                                                                  65        129
2005   1,965                                                                                             65

External Growth CapEx:   1998  20,000       -          -         -      1,333      1,333      1,333      1,333      1,333      1,333
Annual Growth: 0.0%    1999  15,000                          667      1,000      1,000      1,000      1,000      1,000      1,000
2000  10,000                                     333        667        667        667        667        667
2001  10,000                                                333        667        667        667        667
2002  10,000                                                           333        667        667        667
2003  10,000                                                                      333        667        667
2004  10,000                                                                                 333        667
2005  10,000                                                                                            333
-------    -------   -------    -------    -------    -------    -------    -------    -------
Total Depreciation:                   $11,629    $11,629   $12,768    $15,111    $16,137    $17,178    $18,229    $19,291    $20,364
=======    =======   =======    =======    =======    =======    =======    =======    =======

PaineWebber Incorporated         7 of 18            For Discussion Purposes Only

Project Heat
- --------------------------------------------------------------------------------
Star Gas Stand Alone Debt Schedule
(in thousands except per share and per unit data)

Scenario I: Base Case                                          Projected
Estimated  Normalized ------------------------------------------------------------------------
1998       1998      1999       2000       2001        2002      2003       2004      2005
-------    -------   -------    -------    -------    -------    -------    -------   -------

8.04% 1st Mortgage Notes
Beginning Balance                   $85,000    $85,000   $85,000    $85,000    $85,000    $85,000    $85,000    $85,000   $85,000
Borrowing                                0          0         0          0          0          0          0          0         0
Amortization                             0          0         0          0          0          0          0          0         0
-------    -------   -------    -------    -------    -------    -------    -------   -------
Ending Balance                       85,000     85,000    85,000     85,000     85,000     85,000     85,000     85,000    85,000

Interest Payment              8.04%   6,834      6,834     6,834      6,834      6,834      6,834      6,834      6,834     6,834
Make-Whole Payment                        0          0         0          0          0          0          0          0         0

7.17% Pearl Notes
Beginning Balance                        $0         $0   $11,000    $11,000    $11,000    $11,000    $11,000    $11,000   $11,000
Borrowing                           11,000     11,000         0          0          0          0          0          0         0
Amortization                             0          0         0          0          0          0          0          0         0
-------    -------   -------    -------    -------    -------    -------    -------   -------
Ending Balance                       11,000     11,000    11,000     11,000     11,000     11,000     11,000     11,000    11,000

Interest Payment              7.17%     613        613       789        789        789        789        789        789       789
% of year Pearl Notes
Outstanding                          77.7%      77.7%         0          0          0          0          0          0         0

8.25% WC Revolver
Beginning Balance                         -          -    $7,457     $7,457     $7,457     $7,457     $7,457     $7,457    $7,457
Borrowing for Change in WC               -          -         0          -          0          0         (0)         0         0
Borrowing for Pay Full MQD           5,894      1,742         -          -          -          -          -          -         -
Borrowing/(Payment)                  1,563      5,715         0          0          0          0          0          0         0
-------    -------   -------    -------    -------    -------    -------    -------   -------
Ending Balance                        7,457      7,457     7,457      7,457      7,457      7,457      7,457      7,457     7,457

Effective Avg WC Balance              3,729      3,729     3,729      3,729      3,729      3,729      3,729      3,729     3,729
Interest Payment              8.25%     308        308       308        308        308        308        308        308       308

7.50% Acquisition Facility
Beginning Balance                         -          -        $0     $6,194    $16,871    $22,348    $26,676    $32,228   $36,245
External Acquisitions               20,000     20,000    10,000     10,000     10,000     10,000     10,000     10,000    10,000
External Acquisitions at           
Beginning of 1999                       -          -     5,000          -          -          -          -          -         -
Internal Acquisitions                1,841      1,841     1,797      1,824      1,850      1,878      1,906      1,935     1,965
Borrowings to Repay  
Existing Debt                           -          -         -          -          -          -          -          -         -
Payment                                  -          -   (10,266)       (35)    (4,460)    (4,460)       (35)       (35)      (35)
Remaining Distributions            
to Repay Debt                           -          -      (366)    (1,112)    (1,913)    (3,090)    (6,319)    (7,884)   (9,692)
-------    -------   -------    -------    -------    -------    -------    -------   -------
Ending Balance                           0          0     6,194     16,871     22,348     26,676     32,228     36,245    38,483 

Interest Payment              7.50%      69         69       420        865      1,471      1,838      1,834      2,193     2,427

Total Debt                
Beginning Balance                   $85,000    $85,000  $103,457   $109,651   $120,328   $125,805   $130,133   $135,685  $139,702
Amortization of Mortgage Notes           -          -         -          -          -          -          -          -         -
Borrowing for Pearl Notes           11,000     11,000         -          -          -          -          -          -         -
Borrowing for Changes in WC              -          -         0          -          0          0         (0)         0         0
Borrowing to Pay Full MQD            5,894      1,742         -          -          -          -          -          -         -
Acquisition Borrowing               21,841     21,841    16,797     11,824     11,850     11,878     11,906     11,935    11,965
Borrowing to Repay Existing Debt         -          -         -          -          -          -          -          -         -
Remaining Distributions to 
Repay Debt                              -          -      (366)    (1,112)    (1,913)    (3,090)    (6,319)    (7,884)   (9,692)
Borrowing/(Payment) on WC
Revolver and Acq. Facility          1,563      5,715   (10,266)       (35)    (4,460)    (4,460)       (35)       (35)      (35)
--------   --------  --------   --------   --------   --------   --------   --------  --------
Ending Balance                    $125,298   $125,298  $109,651   $120,328   $125,805   $130,133   $135,685   $139,702  $141,940
========   ========  ========   ========   ========   ========   ========   ========  ========

Interest Expense
Interest Expense                    $7,824     $7,824    $8,350     $8,795     $9,401    $9,769      $9,764    $10,123   $10,358
Bank Fee                                94         94        94         94         94         94         94         94        94
-------    -------   -------    -------    -------    -------    -------    -------   ------- 
Total Interest Payment          $7,807     $7,807    $9,114    $10,028    $10,748    $11,276     $9,858    $10,217   $10,452 
=======    =======   =======    =======    =======    =======    =======    =======   =======
*** Total Interest Numbers are hard input per A.G. Edwards' request.***

PaineWebber Incorporated                                                         For discussion purposes only
8 of 18                   

Project Heat
- --------------------------------------------------------------------------------
Star Gas Stand Alone Schedule of Actual Distributions      Scenario I: Base Case
(in thousands except per share and per unit data)

Projected
Assumes Revised Target               Estimated  Normalized -------------------------------------------------------------------------
Distribution Structure                1998       1998      1999       2000       2001        2002      2003       2004       2005
-------    -------   -------    -------    -------    -------    -------    -------    -------

Distributable Cash                                                                                                                  
- ------------------
Cash from Operations                  $10,815    $14,967   $17,626    $18,523    $19,623    $20,922    $24,277    $25,971   $27,914
Maintenance CapEx                    (2,710)    (2,710)   (3,274)    (3,395)    (3,694)    (3,816)    (3,942)    (4,072)   (4,206)
Other                                   (18)       (18)      (35)       (35)       (35)       (35)       (35)       (35)      (35)
-------    -------   -------    -------    -------    -------    -------    -------   -------
Total MLP Distributable Cash Flow       8,087     12,239    14,317     15,093     15,894     17,071     20,300     21,864    23,673

Distributable Cash Flow/Unit          $  1.27    $  1.93   $  2.25    $  2.38    $  2.50    $  2.69    $  3.19    $  3.44   $  3.73

Structure
- ---------
Common Unit Ending Balance              3,832      3,832     3,832      3,832      3,832      3,832      3,832      3,832     3,832 
Subordinated Units                      2,396      2,396     2,396      2,396      2,396      2,396      2,396      2,396     2,396 
General Partner Interest Unit             
Equivalent                              127        127       127        127        127        127        127        127       127 
-------    -------   -------    -------    -------    -------    -------    -------    -------
Total Units Outstanding                 6,355      6,355     6,355      6,355      6,355      6,355      6,355      6,355     6,355 

Distribution Levels
- -------------------
MQD                                   $  2.20    $  2.20   $  2.20    $  2.20    $  2.20    $  2.20    $  2.20    $  2.20   $  2.20 
First Target                          $  2.42    $  2.42   $  2.42    $  2.42    $  2.42    $  2.42    $  2.42    $  2.42   $  2.42 
Second Target                         $  2.84    $  2.84   $  2.84    $  2.84    $  2.84    $  2.84    $  2.84    $  2.84   $  2.84 
Third Target                          $  3.70    $  3.70   $  3.70    $  3.70    $  3.70    $  3.70    $  3.70    $  3.70   $  3.70 
Indicated Cash Distribution           $  2.20    $  2.20   $  2.20    $  2.20    $  2.20    $  2.20    $  2.20    $  2.20   $  2.20 

Distribution of MQD
- -------------------
Cash Available                          8,087     12,239    14,317     15,093     15,894     17,071     20,300     21,864    23,673
Cash Borrowed to Pay Full MQD           5,894      1,742         0          0          0          0          0          0         0
Allocation to:
Common Units                          8,430      8,430     8,430      8,430      8,430      8,430      8,430      8,430     8,430 
Subordinated Units                    5,271      5,271     5,271#     5,271#     5,271      5,271#     5,271#     5,271     5,271
General Partner Interest                280        280       280#       280#       280        280#       280#       280       280

First Target Distribution
- -------------------------
Cash Available                              0          0       336      1,112      1,913      3,090      6,319      7,884     9,692
Cash Required for Target
Distribution                            0          0     1,398      1,398      1,398      1,398      1,398      1,398     1,398 
Cash Required for Indicated
Distribution                            0          0         0          0          0          0          0          0         0
Actual Cash Distributed                   0          0         0          0          0          0          0          0         0

Allocation to:
Common Units                              0          0         0          0          0          0          0          0         0
Subordinated Units                        0          0         0          0          0          0          0          0         0
General Partner Interest                  0          0         0          0          0          0          0          0         0

Second Target Distribution
- --------------------------
Cash Available                              0          0         0          0          0          0          0          0         0
Cash Required for Target
Distribution                            0          0         0          0          0          0          0          0         0
Cash Required for Indicated
Distribution                            0          0         0          0          0          0          0          0         0
Actual Cash Distributed                   0          0         0          0          0          0          0          0         0

Allocation to:
Common Units                              0          0         0          0          0          0          0          0         0
Subordinated Units                        0          0         0          0          0          0          0          0         0
General Partner Interest                  0          0         0          0          0          0          0          0         0
Incentive Distribution                    0          0         0          0          0          0          0          0         0

Third Target Distribution
- -------------------------
Cash Available                              0          0         0          0          0          0          0          0         0
Cash Required for Target
Distribution                            0          0         0          0          0          0          0          0         0
Cash Required for Indicated
Distribution                            0          0         0          0          0          0          0          0         0
Actual Cash Distributed                   0          0         0          0          0          0          0          0         0

Allocation to:
Common Units                              0          0         0          0          0          0          0          0         0
Subordinated Units                        0          0         0          0          0          0          0          0         0
General Partner Interest                  0          0         0          0          0          0          0          0         0
Incentive Distribution                    0          0         0          0          0          0          0          0         0

PaineWebber Incorporated         9 0f 18      For discussion purposes only

PROJECT HEAT                                                               
===================================================================================================================================
STAR GAS STAND ALONE SCHEDULE OF ACTUAL DISTRIBUTIONS (CONT'D)        SCENARIO I:  BASE CASE                 

(in thousands except per share and per unit data)

ESTIMATED   NORMALIZED                                 PROJECTED
--------------------------------------------------------------------
1998        1998        1999      2000      2001      2002      2003      2004      2005
---------   ----------   --------  --------  --------  --------  --------  --------  -------- 

Remaining Distribution
- ----------------------
Cash Available                                0            0          0         0         0         0         0         0         0
Allocation to:                                                                                                                    
Common Units                             0            0          0         0         0         0         0         0         0
Subordinated Units                       0            0          0         0         0         0         0         0         0
General Partner Interest                 0            0          0         0         0         0         0         0         0
Incentive Distribution                   0            0          0         0         0         0         0         0         0
Repay Indebtedness                       0            0        336     1,112     1,913     3,090     6,319     7,884     9,692

Total Distributions
- -------------------
Common Units                              8,430        8,430      8,430     8,430     8,430     8,430     8,430     8,430     8,430
Subordinated Units                        5,271        5,271      5,271     5,271     5,271     5,271     5,271     5,271     5,271
General Partner Interest                    280          280        280       280       280       280       280       280       280
Incentive Distribution                        0            0          0         0         0         0         0         0         0
---------   ----------   --------  --------  --------  --------  --------  --------  -------- 
Total Distribution                 $13,981      $13,981    $13,981   $13,981   $13,981   $13,981   $13,981   $13,981   $13,981 
=========   ==========   ========  ========  ========  ========  ========  ========  ======== 

Total Distributions Per Unit
- ----------------------------
Common Unit                               $2.20        $2.20      $2.20     $2.20     $2.20     $2.20     $2.20     $2.20     $2.20
Subordinated Unit                          2.20         2.20       2.20      2.20      2.20      2.20      2.20      2.20      2.20
GP Unit                                    2.20         2.20       2.20      2.20      2.20      2.20      2.20      2.20      2.20 

PaineWebber Incorporated                                                      For discussion purposes only                        

10 of 18

Project Heat
- --------------------------------------------------------------------------------
(in thousands except per share and per unit data)

Scenario I: Base Case                                          Projected
Estimated  Normalized -------------------------------------------------------------------------
1998       1998      1999       2000       2001        2002      2003       2004       2005
-------    -------   -------    -------    -------    -------    -------    -------    -------

Petro EBITDA Calculation                                          
- ------------------------------------------------------------------------------------------------------------------------------------
Year 1     Year 2    Year 3     Year 4     Year 5     Year 6      Year 7    Year 8
EBITDA Growth Rate                               (4.1)%     (4.1)%    (4.1)%     (4.1)%     (4.1)%     (4.1)%      (4.1)%    (4.1)%
- ------------------------------------------------------------------------------------------------------------------------------------

Base EBITDA Timing                                                                                       
Acqisitions:    End  1998  $15,000                                                                              
Mid  1999   30,000
Mid  2000   30,000                                                                           
Mid  2001   30,000                                                                     
Mid  2002   30,000                                                                     
Mid  2003   30,000                                                                     
Mid  2004   30,000                                                                     
Mid  2005   30,000                                                                     
-------    -------   -------    -------    -------    -------    -------    -------   --------
Total EBITDA                        $38,500    $43,440   $55,798    $62,665    $69,509    $76,324    $83,807    $92,024   $101,047
=======    =======   =======    =======    =======    =======    =======    =======   ========

Petro Depreciation Calculation

Existing Depreciation                 $29,660    $29,660   $29,660    $29,660    $29,660    $29,660    $29,660    $29,660    $29,660

Maintenenance CapEx:     1998  $3,500       -          -      $233       $233       $233       $233       $233       $233       $233
Annual Growth: 0.0%    1999   3,500                          117        233        233        233        233        233        233
2000   3,500                                     117        233        233        233        233        233
2001   3,500                                                117        233        233        233        233
2002   3,500                                                           117        233        233        233
2003   3,500                                                                      117        233        233
2004   3,500                                                                                 117        233
2005   3,500                                                                                            117

Internal Growth CapEx:   1998      $0       -          -         -          -          -          -          -          -          -
Annual Growth: 0.0%    1999       0                            -          -          -          -          -          -          -
2000       0                                       -          -          -          -          -          -
2001       0                                                  -          -          -          -          -
2002       0                                                             -          -          -          -
2003       0                                                                        -          -          -
2004       0                                                                                   -          -
2005       0                                                                                              -

External Growth CapEx:   1998 $15,000       -          -     1,000      1,000      1,000      1,000      1,000      1,000      1,000
Annual Growth: 0.0%    1999  30,000                        1,000      2,000      2,000      2,000      2,000      2,000      2,000
2000  30,000                                   1,000      2,000      2,000      2,000      2,000      2,000
2001  30,000                                              1,000      2,000      2,000      2,000      2,000
2002  30,000                                                         1,000      2,000      2,000      2,000
2003  30,000                                                                    1,000      2,000      2,000
2004  30,000                                                                               1,000      2,000
2005  30,000                                                                                          1,000
-------    -------   -------    -------    -------    -------    -------    -------    -------
Total Depreciation:                   $29,660    $29,660   $32,010    $34,243    $36,477    $38,710    $40,943    $43,177    $45,410
=======    =======   =======    =======    =======    =======    =======    =======    =======

PaineWebber Incorporated       11 of 18        For Discussion Purposes Only

Project Heat  
- --------------------------------------------------------------------------------
(in thousands except per share and per unit data)

Scenario I: Base Case

STAR PRO FORMA INCOME STATEMENT

Projected
Estimated Normalized  ----------------------------------------------------------------------
1998       1998     1999       2000      2001      2002      2003       2004       2005
--------- ----------  -------   -------   -------   -------   --------   --------   --------

Combined EBITDA                         $57,129    $66,221   $82,528   $91,206   $99,870   $108,512  $117,932   $128,202   $139,402
Consolidated Savings                       500        500       500       500       500        500       500        500        500 
-------    -------   -------   -------   -------   --------  --------   --------   --------

Pro Forma EBITDA                         57,629     66,721    83,028    91,706   100,370    109,012   118,432    128,702    139,902
Depreciation and Amortization           41,289     41,289    44,778    49,354    52,613     55,888    59,173     62,468     65,774 
-------    -------   -------   -------   -------   --------  --------   --------   --------

EBIT                                     16,340     25,432    38,250    42,352    47,757     53,124    59,260     66,235     74,128
Interest Expense                       (27,697)   (27,697)  (28,488)  (30,079)  (30,142)   (28,240)  (25,665)   (22,206)         -
Interest Income                            384        384        35        35        35         35        35         35         35
Other Income                                 -          -         -         -         -          -         -          -          -

EBT                                     (10,972)    (1,880)    9,797    12,308    17,650     24,919    33,629     44,063     74,163
-------    -------   -------   -------   -------   --------  --------   --------   --------
Current Income Taxes                      (525)      (525)     (525)     (525)     (525)      (525)     (525)      (525)      (525)
Deferred Income Taxes                        -          -         -         -         -          -         -          -          -
-------    -------   -------   -------   -------   --------  --------   --------   --------
Net Income Available to Common         ($11,497)    ($2,405)  $9,272   $11,783   $17,125    $24,394   $33,104    $43,538    $73,638 
=======    ========  =======   =======   =======   ========   =======   ========   ========

STAR PRO FORMA UNITS OUTSTANDING

Common Units
Beginning Balance                                  10,418    10,418    10,418    10,418     10,418    10,418     10,418     10,418
Issuance                                              -         -         -         -          -         -          -          -
Buyback                                               -         -         -         -          -         -          -          - 
-------    -------   -------   -------   -------   --------  --------   --------   --------
Ending Balance                           10,418     10,418    10,418    10,418    10,418     10,418    10,418     10,418     10,418

SR Subordinated Units
Beginning Balance                                   3,296     3,296     3,296     3,296      3,296     3,296      3,296      3,296
Issuance                                              -         -         -         -          -         -          -          -
Buyback                                               -         -         -         -          -         -          -          - 
-------    -------   -------   -------   -------   --------  --------   --------   --------
Ending Balance                            3,296      3,296     3,296     3,296     3,296      3,296     3,296      3,296      3,296 

Subordinated Units
Beginning Balance                                     754       754       754       754        754       754        754        754
Issuance                                              -         -         -         -          -         -          -          -
Buyback                                               -         -         -         -          -         -          -          - 
-------    -------   -------   -------   -------   --------  --------   --------   --------
Ending Balance                              754        754       754       754       754        754       754        754        754

GP Implied Units
Beginning Balance                                     295       295       295       295        295       295        295        295
Issuance                                              -         -         -         -          -         -          -          -
Buyback                                               -         -         -         -          -         -          -          - 
-------    -------   -------   -------   -------   --------  --------   --------   --------
Ending Balance                              295        295       295       295       295        295       295        295        295

Total                               14,764     14,764    14,764    14,764    14,764     14,764    14,764     14,764     14,764
=======    =======   =======   =======   =======   ========  ========   ========   ========

PaineWebber Incorporated                                        12 of 18                                For Discussion Purposes Only

Project Heat  
- --------------------------------------------------------------------------------
(in thousands except per share and per unit data)

Star Pro Forma Balance Sheet                      Scenario I: Base Case

Projected
Estimated  --------------------------------------------------------------------------
1998       1999       2000       2001       2002       2003       2004       2005
--------   --------   --------   --------   --------   --------   --------   --------

Assets:
Cash                                      $ 10,982   $  1,000   $  1,000   $  1,000   $  1,000   $  1,000   $  1,000   $  1,000
Other Current Assets                        75,099    109,247    120,915    132,563    144,182    156,847    170,655    185,713
--------   --------   --------   --------   --------   --------   --------   --------
Total Current Assets                       86,081    110,247    121,915    133,563    145,182    157,847    171,655    186,713

PP&E and Intangibles, Net                  212,597    221,390    220,754    217,185    210,491    200,667    187,707    171,604
Other Assets                                56,902     56,902     56,902     56,902     56,902     56,902     56,902     56,902
--------   --------   --------   --------   --------   --------   --------   --------
Total Assets                              355,580    388,539    399,571    407,651    412,576    415,417    416,265    415,219
========   ========   ========   ========   ========   ========   ========   ========

Liabilities:
Current Liabilities                         77,481    111,629    123,297    134,945    146,564    159,229    173,038    188,095
8.25% Existing Credit Facility               7,457      7,457      7,457     47,422     87,387    127,352    167,317    207,282
Total LT Debt                              300,859    324,355    347,369    325,503    296,647    256,824    204,395    119,688
Other Liabilities                               51         51         51         51         51         51         51         51
--------   --------   --------   --------   --------   --------   --------   --------
Total Liabilities                         385,848    443,492    478,174    507,921    530,649    543,456    544,801    515,117

Preferred Stock                                   -          -          -          -          -          -          -          -
Common Shareholder's Equity                 (30,268)   (54,953)   (78,603)  (100,271)  (118,074)  (128,040)  (128,536)   (99,987)
--------   --------   --------   --------   --------   --------   --------   --------
Total Liabilities and Equity             $355,580   $388,539   $399,571   $407,651   $412,576   $415,417   $416,265   $415,219
========   ========   ========   ========   ========   ========   ========   ========
Check               -          -          -          -          -          -          -          - 

Star Pro Forma Cash Flow Statement
Net Income                                            $  9,272   $ 11,783   $ 17,125   $ 24,394   $ 33,104  $  43,538   $ 73,638
Depreciation and Amortization                          44,778     49,354     52,613     55,888     59,173    62,4682     65,774
Deferred Taxes                                              -          -          -          -          -          -          -
Other Assets/Liabilities                                    -          -          -          -          -          -          -
Change in Non-Cash Working Capital                          -          -          0          -          -          -          -
--------   --------   --------   --------   --------   --------   --------
Cash from Operations                                    54,050     61,137     69,738     80,282     92,277    106,006    139,412 

Maintenance CapEx                                      (6,774)    (6,895)    (7,194)    (7,316)    (7,442)    (7,572)    (7,706)
Internal Growth CapEx                                  (1,797)    (1,824)    (1,850)    (1,878)    (1,906)    (1,935)    (1,965)
External Growth CapEx                                 (45,000)   (40,000)   (40,000)   (40,000)   (40,000)   (40,000)   (40,000)
--------   --------   --------   --------   --------   --------   --------
Cash from Investments                                  (53,571)   (48,719)   (49,044)   (49,194)   (49,348)   (49,507)   (49,671)

Acquisition Borrowing                                  46,797     46,824      1,850      1,878      1,906      1,935      1,965
Remaining Distributions to Repay Debt                 (13,284)   (18,774)   (23,717)   (30,734)   (41,729)   (54,364)   (86,671)
Amortization of Existing Debt                          (5,478)    (8,141)       (60)       (60)      (120)         -          -
Borrowing to Repay Existing Debt                        5,478      8,141         60         60        120          -          -
Borrowing for Changes in WC                                 -          -          -          -          -         (0)         -
Change in Common Equity                                     -          -          -          -          -          -          -
Distributions                                         (33,957)   (35,433)   (38,792)   (42,196)   (43,070)   (44,035)   (44,999)
--------   --------   --------   --------   --------   --------   --------
Cash from Financing                                       (444)    (7,383)   (60,659)   (71,053)   (82,893)   (96,464)  (129,706)

Net Cash Flow                                               35      5,035    (39,965)   (39,965)   (39,965)   (39,965)   (39,965)
Initial Cash Balance                                    10,982      1,000      1,000      1,000      1,000      1,000      1,000
--------   --------   --------   --------   --------   --------   --------
Cash Available for Paydown on 
WC Revolver and Acq. Facility                          11,017      6,035    (38,965)   (38,965)   (38,965)   (38,965)   (38,965)

Minimum Cash Balance                                     1,000      1,000      1,000      1,000      1,000      1,000      1,000

Borrowing/(Paydown) on         
WC Revolver and Acq. Facility                         (10,017)    (5,035)    39,965     39,965     39,965     39,965     39,965 
--------   --------   --------   --------   --------   --------   --------
Ending Cash Balance                                      1,000      1,000      1,000      1,000      1,000      1,000      1,000

Net Change in Cash                                     ($9,982)        $0        ($0)        $0        ($0)        $0        ($0)
========   ========   ========   ========   ========   ========   ========

PaineWebber Incorporated                                     13 of 18                                  For Discussion Purposes Only 

Project Heat
- --------------------------------------------------------------------------------
(in thousands except per share and per unit data)

Projected
Estimated Normalized ----------------------------------------------------------------
Star Pro Forma Debt Schedule                    1998      1998     1999      2000      2001      2002      2003      2004     2005
-------   -------  -------   -------   -------   -------   -------   -------  -------

Scenario I: Base Case
8.04% 1st Mortgage Notes                                                               
Beginning Balance                           $85,000   $85,000  $85,000   $85,000   $85,000   $85,000   $85,000   $85,000  $85,000
Borrowing                                        -         -        -         -         -         -         -         -        -
Amortization                                     -         -        -         -         -         -         -         -        -
-------   -------  -------   -------   -------   -------   -------   -------  -------
Ending Balance                               85,000    85,000   85,000    85,000    85,000    85,000    85,000    85,000   85,000

Interest Payment             8.04%            6,834     6,834    6,834     6,834     6,834     6,834     6,834     6,834    6,834

7.17% Pearl Notes                                                                     
Beginning Balance                            11,000    11,000   11,000    11,000    11,000    11,000    11,000    11,000   11,000
Borrowing                                        -         -        -         -         -         -         -         -        -
Amortization                                     -         -        -         -         -         -         -         -        -
-------   -------  -------   -------   -------   -------   -------   -------  -------
Ending Balance                               11,000    11,000   11,000    11,000    11,000    11,000    11,000    11,000   11,000

Interest Payment             7.17%              789       789      789       789       789       789       789       789      789

0.00% Other Notes                                                                     
Beginning Balance                                -         -        -         -         -         -         -         -        -
Borrowing                                        -         -        -         -         -         -         -         -        -
Amortization                                     -         -        -         -         -         -         -         -        -
-------   -------  -------   -------   -------   -------   -------   -------  -------
Ending Balance                                    -         -        -         -         -         -         -         -        -

Interest Payment             0.00%                -         -        -         -         -         -         -         -        -

8.50% New Debt                                                                        
Beginning Balance                           125,000   125,000  125,000   130,478   138,619   138,679   138,739   138,859  138,859
Borrowing                                        -         -    5,478     8,141        60        60       120         -        -
Amortization                                     -         -        -         -         -         -         -         -        -
-------   -------  -------   -------   -------   -------   -------   -------  -------
Ending Balance                              125,000   125,000  130,478   138,619   138,679   138,739   138,859   138,859  138,859

Interest Payment             8.50%           10,625    10,625   10,858    11,437    11,785    11,790    11,798    11,803   11,803

Exchange of 8.46% Senior                                                              
Notes                                                                                 
Beginning Balance                                 -         -   66,000    66,000    66,000    66,000    66,000    66,000   66,000
Borrowing                                   66,000    66,000        -         -         -         -         -         -        -
Amortization                                     -         -        -         -         -         -         -         -        -
-------   -------  -------   -------   -------   -------   -------   -------  -------
Ending Balance                               66,000    66,000   66,000    66,000    66,000    66,000    66,000    66,000   66,000

Interest Payment             8.46%            5,584     5,584    5,584     5,584     5,584     5,584     5,584     5,584    5,584

8.00% Acq. & Other Notes                                                              
Payable                                                                               
Beginning Balance                            16,798    16,798   13,859     8,381       240       180       120         -        -
Borrowing                                        -         -        -         -         -         -         -         -        -
Amortization                                (2,939)   (2,939)  (5,478)   (8,141)      (60)      (60)     (120)        -        -
-------   -------  -------   -------   -------   -------   -------   -------  -------
Ending Balance                               13,859    13,859    8,381       240       180       120         -         -        -

Interest Payment             8.00%            1,226     1,226      890       345        17        12         5         -        -

8.25% WC Revolver                                                                     
Beginning Balance                                 -         -    7,457     7,457     7,457    47,422    87,387   127,352  167,317
Borrowing for Change                                                               
in WC                                           -         -        -         -        (0)        -         -         -        -
Borrowing/(Payment)                              -         -        -         -    39,965    39,965    39,965    39,965   39,965 
-------   -------  -------   -------   -------   -------   -------   -------  -------
Ending Balance                                    -     7,457    7,457     7,457    47,422    87,387   127,352   167,317  207,282 

Effective Avg WC Balance                     23,600    23,600   21,500    21,500    21,500    21,500    21,500    21,500   21,500
Interest Payment             8.25%            1,947     1,947    1,774     1,774     1,774     1,774     1,774     1,774    1,774

7.50% Acquisition Facility                                                            
Beginning Balance                                 -         -        -    23,496    46,510    24,644    (4,212)  (44,035) (96,464)
External Acquisitions                            -         -   40,000    45,000         -         -         -         -        -
External Acquisitions                        
at Beginning of 1999                            -         -    5,000         -         -         -         -         -        -
Internal Acquisitions                            -         -    1,797     1,824     1,850     1,878     1,906     1,935    1,965
Payment                                          -         -  (10,017)   (5,035)        -         -         -         -        -
Remaining Distributions                                                            
to Repay Debt                                   -         -  (13,284)  (18,774)  (23,717)  (30,734)  (41,729)  (54,364) (86,671)
-------   -------  -------   -------   -------   -------   -------   -------  -------
Ending Balance                                    -         -   23,496    46,510    26,644    (4,212)  (44,035)  (96,464)(181,171)

Interest Payment             7.50%               $0        $0   $1,069    $2,625    $2,668      $766   ($1,809)  ($5,269)($10,411)

PaineWebber Incorporated                                 14 of 18                              For Discussion Purposes Only

PROJECT HEAT
- --------------------------------------------------------------------------------
(in thousands except per share and per unit data)          Scenario 1: Base Case
Projected
Estimated Normalized ----------------------------------------------
STAR PRO FORMA DEBT SCHEDULE (CONT'D)                          1998      1998      1999      2000      2001      2002     2003   
---------  ---------  -------  -------    ------    -------  ------

Total Pro Forma Debt                                                                                                             
Beginning Balance                                        $237,798  $237,798   308,316  $331,812  $354,826  $372,925  $384,034 
Amortization of Existing Debt                           (2,939)   (2,939)   (5,478)   (8,141)      (60)      (60)     (120)  
Borrowing for Changes in WC                                  -         -         -         -        (0)        -         - 
Acquisition Borrowing                                        -         -    46,797    46,824     1,850     1,878     1,906 
Borrowing to Repay Existing Debt                             -         -     5,478     8,141        60        60       120 
Remaining Distributions to Repay Debt                        -         -   (13,284)  (18,774)  (23,717)  (30,734)  (41,729)
Borrowing/(Payment) on WC Revolver and Acq. Facility         -         -   (10,017)   (5,035)   39,965    39,965    39,965
--------  --------   -------  --------  --------  --------  --------   
Ending Balance                                           234,859   234,859   331,812   354,826   372,925   384,034   384,176

Interest Expense                                          27,005    27,005    27,796    29,387    29,450    27,548    24,973
Chase Fees                                                   692       692       692       692       692       692       692
--------  --------   -------  --------  --------  --------  --------   
Total Interest Payment                                 27,697    27,697    28,488    30,079    30,142    28,240    25,665
========  ========   =======  ========  ========  ========  ========  

PROJECT HEAT
- --------------------------------------------------------------------------------
(in thousands except per share and per unit data)          Scenario 1: Base Case

Projected
----------------------
STAR PRO FORMA DEBT SCHEDULE (CONT'D)                         2004         2005   
----------------------

Total Pro Forma Debt                                                            
Beginning Balance                                         $384,176    $371,712 
Amortization of Existing Debt                                 -           - 
Borrowing for Changes in WC                                   -           - 
Acquisition Borrowing                                     1,935       1,965
Borrowing to Repay Existing Debt                              -           -
Renaming Distributions to Repay Debt                    (54,364)    (86,671)
Borrowing/(Payment) on WC Revolver and Acq. Facility     39,965      39,965
--------    --------
Ending Balance                                            371,712     326,970

Interest Expense                                           21,514      16,372
Chase Fees                                                    692         692
--------    --------
Total Interest Payment                                 $22,206     $17,064
=========    ======== 

15 of 18

Project Heat  
- --------------------------------------------------------------------------------
(in thousands except per share and per unit data)

Scenario I: Base Case

STAR PRO FORMA DISTRIBUTION SCHEDULE OF ACTUAL DISTRIBUTIONS

Projected
Estimated Normalized  ----------------------------------------------------------------------
1998       1998     1999       2000      2001      2002      2003       2004       2005
--------- ----------  -------   -------   -------   -------   --------   --------   --------

Distributable Cash
Cash from Operations (excl chg in WC)   $29,792    $38,884   $54,050   $61,137   $69,738    $80,282   $92,277   $106,006   $139,412
Maintenance CapEx                       (6,210)    (6,210)   (6,774)   (6,895)   (7,194)    (7,316)   (7,442)    (7,572)    (7,706)
Other                                     (384)      (384)      (35)      (35)      (35)       (35)      (35)       (35)       (35)
-------    -------   -------   -------   -------   --------  --------   --------   --------
Total MLP Distributable Cash Flow        23,197     32,289    47,241    54,207    62,509     72,931    84,800     98,399    131,671

Distributable Cash Flow/Unit              $1.57      $2.19     $3.20     $3.67     $4.23      $4.94     $5.74      $6.66      $8.92

Structure
Common Unit Ending Balance               10,418     10,418    10,418    10,418    10,418     10,418    10,418     10,418     10,418 
SR Subordinated Units                     3,296      3,296     3,296     3,296     3,296      3,296     3,296      3,296      3,296
Subordinated Units                          754        754       754       754       754        754       754        754        754
General Partner Interest Unit 
Equivalent                                 295        295       295       295       295        295       295        295        295
-------    -------   -------   -------   -------   --------  --------   --------   --------
Total Units Outstanding                  14,764     14,764    14,764    14,764    14,764     14,764    14,764     14,764     14,764 

Distribution Levels                       $2.20      $2.20     $2.20     $2.20     $2.20      $2.20     $2.20      $2.20      $2.20 
MQD                                       $2.20      $2.20     $2.20     $2.20     $2.20      $2.20     $2.20      $2.20      $2.20 
First Target                              $2.42      $2.42     $2.42     $2.42     $2.42      $2.42     $2.42      $2.42      $2.42 
Second Target                             $2.84      $2.84     $2.84     $2.84     $2.84      $2.84     $2.84      $2.84      $2.84 
Third Target                              $3.70      $3.70     $3.70     $3.70     $3.70      $3.70     $3.70      $3.70      $3.70 

Indicated Cash Distribution               $2.20      $2.20     $2.30     $2.40     $2.60      $2.80     $2.85      $2.90      $2.95 

Distribution of MQD
Cash Available                           23,197     32,289    47,241    54,207    62,509     72,931    84,800     98,399    131,671 
Allocaton to:
Common Units                            22,733     22,920    22,920    22,920    22,920     22,920    22,920     22,920     22,920 
SR Subordinated Units                        0      7,251     7,251     7,251     7,251      7,251     7,251      7,251      7,251
Subordinated Units                           0      1,472     1,659     1,659     1,659      1,659     1,659      1,659      1,659 
General Partner Interest                   464        646       650       650       650        650       650        650        650

First Target Distribution
Cash Available                                0          0    14,761    21,727    30,028     40,450    52,319     65,919     99,190
Cash Required for Target 
Distribution                                0          0     3,248     3,248     3,248      3,248     3,248      3,248      3,248
Cash Required for Indicated
Distribution                                0          0     1,476     2,953     5,905      8,858     9,596     10,335     11,073
Actual Cash Distributed                      0          0     1,476     2,953     3,248      3,248     3,248      3,248      3,248

Allocation to:
Common Units                                 0          0     1,042     2,084     2,292      2,292     2,292      2,292      2,292
SR Subordinated Units                        0          0       330       659       725        725       725        725        725
Subordinated Units                           0          0        75       151       166        166       166        166        166
General Partner Interest                     0          0        30        59        65         65        65         65         65

Total Distribution to:
Common Units                                 0          0     1,042     2,084     2,292      2,292     2,292      2,292      2,292 
SR Subordinated Units                        0          0       330       659       725        725       725        725        725 
Subordinated Units                           0          0        75       151       166        166       166        166        166 
General Partner Interest                     0          0        30        59        65         65        65         65         65

PaineWebber Incorporated                                        16 of 18                                For Discussion Purposes Only

Project Heat  
- --------------------------------------------------------------------------------
(in thousands except per share and per unit data)

Scenario I: Base Case

STAR PRO FORMA DISTRIBUTION SCHEDULE OF ACTUAL DISTRIBUTIONS (cont'd)

Projected
Estimated Normalized  ----------------------------------------------------------------------
1998       1998     1999       2000      2001      2002      2003       2004       2005
--------- ----------  -------   -------   -------   -------   --------   --------   --------

Second Target Distribution
Cash Available                                0          0         0         0    26,780     37,202    49,071     62,671     95,942
Cash Required for Target 
Distribution                                0          0         0         0     7,149      7,149     7,149      7,149      7,149
Cash Required for Indicated
Distribution                                0          0         0         0     3,064      6,468     7,319      8,170      9,022
Actual Cash Distributed                      0          0         0         0     3,064      6,468     7,149      7,149      7,149

Allocation to:
Common Units                                 0          0         0         0     1,875      3,959     4,376      4,376      4,376
SR Subordinated Units                        0          0         0         0       593      1,252     1,384      1,384      1,384
Subordinated Units                           0          0         0         0       136        287       317        317        317
General Partner Interest                     0          0         0         0        61        129       143        143        143
Incentive Right                              0          0         0         0       398        841       929        929        929
Incentive Right to GP Interest             0          0         0         0        96        203       224        224        224
Incentive Right to Sr. Sub Units           0          0         0         0       302        638       705        705        705

Total Distribution to:
Common Units                                 0          0         0         0     1,875      3,959     4,376      4,376      4,376 
SR Subordinated Units                        0          0         0         0       895      1,890     2,089      2,089      2,089 
Subordinated Units                           0          0         0         0       136        287       317        317        317 
General Partner Interest                     0          0         0         0       157        332       367        367        367

Third Target Distribution
Cash Available                                0          0         0         0         0          0    41,922     55,522     88,793
Cash Required for Target 
Distribution                                0          0         0         0         0          0    16,591     16,591     16,591
Cash Required for Indicated
Distribution                                0          0         0         0         0          0       193      1,157      2,122
Actual Cash Distributed                      0          0         0         0         0          0       193      1,157      2,122

Allocation to:
Common Units                                 0          0         0         0         0          0       104        625      1,146
Sr. Subordinated Units                       0          0         0         0         0          0        33        198        363
Subordinated Units                           0          0         0         0         0          0         8         45         83
General Partner Interest                     0          0         0         0         0          0         4         23         42
Incentive Right                              0          0         0         0         0          0        44        266        488
Incentive Right to GP Interest             0          0         0         0         0          0        11         64        118
Incentive Right to Sr. Sub Units           0          0         0         0         0          0        34        202        370

Total Distribution to:
Common Units                                 0          0         0         0         0          0       104        625      1,146 
Sr. Subordinated Units                       0          0         0         0         0          0        67        400        733 
Subordinated Units                           0          0         0         0         0          0         8         45         83 
General Partner Interest                     0          0         0         0         0          0        15         87        160

Remaining Distribution
Cash Available                                0          0         0         0         0          0         0          0          0
Cash Required for Indicated
Distribution                                0          0         0         0         0          0         0          0          0
Actual Cash Distributed                      0          0         0         0         0          0         0          0          0

Allocation to:
Common Units                                 0          0         0         0         0          0         0          0          0
Sr. Subordinated Units                       0          0         0         0         0          0         0          0          0
Subordinated Units                           0          0         0         0         0          0         0          0          0
General Partner Interest                     0          0         0         0         0          0         0          0          0
Incentive Right                              0          0         0         0         0          0         0          0          0
Incentive Right to GP Interest             0          0         0         0         0          0         0          0          0
Incentive Right to Sr. Sub Units           0          0         0         0         0          0         0          0          0
Repay Indebtedness                            0          0    13,284    18,774    23,717     30,734    41,729      54,364    86,671
Total Distribution to:
Common Units                                 0          0         0         0         0          0         0          0          0 
Sr. Subordinated Units                       0          0         0         0         0          0         0          0          0 
Subordinated Units                           0          0         0         0         0          0         0          0          0 
General Partner Interest                     0          0         0         0         0          0         0          0          0

PaineWebber Incorporated                                        17 of 18                                For Discussion Purposes Only

PROJECT HEAT
================================================================================
(in thousands except per share and per unit data)

STAR GAS PRO FORMA SCHEDULE OF ACTUAL DISTRIBUTIONS (cont'd)      Scenario I:   Base Case

Estimated   Normalized                                Projected
-----------------------------------------------------------------
1998        1998          1999       2000      2001     2002     2003     2004     2005
----------   ----------    --------   -------   -------  -------  -------  -------  --------

Total Distributions                    
- -------------------
Common Units                            $ 22,733    $   22,910     $ 23,962   $ 25,004  $ 27,088 $ 29,171 $ 29,692 $ 30,213 $ 30,734
SR Subordinated Units                          0         7,251        7,581      7,910     8,872    9,867   10,132   10,465   10,798
Subordinated Units                             0         1,472        1,734      1,810     1,961    2,112    2,149    2,187    2,225
General Partner Interest                     464           646          679        709       872    1,047    1,097    1,169    1,242
--------    ----------     --------   --------  -------- -------- -------- -------- --------
Total Distributions                $ 23,197    $   32,289     $ 32,957   $ 35,433  $ 38,792 $ 42,196 $ 43,070 $ 44,035 $ 44,999
========    ==========     ========   ========  ======== ======== ======== ======== ========

Total Distributions Per Units
- -----------------------------
Common Units                            $   2.18    $     2.20     $   2.30   $   2.40  $   2.60 $   2.80 $   2.85 $   2.90 $   2.95
SR Subordinated Units                       0.00          2.20         2.30       2.40      2.69     2.99     3.07     3.18     3.28
Subordinated & GP Units                     0.44          2.02         2.30       2.40      2.70     3.01     3.09     3.20     3.30

Total Incentive Distributions    NPV
--------
To GP Interest           $   357   $      0    $        0     $      0   $      0  $     96 $    203 $    235 $    289 $    342
To Sr. Sub Units           1,121          -             -            -          -       302      638      739      907    1,075
--------  --------    ----------     --------   --------  -------- -------- -------- -------- --------
Sub-Total             1,478          -             -            -          -       398      841      974    1,196    1,417
Present Value of 
Terminal Value      1,189          -             -            -          -         -        -        -        -    5,670
--------
Total       $ 2,667

18 of 18

FOR DISCUSSION PURPOSES ONLY                                          5/4 DRAFT
PRELIMINARY STATUS REPORT
BOARD OF DIRECTORS
STAR GAS PARTNERS, L.P.

Petro management and its advisors have been working on a proposed
transaction between Petro and Star for over a year. Star Committee has engaged
Baker & Botts, LLP as its counsel and A.G. Edwards & Sons, Inc. as its financial
advisor. After one month of preliminary due diligence and review, the Committee
and its advisors better understand and appreciate the complexity of the proposed
transaction and the amount of hard work and creativity dedicated to this
proposal.

During the past year, both parties have experienced management changes and
adverse weather conditions. During this period, Petro has suspended its common
dividends and its publicly held common shares have traded down. Star's publicly
held common units have traded flat to slightly up, but Star has made
distributions to its common unitholders and its subordinated unitholders (that
is, Petro) even though such distributions exceeded distributable cash flow (that
is, Star returned capital). The Star Committee notes that Petro's capital
constraints have effectively eliminated its historic acquisition program while
Star has demonstrated a far more viable acquisition program.

In light of these and other significant changes in relative performance,
market conditions and strategic rationale for the proposed transaction, the Star
Committee (after considering the preliminary report of A.G. Edwards and
consulting with counsel), proposes a re-examination, restructuring and repricing
of the proposed transaction between Petro and Star.

Subject to further diligence and assuming no material adverse changes in
the parties or in market conditions, the Star Committee proposes:

(A)  Star Partnership Agreement. Appropriate steps should be initiated
--------------------------                                       
to amend the Star Partnership Agreement as of the closing date
(assumed to be September 30, 1998) in order to:

(A-1) raise the future required minimum quarterly distribution ("MQD")
for common unitholders from $2.20 per annum to $2.30 per annum;

(A-2) authorize a new class of senior subordinated units which shall
be junior to all present and future common units, but senior to
the present subordinated units; and

(A-3) prohibit the payment of any future distributions to senior
subordinated unitholders and to subordinated unitholders except
from net distributable cash

flow available for such period after first paying MQD to the
common unitholders for such period plus any cumulative common
unit arrearages.

(B)  Definitive Transaction Agreement. A draft of the definitive
--------------------------------   
transaction agreement should be prepared by Petro for Star Committee's
careful consideration (and for future submission to the Board of
Directors and common unitholders of Star and to the Board of Directors
and shareholders of Petro for approval) setting forth the following
steps:

(B-1) At closing of the Transaction, Star shall be obligated to pay to
Petro or assume from Petro a "Maximum Aggregate Consideration"
of [$390 million] consisting of (A) the total consideration paid
to Petro's common shareholders calculated at [26,563,000] Petro
common shares at [$ _________] per share; (B) the principal
amount of Petro's total debt and preferred stock outstanding
just prior to closing and any refinancing of such debt or
preferred stock; and (C) any premiums paid above and beyond the
principal amount of such debt and preferred stock to redeem,
exchange, defease or otherwise cancel these liabilities. In
addition, the distributions made to the Petro common
shareholders and the refinancing of any assumed debt or
preferred stock may not result in more than [10,300,000] common
units outstanding at closing and must result in at least [$125
million] of new debt carrying an interest rate of no greater
than [8.50%] having been closed prior to, or simultaneous with,
the closing of this Transaction.

(B-2) Prior to the closing of the Transaction, in return for the
Maximum Aggregate Consideration defined in (B-1), Petro shall
represent, warrant and agree that:

(A) Petro shall set up appropriate reserves and fund the
following:

(1)  off-balance sheet pension liabilities of [$5 million],
(2)  off-balance sheet tax liabilities relating to Pearl of
[$3.5 million],
(3)  surplus cash available for distributions equal to
[$1.10] per new common unit issued,
(4)  all of the Transaction costs, including the gross
spread on Star's new MLP equity and debt; financial
advisory fees and fairness opinions for Petro and Star;
legal, accounting and printing fees for Petro and Star;
all exchange and solicitation fees related to the
retirement or redemption of Petro's debt and preferred
stock; all appraisals and environmental reports; all
rating agencies and bank fees; and all other out-of-
pocket costs and expenses associated with the
Transaction, and
(5)  any "Unearned MQD" monies that Petro wishes to have
available for payment to senior subordinated or
subordinated unitholders following the closing of the
Transaction.

(B) Petro shall have no borrowed money debt of any kind
outstanding other than any such amounts included in (B-1);

(C) Petro shall have no preferred stock of any kind outstanding
other than any such amounts included in (B-1);

(D) Petro shall have transferred to Star a minimum of
[2,000,000] of its subordinated units free and clear for
cancellation;

(E) Petro shall have a minimum balance of cash of [$500,000], a
positive working capital balance (subject to further due
diligence), and a total common shareholders' deficit on its
balance sheet of no greater than [$_______million], all as
of the closing.

(B-3) In the event Petro is unable or unwilling to represent and
warrant each of the matters set forth in (B-2), then the Maximum
Aggregate Consideration set forth in (B-1) shall be reduced on a
dollar-for-dollar basis.

Round II
Appendices to

Preliminary Report to
The Special Committee of Gas

Analyses Performed at $2.00 Per Share

A. G. Edwards & Sons, Inc.
INVESTMENT BANKING

May 4, 1998

Overview of Oil
EBITDA Reconciliation: 1997 //(a)//

- --------------------------------------------------------------------------------
Oil 
---

1997 Actual EBITDA                                                   $36,010

NORMALIZING ADJUSTMENTS:

Weather was 3.8% warmer than 30-year normal

3.8% of 1997 budgeted retail gallons          13,482 gallons

Gross profit margin                              $0.4545

Delivery and garage cost savings                ($0.0814)
-------

Net impact per gallon                            $0.3731

$ impact                                                          5,030 

Insurance reserve                                                      2,000
-------

1997 Adjusted EBITDA                                                 $43,040
=======

- --------------------------------------------------------------------------------
(a) Management's assumptions.

Page 1

Overview of Oil
EBITDA Reconciliation: 1997-1998 (a)
(continued)

Oil
---

1997 Adjusted EBITDA                                                   $43,040

Volume Adjustments for 1998  

Sale of TLC Division in 1997              (16,926) gallons  

Attrition in 1998 (4.1%)                  (17,375)  

1997 Acquisitions                           9,828
-------
(24,473) gallons
@
$0.1700/gallon (b)         (4,159)
Gross Profit Margin Increase   $0.006 per gallon on 395,086 gallons (c)  2,371
Inflation                                                               (3,662)

Operating Cost Reductions (d)                                            5,850
-------
1998 EBITDA Budget                                                     $43,440
=======

- --------------------------------------------------------------------------------
(a)  Management's assumptions.
(b)  Represents the average gross profit per gallon ($.4700 per gallon) offset
by $.30 per gallon reduction in operating expenses.
(c)  Actual gross profit margin increase achieved in first quarter of 1998 was
$5.9 million (156 million gallons @ $0.037/gallon).
(d)  Represents already accomplished reductions in branch, regional and
corporate expenses in excess of normal indexing related to volume
reductions as well as 1% productivity improvements.

Page 2

Overview of Oil
EBITDA Reconciliation: 1998 (a)
(continued)

Oil
---

1998 EBITDA Budget                                             $43,440

Actual Differential between first three months   
of Fiscal 1998 vs. Budget                                     (9,318)

Revised margin improvement and cost savings   
estimates based on first three months of   
Fiscal 1998 vs. Budget.                                        4,318
-------  
Adjusted 1998 EBITDA Budget                                    $38,440
=======

- --------------------------------------------------------------------------------
(a)  Management's assumptions.

Page 3

OVERVIEW OF OIL
EBITDA RECONCILIATION: 1998-1999 (a)
(continued)

OIL
---

1998 EBITDA Budget                                               $43,440

Internal Attrition (4.1%) and other adjustments                   (3,897)

Acquisition Growth  
$30,000 of acquisitions at 4.75x multiple                        6,315
-------

1999 Projection                                                  $45,858
=======

- --------------------------------------------------------------------------------
(a)  Management's assumptions.

Page 4

OVERVIEW OF OIL
EBITDA SUMMARY

OIL 
---

1997 Actual                                                        $36,010
1997 Adjusted                                                       43,040

1998 Budget                                                        $43,440

Adjusted 1998 Budget                                               $38,440

1999E                                                              $45,858

- --------------------------------------------------------------------------------

Page 5

OVERVIEW OF GAS
EBITDA RECONCILIATION:  1997 (a)
($ in thousands)

GAS
---

1997 Actual EBITDA                                               $19,703 (b)

NORMALIZING ADJUSTMENTS:

Weather
Residential -  1,125 gallons @ 0.7106 margin                       799
Commercial - 277 gallons @ 0.4459 margin                           124

Margin
Residential - 50,832 gallons @ (0.7106-0.6995)                    (564)
Commercial - 19,864 gallons @ (0.4454-0.4348)                     (220)
Wholesale - 38,404 gallons @ (0.0975-0.0675)                    (1,152)

Compensation                                                         (56)

Elimination of strategic expense                                     902 (c)

Pearl Gas EBITDA                                                   3,012

Pearl Gas acquisition adjustments                                    273 (d)
------- 

1997 Adjusted EBITDA                                             $22,821
=======

- --------------------------------------------------------------------------------
(a)  Management's assumptions.
(b)  Not pro forma for Pearl Gas acquisition.
(c)  Certain expenses including the exploration of strategic alternatives by
Morgan Stanley.
(d)  Certain cost savings, primarily salary and benefit expenses of certain
selling shareholders.

Page 6

OVERVIEW OF GAS
EBITDA RECONCILIATION:  1997-1999 (a)
($ IN THOUSANDS)
(continued)

- --------------------------------------------------------------------------------
GAS
---

1998 EBITDA Budget                                                 $22,781

Actual Differential between first six months
of Fiscal 1998 vs. Budget                                         (4,502)
-------

Adjusted 1998 EBITDA Budget                                        $18,279
=======

1998 EBITDA Budget                                                 $22,781

Internal Growth of 1.7%                                                379

Acquisition Growth
$20 million of acquisitions at 7x multiple
completed on 9/30/98                                            2,857
$10 million of acquisitions at 7x multiple
completed on 4/1/99                                               713
-------

1999 EBITDA Projection                                             $26,730
=======

- --------------------------------------------------------------------------------
(a) Management's assumptions.

Page 7

Summary of Transaction
Pro Forma Gas Units Outstanding
(in thousands)

To simplify the         
complexity of the steps 
in the Transaction,     
A.G. Edwards prepared   
a summary of its        
understanding.       

[_]  There are currently 6,355 Gas units outstanding comprised of 3,832 common
units, 2,396 subordinated units and 127 general partner ("GP") units. The
subordinated units and GP units are assets of Oil.

[_]  There are currently 26,563 shares of Oil common stock outstanding,
comprised of public shareholders and "insiders." The public holds 17,160
Class A shares. The "insiders" hold 9,404 shares which include 6,795 Class
A shares, 11 Class B shares and 2,598 Class C shares.

[_]  Each shareholder of Oil will receive a certain number of units in Gas such
that the implied consideration paid for each Oil share is $2.00.

[_]  The publicly held 17,160 Class A shares will receive .1000 shares of newly
created senior subordinated units (1,716 units in total) with an implied
value of $20.00/unit. This represents an implied purchase price of
$2.00/share for an implied total purchase price of $34.3 million.

[_]  The "insiders" of Oil, who hold a total of 9,404 shares (comprised of A, B
and C shares) will also receive $2.00/share for a total of $18.8 million.
The consideration received by these shareholders will be funded by:

- (1) the distribution of existing units of Gas which are currently owned
by Oil
[_] all of the 127 GP units owned by Oil will be given as
consideration at an implied value of $21.62/unit, for a total of
$2.7 million.
[_] 373 of the 2,396 subordinated units owned by Oil will be given as
consideration at an implied value of $16.58/unit, for a total of
$6.2 million.
- (2) the distribution of newly-created units of Gas
[_] to fund the remaining $9.9 million of the $18.8 million due to
the Oil "insiders", Gas will issue 350 newly-created senior
subordinated units and 133 newly-created GP units. The implied
values for these new units are $20.00 and $21.62, respectively.

Page 8

Summary of Transaction
Pro Forma Gas Units Outstanding
(in thousands)
(continued)

[_]  Of the 2,396 Subordinated units and 127 GP units owned by Oil, only 2,023
subordinated units will not have been used as consideration paid to the
"inside" Oil shareholders. Hence, these 2,023 subordinated units will be
retired by Gas. A.G. Edwards has assumed that the implied value of these
units are $16.58/unit for a total retired value of approximately $33.5
million.

Page 9

Summary of Gas Units Outstanding
Pre-Financing Assumptions

- -------------------------------------------------------------------------------------------------------------
Distributed to Oil           Issued to Oil                                 
----------------------   ------------------------                            
Type of Units         Current   Public        Insiders      Public      Insiders       Retired     Pro Forma 
- -----------------     -------   ------      ----------   ----------    ----------     ---------   ----------- 

Common                  3,832        -               -            -             -             -         3,832

Senior Subordinated         -        -               -        1,716           350             -         2,066 

Subordinated            2,396        -             373            -             -        (2,023)          373

General Partner (a)       127        -             127            -           133             -           260 
-------                                                                     ----------- 
6,355                                                                           6,531

___________________________________
(a)  The number of GP units issued reflect the assumption of a 6,461 common unit
equity offering to refinance certain of the assumed Oil debt.  Hence, the
number of GP units reflected in the pro forma column do not equal 2% of the
pro forma outstanding units shown above but do equal exactly 2% of the pro
forma units outstanding on a post financing basis.

Page 10

EQUITY PURCHASE PRICE CALCULATION
IMPLIED EQUITY VALUE OF OIL'S ASSETS
(units in thousands, $ in millions, except per unit amounts)

Purchase Price of Oil's Equity           Purchase Price of Oil's Equity
----------------------------------      -------------------------------------

Value of Securities         Equity Value of Oil's      Value of Oil's GP and
Event                                  Paid to Oil Shareholders        Heating Oil Assets      Subordinated Units in Star
- ---------------------------------   ------------------------------  ----------------------  -----------------------------

Issuance of Senior Subordinated
Units to Public Oil Shareholders         1,716 x $20.00
---------------------   
$34.4                       $34.3                          -

Distribution of General Partner
Units to Inside Oil Shareholders           127 x $21.62
---------------------
$2.7                          -                         $2.7

Distribution of Subordinated
Units to Inside Oil Shareholders           373 x $16.58
---------------------
$6.2                          -                         $6.2

Issuance of General Partner                
Units to Inside Oil Shareholders           133 x $21.62
---------------------
$2.9                        $2.9                          -

Issuance of Senior Subordinated
Units to Inside Oil Shareholders           350 x $20.00
---------------------
$7.0                        $7.0                          -

Retire Subordinated Units                                               ($33.5)                   2,023 x $16.58
------------------
$33.5

$10.7                       $42.5
-------                        ----------------------------- 
Total                                        $53.1                                   $53.1

Divided by 26,563 shares of Oil's Common stock=   $2.00 per share

Page 11

PREMIUM PAID ANALYSIS

------------------------------------------------------------------------------------------------------------------------------
Dollars 
Stock Price Premium Analysis               in thousands        Notes     
--------------------------------------------   ---------------      ----------------------------------------------------------

Equity purchase price of Oil                       $53,126          $2.00 share price x 26,563 shares.

Premium to stock price one day prior                  23.1%         $1.625 close on April 22, 1998.
Premium to stock price one month prior                28.0%
Premium to stock price three months prior            -20.0% 
Premium to stock price six months prior              -36.0%

Purchase Price
--------------------------------------------

Equity purchase price of heating oil assets       $ 10,657          See page 11. 

Debt assumption value (b)                          338,223  
---------------
Aggregate purchase price of heating oil              
assets                                          $348,880       
===============

Multiples
--------------------------------------------                        ------------------          
Multiples          Notes  
------------------      -----------------------------------

1997 Revenue                                      $548,141                   0.6 x          As a multiple of aggregate 
transaction value.
1997 EBITDA (c)                                     36,010                   9.7            As a multiple of aggregate
transaction value. 
1997 EBIT (d)                                        6,264                  55.7            As a multiple of aggregate 
transaction value.
1997 Net loss to common shares (d)               ($ 19,338)                   NM            As a multiple of equity value.
Equity (e)                                        (177,033)                   NM            As a multiple of equity value.

1997 Adjusted EBITDA (c)                            43,040                   8.1 x          As a multiple of aggregate
transaction value.
1998 EBITDA budget (c)                              43,440                   8.0            As a multiple of aggregate 
transaction value.
Adj. 1998 EBITDA budget (c)                         38,440                   9.1            As a multiple of aggregate 
transaction value.
1999P EBITDA (c)                                    45,858                   7.6            As a multiple of aggregate 
transaction value.
==================

________________________________________________________
(a) Updated through April 22, 1998.
(b) Includes cost of debt at assumed redemption value, preferred stock at
assumed redemption value, transaction fees, and certain off-balance 
sheet liabilities, net of excess cash. See page 13.
(c) Calculated as gross profit minus SG&A expense and direct delivery 
expense.
(d) Excludes restructuring charge, pension curtailment expense, provision 
for supplemental benefits and corporate identity expenses.
(e) As of 12/31/97.

Page 12

Transaction Multiple Analysis
Firm Valuation

Equity Purchase Price of Heating Oil Assets                         $ 10,656,580                           
-------                   
+  Cost of Debt at Redemption Value                                 290,992,000                           

+  Cost of Preferred stock at Redemption Value                       34,375,000                           

+  Transaction Fees                                                  19,104,000                           
-------  338,223,100
+  Off-Balance Sheet Pension and Tax Liability                        8,500,000                            

-  Excess Cash

Oil's cash balance at 9/30/98(a)                22,355,000
Required cash on hand                             (500,000)
Additional Surplus (b)                          (7,107,100)    14,747,900
-------
------------   
Firm Value                                                          $348,879,680
============

___________________  
(a)  Includes cash collateral of $9,350,000.
(b)  Assumes an Additional Surplus of $1.10 per new common unit issued is funded
by Oil.

Page 13

Transaction Multiple Analysis
Transaction Multiples for Firm Valuation

EBITDA
-------------------------------------
Purchase Price             Year                 Amount           Multiple Paid
- --------------      --------------------    -------------        -------------

$348,879,680        1997 Adjusted            $43,040,000              8.1x

$348,879,680        Adjusted 1998 Budget     $38,440,000              9.1x

$348,879,680        1999 Projected           $45,858,000              7.6x

Page 14

Transaction Multiple Analysis
Distribution of Value

- --------------------------------------------------------------------------------
OIL

1997 Adjusted        EBITDA
EBITDA           Multiple       Purchase Price
- -------------       --------       --------------
$43,040,000          8.1x          $348,879,680

Ability to Further Consolidate Heating Oil Industry              Core Business
- ---------------------------------------------------              -------------

Acquisition                                  EBITDA                        $43,040,000    
EBITDA             Multiple               Purchase Price      EBITDA Decline Rate                  7.75% (a)
- ------------        -------------            --------------                                                   
WACC                                 7.78% (b)
$6,315,789            4.75x                 $30,000,000                                                     

Decline Rate                                         7.75% (a)                                                
WACC                                                 7.78% (b)                                                
Perpetuity                                    $40,663,681                                                     
Purchase Price                                $30,000,000                                                     
--------------                                                    
Net Present Value of the Heating Oil Acq.     $10,663,681        

Value in perpetuity of Ability to                                
--------------                                    ------------- 
Consolidate Heating Oil Industry            $137,034,135       Value of Core Business        $277,109,433
==============                                    ============= 

---------------+----------------------------------

_________________________________________________________________________
Implied Total Valuation                                    $414,143,568

% of Valuation attributable to core business                       66.9%

% of Valuation attributable to consolidation opportunities         33.1%
_________________________________________________________________________

(a) A.G. Edwards' estimate of the decline rate of EBITDA based on a 4.1% 
attribution rate.
(b) See page 25.

Page 15

Transaction Multiple Analysis
Transaction Multiples for Existing Heating Oil Business

- --------------------------------------------------------------------------------
Revised                        EBITDA
---------------------------------
Purchased Price (a)        Year                Amount            Multiple Paid  
- -------------------    --------------      -------------        ---------------

$233,440,425         1997 Adjusted         $43,040,000            5.4x

$233,440,425         Adjusted 1998 Budget  $38,440,000            6.1x

$233,440,425         1999 Projected        $45,858,000            5.1x 

- --------------------------------------------------------------------------------
(a) Represents A.G Edwards' estimate of the portion of the $348.9 million price 
being paid for Oil's heating oil business that can be attributable to its 
core business. Calculation: $348.9 million x 66.9%. See page 15.

Page 16

Relative Contribution Analysis (a)
($ in thousands)

Gas' EBIDTA Contribution

96-97         35.4%
[CHARTS APPEARS HERE]
98-99         38.4%

96-99         35.1%

For Gas' contribution
of approximately 35% of
the combined entity's
EBITDA, it will receive
approximately 40% of the
implied firm value.

___________________________________
(a)  For purposes of its analysis, A.G. Edwards converted Oil's historical
December 31st fiscal year-end to a September 30th fiscal year-end for
comparison purposes.  Oil's projections are based on a December 31st
calendar year end.  Other measures of relative contribution analysis are
non-meaningful.
(b)  Includes only heating oil EBITDA for Oil.
(c)  Firm value for all of Oil.
(d)  Implied firm value of only Oil's heating oil assets.

Page 17

ACCRETION/DILUTION ANALYSIS
VARIATIONS IN MARGIN GROWTH RATES AND ACQUISITION ASSUMPTIONS

- --------------------------------------------------------------------------------

4.1% ATTRITION                4.1% ATTRITION                4.1% ATTRITION
GAS         $0.00 MARGIN GROWTH           $0.00 MARGIN GROWTH           $0.005 MARGIN GROWTH
STAND-ALONE $30.0MM AT 4.75X ACQUISITIONS $30.0MM AT 5.25X ACQUISITIONS $30.0MM AT 4.75X ACQUISITIONS
----------- ----------------------------- ----------------------------- -----------------------------

DCF PER UNIT
1998E (a)            $1.220               $1.770                        $1.770                        $1.770
1998N (b)             1.930                2.500                         2.500                         2.500
1999P                 2.090                2.780                         2.740                         2.940
ACCRETION/DILUTION
1998E (a)                                   45.1%                         45.1%                         45.1%
1998N (b)                                   29.5%                         29.5%                         29.5%
1999P                                       33.0%                         31.1%                         40.7%
COMMON UNIT
COVERAGE
1998E (a)              0.90x                1.00x                         1.00x                         1.00x
1998N (b)              1.42                 1.41                          1.41                          1.41
1999P                  1.48                 1.50                          1.47                          1.58
TOTAL UNIT
COVERAGE
1998E (a)              0.55x                0.81x                         0.81x                         0.81x
1998N (b)              0.88                 1.14                          1.14                          1.14
1999P                  0.95                 1.21                          1.19                          1.28
LEVERAGED UNIT
COVERAGE (C)
1998E (a)              0.94x                1.00x                         1.00x                         1.00x
1998N (b)              1.21                 1.18                          1.18                          1.18
1999P                  1.24                 1.22                          1.21                          1.26

4.1% ATTRITION
$0.005 MARGIN GROWTH
$30.0MM AT 5.25X ACQUISITIONS
-----------------------------

DCF PER UNIT
1998E (a)                     $1.770
1998N (b)                      2.500
1999P                          2.890
ACCRETION/DILUTION
1998E (a)                       45.1%
1998N (b)                       29.5%
1999P                           38.3%
COMMON UNIT
COVERAGE
1998E (a)                       1.00x
1998N (b)                       1.41
1999P                           1.55
TOTAL UNIT
COVERAGE
1998E (a)                       0.81x
1998N (b)                       1.14
1999P                           1.26
LEVERAGED UNIT
COVERAGE (C)
1998E (a)                       1.00x
1998N (b)                       1.18
1999P                           1.25

- ------
(a) 1998 estimate assumes no acquisitions for either company, and is adjusted
to reflect actual results through 3/31/98.
(b) 1998 budgeted.
(c) Defined as (DCF+Int)/[((GP units + common units)*MQD) + Int)]

PAGE 18

PUBLIC COMPANY ANALYSIS

[_]  A.G. Edwards compared certain financial and market information of Gas on a
historical and pro forma basis to that of certain public master limited
partnerships which A.G. Edwards deemed relevant for the purposes of this
analysis. A.G. Edwards reviewed the trading multiples from a total of 6
public propane master limited partnerships.

[_]  The selected propane master limited partnerships are as follows:

- AmeriGas Partners, L.P.               - Heritage Propane Partners, L.P.
- Cornerstone Propane Partners, L.P.    - National Propane Partners, L.P.
- Ferrellgas Partners, L.P.             - Suburban Propane Partners, L.P.

[_]  No company used in the analysis is identical to Gas.

PUBLIC COMPARABLE COMPANIES (a)
- ------------------------------------------------------------------------------------------------------------
PUBLIC            PUBLIC  
PRO FORMA        COMPANY           COMPANY  
GAS              GAS           MEDIANS           RANGES   
- ------------------------------------------------------------------------------------------------------------

Yield                                     10.0%            10.5%            9.6%          8.5% to 10.6%
Firm value/LTM EBITDA                     12.7x (b)        10.2x (b)       12.5x          9.8x to 16.7x
Firm value/1998 normalized EBITDA          8.7x (c)         8.0x (c)       11.5x         10.3x to 13.7x
Equity Market Cap/LTM DCF                 18.0x (d)        12.4x (d)       15.7x          9.4x to 25.5x
Equity Market Cap/1998 normalized DCF      9.7x (e)         7.9x (e)       13.9x         11.6x to 16.9x
LTM common unit coverage                   0.9x (f)         1.0x (f)        1.4x          0.6x to 1.5x
1998E common unit coverage                 1.5x (g)         1.5x (g)        1.4x          0.9x to 1.9x
LTM total unit coverage                    0.6x (f)         0.8x (f)        0.7x          0.4x to 1.0x
1998E total unit coverage                  1.0x (g)         1.2x (g)        0.7x          0.7x to 1.0x
1998E leveraged unit coverage              1.2x (g) (h)     1.2x (g) (h)    1.1x          0.9x to 1.3x
- -------------------------------------------------------------------------------------------------------------

(a) Public comparable companies include: APU, CNO, PGP, HPG, CNL and SPH.
(b) Firm value/adjusted 1998 budget EBITDA.
(c) Firm value/1999 estimated EBITDA.
(d) Equity market cap/adjusted 1998 budget EBITDA.
(e) Equity market cap/1999 estimated DCF.
(f) Adjusted 1998 budget.
(g) 1999 estimates.
(h) Defined as (DCF + interest)/(((GP units + common units)*MQD) + interest).

Page 19

PUBLIC COMPANY ANALYSIS
($ IN MILLIONS, EXCEPT PER UNIT DATA)

- ------------------------------------------------------------------------------------------------------------------------------------

Closing          Implied          Implied  
Price on        Market Value        Firm        Distribution  
Company                                    Ticker       (4/22/98)        of Equity          Value         per Unit       Yield     
- ------------------------------------------------------------------------------------------------------------------------------------

Gas                                (a)                  $21.938         $  139.4            $  232.0     $2.20           10.0% 

AmeriGas Partners, L.P.                     APU          25.938          1,108.6             1,867.2      2.20            8.5%   
Cornerstone Propane Partners, L.P. (d)      CNO          22.688            455.7               671.7      2.16            9.5%
Ferrellgas Partners, L.P.          (e)      FGP          20.875            666.6             1,192.3      2.00            9.6%
Heritage Propane Partners, L.P.             HPG          23.125            197.8               371.8      2.00            8.6%
National Propane Partners, L.P.             NPL          20.313            232.9               375.6      2.10           10.3%
Suburban Propane Partners, L.P.    (f)      SPH          18.813            551.4               942.0      2.00           10.6%

- ------------------------------------------------------------------------------------------------------------------------------------
Mean                                                                                                                      9.5%
Median                                                                                                                    9.6%
- ------------------------------------------------------------------------------------------------------------------------------------

Pro Forma                                               $21.938         $  285.0 (g)        $  583.8 (h) $2.30           10.5% 

- ------------------------------------------------------------------------------------------------------------------------------------

Common                 LTM Distributable Cash Flow/          
----------------------------
Units/           Distribution to          Distribution         FY98E
Company                                    Ticker     Total Units         Common Units            to Total Units        DCF/unit
- ------------------------------------------------------------------------------------------------------------------------------------

Gas                                (a)                   60.3%               0.9x (b)                 0.6x  (b)           $ 2.09 (c)

AmeriGas Partners, L.P.                     APU          52.8%               1.5x                     0.8x                  2.14
Cornerstone Propane Partners, L.P. (d)      CNO          66.5%               0.6x                     0.4x                  1.47
Ferrellgas Partners, L.P.          (e)      FGP          47.0%               1.4x                     0.7x                  1.34
Heritage Propane Partners, L.P.             HPG          55.8%               1.3x                     0.8x                  2.01
National Propane Partners, L.P.             NPL          59.6%               0.9x                     0.5x                  1.60
Suburban Propane Partners, L.P.    (f)      SPH          75.1%               1.4x                     1.0x                  1.41

- ------------------------------------------------------------------------------------------------------------------------------------

Mean                                                     59.5%               1.2x                     0.7x       
Median                                                   57.7%               1.4x                     0.7x
- ------------------------------------------------------------------------------------------------------------------------------------

Pro Forma                                                79.2%               1.0x (b)                 0.8x (b)              2.78 (c)

- -----------------------------------------------------------------------------------------------------------
FY98E Distributable Cash Flow /
-------------------------------
Distribution to                Distribution
Company                                    Ticker         Common Units                   to Total Units
- -----------------------------------------------------------------------------------------------------------

Gas                                (a)                       1.5x(c)                         1.0x(c)

AmeriGas Partners, L.P.                     APU              1.9x                            1.0x
Cornerstone Propane Partners, L.P. (d)      CNO              1.1x                            0.7x
Ferrell gas Partners, L.P.         (e)      FGP              1.4x                            0.7x
Heritage Propane Partners, L.P.             HPG              1.8x                            1.0x
National Propane Partners, L.P.             NPL              1.3x                            0.8x
Suburban Propane Partners, L.P.    (f)      SPH              0.9x                            0.7x

- -----------------------------------------------------------------------------------------------------------
Mean                                                         1.4x                            0.8x
Median                                                       1.4x                            0.7x
- -----------------------------------------------------------------------------------------------------------

Pro Forma                                                    1.5x (c)                        1.2x (c)

_________________________________

1998 estimates per A.G. Edwards' research, except for Gas, Oil and Pro Forma.
Implied Firm Value equals common, subordinated and GP units, multiplied by the 
market price of common units plus debt, less cash.
(a)  Pro forma for the Pearl Gas acquisition and the common unit offering. 
Fiscal 1997 maintenance capital expenditure used as LTM figure.
(b)  For Gas and Pro forma only, LTM DCF figures are adjusted 1998 budget DCF 
estimates.
(c)  For Gas and Pro forma only, FY98E DCF figures are 1999 DCF estimates.
(d)  Financial information pro forma for common unit offering. Maintenance 
capital expenditures assumed to be 8% of EBITDA due to lack of disclosure.
(e)  Maintenance capital expenditures assumed to be 8% of EBITDA due to lack of 
disclosure.
(f)  Financial figures exclude $5.1 million gain from sale of minority interest.
(g)  12.992 units @ $21.9375.
(h)  $285.0 in equity plus $308.316 pro forma debt (see page 24), less $10.839 
cash and $9.350 in cash collateral.

Page 20

PUBLIC COMPANY ANALYSIS

LTM              1998E       LONG TERM     LTM     FIRM VALUE/  FIRM VALUE/    EQUITY       EQUITY
LEVERAGED         LEVERAGED       DEBT/     EBITDA/       LTM         1998E     MARKET CAP/  MARKET CAP/
UNIT COVERAGE (A) UNIT COVERAGE (A) FIRM VALUE INT. EXP.    EBITDA       EBITDA       LTM DCF     1998E DCF
----------------- ----------------- ---------- ---------  -----------  -----------  -----------  -----------

GAS                      0.9x(b)           1.2x(c)       41.4%      2.3x(d)    12.7x(d)      8.7x(e)     18.0x(f)      9.7x(g)
AmeriGas
Partners, L.P.          1.2x              1.3x          37.3%      2.2x       12.6x        12.1x        15.5x        14.1x
Cornerstone
Propane
Partners, L.P.          0.8x              1.0x          35.1%      2.1x       16.7x        13.7x        25.5x        16.9x
Ferrellgas
Partners, L.P           1.2x              1.1x          41.5%      2.1x       12.5x        12.0x        15.8x        15.9x
Heritage Propane
Partners, L.P.          1.1x              1.3x          46.0%      2.6x       10.9x        10.6x        15.7x        11.6x
National Propane
Partners, L.P.          0.9x              1.1x          36.8%      3.2x       16.3x        11.0x        18.0x        13.0x
Suburban Propane
Partners, L.P.          1.2x              0.9x          45.5%      2.9x        9.8x        10.3x         9.4x        13.6x
---               ---           ----       ---        ----         ----         ----         ----
MEAN                     1.1x              1.1x          40.4%      2.5x       13.1x        11.6x        16.6x        14.2x
MEDIAN                   1.1x              1.1x          39.4%      2.4x       12.5x        11.5x        15.7x        13.9x
===               ===           ====       ===        ====         ====         ====         ====
PRO FORMA                1.0x(b)           1.2x(c)       54.6%      2.1x(d)    10.2x(d)      8.0x(e)     12.4x         7.9x(g)

- ------
EBITDA is defined as net income (loss) before extraordinary items plus
interest, income taxes, depreciation and amortization, impairment expense,
and other non-recurring and non-operating items.
(a) Defined as (DCF + interest)/(((GP units + common units)*MQD) + interest).
(b) For Gas and Pro forma only, LTM leveraged unit coverage figures use
adjusted 1998 budget estimates.
(c) For Gas and Pro forma only, 1998E leveraged unit coverage figures use 1999
estimates.
(d) For Gas and Pro forma only, LTM EBITDA figures are adjusted 1998 budget
estimates.
(e) For Gas and Pro forma only, 1998E EBITDA figures are 1999 estimates.
(f) For Gas and Pro forma only, LTM DCF figures are adjusted 1998 budget DCF
estimates.
(g) For Gas and Pro forma only, 1998E DCF figures are 1999 DCF estimates.

Page 21

DISCOUNTED CASH FLOW ANALYSIS
GAS--STAND ALONE
($ IN THOUSANDS)

- --------------------------------------------------------------------------------

INCOME STATEMENT SUMMARY
(a):                                  1998    1999     2000     2001     2002    TERMINAL
- ------------------------             ------  -------  -------  -------  -------  --------

EBITDA                               18,279   26,730   28,541   30,361   32,188
% increase                                    46.2%     6.8%     6.4%     6.0%
Net income                           (1,182)   3,733    3,621    3,695    3,953
CASH FLOW SUMMARY:
- ------------------
After-tax EBI                                 12,847   13,649   14,443   15,229
Depreciation and
amortization                                 13,858   14,868   15,893   16,934
Maintenance capital
expenditures                                 (3,274)  (3,395)  (3,694)  (3,816)
Working capital
increases                                      (500)    (500)    (500)    (500)
-------  -------  -------  -------
Net operating cash flow
(free cash flow)                             22,931   24,622   26,142   27,847
---------
WEIGHTED AVERAGE COST OF
CAPITAL (b)                    7.9%
---------
TERMINAL EBITDA MULTIPLE (c)   10.2x
---------
Discount factor (d)                           0.9629   0.8927   0.8276   0.7673    0.7388
Terminal value (e)                                                               $328,318
---------
Present value              $329,621          $22,079  $21,980  $21,635  $21,367  $242,560
---------          -------  -------  -------  -------  --------
Current net debt (f)      $(113,629)
---------
Net present value of
equity                   $ 215,992
=========
Common units/Total units
(g)                           60.3%
---------
Equity value to common
units (h)                $ 130,234
=========

- -------
(a) Based on management projections.
(b) Based on comparable companies' WACC.
(c) Gas' current firm value of $232.0 million/$22.781 million normalized 1998
EBITDA = 10.2x, which represents a multiple of current year normalized
EBITDA.
(d) Discount factor calculated using half-year convention.
(e) Terminal value calculated using EBITDA multiple.
(f) Represents total projected debt less cash as of 9/30/98.
(g) Total units include common, subordinated and GP units.
(h) Current market value of common units is 3,832 units *$21.938 unit price =
$84,065

PAGE 22

DISCOUNTED CASH FLOW ANALYSIS
GAS--PRO FORMA PAINEWEBBER MODEL (a)
($ IN THOUSANDS)

1998     1999     2000     2001     2002    TERMINAL
-------  -------  -------  -------  -------  --------

INCOME STATEMENT
SUMMARY (b):
EBITDA                                57,219   73,088   77,832   82,549   87,242
% increase                                      27.7%     6.5%     6.1%     5.7%
Net income                           (12,056)  (5,514)  (8,750) (12,482) (16,325)
CASH FLOW SUMMARY:
After-tax EBI                                  23,954   22,825   21,649   20,427
Depreciation and
amortization                                  48,609   54,482   60,375   66,290
Maintenance capital
expenditures                                  (6,915)  (7,109)  (7,482)  (7,680)
Working capital
increases (c)                                  8,839   (1,000)   1,000)  (1,000)
-------  -------  -------  -------
Net operating cash flow
(free cash flow)                              74,487   69,198   73,542   78,037
---------
WEIGHTED AVERAGE COST OF
CAPITAL (d)                    7.8%
---------
TERMINAL EBITDA MULTIPLE
(e)                           10.2x
---------
Discount factor (f)                            0.9632   0.8937   0.8292   0.7693    0.7410
Terminal value (g)                                                                $889,868
---------
PRESENT VALUE             $ 913,993           $71,748  $61,841  $60,978  $60,033  $659,393
---------           -------  -------  -------  -------  --------
Less net debt (h)         $(298,800)
---------
NET PRESENT VALUE OF
EQUITY                   $ 615,193
=========
Original common
units/Total units (i)         29.5%
---------
EQUITY VALUE TO COMMON
UNITS (j)                $ 181,439
=========

- -------
(a) Scenario assumes 4.1% steady attrition, 0% margin improvement, and $30
million in acquisitions at 4.75 multiple.
(b) Based on management projections.
(c) A.G. Edwards' assumption.
(d) Based on comparable companies' WACC.
(e) Gas' current firm value of $232.0 million/$22.781 million normalized 1998
EBITDA = 10.2x, which represents a multiple of current year normalized
EBITDA.
(f) Discount factor calculated using half-year convention.
(g) Terminal value calculated using EBITDA multiple.
(h) Represents total pro forma projected debt less cash and cash collateral as
of 9/30/98.
(i) Total units include common, newly issued common, senior subordinated,
subordinated and GP units.
(j) Current market value of common units is 3,832 units * $21.938 unit price =
$84,065.

Page 23

CAPITAL STRUCTURE ANALYSIS 
GAS -- PRO FORMA AS OF 9/30/98
($ IN THOUSANDS)

=====================================================================================================
PRO FORMA
GAS           OIL        ADJUSTMENTS       GAS 
--------      --------    -------------  -----------  

DEBT:
8.04% First Mortgage Notes                   $ 85,000      $      0         $      0     $ 85,000           
7.25% WC Revolver                               7,457             -                -        7,457     
7.25% Acquisition Facility                     10,673             -                -       10,673     
7.17% First Mortgage Notes                     11,000             -                -       11,000        

11.96% Senior Notes                                  -        60,000          (60,000)           -     
14.10% Senior Notes                                  -         3,100           (3,100)           -
14.10% Subordinated Notes                            -         3,100           (3,100)           -
10.13% Sub Notes & Sr Notes                          -        50,000          (50,000)           -
9.38% Sub Notes & Sr Notes                          -        75,000          (75,000)           -
12.25% Sub Notes & Sr Notes                          -        81,250          (81,250)           -
8.00% Existing Acq Notes Payable                    -        13,859                -       13,859  

8.46% Exchange Debt                                 -             -           66,000       66,000   
8.50% New Debt                                      -             -          125,000      125,000
--------      --------         --------     --------
TOTAL DEBT                                       $114,130      $286,309         ($81,450)    $318,989

WEIGHTED AVERAGE COST OF DEBT                                                                     8.2%        

PREFERRED STOCK:
14.33% Preferred Stock                        $      0      $  4,167          ($4,167)    $      0          
12.88% Preferred Stock                               -        30,000          (30,000)           -
--------      --------         --------     --------       
-        34,167          (34,167)           -

COMMON EQUITY                                    $ 67,042     ($210,015)        $112,537     ($30,436)      
- -----------------------------------------------------------------------------------------------------

Page 24

DISCOUNTED CASH FLOW ANALYSIS
PRO FORMA WEIGHTED AVERAGE COST OF CAPITAL DERIVATION
($ IN MILLIONS)

- --------------------------------------------------------------------------------

TOTAL
MARKET                       IMPLIED   TOTAL    TOTAL
LEVERED   VAL.     UNIT      TOTAL     MARKET   DEBT/  DEBT AS %   UN-
BETA     DEBT   PRICE AT    UNITS    VALUE OF  TOTAL  OF TOTAL  LEVERED
COMPARABLE COMPANY         (A)   (BK=MKT) (4/22/98) OUT. (MIL)  EQUITY   EQUITY  CAPITAL   BETA
- ------------------       ------- -------- --------- ---------- --------  ------ --------- -------

AmeriGas Partners, L.P.   0.52    $777.8   $25.938     41.9    $1,108.6   70.2%    41.2%   0.306
Cornerstone Propane
Partners, L.P.           0.41     235.8    22.688     19.7       455.7   51.7%    34.1%   0.270
Ferrellgas Partners,
L.P.                     0.39     537.2    20.875     31.3       666.6   80.6%    44.6%   0.216
Heritage Propane
Partners, L.P.           0.44     176.9    23.125      8.4       197.8   89.4%    47.2%   0.232
National Propane
Partners, L.P.           0.34     147.4    20.313     11.2       232.9   63.3%    38.8%   0.208
Star Gas Partners, L.P.   0.34       96.0   21.938      6.2       139.4   68.9%    40.8%   0.201 
Suburban Propane 
Partners, L.P.           0.38     428.2    18.813     28.7       551.4   77.6%    43.7%   0.214

Comparable group's average unlevered
----------------------------------------------------
beta:                                        0.23      Pro forma capitalization-at market (b)
Pro forma debt-to-equity ratio (b):          111.9%     Total debt                   $319.0          52.8%
Pro forma debt as a percent of total                    Total equity                  285.0          47.2% 
capital (b):                                 52.8%                                  ------         ------           
Comparable group's beta relevered for
Pro forma capital structure:                0.392                                   $604.0         100.0%
-------      ---------------------------------------------------- 
DERIVATION OF WEIGHTED AVERAGE COST OF CAPITAL:                MARKET RISK PREMIUM RANGE (D)
---------------------------------------
11.3%  12.3%    13.3%
---------------------------------------
Pro forma theoretical levered beta:                   0.392
Assumed % of equity in Pro forma capital structure
(b):                                                  47.2%
Risk-free rate of return (c):                           5.7%
Pro forma cost of equity range (at various market
risk premiums):                                                   10.1%  10.5%    10.9%
====   ====     ====
Pro forma assumed tax rate:                            35.0%
Assumed % of debt in capital structure (b):            52.8%
Pro forma estimated cost of debt (e):                   8.2%
Pro forma estimated after-tax cost of debt:             5.3%        5.3%   5.3%     5.3%
---    ---      ---
Pro forma weighted average cost of capital range
---------------------------------------
(f):                                                               7.6%   7.8%     8.0%
---------------------------------------

- --------
(a) Source; Bloomberg. 143 week (maximum weekly time period allowed, or the
number of weeks available, which may be less than 143) adjusted beta
relative to the S&P 500 index.
(b) Market value of long-term debt is assumed to be equal to the book value.
(c) Ten-year Treasury rate on April 22, 1998.
(d) Ibbotson Associates 1997. Total returns for small company stocks of 17.7%
minus the risk-free rate.
(e) Based on Pro forma current debt structure.
(f) Calculation based upon use of the Capital Asset Pricing Model (CAPM).

25

Round II
Appendices To

Preliminary Report to
The Special Committee of Gas

Analyses Performed at $2.50 Per Share

A.G.Edwards & Sons, Inc.
INVESTMENT BANKING

May 4, 1998

Equity Purchase Price Calculation
Implied Equity Value of Oil's Assets
(units in thousands, $ in millions,
except per unit amounts)

- ---------------------------------------------------------------------------------------------------------------------------------
Purchase Price of Oil's Equity                   Purchase Price of Oil's Equity
------------------------------       -----------------------------------------------------

Value of Securities               Equity Value of Oil's       Value of Oil's GP and
Event                                    Paid to Oil Shareholders             Heating Oil Assets       Subordinated Units in Star
- ------------------------------------    -------------------------           ----------------------   ---------------------------

Issuance of Senior Subordinated
Units to Public Oil Shareholders         2,160  x  $ 19.86
------------------                   
$42.9                               $42.9                                 -- 
Distribution of General Partner                                                                                           
Units to Inside Oil Shareholders           127  x  $ 21.46                                                                
-------------------                                                               
$2.7                                  --                                $2.7 
Distribution of Subordinated                                                                                              
Units to Inside Oil Shareholders           540  x  $ 16.44                                                                
-------------------                                                               
$8.9                                  --                                $8.9 
Issuance of General Partner                                                                                               
Units to Inside Oil Shareholders           147  x  $ 21.46                                                                
-------------------                                                               
$3.2                                $3.2                                 -- 
Issuance of Senior Subordinated                                                                                           
Units to Inside Oil Shareholders           441  x  $ 19.86                                                                
-------------------                                                               
$8.8                                $8.8                                 --  
Retire Subordinated Units                                                                                       1,856   x    $16.44
--------------------
($30.5)                              $30.5

$24.3                               $42.1 
-----                                 -------------------------------------
Total                                         $66.4                                                $66.4

Divided by 26,563 shares of Oil's Common stock =  $ 2.50 per share

Page 1

PREMIUM PAID ANALYSIS

- ----------------------------------------------------------------------------------------------------------------------------------
Dollars
STOCK PRICE PREMIUM ANALYSIS(a)            in thousands               Notes
- -----------------------------------------    ----------------             --------------------------------------------------------

Equity purchase price of Oil                    $   66,408                  $2.50 share

price x 26,563 shares.

Premium to stock price one day prior                  53.8%                 $1.625 close on April 22, 1998.
Premium to stock price one month prior                60.0%
Premium to stock price three months prior              0.0%
Premium to stock price six months prior              -20.0%

PURCHASE PRICE               
- -----------------------------------------      

Equity purchase price of heating oil            $   24,294
assets
Debt assumption value (b)                          338,223
----------
Aggregate purchase price of heating oil         $  362,517
assets                                         ==========

MULTIPLES  
- ----------------------------------------                                 -----------
MULTIPLES    NOTES
-----------   ---------------------------------------------
1997 Revenue                                    $  548,141                   0.7  x    As a multiple of aggregate transaction value.
1997 EBITDA (c)                                     36,010                  10.1       As a multiple of aggregate transaction value.
1997 EBIT (d)                                        6,264                  57.9       As a multiple of aggregate transaction value.
1997 Net loss to common shares (d)               ($ 19,338)                   NM       As a multiple of equity value.
Equity (e)                                        (177,033)                   NM       As a multiple of equity value.

1997 Adjusted EBITDA (c)                            43,040                   8.4  x    As a multiple of aggregate transaction value.
1998 EBITDA budget (c)                              43,440                   8.3       As a multiple of aggregate transaction value.
Adj. 1998 EBITDA  budget (c)                        38,440                   9.4       As a multiple of aggregate transaction value.
1999P EBITDA (c)                                    45,858                   7.9       As a multiple of aggregate transaction value.

-----------

_______________________________________________________
(a) Updated through April 22, 1998.
(b) Includes cost of debt at assumed redemption value, preferred stock at 
assumed redemption value, transaction fees, and certain
off-balance sheet liabilities, net of excess cash.
(c) Calculated as gross profit minus SG&A expense and direct delivery
expense.
(d) Excludes restructuring charge, pension curtailment expense,
provision for supplemental benefits and corporate identity expense.
(e) As of 12/31/97.
Page 2

Transaction Multiple Analysis 
Firm Valuation

--------------------------------------------------------------------------------------------------------------

Equity Purchase Price of Heating Oil Assets                                 $ 24,294,340    
----------------           
+  Cost of Debt at Redemption Value                                        290,992,000 

+  Cost of Preferred stock at Redemption Value                              34,375,000

+  Transaction Fees                                                         19,104,000

-- 338,223,100

+  Off-Balance Sheet Pension and Tax Liability                               8,500,000

-  Excess Cash

Oil's cash balance at 9/30/98 (a)           22,355,000
Required cash on hand                         (500,000)
Additional Surplus (b)                      (7,107,100)             14,747,900 
----------------           
----------------           
Firm Value                                                                  $362,517,440
================

_______________________________________________________________________________
(a) Includes cash collateral of $9,350,000.
(b) Assumes an Additional Surplus of $1.10 per new common unit issued is
funded by Oil.

Page 3

Transaction Multiple Analysis
Transaction Multiples for Firm Valuation

-----------------------------------------------------------------------
EBITDA                 
---------------------------------      
Purchase Price         Year                Amount     Multiple Paid
---------------    ------------------    -----------  -----------------

$362,517,440      1997 Adjusted         $43,040,000      8.4x

$362,517,440      Adjusted 1998 Budget  $38,440,000      9.4x

$362,517,440      1999 Projected        $45,858,000      7.9x

Page 4

Transaction Multiple Analysis
Distribution of Value 

- ------------------------------------------------------------------------------------------------------------------------------------
OIL

1997 Adjusted           EBITDA
EBITDA               Multiple                Purchase Price
- --------------      ----------------        ----------------------   

$43,040,000              8.4x                   $362,517,440

Ability to Further Consolidate Heating Oil Industry                             Core Business
- ---------------------------------------------------                         --------------------

Acquisition                                             EBITDA                           $ 43,040,000
EBITDA               Multiple               Purchase Price                  EBITDA Decline Rate                      7.75% (a)
- --------------      ----------------        ----------------------              WACC                                     7.80%  

$6,315,789              4.75x                  $ 30,000,000

Decline Rate                                             7.75% (a)
WACC                                                     7.80%
Perpetuity                                       $ 40,617,940
Purchase Price                                   $ 30,000,000
----------------------
Net Present Value of the Heating Oil Acq.        $ 10,617,940

Value in perpetuity of Ability to
----------------------                                              --------------
Consolidate Heating Oil Industry               $136,140,329                   Value of Core Business           $276,797,720
======================                                              ==============  

------------------------------------------------------------------ 

- --------------------------------------------------------------------------------
Implied Total Valuation                                          $412,938,049

% of Valuation attributable to core business                         67.0%

% of Valuation attributable to consolidation opportunities           33.0%
- --------------------------------------------------------------------------------

(a) A.G. Edwards'estimate of the decline rate of EBITDA based on a 4.1%
attrition rate.
Page 5

Transaction Multiple Analysis
Transaction Multiples for Existing Heating Oil Business                            

- ------------------------------------------------------------------------------------------------------------------------------------

Revised                             EBITDA
-------------------------------------    
Purchase Price (a)             Year               Amount               Multiple Paid
- -----------------------       ----------------    -----------------     ---------------------

$243,000.133             1997 Adjusted          $43,040,000                5.6x

$243,000,133             Adjusted 1998 Budget   $38,440,000                6.3x

$243,000,133             1999 Projected         $45,858,000                5.3x

- ------------------------------------------------------------------------------------------------------------------------------------

(a) Represents A.G. Edwards' estimate of the portion of the $362.5 million price
being paid for Oil's heating oil business that can be attributable to its
core business. Calculation: $362.5 million x 66.9%.

Page 6

Accretion/Dilution Analysis
Variations in Margin Growth Rates and Acquisition Assumptions

------------------------------------------------------------------------------------------------------------------
$2.00 per share                         $2.50 per share
4.1% Attrition                           4.1% Attrition
Gas            $0.00 Margin growth                      $0.00 Margin growth
Stand-alone        $30.0mm at 4.75x Acquisitions           $30.0mm at 4.75x Acquisitions 
---------------     --------------------------------         -------------------------------     
DCF PER UNIT                                                                                       

1998E (a)                  $1.220                      $1.770                        $1.680      
1998N (b)                   1.930                       2.500                         2.370        
l999P                       2.090                       2.780                         2.630        

ACCRETION / DILUTION                                                                               
1998E (a)                                               45.1%                         37.7%        
1998N (b)                                               29.5%                         22.8                 
1999P                                                   33.0%                         25.8%      

COMMON UNIT COVERAGE                                                                              
1998E (a)                   0.90x                       l.00x                         1.00x                 
1998N (b)                   1.42                        1.41                          1.41      
1999P                       1.48                        1.50                          1.50    

TOTAL UNIT COVERAGE                                                                                
1998E (a)                   0.55x                       0.81x                         0.76x                 
1998N (b)                   0.88                        1.14                          1.08       
1999P                       0.95                        1.21                          1.15

LEVERAGED UNIT COVERAGE (c)
1998E (a)                   0.94x                       l.00x                         l.00x
1998N (b)                   1.21                        1.18                          1.18
1999P                       1.24                        1.22                          1.22
------------------------------------------------------------------------------------------------------------------

(a) 1998 estimate assumes no acquisitions for either company, and is
adjusted to reflect actual results through 3/31/98.
(b) 1998 budgeted.
(c) Defined as (DCF + Int)/[((GP units + common units)* MQD) + Int)]

Page 7

Public Company Analysis

[_]   A.G. Edwards compared certain financial and market information of
Gas on a historical and pro forma basis to that of certain public
master limited partnerships which A.G. Edwards deemed relevant
for the purposes of this analysis. A.G. Edwards reviewed the
trading multiples from a total of 6 public propane master limited
partnerships.

[_]   The selected propane master limited partnerships are as
follows:
-  AmeriGas Partners, L.P.              -  Heritage Propane
Partners, L.P.
-  Cornerstone Propane Partners, L.P.   -  National Propane
Partners, L.P.
-  Ferrellgas Partners, L.P.            -  Suburban Propane 
Partners, L.P.

[_]   No company used in the analysis is identical to Gas.

Public Comparable Companies (a)
-------------------------------------------------------------------------------------------------------------------
Public                  Public
Pro Forma          Company                  Company
Gas                Gas             Medians                  Ranges
-------------------------------------------------------------------------------------------------------------------

Yield                                      10.0%             10.5%              9.6%               8.5% to 10.6%
Firm value/LTM EBITDA                      12.7x (b)         10.5x (b)         12.5x               9.8x to 16.7x 
Firm value/1998 normalized EBITDA           8.7x (c)          8.2x (c)         11.5x              10.3x to 13.7x
Equity Market Cap/LTM DCF                  18.0x (d)         13.1x (d)         15.7x               9.4x to 25.5x
Equity Market Cap/1998 normalized DCF       9.7x (e)          8.3x (e)         13.9x              11.6x to 16.9x
LTM commnon unit coverage                   0.9x (f)          1.0x (f)          1.4x               0.6x to 1.5x
1998E common unit coverage                  1.5x (g)          1.5x (g)          1.4x               0.9x to 1.9x
LTM total unit coverage                     0.6x (f)          0.8x (f)          0.7x               0.4x to l.0x
1998E total unit coverage                   1.0x (g)          1.1x (g)          0.7x               0.7x to l.0x
1998E leveraged unit coverage               1.2x (g)(h)       1.2x (g)(h)       1.1x               0.9x to 1.3x
-------------------------------------------------------------------------------------------------------------------

(a) Public comparable companies include: APU, CNO, FGP, HPG, CNL and 
SPH.  
(b) Firm value/adjusted 1998 budget EBITDA.    
(c) Firm value/1999 estimated EBITDA.                 
(d) Equity market cap/adjusted 1998 budget EBITDA. 
(e) Equity market cap/l999 estimated DCF.
(f) Adjusted 1998 budget.
(g) 1999 estimates.
(h) Defined as (DCF + interest)/(((GP units + common units)*MQD)+ 
interest).

Page 8

Public Company Analysis
($ in millions, except per unit data)

- ------------------------------------------------------------------------------------------------------------------------------------

Closing        Implied        Implied                                 Common    
Price on     Market Value      Firm         Distribution              Units/ 
Company                                   Ticker    (4/22/98)      of Equity       Value          per Unit      Yield   Total Units
- ------------------------------------------------------------------------------------------------------------------------------------

Gas                                 (a)               $21.938        $139.4         $232.0          $2.20       10.0%       60.3% 

AmeriGas Partners L.P.                     APU         25.938       1,108.6        1,867.2           2.20        8.5%       52.8%
Cornerstone Propane Partners, L.P.  (d)    CN0         22.688         455.7          671.7           2.16        9.5%       66.5%
Ferrellgas Partners L.P.            (e)    FGP         20.875         666.6        1,192.3           2.00        9.6%       47.0%
Heritage Propane Partners L.P.             HPG         23.125         197.8          371.8           2.00        8.6%       55.8%
National Propane Partners L.P.             NPL         20.313         232.9          375.6           2.10       10.3%       59.6%
Suburban Propane Partners L.P.      (f)    SPH         18.813         551.4          942.0           2.00       10.6%       75.1%

- -----------------------------------------------------------------------------------------------------------------------------------
Mean                                                                                                             9.5%       59.5%
Median                                                                                                           9.6%       57.7%
- -----------------------------------------------------------------------------------------------------------------------------------

Pro Forma                                           $  21.938      $  300.7 (g)   $  599.5 (h)     $ 2.30       10.5%       75.1%

- ----------------------------------------------------------------------------------------------------------------------------------
LTM Distributable Cash Flow/                  FY98E Distributable Cash Flow/ 
----------------------------                  ------------------------------- 
Distribution to    Distribution     FY98E      Distribution to    Distribution 
Company                                             Common Units     to Total Units   DCF/unit     Common Units     to Total Units 
- ----------------------------------------------------------------------------------------------------------------------------------

Gas                                                       0.9x (b)       0.6x (b)     $ 2.09 (c)         1.5x (c)        1.0x (c)

AmeriGas Partners L.P.                                    1.5x           0.8x           2.14             1.9x            l.0x
Cornerstone Propane Partners, L.P.                        0.6x           0.4x           1.47             1.1x            0.7x
Ferrellgas Partners L.P.                                  1.4x           0.7x           1.34             1.4x            0.7x
Heritage Propane Partners L.P.                            1.3x           0.8x           2.01             1.8x            1.0x
National Propane Partners L.P.                            0.9x           0.5x           1.60             1.3x            0.8x
Suburban Propane Partners L.P.                            1.4x           1.0x           1.41             0.9x            0.7x

- ------------------------------------------------------------------------------------------------------------------------------------

Mean                                                      1.2x           0.7x                            1.4x            0.8x
Median                                                    1.4x           0.7x                            1.4x            0.7x
- ------------------------------------------------------------------------------------------------------------------------------------

Pro Forma                                                 1.0x (b)       0.8x (b)       2.64 (c)         1.5x            1.1x (c)

- ----------------------------------
1998 estimates per A.G. Edwards' research, except for Gas, Oil, and Pro Forma.
Implied Firm Value equals common, subordinated and GP units, multiplied by the
market price of common units plus debt, less cash.
(a) Pro Forma for the Pearl Gas acquisition and the common unit offering. 
Fiscal 1997 maintenance capital expenditure used as LTM figure.
(b) For Gas and Pro Forma only, LTM DCF figures are adjusted 1998 budget DCF 
estimates.
(c) For Gas and Pro Forma only, FY98E DCF figures are 1999 DCF estimates.
(d) Financial information pro forma for common unit offering. Maintenance 
capital expenditures assumed to be 8% of EBITDA due to lack of disclosure.
(e)Maintenance capital expenditures assumed to be 8% of EBITDA due to lack of
disclosure. 
(f) Financial figures exclude $5.1 million gain from sale of minority interest.
(g) 13,708 units x $21.375.
(h) $300.7 in equity plus $318.989 pro forma debt, less $10.839 cash and $9.350
in cash collateral.

Page 9

PUBLIC COMPANY ANALYSIS

LTM                   1998E            LONG TERM           LTM         FIRM VALUE/    
LEVERAGED             LEVERAGED            DEBT/            EBITDA/          LTM        
UNIT COVERAGE (A)      UNIT COVERAGE (A)     FIRM VALUE        INT. EXP.        EBITDA      
--------------------------------------------------------------------------------------------  

GAS                                        0.9x (b)              1.2x (c)              41.4%           2.3x (d)      12.7x (d)     

AmeriGas Partners, L.P.                    1.2x                  1.3x                  37.3%           2.2x          12.6x         
Cornerstone Propane Partners, L.P.         0.8x                  1.0x                  35.1%           2.1x          16.7x         
Ferrellgas Partners, L.P.                  1.2x                  1.1x                  41.5%           2.1x          12.5x         
Heritage Propane Partners, L.P.            1.lx                  1.3x                  46.0%           2.6x          10.9x         
National Propane Partners, L.P.            0.9x                  1.1x                  36.8%           3.2x          16.3x         
Suburban Propane Partners, L.P.            1.2x                  0.9x                  45.5%           2.9x           9.8x         

- ---------------------------------------------------------------------------------------------------------------------------------  
MEAN                                       1.1x                  1.1x                  40.4%           2.5x          13.1x         
MEDIAN                                     1.1x                  1.1x                  39.4%           2.4x          12.5x         
- ---------------------------------------------------------------------------------------------------------------------------------  

PRO FORMA                                  1.0x (b)              1.2x (c)              53.2%           2.1x (d)      l0.5x (d)     

FIRM VALUE/       EQUITY            EQUITY                                          
1998E        MARKET CAP/       MARKET CAP/                                       
EBITDA          LTM DCF          1998E DCF                                        
-----------------------------------------------                                     

GAS                                        8.7x (e)       18.0x (f)           9.7x (g)                                       

AmeriGas Partners, L.P.                   12.1x           15.5x              14.1x                                           
Cornerstone Propane Partners, L.P.        13.7x           25.5x              16.9x                                           
Ferrellgas Partners, L.P.                 12.0x           15.8x              15.9x                                           
Heritage Propane Partners, L.P.           10.6x           15.7x              11.6x                                           
National Propane Partners, L.P.           11.Ox           18.0x              13.0x                                           
Suburban Propane Partners, L.P.           10.3x            9.4x              13.6x                                           

- ----------------------------------------------------------------------------------------                                     
MEAN                                      11.6x           16.6x              14.2x                                           
MEDIAN                                    11.5x           15.7x              13.9x                                           
- ----------------------------------------------------------------------------------------                                     

PRO FORMA                                  8.2x (e)       13.1x (f)           8.3x (g)                                        

- -------------------------------------------------------------
EBITDA is defined as net income (loss) before extraordinary items plus
interest, income taxes, depreciation and amortization, impairment expense,
and other non-recurring and non-operating items.
(a)  Defined as (DCF + interest)/(((GP units + common units)*MQD)+interest).
(b)  For Gas and Pro forma only, LTM leveraged unit coverage figures
use adjusted 1998 budget estimates.
(C)  For Gas and Pro Forma only, 1998E leveraged unit coverage figures
use 1999 estimates.
(d)  For Gas and Pro Forma only, LTM EBITDA figures are adjusted 1998
budget estimates.
(e)  For Gas and Pro Forma only, 1998E EBITDA figures are 1999 estimates.
(f)  For Gas and Pro Forma only, LTM DCF figures are adjusted 1998 budget
DCF estimates.
(g)  For Gas and Pro Forma only, 1998E DCF figures are 1999 DCF
estimates.

Page 10

DISCOUNTED CASH FLOW ANALYSIS
PRO FORMA WEIGHTED AVERAGE COST OF CAPITAL DERIVATION
($ IN MILLIONS)

- ---------------------------------------------------------------------------------------------------

TOTAL                                     TOTAL
MARKET            TOTAL IMPLIED   TOTAL  DEBT AS
LEVERED   VAL.     UNIT    UNITS  MARKET   DEBT/   % OF
BETA     DEBT   PRICE AT  OUT.  VALUE OF  TOTAL   TOTAL  UNLEVERED
COMPARABLE COMPANY         (A)   (BK=MKT) (4/22/98) (MIL)  EQUITY   EQUITY CAPITAL   BETA
- ---------------------------------------------------------------------------------------------------

AmeriGas Partners, L.P.   0.52    $777.8   $25.938   41.9 $1,108.6   70.2%  41.2%    0.306
Cornerstone Propane
Partners, L.P.           0.41     235.8    22.688   19.7    455.7   51.7%  34.1%    0.270
Ferrellgas Partners,
L.P.                     0.39     537.2    20.875   31.3    666.6   80.6%  44.6%    0.216
Heritage Propane
Partners, L.P.           0.44     176.9    23.125    8.4    197.8   89.4%  47.2%    0.232
National Propane
Partners, L.P.           0.34     147.4    20.313   11.2    232.9   63.3%  38.8%    0.208
Star Gas Partners, L.P.   0.34      96.0    21.938    6.2    139.4   68.9%  40.8%    0.201
Suburban Propane
Partners, L.P.           0.38     428.2    18.813   28.7    551.4   77.6%  43.7%    0.214

---------------------------
Comparable group's average unlevered                Pro forma capitalization--
beta:                                        0.23  at market (b)
Pro forma debt-to-equity ratio (b):          106.1% Total debt                     $319.0    51.5%
Pro forma debt as a percent of total
capital (b):                                 51.5% Total equity                    300.7    48.5%
-----    ---- 
Comparable group's beta relevered for               ----------------------------
pro forma capital structure:                0.384                                  $619.7   100.0%
=======
DERIVATION OF WEIGHTED AVERAGE COST OF CAPITAL:              MARKET RISK PREMIUM RANGE (D)
- -----------------------------------------------              -----------------------------
11.3%  12.3%  13.3%
-------------------
Pro forma theoretical levered beta:                    0.384
Assumed % of equity in Pro forma capital structure
(b):                                                   48.5%
Risk-free rate of return (c):                            5.7%
Pro forma cost of equity range (at various market
risk premiums):                                                 10.0%  10.4%  10.8%
====   ====   ====
Pro forma assumed tax rate:                             35.0%
Assumed % of debt in capital structure (b):             51.5%
Pro forma estimated cost of debt (e):                    8.2%
Pro forma estimated after-tax cost of debt:              5.3%     5.3%   5.3%   5.3%

------   ----   ----
Pro forma weighted average cost of capital range                  7.6%   7.8%   8.0% 
(f):                                                          ------   ----   ----     
--------------------

- ------
(a) Source: Bloomberg. 143 week (maximum weekly time period allowed, or the
number of weeks available, which may be less than 143) adjusted beta
relative to the S&P 500 index.
(b) Market value of long-term debt is assumed to be equal to the book value.
(c) Ten-year Treasury rate on April 22, 1998.
(d) Ibbotson Associates 1997. Total returns for small company stocks of 17.7%
minus the risk-free rate.
(e) Based on Pro forma current debt structure.
(f) Calculation based upon use of the Capital Asset Pricing Model (CAPM).

PAGE 11

Draft 5/7/98

PRELIMINARY STATUS REPORT
BOARD OF DIRECTORS
STAR GAS PARTNERS, L.P.

Petro management and its advisors have been working on a proposed
transaction between Petro and Star for over a year. Star Committee has engaged
Baker & Botts, LLP as its counsel and A.G. Edwards & Sons, Inc. as its financial
advisor. After one month of preliminary due diligence and review, the Committee
and its advisors better understand and appreciate the complexity of the proposed
transaction and the amount of hard work and creativity dedicated to this
proposal.

During the past year, both parties have experienced management changes and
adverse weather conditions. During this period, Petro has suspended its common
dividends and its publicly held common shares have traded down. Star's publicly
held common units have traded flat to slightly up, but Star has made
distributions to its common unitholders and its subordinated unitholders (that
is, Petro) even though such distributions exceeded distributable cash flow (that
is, Star returned capital). The Star Committee notes that Petro's capital
constraints have effectively eliminated its historic acquisition program while
Star has demonstrated a far more viable acquisition program.

In light of these and other significant changes in relative performance,
market conditions and strategic rationale for the proposed transaction, the Star
Committee (after considering the preliminary report of A.G. Edwards and
consulting with counsel), proposes a re-examination, restructuring and repricing
of the proposed transaction between Petro and Star.

Subject to further diligence and assuming no material adverse changes in
the parties or in market conditions, the Star Committee proposes:

(A)  Star Partnership Agreement. Appropriate steps should be initiated to
--------------------------
amend the Star Partnership Agreement as of the closing date (assumed
to be September 30, 1998) in order to:

(A-1)  raise the future required minimum quarterly distribution
("MQD") for common unitholders from $2.20 per annum to $2.30
per annum;

(A-2)  authorize a new class of senior subordinated units which shall
be junior to all present and future common units, but senior to
the present subordinated units; and

(A-3)  prohibit the payment of any future distributions to senior
subordinated unitholders and to subordinated unitholders except
from net distributable cash

flow available for such period after first paying MQD to the
common unitholders for such period plus any cumulative common
unit arrearages.

(B)  Definitive Transaction Agreement. A draft of the definitive 
--------------------------------  
transaction agreement should be prepared by Petro for Star Committee's
careful consideration (and for future submission to the Board of
Directors and common unitholders of Star and to the Board of Directors
and shareholders of Petro for approval) setting forth the following
steps:

(B-1)  At closing of the Transaction, Star shall be obligated to pay
to Petro or assume from Petro a "Maximum Aggregate
Consideration" of [$390 million] consisting of:

(A)  The issuance of 6,400 new common units at a price per
common unit of [$______]. The gross spread on this
offering shall not exceed 5.0%.
(B)  The issuance of $125,000 of new debt. The gross spread on
this offering shall not exceed 3.0%.
(C)  The principal amount of all of Petro's outstanding debt
and preferred stock of at closing, less the value of
Petro's cash balance at closing.
(D)  The issuance of no greater than 2,100 new senior
subordinated units. The value of such units is assumed to
equal $20.00 per unit.
(E)  The outstanding balance of subordinated units at closing.
The value of such units is assumed to equal $16.58 per
unit.
(F)  The outstanding balance of GP units, which shall be no
greater than 2% of all outstanding units. The value of
such units is assumed to equal [$21.62] per unit.

(B-2)  Consideration paid to Petro's common shareholders shall consist
only of the senior subordinated, subordinated and GP units
included in (B-1)(D), (B-1)(E) and (B-1)(F).

(B-3)  Prior to the closing of the Transaction, in return for the
Maximum Aggregate Consideration defined in (B-1), Petro shall
represent, warrant and agree that:

(A)  Petro shall set up appropriate reserves and fund the
following:

(1)  surplus cash available for distributions equal to
[$1.10] per new common unit issued,
(2)  excluding only the gross spreads on the new MLP
equity and debt offerings, all other Transaction
costs, including financial advisory fees and fairness
opinions for Petro and Star; legal, accounting and
printing fees for Petro and Star; all exchange and
solicitation fees related to the retirement or
redemption of Petro's debt and preferred stock; all
appraisals and environmental reports; all rating
agencies and bank fees; and all other out-of-pocket
costs and expenses associated with the Transaction,
and

(3)  any "Unearned MQD" monies that Petro wishes to have
available for payment to senior subordinated or
subordinated unitholders following the closing of the
Transaction. 

(B)  Petro shall have no borrowed money debt of any kind
outstanding other than any such amounts included in (B-1);

(C)  Petro shall have no preferred stock of any kind
outstanding other than any such amounts included in (B-1);

(D)  Petro shall have a minimum balance of cash of [$500,000],
a positive working capital balance (subject to further due
diligence), and a total common shareholders' deficit on
its balance sheet of no greater than [$______ million],
all as of the closing.

(B-4)  In the event Petro is unable or unwilling to represent and
warrant each of the matters set forth in (B-3), then the
Maximum Aggregate Consideration set forth in (B-1) shall be
reduced on a dollar-for-dollar basis.

Draft 5/20/98

PROPOSAL TO
THE SPECIAL COMMITTEE
STAR GAS PARTNERS, L.P.

Subject to further diligence and assuming no material adverse changes in
Star or Petro, or in market conditions, A.G. Edwards proposes:

(A)  Increase Common Unit Distribution Payments. Simultaneous with the
------------------------------------------
closing date, the quarterly distribution for common unitholders shall
be raised from $2.20 per annum to $2.30 per annum.

(B)  Star Partnership Agreement. Appropriate steps should be initiated to
--------------------------
amend the Star Partnership Agreement as of the closing date (assumed
to be September 30, 1998) in order to:

(B-1)  authorize the creation of new classes of senior subordinated
units and deferred partnership units, which shall be junior to
all present and future common units, but senior to the present
subordinated units;

(B-2)  prohibit the payment of any distributions to senior
subordinated unitholders and to subordinated unitholders except
from net distributable cash flow available for such period
after first paying MQD to the common unitholders for such
period plus any cumulative common unit arrearages; and

(B-3)  provide a surplus available for common unit distributions
equal to $ 1.10 per new common unit, as part of the Refinancing
Transaction, described below.

(C)  Definitive Transaction Agreement. A draft of the definitive
--------------------------------
transaction agreement should be prepared by Petro for The Special
Committee's careful consideration (and for future submission to the
Board of Directors and common unitholders of Star and to the Board of
Directors and shareholders of Petro for approval) setting forth the
following steps:

(C-1)  At closing of the Transaction, Star shall be obligated to pay
to Petro's common shareholders, subject to the Revision Amount
as defined in (C-4) below, the following:

(A) 2,718 senior subordinated units of Star;  
(B) 524 subordinated units of Star; the balance must be
delivered to Star free and clear for retirement;

(C) 289 GP units of Star; and
(D) 909 deferred partnership units of Star, convertible into
senior subordinated units with a trigger relating to the
financial performance of Petro only.

(C-2)  The Closing shall be contingent upon the successful completion
of the following (collectively, the "Refinancing Transaction"):

(A) The issuance of 6,588 new common units at a gross spread of
no greater than 5.0%, and
(B) The issuance of $125,000 new debt at a gross spread of no
greater than 3.0%

The use of proceeds of the Refinancing Transaction shall be
solely to refinance certain of the outstanding indebtedness
assumed from Petro.

(C-3)  Prior to the closing of the Transaction, Petro shall represent,
warrant and agree that:

(A) Prior to the Refinancing Transaction, Petro shall have a
balance of debt and preferred stock (at redemption value),
less any cash balance in excess of such amounts required in
(C-3)(B) below, of no more than $331,367.
(B) Petro shall have a minimum cash balance of $500,000, a
positive working capital balance, and a total common
shareholders' deficit on its balance sheet of no greater
than [$___ million], all as of the closing.
(C) Petro shall set up appropriate reserves and fund all of the
following transactions costs: financial advisory fees and
fairness opinions for Petro and Star; legal, accounting and
printing fees for Petro and Star; all exchange and
solicitation fees related to the retirement or redemption
of Petro's debt and preferred stock; all appraisals and
environmental reports; all rating agencies and bank fees;
and all other out-of-pocket costs and expenses associated
with the Transaction.
(D) Petro shall not declare or distribute any cash dividends to
its common shareholders.

(C-4)  In the event Petro is unable or unwilling to represent and
warrant each of the matters set forth in (C-3), then a Revision
Amount (defined below) will be established. The Revision Amount
shall reduce, on a dollar-for-dollar basis, the amount to be
paid to the Petro common shareholders as set forth in (C-1).
The Revision Amount shall be calculated as follows:

(A) If the cumulative amount of all revisions, taken as a
whole, is less than zero, then the Revision Amount will be
equal to zero dollars, and any cash balance remaining at
Petro shall be transferred to Star. 
(B) If the cumulative amount of all revisions, taken as a
whole, is greater than zero, then the Revision Amount will
be equal to the cumulative amount of all revisions, taken
as a whole. 

Round III

UPDATE TO
PRELIMINARY REPORT TO
THE SPECIAL COMMITTEE OF GAS

A.G.EDWARDS & SONS, INC.
INVESTMENT BANKING

May 21, 1998

Table of Contents

Section
-------

Introduction ..........................................................     I

Review of Events to Date ..............................................    II

Summary of Transaction ................................................   III

Summary Observations ..................................................    IV

Updated Report to the Special Committee ...............................     V

Recommended Proposal to Board of Directors ............................    VI

INTRODUCTION

TRANSACTION PROPOSAL    [  ]   During 1997, Gas ("Gas" or the "Company") and Oil
("Oil") discussed the idea of a possible business
combination by and between Gas and Oil. The
series of proposed transactions involved in such
combination is referred to as the "Transaction".

A.G. EDWARDS'           [  ]   A.G. Edwards & Sons, Inc. ("A.G. Edwards") has
been engaged by the Special Committee (the
"Special Committee") of the Board of Directors of
Gas (the "Board") to act as its financial advisor
with respect to the Transaction and to issue to
the Board an opinion as to the fairness, from a
financial point of view, to the common
unitholders of Gas who are not affiliated with
Oil (the "Common Unitholders"), of the
Transaction (the "Fairness Opinion").

[  ]   The preparation of a fairness opinion is not
susceptible to partial analyses or summary. In
rendering its Fairness Opinion, A.G. Edwards will
apply its judgment to a variety of complex
analyses and assumptions. A.G. Edwards may give
various analyses more or less weight than other
analyses, and may deem various assumptions more
or less probable than other assumptions. The
assumptions made and the judgments applied by
A.G. Edwards in rendering its opinion are not
readily susceptible to description beyond that
set forth in the written text of the Fairness
Opinion itself.

Page 1

INTRODUCTION
(continued)

AS PART OF ITS ENGAGEMENT,   [  ]  A review of the preliminary structure of the
A.G. EDWARDS' ACTIVITIES           Transaction; 
INCLUDED, BUT WERE NOT       [  ]  A review of Gas' and Oil's historical    
LIMITED TO, THE FOLLOWING:         financial statements and the financial   
projections of Gas and Oil;              

[  ]  A review of certain market data of Gas'  
Common Units and Oil's Common Stock;     

[  ]  An analysis of the pro forma financial   
statements of Gas giving effect to the   
Transaction (as proposed);               

[  ]  Conversations with PaineWebber regarding the
nature and extent of development of the terms
of the Transaction;                      

[  ]  An investigation regarding current operations
and future prospects of Gas and Oil, through
interviews with members of Gas' and Oil's
management, respectively;                

[  ]  A review of the industries in which Gas and
Oil operate;                             

[  ]  A review of the market data for stocks of
public companies in the same or similar lines
of business to Gas;                      

[  ]  Analyses of the Transaction using various
valuation methodologies; and             

[  ]  Other analyses which it deemed necessary.    

Page 2

INTRODUCTION
(continued)

NATURE OF INFORMATION    [ ]   A.G. Edwards relied upon and assumed, without
REVIEWED AND PRESENTED         independent verification, the accuracy and
completeness of all financial and other
information publicly available, or furnished to,
or otherwise discussed with A.G. Edwards
including financial statements and financial
projections, as provided by management of Gas and
Oil and Oil's financial advisor. With respect to
financial projections and other information
provided to or otherwise discussed with A.G.
Edwards, A.G. Edwards assumed and was advised by
the senior management of Gas and Oil,
respectively, that such projections and other
information were reasonably prepared on a basis
that reflects the best currently available
estimates and judgments of the senior management
of Gas and Oil, respectively, as to the expected
future financial performance of Gas and Oil, in
each case on a stand-alone basis and after giving
effect to the Transaction. A.G. Edwards was not
engaged to, and did not, independently verify the
information provided and performed no audit of
assets or liabilities and no independent
appraisal of assets or liabilities of either Gas
or Oil. A.G. Edwards has relied upon the
assurances of the management of Gas and Oil that
they are not aware of any facts that would make
such information inaccurate or misleading.

[ ]   In performing its analyses, A.G. Edwards made
numerous assumptions with respect to the propane
distribution industry and the home heating oil
distribution industry, and general business and
economic conditions which are beyond the control
of Gas and Oil. The analyses performed by A.G.
Edwards are not necessarily indicative of actual
values or actual future results, which may be
significantly more or less favorable than
suggested by such analyses. Such analyses were
prepared solely as part of A.G. Edwards'
Preliminary Report to the Special Committee.

[ ]   This presentation is for the private use of the
Special Committee and may not be distributed to
any other parties without A.G. Edwards' written
permission.

Page 3

REVIEW OF EVENTS TO DATE

FEBRUARY 11      [  ]   A.G. Edwards presents its qualifications to the Special
Committee and its legal counsel.

MARCH 23         [  ]   Special Committee engaged A.G. Edwards.

MARCH 23         [  ]   A.G. Edwards met with members of Gas' and Oil's
management and submitted preliminary data request list.

[  ]   A.G. Edwards began due diligence with management and
other representatives of Gas and Oil.

MARCH 30         [  ]   A.G. Edwards received data related to its preliminary
data request list. 

MARCH 30         [  ]   A.G. Edwards continued the due diligence process with
respect to Gas and Oil. 

APRIL 28         [  ]   Special Committee and A.G. Edwards met to discuss the
Transaction.

MAY 7            [  ]   Special Committee and A.G. Edwards met with Oil's
management and PaineWebber to discuss the Transaction.

MAY 8            [  ]   A.G. Edwards continued onsite diligence at Oil

MAY 19           [  ]   A.G. Edwards met with PaineWebber and Oil's management
to discuss the Transaction.

MAY 20           [  ]   Special Committee meeting to discuss the Transaction.

Page 4

Summary of Transaction
Pro Forma Gas Units Outstanding
(in thousands)

To simplify the complexity of the steps in the Transactions, A.G. Edwards 
prepared a summary of its understanding.

[_]     There are currently 6,355 Gas units outstanding comprised of 3,832
common units, 2,396 subordinated units and 127 general partner ("GP")
units. The subordinated units and GP units are assets of Oil.

[_]     There are currently 26,563 shares of Oil common stock outstanding,
comprised of public shareholders and "insiders." The public holds 17,160
Class A shares. The "insiders" hold 9,404 shares which include 6,795
Class A shares, 11 Class B shares and 2,598 Class C shares.

[_]     Each shareholder of Oil will receive a certain number of units in Gas
such that the implied consideration paid for each Oil share is $2.50.
Additionally, each shareholder will receive a certain number of deferred
partnership units ("DPUs") such that if each unit is converted at the
earliest possible time, then each shareholder will receive an additional
$0.65 per share in future value.

[_]     The publicly held 17,160 Class A shares will initially receive .1316
shares of newly created senior subordinated units (2,258 units in total)
with an implied value (per PaineWebber) of $19.00/unit. This represents
an implied purchase price of $2.50/share for an implied total purchase
price of $42.9 million.

[_]     The "insiders" of Oil, who hold a total of 9,404 shares (comprised of A,
B and C shares) will also initially receive an implied purchase price of
$2.50/share for a total of $23.5 million. The consideration received by
these shareholders will be funded by:

-  (1) the distribution of existing units of Gas which are currently
owned by Oil
[_] all of the 127 GP units owned by Oil will be given as
consideration at an implied value of $22.13/unit, for a total
of $2.8 million.
[_] 524 of the 2,396 subordinated units owned by Oil will be
given as consideration at an implied value (per PaineWebber)
of $16.00/unit, for a total of $8.4 million.
-  (2) the distribution of newly-created units of Gas
[_] to fund the remaining $12.3 million of the $23.5 million due
to the Oil "insiders", Gas will issue 461 newly-created
senior subordinated units and 162 newly-created GP units. The
implied values for these new units are $19.00 and $22.13,
respectively.

Page 5

Summary of Transaction
Pro Forma Gas Units Outstanding
(in thousands)
(continued)

[_]     Of the 2,396 subordinated units and 127 GP units owned by Oil, only
1,872 subordinated units will not have been used as consideration paid
to the "inside" Oil shareholders. Hence, these 1,872 subordinated units
will be retired by Gas. A.G. Edwards has assumed that the implied value
of these units are the same as the value PaineWebber is placing on the
subordinated units, which is $16.00/unit, for a total retired value of
approximately $30.0 million.

Page 6

SUMMARY OF GAS UNITS OUTSTANDING 
PRE-FINANCING ASSUMPTIONS

- --------------------------------------------------------------------------------

Distributed to Oil          Issued to Oil
------------------------    -----------------------
Type of Units          Current        Public       Insiders       Public      Insiders       Retired      Pro Forma
- -------------        ----------      --------     -----------    --------    -----------    ---------    -----------

Common                    3,832             -               -           -              -            -          3,832  

Senior Subordinated           -             -               -       2,258            461            -          2,718 

Subordinated              2,396             -             524           -              -       (1,872)           524 

DPUs                          -             -               -         587            322            -            909 

General Partner (a)         127             -             127           -            162            -            289
----------                                                                          -----------

6,355                                                                                8,272 

- --------------------------------------------------------------------------------
(a)  The number of GP units issued reflects the assumption of a 6,588 common
unit equity offering to refinance certain of the assumed Oil debt and a 475
common unit equity offering to finance Gas' acquisitions. Hence, the number
of GP units reflected in the pro forma column do not equal 2% of the pro
forma outstanding units shown above but do equal exactly 2% of the pro
forma units outstanding on a post financing basis.

Page 7

Equity Purchase Price Calculation
Implied Equity Value Of Oil's Assets
(units in thousands, $ in thousands, except per unit amounts)

Purchase Price of Oil's Equity               Purchase Price of Oil's Equity 
------------------------------     --------------------------------------------------------

Value of Securities             Equity Value  of Oil's        Value of Oil's GP and
Event                                      Paid to Oil Shareholders            Heating Oil Assets         Subordinated Units in Star
- --------------------------------         ---------------------------       --------------------------  -----------------------------

Issuance of Senior Subordinated
Units to Public Oil Shareholders           2,258      x     $19.00
-----------------------
$42,900                           $42,900                          -

Distribution of General Partner
Units to Inside Oil Shareholders             127      x     $22.13
-----------------------
$2,810                                -                         $2,810   

Distribution of Subordinated 
Units to Inside Oil Shareholders             524      x     $16.00  
-----------------------  
$8,382                                -                         $8,382 

Issuance of General Partner
Units to Inside Oil Shareholders             162      x     $22.13  
----------------------- 
$3,584                            $3,584                           -

Issuance of Senior Subordinated
Units to Inside Oil Shareholders             461      x     $19.00 
-----------------------
$8,750                            $8,750                           -

Issuance of DPUs                             909      x     $19.00    
-----------------------
$17,271                           $17,271

1,872  x  $16.00  
----------------
Retire Subordinated Units                                                           (29,954)                        $29,954 

$42,551                         $41,146
---------------------------------
-------------                                     
Total including DPUs                              $83,697                                           $83,697

- -------------------------------------------------------------------
Divided by 26,563 shares, of Oil's Common stock = $3.15 per share
- -------------------------------------------------------------------

Total excluding DPUs                          $66,426        

- -------------------------------------------------------------------
Divided by 26,563 shares of Oil's Common stock = $2.50 per share
- -------------------------------------------------------------------

Page 8

PRO FORMA WEIGHTED AVERAGE COST OF CAPITAL DERIVATION FOR COMMON UNITS
($ IN MILLIONS)

- ---------------------------------------------------------------------------------------------------

TOTAL                                     TOTAL
MARKET            TOTAL IMPLIED   TOTAL  DEBT AS
LEVERED   VAL.     UNIT    UNITS  MARKET   DEBT/   % OF
BETA     DEBT   PRICE AT  OUT.  VALUE OF  TOTAL   TOTAL  UNLEVERED
COMPARABLE COMPANY         (A)   (BK=MKT) (5/15/98) (MIL)  EQUITY   EQUITY CAPITAL   BETA
- ---------------------------------------------------------------------------------------------------

AmeriGas Partners, L.P.   0.50    $701.7   $24.688   41.9 $1,055.2   66.5%  39.9%    0.300
Cornerstone Propane
Partners, L.P.           0.40     237.1    21.875   19.8    442.7   53.6%  34.9%    0.260
Ferrellgas Partners,
L.P.                     0.38     537.2    21.750   31.3    694.5   77.4%  43.6%    0.214
Heritage Propane
Partners, L.P.           0.43     176.9    23.000    8.4    196.7   89.9%  47.3%    0.226
National Propane
Partners, L.P.           0.34     141.0    19.688   11.2    225.7   62.5%  38.5%    0.209
Star Gas Partners, L.P.   0.29      96.0    21.375    6.2    135.8   70.7%  41.4%    0.170
Suburban Propane
Partners, L.P.           0.35     428.2    19.063   28.7    558.8   76.6%  43.4%    0.198

---------------------------
Comparable group's average unlevered                     Pro forma capitalization--
beta:                                        0.23       at market (b)
Pro forma debt-to-equity ratio (b):          103.5%    Total debt       $319.0    50.8%
Pro forma debt as a percent of total
capital (b):                                50.85%    Total equity      308.3    49.2%
------   -----
Comparable group's beta relevered for
pro forma capital structure:                0.377                      $627.3   100.0%
=======
DERIVATION OF WEIGHTED AVERAGE COST OF CAPITAL:           MARKET RISK OF PREMIUM RANGE (D)
- -----------------------------------------------
11.3%  12.3%  13.3%
Pro forma theoretical levered beta:                 0.377
Assumed % of equity in Pro forma capital structure
(b):                                               49.2%
Risk-free rate of return (c):                        5.7%
Pro forma cost of equity range (at various market
risk premiums):                                               9.9%  10.3%  10.7%
===   ====   ====
Pro forma assumed tax rate:                         35.0%
Assumed % of debt in capital structure (b):         50.8%
Pro forma estimated cost of debt (e):                8.2%
Pro forma estimated after-tax cost of debt:          5.3%      5.3%   5.3%   5.3%
---   ----   ----
Pro forma weighted average cost of capital range
(f):                                                          7.6%   7.8%   8.0%
---   ----   ----

- ------
(a) Source: Bloomberg. 143 week (maximum weekly time period allowed, or the
number of weeks available, which may be less than 143) adjusted beta
relative to the S&P 500 index.
(b) Market value of long-term debt is assumed to be equal to the book value.
(c) Ten-year Treasury rate on May 15, 1998.
(d) Ibbotson Associates 1997. Total returns for small company stocks of 17.7%
minus the risk-free rate.
(e) Based on Pro forma current debt structure.
(f) Calculation based upon use of the Capital Asset Pricing Model (CAPM).

PAGE 9

PRO FORMA WEIGHTED AVERAGE COST OF CAPITAL DERIVATION FOR 
SENIOR SUBORDINATED UNITS
($ IN MILLIONS)

===================================================================================================================================
TOTAL                                IMPLIED   TOTAL     TOTAL
MARKET       UNIT        TOTAL       MARKET    DEBT/    DEBT AS %   UN-
LEVERED   VAL. DEBT   PRICE AT      UNITS      VALUE OF   TOTAL    OF TOTAL  LEVERED
COMPARABLE COMPANY                      BETA (A)  (BK = MKT)  (5/15/98)  OUT. (MIL)    EQUITY    EQUITY    CAPITAL   BETA
- ----------------------------------------------------------------------------------------------------------------------------

AmeriGas Partners, L.P.                  0.50       $701.7      $24.688        41.9    $,1,055.2   66.5%    39.9%    0.300
Cornerstone Propane Partners, L.P.       0.40        237.1       21.875        19.8        442.7   53.6%    34.9%    0.260 
Ferrellgas Partners, L.P.                0.38        537.2       21.750        31.3        694.5   77.4%    43.6%    0.214 
Heritage Propane Partners, L.P.          0.43        176.9       23.000         8.4        196.7   89.9%    47.3%    0.226 
National Propane Partners, L.P.          0.34        141.0       19.688        11.2        225.7   62.5%    38.5%    0.209 
Star Gas Partners, L.P.                  0.29         96.0       21.375         6.2        135.8   70.7%    41.4%    0.170 
Suburban Propane Partners, L.P.          0.35        428.2       19.063        28.7        558.8   76.6%    43.4%    0.198 

--------------------------------------------------
Pro forma Capitalization-at market (b)
Comparable group's average unlevered beta:                            0.23        Total debt                       $558.0    89.0%
Pro forma debt-to-equity ratio (b):                                  805.5%       Total equity                       69.3    11.0%
------   -----
$627.3   100.0%
--------------------------------------------------
Pro forma debt as a percent of total capital (b):                     89.0%
Comparable group's beta relevered for Pro forma capital structure:   1.406 
===== 

DERIVATION OF WEIGHTED AVERAGE COST OF CAPITAL:                                                MARKET RISK PREMIUM RANGE (D)
- ----------------------------------------------                                            --------------------------------------
11.3%       12.3%       13.3%
--------------------------------------
Pro forma theoretical levered beta:                                           1,406
Assumed % of equity in Pro forma capital structure (b):                        11.0%
Risk - free rate of return (c):                                                 5.7%
pro forma cost of equity range (at various market risk premiums):                              21.6%       23.0%       24.4%  
=====       =====       =====
--------------------------------------

____________________________________________
(a)  Source: Bloomberg. 143 week (maximum weekly time period allowed, or the
number of weeks available, which may be less that 143) adjusted beta
relative to the S&P 500 index.
(b)  Market value of long-term debt is assumed to be equal to the book value;
debt includes the market value of pro forma common and GP units; senior
equity includes the value of senior sub and sub units.
(c)  Ten - year Treasury rate on May 15, 1998.
(d)  Ibbotson Associates 1997. Total returns for small company stocks of 17.7% 
minus the risk-free rate.

Page 10

IMPLIED UNIT VALUES

-------------------------------------------------------------------------------------------------------------
1999         2000          2001          THEREAFTER         COST OF EQUITY
--------     --------      --------       ------------       ----------------

COMMON UNIT
Indicated Distribution         $ 2.30        $2.30          $2.30              $2.30
------------     
10.3%
Discount Factor                  1.10         1.22           1.34               1.34               10.3%          

--------
NPV of future distributions      $22.32
--------                                                                        

SENIOR SUBORDINATED UNIT
Indicated Distribution         $ 2.30        $2.30          $2.30              $2.30                           
------------                            
10.3%                            
Discount Factor                  1.23         1.51           1.86               1.86               23.0%         

--------
NPV of future distributions      $16.63
--------                                                                          

DPU                             
Indicated Distribution         $ 0.00        $0.77          $1.53              $2.30
------------     
10.3%
Discount Factor                  1.23         1.51           1.86               1.86               23.0%      

--------
NPV of future distributions      $13.34
--------                                                                          

Page 11

EQUITY PURCHASE PRICE CALCULATION
IMPLIED EQUITY VALUE OF OIL'S ASSETS WITH REVISED UNIT VALUES
(UNITS IN THOUSANDS, $ IN THOUSAND, EXCEPT PER UNIT AMOUNTS)

================================================================================================================================
Purchase Price of Oil's Equity               Purchase Price of Oil's Equity           
--------------------------------    ---------------------------------------------------
Value of Securities          Equity Value of Oil's      Value of Oil's GP and     
Event                                       Paid to Oil Shareholders          Heating Oil Assets     Subordinated Units in Star 
- ---------------------------------       --------------------------------    --------------------------------------------------- 

Issuance of Senior Subordinated 
Units to Public Oil Shareholders           2,258       x      $16.63
--------------------------------
$37,549                         $37,549                     -

Distribution of General Partner
Units to Inside Oil Shareholders             127       x      $22.13
--------------------------------
$ 2,810                               -                $2,810

Distribution of Subordinated
Units to Inside Oil Shareholders             524       x      $16.63                      
-------------------------------- 
$ 8,712                               -                $8,712

Issuance of General Partner
Units to Inside Oil Shareholders             162       x      $22.13                
--------------------------------  
$ 3,584                         $ 3,584                     -

Issuance of Senior Subordinated
Units to Inside Oil Shareholders             461       x      $16.63
--------------------------------  
$ 7,659                         $ 7,659                     -

Issuance of DPUs                             909       x      $13.34
--------------------------------  
$12,126                         $12,126

Retire Subordinated Units                                                                               1,872    x    $16.00
--------------------
($29,954)                  $29,954

$30,964                   $41,476
-----------                            -------------------------
Total including DPUs                                $72,439                                       $72,439

- ---------------------------------------------------------------------
Divided by 26,563 shares of Oil's Common stock =      $2.73 per share
- ---------------------------------------------------------------------

Total excluding DPUs                                $60,313

- ---------------------------------------------------------------------
Divided by 26,563 shares of Oil's Common stock =      $2.27 per share
- --------------------------------------------------------------------- 

Page 12

EQUITY PURCHASE PRICE CALCULATION
IMPLIED EQUITY VALUE OF OIL'S ASSETS WITH REVISED DPU VALUE ONLY
(UNITS IN THOUSANDS, $ IN THOUSAND, EXCEPT PER UNIT AMOUNTS)

===============================================================================================================================

Purchase Price of Oil's Equity                  Purchase Price of Oil's Equity
------------------------------------  ----------------------------------------------------

Value of Securities           Equity Value of Oil's      Value of Oil's GP and
Event                                      Paid to Oil Shareholders           Heating Oil Assets    Subordinated Units in Star
- -----------------------------------  ------------------------------------  ----------------------- ----------------------------

Issuance of Senior Subordinated
Units to Public Oil Shareholders            2,258      x      $19.00              $42,900                           -
----------------------------
$42,900

Distribution of General Partner
Units to Inside Oil Shareholders              127      x      $22.13                  -                          $2,810
----------------------------
$2,810

Distribution of Subordinated
Units to Inside Oil Shareholders              524      x      $16.00
----------------------------                -                          $8,382
$8,382

Issuance of General Partner
Units to Inside Oil Shareholders              162      x      $22.13
----------------------------             $3,584                           -
$3,584                      

Issuance of Senior Subordinated
Units to Inside Oil Shareholders              461      x      $19.00               $8,750                           -
----------------------------
$8,750

Issuance of DPUs                              909      x      $13.34              $12,124              
----------------------------
$12,124

Retire Subordinated Units                                                                                  1,872    x   $16.00
-------------------
($29,954)                       $29,954

Total including DPUs                                                              $37,404                        $41,146
---------                          -------------------------------
$78,550                                       $78,550 
- ----------------------------------------------------------------------
Divided by 26,563 shares of Oil's Common stock =      $2.96 per share
- ----------------------------------------------------------------------

Total excluding DPUs                                $66,426

- ----------------------------------------------------------------------
Divided by 26,563 shares of Oil's Common stock =      $2.50 per share
- ----------------------------------------------------------------------

Page 13

SUMMARY OBSERVATIONS

ACCRETION/DILUTION       [_]  A.G. Edwards reviewed the distributable cash flow
ANALYSIS                      per unit and the related accretion, common unit
coverage and total unit coverage on a pro forma
basis.

[_]  For the purpose of this analysis, A.G. Edwards had
PaineWebber run its pro forma financial model for
four scenarios to determine the sensitivity of
certain assumptions.

-------------------------------------------------------
ACCRETION/DILUTION ANALYSIS                 
Variations in Margin Growth Rates and Acquisition
Assumptions

$2.50 PER SHARE OF PETRO
-------------------------------------------------------------
GAS        $0.005 MARGIN GROWTH            $0.00 MARGIN GROWTH
STAND-ALONE    $30.0MM AT 4.75X ACQUISITIONS   $30.0MM AT 5.25X ACQUISITIONS
-----------    -----------------------------   -----------------------------

DCF PER UNIT
1998E (a)                    $1.220                 $1.580                            $1.580
1998N (b)                     1.760                  2.420                             2.420
1999P                         1.900                  2.730                             2.440

ACCRETION/DILUTION
1999E (a)                                             29.5%                             29.5%
1998N (b)                                             37.5%                             37.5%
1999P                                                 43.7%                             28.4%

COMMON UNIT COVERAGE
1998E (a)                      0.90x                  0.94x                             0.94x
1998N (b)                      1.30                   1.44                              1.44
1999P                          1.34                   1.54                              1.37

TOTAL UNIT COVERAGE
1998E (a)                      0.55x                  0.72x                             0.72x
1998N (b)                      0.80                   1.10                              1.10
1999P                          0.86                   1.19                              1.06

LEVERAGED UNIT COVERAGE (c)
1998E (a)                      0.94x                  0.97x                             0.97x
1998N (b)                      1.15                   1.20                              1.20
1999P                          1.17                   1.25                              1.17

$2.25 PER SHARE OF PETRO
------------------------------------------------------------------------------
$0.005 MARGIN GROWTH                         $0.000 MARGIN GROWTH
$30.0MM AT 4.75X ACQUISITIONS                $30.0MM AT 5.25X ACQUISITIONS
--------------------------------             ---------------------------------

DCF PER UNIT
1998E (a)                        $1.620                                            $1.620
1998N (b)                         2.480                                             2.480
1999P                             2.800                                             2.500

ACCRETION/DILUTION
1999E (a)                          32.8%                                             32.8%
1998N (b)                          40.9%                                             40.9%
1999P                              47.4%                                             31.6%

COMMON UNIT COVERAGE
1998E (a)                          0.94x                                             0.94x
1998N (b)                          1.44                                              1.44
1999P                              1.54                                              1.38

TOTAL UNIT COVERAGE
1998E (a)                          0.74x                                             0.74x
1998N (b)                          1.13                                              1.13
1999P                              1.22                                              1.09

LEVERAGED UNIT COVERAGE (c)
1998E (a)                          0.97x                                             0.97x
1998N (b)                          1.20                                              1.20
1999P                              1.25                                              1.17

-------------------------------------------------------
(a)  1998 estimate assumes no acquisitions for either
company, and is adjusted to reflect actual results
through 3/31/98.
(b)  1998 budgeted.  
(c)  Defined as (DCF + Int)/[((GP units + common
units)*MQD) + Int)]

SUMMARY OBSERVATIONS
(continued)

PUBLIC COMPANY           [_]  A.G. Edwards compared certain financial and market
ANALYSIS                      information of Gas on both a stand-alone and pro
forma basis to that of certain public master
limited partnerships.

Public Comparable Companies (a)
================================================================================================== 
Public         Public
Pro forma      Company        Company
Gas              Gas         Medians        Ranges
--------------------------------------------------------------------------------------------------

Yield                                      10.3%           10.8%           9.5%      8.7% to 10.7%
Firm value/LTM EBITDA                      12.2x (b)       10.7x (b)      12.3x      9.1x to 18.5x
Firm value/1998 normalized EBITDA           8.8x (c)        8.0x (c)      11.0x     10.2x to 13.7x 
Equity Market Cap/LTM DCF                  17.6x (d)       14.0x (d)      16.0x      8.6x to 24.8x
Equity Market Cap/1998 normalized DCF      10.4x (e)        7.8x (e)      13.6x     11.6x to 16.6x
LTM common unit coverage                    0.9x (f)        0.9x (f)       1.4x      0.6x to 1.5x
1998E common unit coverage                  1.3x (g)        1.6x (g)       1.4x      0.9x to 1.8x
LTM total unit coverage                     0.6x (f)        0.7x (f)       0.7x      0.4x to 1.1x
1998E total unit coverage                   0.9x (g)        1.2x (g)       0.7x      0.7x to 1.0x
1998E leveraged unit coverage               1.2x (g)(h)     1.3x (g)(h)    1.1x      0.9x to 1.3x
-------------------------------------------------------------------------------------------------- 
(a)  Public comparable companies include: APU, CNO, FGP, HPG, CNL and SPH.
(b)  Firm value/adjusted 1998 budget EBITDA.
(c)  Firm value/1999 estimated EBITDA.
(d)  Equity market cap/adjusted 1998 budget EBITDA.
(e)  Equity market cap/1999 estimated DCF.
(f)  Adjusted 1998 budget.
(g)  1999 estimates.
(h)  Defined as (DCF + interest)/(((GP units + common units*MQD)+interest).

Page 15

SUMMARY OBSERVATIONS
(continued)

TRANSACTION MULTIPLE  [_]     A.G. Edwards calculated the implied transaction
ANALYSIS                      multiple paid for Oil on a firm valuation basis,
including costs and certain adjustments associated
with the Transaction, and arrived at the following
multiples:

EBITDA                  MULTIPLE 
------                  -------- 
1997 Adjusted                8.4x   
Adjusted 1998 Budget         9.7x   
1999 Projected               7.3x    

[_]     A.G. Edwards calculated the implied transaction
multiple paid for Oil's existing heating oil
business, excluding the valuation attributable to
consolidation opportunities, and arrived at the
following multiples:

EBITDA                  MULTIPLE  
------                  --------  
1997 Adjusted                5.7x    
Adjusted 1998 Budget         6.5x    
1999 Projected               4.9x     

[_]     Oil has historically paid EBITDA multiples
averaging 4.5x, with a range of 2.7x to 6.5x, for
its acquisitions.

[_]     Oil has historically received EBITDA multiples
averaging 9.0x, with a range of 8.0x to 9.8x, for
certain of its heating oil businesses.

[_]     Gas has historically paid EBITDA multiples
averaging 7.0x, with a range of 5.1x to 7.3x, for
its acquisitions.

Page 16

SUMMARY OBSERVATIONS

(continued)

Transacton Multiple Analysis (continued)

Multiples in the Propane Industry

[_]     Propane

-    Average Propane Multiple                                6-7x
-    Current Market Multiple of EBITDA                     12-13x
-    Adjusted for Weather                                  10-11x
-    Multiple Premium for Large, Multi-State Aggregators       4x

[_]     Heating Oil

-    Average Multiple for Heating Oil Companies              4-5x
-    Multiple Premium for Large, Multi-State Aggregators       4x
-    Multiple for Heating Oil Aggregator                     8-9x

Page 17

SUMMARY OBSERVATIONS
(continued)

DISCOUNTED CASH FLOW     [_]  A.G. Edwards calculated the implied present value 
ANALYSIS                      of estimated unlevered free cash flows for Gas on 
both a stand-alone and pro forma basis.

[_]  Key assumptions used in the analysis were:
-   Oil maintaining a flat 4.1% attrition rate;
$0.005 margin improvement; and completing $30
million in acquisitions each year at a 4.75x
EBITDA multiple.
-   A 7.8% weighted average cost of capital for
both cases.
-   A 10.3x terminal EBITDA multiple, representing
the current year normalized EBITDA.

DISCOUNTED CASH FLOW
-----------------------------------------------------------------------------------------------------------

NET PRESENT         ORIGINAL         EQUITY VALUE
PRESENT        CURRENT             VALUE          COMMON UNITS/       TO ORIGINAL
($ IN THOUSANDS)        VALUE       NET DEBT (a)        OF EQUITY       TOTAL UNITS (b)   COMMON UNITS (c)
-----------------------------------------------------------------------------------------------------------

PRO FORMA             $956,846       ($296,133)          $660,713            26.6%           $175,506

GAS STAND-ALONE       $306,529       ($113,629)          $192,900            60.3%           $116,310
----------

Increase in value to original common unit holders:      $ 59,196
==========

_______________________________________________
(a)  Represents total projected debt less cash as of 
9/30/98.
(b)  Total units include common, subordinated and GP 
units.
(c)  Current market value of common units is $81,909.

Page 18

SUMMARY OBSERVATIONS
(continued)

COMPARATIVE STOCK        [_]  A.G. Edwards has compared the historical prices of
PRICE PERFORMANCE             Gas' and Oil's common unit/stock to an index of
selected companies.

[_]  While Gas' unit price has remained relatively flat
over the last two years, in line with the
comparable index, Oil's stock price has declined
significantly over this period.

COMPARATIVE STOCK PRICE PERFORMANCE
-------------------------------------------------------

PREMIUM OF CURRENT PRICE TO PRICE
------------------------------------------------------------------------
CURRENT     2 YEARS    1 YEAR    180 DAYS    60 DAYS   30 DAYS
PRICE (b)     PRIOR      PRIOR      PRIOR      PRIOR     PRIOR
----------------------------------------------------------------------------------

Gas                21.38      6.2%        2.4%      -2.8%       -4.5%     -2.8%
Oil                 1.88    -73.1%      -31.6%     -38.6%       25.3%     18.2%
Composite (a)      21.68     -2.9%        5.4%      -3.5%       -0.5%      0.2%

(a) Composite index includes the following 
companies: APU, CNO, HPG, FGP, NPL, SPH.
(b) As of 5/15/98

[GRAPH OF GAS APPEARS HERE]  [GRAPH OF OIL APPEARS HERE] 

Page 19

SUMMARY OBSERVATIONS
(continued)

EXCHANGE RATIO            [_] A.G. Edwards reviewed the historical prices of
ANALYSIS                      Gas' and Oil's common unit/stock and the
implied historical exchange ratio.

[_] Due to the price decline of Oil's common stock 
over the past year, the current exchange ratio, 
based on the current consideration of $2.50 per 
share and compared to the current unit/share 
prices of Gas and Oil ($21.375 and $1.875, 
respectively, as of May 15, 1998), represents a 
premium of 33.3% to the current market price of 
Oil.

[GRAPH OF EXCHANGE RATIO APPEARS HERE]

Factset: Daily

(a) Represents the current price of Gas divided by
the current price of Oil.
(b) Represents the current price of Gas divided by
the proposed $2.50 price in current 
consideration offered for each share of Oil.
(c) Represents Gas' average price for the period 
divided by Oil's average price for the period.

Page 20

SUMMARY OBSERVATIONS
(continued)

PREMIUMS PAID ANALYSIS    [_] An analysis of acquisitions of companies whose 
stock traded under $5.00 per share (pre-merger) 
versus companies that traded over $10.00 per 
share (pre-merger) indicates a substantial 
difference in the premiums paid.

[_] Normal premiums for merger of equal transactions 
is -2.5% to 21.2% and normal premiums for 
companies whose stock trades below $5.00 per 
share is 13.5% to 81.0%.

MEAN LESS ONE                       MEAN PLUS ONE
STANDARD DEVIATION      MEAN        STANDARD DEVIATION
------------------    ---------     ------------------

Merger of Equals                                -2.5%               9.4%               21.2%

Target Stock Price greater than $10.00          10.7%              33.2%               55.8%

Target Stock Price less than $5.00              13.5%              47.3%               81.0%

======================================================================================================

Page 21

Summary Observations
(continued)

Relative Contribution    [_]  A.G. Edwards reviewed and compared the relative
Analysis                      EBITDA contribution of Gas and Oil to each firms'
share of the implied combined firm value. Other
measures of relative contribution analysis were
non-meaningful.

[_]  For Gas' contribution of approximately 34% of the
combined entity's EBITDA(a), it will receive
approximately 41% of the implied firm value.

EBITDA (b)
[GRAPH APPEARS HERE]

IMPLIED FIRM VALUE
SEPTEMBER 30, 1998

[PIE CHART APPEARS HERE]

___________________________________
(a)  For purposes of its analysis, A.G. Edwards converted Oil's
historical December 31st fiscal year-end to a September 30th
fiscal year-end for comparison purposes. Oil's projections are
based on a December 31st calendar year end. Other measures of
relative contribution analysis are non-meaningful.
(b)  Includes only heating oil EBITDA for Oil.
(c)  Implied firm value of only Oil's heating oil assets.

Page 22

Updated Report to Gas' Special Committee

A.G. Edwards has continued its diligence reviews of Oil and Gas, has
exchanged data and views with Oil's advisor, and has further updated
its earlier views and opinions of the Proposed Transaction. Certain
additional observations since our last meeting include:

[_]  Oil continues to perform relatively better than Gas.

-  Additional cost reductions at Oil should add $4.4 million
annually to Oil's ongoing EBITDA.

-  Oil continues to show improvements in its attrition rate and
margin growth. YTD through 3/31/98, Oil's attrition rate was
3.3% (4.0% in January, 3.5% in February and 2.8% in March) and
its margin growth was 3.7 cents.

-  Gas continues to experience much slower growth than originally
budgeted; management has revised downward its internal growth
projections and budget.

-  Although not yet reflected in the market, Gas is now not
---
expecting to earn its $2.20 MQD until possibly 2003.

-  Upward revisions at Oil and downward revisions at Gas now
appear to make the Proposed Transaction more accretive than
historically thought; the revisions support a 1999P DCF/share
of $2.73, which should easily support the proposed
distribution increase from $2.20 to $2.30/unit.

[_]  Oil's stock price has recently improved while Gas' unit price has
declined slightly.

-  Oil's stock price now trades at $2.0625/share vs.
$1.5625/share, an increase of 32.0%.

-  Gas' common unit price now trades at $21.125/unit vs.
$22.125/unit, a decrease of 4.5%.

[_]     An analysis of premiums paid in acquisitions of companies
whose stocks trade under $5.00 per share supports the view
that such companies generally receive a larger acquisition
premium in this inefficient sector of the market. An analysis
of transactions since 1996 indicated an average premium of
47.3% for companies whose stocks trade under $5.00/share
(normal range: 13.5% - 81.0%) compared to an average premium
of 33.2% for companies whose stocks trade over $10.00/share
(normal range: 10.7% - 55.8%).

Page 23

Updated Report to Gas' Special Committee
(continued)

[_]  Although A.G. Edwards cannot presently provide any opinion
regarding the Proposed Transaction, A.G. Edwards does recommend
--------------
that the Special Committee communicate to Oil and Oil's financial
advisor that the Committee is willing to move forward with the
Proposed Transaction as outlined in the "Proposal to Special
Committee, Star Gas Partners, L.P.," attached hereto in Section
VI. It is our understanding that Oil respectfully disagrees with
selected aspects of the proposal.

[_]  A.G. Edwards recommends that Joel Swanson, Esq. and Baker &
Botts, LLP consult with Oil's attorneys regarding the proposed
resolution of the myriad of legal issues involving tax,
partnership and corporate compliance and the timing of the
documentation of the Transaction in terms of definitive
agreements, proxy statements and the like.

Page 24

DRAFT 5/21/98
SPECIAL COMMITTEE
STAR GAS PARTNERS, L.P.
REVISED PROPOSAL

After careful consideration of the Proposed Transaction and the views 
expressed by Petro and PaineWebber, the Special Committee and its advisors 
recommend that further refinement and evaluation of the Proposed Transaction is 
appropriate.

Subject to further diligence and assuming no material adverse changes in 
Star or Petro, or in market conditions, the Special Committee proposes that the 
transaction contain the following safeguards for the benefit of Star's common 
unitholders:

(A)  Star Partnership Agreement. Appropriate steps should be initiated to 
--------------------------
amended the Star Partnership Agreement as of the closing date (assumed
to be September 30, 1998) in order to include as a minimum:

(A-1)     authorizing the creation of new classes of senior 
subordinated units and deferred partnership units, which 
shall be junior to all present and future common units;

(A-2)     prohibiting the payment of any distributions to senior 
subordinated unitholders and to subordinated unitholders    
except from net distributable cash flow available from the 
preceding twelve months after first paying $2.30 per unit 
to the common unitholders for such period plus any 
cumulative common unit arrearages from prior period(s); and

(A-3)     providing a surplus available for common unit distributions
equal to $1.10 per new common unit, as part of the
Refinancing Transaction (described below).

(B)  Definitive Transaction Agreement. A draft of the definitive 
--------------------------------
transaction agreement should be prepared by Petro for Special
Committee's careful consideration (and for future submission to the
Board of Directors and common unitholders of Star and to the Board of
Directors and shareholders of Petro for approval) setting forth at
least the following steps:

(B-1)     At closing of the Transaction, Star shall be obligated to 
deliver to Petro's common shareholders, subject to 
reduction by the Revision Amount as defined in (B-4) below,
the following: 

(A)  2,718,000 senior subordinated units of Star;

(B)  524,000 subordinated units of Star; the balance must be 
delivered to Star free and clear for retirement;
(C)  289,000 GP units of Star; and
(D)  909,000 deferred partnership units of Star, convertible into
senior subordinated units at 33 1/3% per annum for each year
in which Petro's after-tax income contributes accretion to 
every Star unit in excess of [$0.50].

(B-2)  The Closing shall be contingent upon the successful completion of
the following (collectively, the "Refinancing Transaction"):

(A)  The issuance of no more than 6,588,000 new common units at a
price per unit of at least $21 with a gross spread of no 
greater than 5.0%, and
(B)  The issuance of $125,000,000 new debt with an interest rate 
no higher than [8.5%] with a gross spread of no greater than
3.0%.

The use of proceeds of the Refinancing Transaction shall be 
solely to refinance certain of the outstanding indebtedness 
assumed from Petro.

(B-3)  Prior to the closing of the Transaction, Petro shall represent, 
warrant and agree that:

(A)  Prior to the Refinancing Transaction, Petro shall have a 
balance of debt and preferred stock (at redemption value),
less any cash balance in excess of such amounts required in
(B-3) (B) below, of no more than $331,367,000.
(B)  Petro shall have a minimum cash balance of $500,000, a 
positive working capital balance, and a total stockholders' 
deficit on its balance sheet of no greater than [$__ 
million], all as of the Closing.
(C)  Petro shall set up appropriate reserves and fund all of the 
following transactions costs: the gross spread on the 
issuance of the new debt referred to in (B-2) (B); financial
advisory fees and fairness opinions for Petro and Star; 
legal, accounting and printing fees for Petro and Star; all
exchange and solicitation fees related to the retirement or 
redemption of Petro's debt and preferred stock; all 
appraisals and environmental reports; all rating agencies 
and bank fees; and all other out-of-pocket costs and 
expenses associated with the Transaction.

(B-4)  In the event Petro is unable or unwilling to represent and 
warrant each of the matters set forth in (B-3), then a Revision
Amount

(defined below) will be established. The Revision Amount shall 
reduce, on a dollar-for-dollar basis, the number of senior 
subordinated units of Star to be delivered to Petro's common 
shareholders as set forth in (B-1)(A) with each senior 
subordinated unit deemed to equal $19/unit. 

The Revision Amount shall be the difference between the net sum 
of monies referred to in (B-3) (A), (B) and (C) above that are
transferred to Star at Closing compared to the defined or stated 
amounts in (B-3). If the Revision Amount is negative, then the 
Revision Amount will be considered to equal zero.

In the event the Revision Amount exceeds [$__million], Star shall
not be obligated to proceed.

(B-5)  Prior to the Closing of the Transaction, Petro shall not declare
or distribute any cash dividends to its common shareholders.

Round III
Appendices to

PRELIMINARY REPORT TO
THE SPECIAL COMMITTEE OF GAS

ANALYSES PERFORMED AT "$2.50 PER SHARE" PLUS ISSUANCE OF DPUS

A.G.EDWARDS & SONS, INC.
INVESTMENT BANKING

May 21, 1998

OVERVIEW OF OIL
EBITDA RECONCILIATION: 1997 (a)

====================================================================================
OIL
---

1997 Actual EBITDA                                                        $36,010

NORMALIZING ADJUSTMENTS:

Weather was 3.8% warmer than 30-year normal

3.8% of 1997 budgeted retail gallons         13,482 gallons

Gross profit margin                               $0.4545

Delivery and garage cost savings                 ($0.0814)
-------
Net impact per gallon                             $0.3731

$ impact                                                                  5,030

Insurance reserve                                                           2,000
-------
1997 Adjusted EBITDA                                                      $43,040
=======

_________________________________________________________________________
(a)  Management's assumptions.

Page 1

OVERVIEW OF OIL
EBITDA RECONCILIATION:  1997-1998 (a)
(continued)

=======================================================================================================
OIL 
--- 

1997 Adjusted EBITDA                                                                         $43,040

Volume Adjustments for 1998                                                                      

Sale of TLC Division in 1997                                    (16,926) gallons               

Attrition in 1998 (4.1%)                                        (17,375)                       

1997 Acquisitions                                                 9,828                        
---------                        

(24,473) gallons               
@                         
$0.1700/gallon (b)       (4,159)
Gross Profit Margin Increase                   $0.006 per gallon on 395,086 gallons (c)     2,371
Inflation                                                                                  (3,662)

Operating Cost Reductions (d)                                                               5,850
-------

Original 1998 EBITDA Budget                                                                  $43,440
======= 

_______________________________________________________________________________
(a)  Management's assumptions.
(b)  Represents the average gross profit per gallon ($.4700 per gallon) offset
by $.30 per gallon reduction in operating expenses.
(c)  Actual gross profit margin increase achieved in first quarter of 1998 was
$5.9 million (156 million gallons @ $0.037/gallon).
(d)  Represents already accomplished reductions as of 12/31/97 in branch,
regional and corporate expenses in excess of normal indexing related to
volume reductions as well as 1% productivity improvements.

Page 2

OVERVIEW OF OIL
EBITDA RECONCILIATION: 1998 (a)
(continued)

- --------------------------------------------------------------------------------
OIL
---

Original 1998 EBITDA Budget                                            $43,440

Non-Budgeted Operating Expense Eliminations (b)                          2,249
-----

Revised 1998 EBITDA Budget                                              45,689

Actual Differential between first three months
of Fiscal 1998 vs. Budget                                         (10,834)

Revised margin improvement based on results 
from the first three months of Fiscal 1998                          2,600
-----

Adjusted 1998 EBITDA Budget                                            $37,455
======
- -------------------------------------------------------------------------------

(a)  Management's assumptions.
(b)  Represent specific operating expense eliminations that are already 
accomplished.

Page 3

OVERVIEW OF OIL
EBITDA RECONCILIATION
Non-budgeted Operating Expense Eliminations

Base        % Applicable                  1999
Expense         To 1998        1998      Thereafter
-------       ------------     ----      ----------

Exton PA Facility Rent                                $  500              20%       $  100       $  500

Corporate Staff Reductions - Salary & Benefits 
Alex Tyshovnytsky                                   310              75%          233          310 
Allen Levenson                                      279              75%          209          279
Joe Massoud                                         310              67%          207          310

Total Staff Reductions                                   900                           649          900

Wage Freeze - Non-Union                                2,000              50%        1,000            - (a)

Wage Freeze - Union                                    1,000              50%          500            -
------                        ------       ------ 
Total                                                 $4,400                        $2,249       $1,400 

_______________________________________________________________________
(a)  Non-Union and Union wage freeze is incorporated via inflation adjustment 
in Oil model for 1999 and is not incorporated for 2000 on.

Page 4

OVERVIEW OF OIL
EBITDA RECONCILIATION: 1998-1999(a)
(continued)

- --------------------------------------------------------------------------------
OIL
---

Original 1998 EBITDA Budget                                            $43,440

$0.01 Margin Increase in 1999 partially offset by 
Internal Attrition (4.1%)                                           1,608

Non-Budgeted Operating Expense Eliminations                              1,400

Acquisition Growth 
$30,000 of acquisitions at 4.75x multiple
using half-year convention                                     3,158
------

1999 Projection                                                        $49,606
======
- --------------------------------------------------------------------------------

(a)  Management's assumptions.

Page 5

OVERVIEW OF OIL
EBITDA SUMMARY

================================================================================
OIL
---

1997 Actual                               $36,010
1997 Adjusted                             $43,040

Original 1998 Budget                      $43,440

Revised 1998 Budget                       $45,689

Adjusted 1998 Budget                      $37,455

1999E                                     $49,606 

- --------------------------------------------------------------------------------

Page 6

OVERVIEW OF GAS
EBITDA RECONCILIATION: 1997(a)
($ IN THOUSANDS)

================================================================================
GAS
---

1997 Actual EDITBA                                             $19,703(b)

NORMALIZING ADJUSTMENTS: 

Weather
Residential - 1,125 gallons @ 0.7106 margin                   799
Commercial - 277 gallons @ 0.4459 margin                      124

Margin 
Residential - 50,832 gallons @ (0.7106 - 0.6995)             (564)
Commercial - 19,864 gallons @ (0.4454 - 0.4348)              (220)
Wholesale - 38,404 gallons @ (0.0975 - 0.0675)             (1,152)

Compensation                                                       (56)

Elimination of strategic expense                                   902(c)

Pearl Gas EBITDA                                                 3,012

Pearl Gas acquisition adjustments                                  273(d)
------

1997 Adjusted EDITBA                                           $22,821
======
- --------------------------------------------------------------------------------

(a)  Management's assumptions.
(b)  Not pro forma for Pearl Gas acquisition.
(c)  Certain expenses including the exploration of strategic alternatives by
Morgan Stanley.
(d)  Certain cost savings, primarily salary and benefit expenses of certain 
selling shareholders.

Page 7

Overview of Gas
EBITDA Reconciliation: 1997 - 1999(a)
($ in thousands)
(continued)

-----------------------------------------------------------------
GAS
---

Revised 1998 EBITDA Budget                            $ 21,730

Approximate Differential between first six            
months of Fiscal 1998 vs. Budget                      (3,451)
--------

Adjusted 1998 EBITDA Budget                           $ 18,279
========

1998 EBITDA Budget                                    $ 21,730

Acquisition Growth                          
$20 million of acquisitions at 7x multiple          
completed on 9/30/98                                 2,857

$10 million of acquisitions at 7x multiple          
completed on 4/1/99 using half-year
convention                                             712
--------

1999 EBITDA Projection                                $ 25,299
========

-----------------------------------------------------------------
(a)  Management's assumptions.

Page 8

SUMMARY OF TRANSACTION
PRO FORMA GAS UNITS OUTSTANDING
(IN THOUSANDS)

TO SIMPLIFY THE              [_]   There are currently 6,355 Gas units 
COMPLEXITY OF THE STEPS            outstanding comprised of 3,832 common units, 
IN THE TRANSACTION,                2,396 subordinated units and 127 general 
A.G. EDWARDS PREPARED              partner ("GP") units. The subordinated units 
A SUMMARY OF ITS                   and GP units are assets of Oil.
UNDERSTANDING.
[_]   There are currently 26,563 shares of Oil
common stock outstanding, comprised of public
shareholders and "insiders." The public holds
17,160 Class A shares. The "insiders" hold
9,404 shares which include 6,795 Class A
shares, 11 Class B shares and 2,598 Class C
shares.

[_]   Each shareholder of Oil will receive a
certain number of units in Gas such that the
implied consideration paid for each Oil share
is $2.50. Additionally, each shareholder will
receive a certain number of deferred
partnership units ("DPUs") such that if each
unit is converted at the earliest possible
time, then each shareholder will receive an
additional $0.65 per share in future value.

[_]   The publicly held 17,160 Class A shares will
initially receive .1316 shares of newly
created senior subordinated units (2,258
units in total) with an implied value (per
PaineWebber) of $19.00/unit. This represents
an implied purchase price of $2.50/share for
an implied total purchase price of $42.9
million.

[_]   The "insiders" of Oil, who hold a total of
9,404 shares (comprised of A, B and C shares)
will also initially receive an implied
purchase price of $2.50/share for a total of
$23.5 million. The consideration received by
these shareholders will be funded by:

-    (1)  the distribution of existing units
of Gas which are currently owned by
Oil

[_]  all of the 127 GP units owned
by Oil will be given as
consideration at an implied
value of $22.13/unit, for a
total of $2.8 million.

[_]  524 of the 2,396 subordinated
units owned by Oil will be
given as consideration at an
implied value (per
PaineWebber) of $16.00/unit,
for a total of $8.4 million.

-    (2)  the distribution of newly-created
units of Gas

[_]  to fund the remaining $12.3
million of the $23.5 million
due to the Oil "insiders", Gas
will issue 461 newly-created
senior subordinated units and
162 newly-created GP units.
The implied values for these
new units are $19.00 and
$22.13, respectively.

Page 31

SUMMARY OF TRANSACTION
PRO FORMA GAS UNITS OUTSTANDING
(IN THOUSANDS)
(continued)

[_]   Of the 2,396 subordinated units and 127 GP
units owned by Oil, only 1,872 subordinated
units will not have been used as
consideration paid to the "inside" Oil
shareholders. Hence, these 1,872 subordinated
units will be retired by Gas. A.G. Edwards
has assumed that the implied value of these
units are the same as the value PaineWebber
is placing on the subordinated units, which
is $16.00/unit, for a total retired value of
approximately $30.0 million.

Page 32

Summary of Gas Units Outstanding 
Pre-Financing Assumptions

--------------------------------------------------------------------------------------------------

Distributed to Oil       Issued to Oil
---------------------- ------------------- 
Type of Units           Current    Public     Insiders   Public   Insiders   Retired   Pro Forma
---------------------   --------- ----------  ---------- -------- ---------- --------- -----------

Common                    3,832          -           -         -         -         -      3,832

Senior Subordinated           -          -           -     2,258       461         -      2,718

Subordinated              2,396          -         524         -         -    (1,872)       524

DPUs                          -          -           -       587       322         -        909

General Partner (a)         127          -         127         -       162         -        289
---------                                                      -----------

6,355                                                           8,272
--------------------------------------------------------------------------------------------------

____________________________________
(a) The number of GP units issued reflects the assumption of
a 6,588 common unit equity offering to refinance certain
of the assumed Oil debt and a 475 common unit equity
offering to finance Gas' acquisitions. Hence, the number
of GP units reflected in the pro forma column do not
equal 2% of the pro forma outstanding units shown above
but do equal exactly 2% of the pro forma units
outstanding on a post financing basis.

Page 11

EQUITY PURCHASE PRICE CALCULATION
IMPLIED EQUITY VALUE OF OIL'S ASSETS
(UNITS IN THOUSANDS, $ IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)

- --------------------------------------------------------------------------------

PURCHASE PRICE OF OIL'S
EQUITY                   PURCHASE PRICE OF OIL'S EQUITY
------------------------ ------------------------------------------------
VALUE OF SECURITIES    EQUITY VALUE OF OIL'S   VALUE OF OIL'S GP AND
EVENT                    PAID TO OIL SHAREHOLDERS  HEATING OIL ASSETS   SUBORDINATED UNITS IN STAR
- -----------------------  ------------------------ --------------------- --------------------------

Issuance of Senior
Subordinated
Units to Public Oil
Shareholders                2,258  x  $19.00
----------------
$42,900                 $42,900                    --
Distribution of General
Partner
Units to Inside Oil
Shareholders                  127  x  $22.13
----------------
$2,810                   --                     $2,810
Distribution of
Subordinated
Units to Inside Oil
Shareholders                  524  x  $16.00
----------------
$8,382                   --                     $8,382
Issuance of General
Partner
Units to Inside Oil
Shareholders                  162  x  $22.13
----------------
$3,584                 $3,584                     --
Issuance of Senior
Subordinated
Units to Inside Oil
Shareholders                  461  x  $19.00
----------------
$8,750                 $8,750                     --
Issuance of DPUs               909  x  $19.00
----------------
$17,271                 $17,271                    --

Retire Subordinated 
Units                                                  ($29,954)             1,872 x $16.00
--------------
$29,954
$42,551                 $41,146
---------------------------
Total including DPUs
----------------
$83,697                              $83,697

- ------------------------------------------------------
Divided by 26,563 shares of Oil's Common stock= $3.15 per share
- ------------------------------------------------------

Total excluding DPUs                            $66,426
- ------------------------------------------------------
Divided by 26,563 shares of Oil's Common stock= $2.50 per share
- ------------------------------------------------------

PAGE 12

PRO FORMA WEIGHTED AVERAGE COST OF CAPITAL DERIVATION FOR COMMON UNITS
($ IN MILLIONS)

- -----------------------------------------------------------------------------------------------------

TOTAL                                       TOTAL
MARKET            TOTAL  IMPLIED   TOTAL   DEBT AS
LEVERED   VAL.     UNIT    UNITS   MARKET   DEBT/    % OF
BETA     DEBT   PRICE AT  OUT.   VALUE OF  TOTAL    TOTAL  UNLEVERED
COMPARABLE COMPANY         (A)   (BK=MKT) (5/15/98) (MIL)   EQUITY   EQUITY  CAPITAL   BETA
- ------------------       ------- -------- --------- -----  --------  ------  ------- ---------

AmeriGas Partners, L.P.   0.50    $701.7   $24.688   41.9  $1,055.2  66.5%    39.9%    0.300
Cornerstone Propane
Partners, L.P.           0.40     237.1    21.875   19.8     442.7  53.6%    34.9%    0.260
Ferrellgas Partners,
L.P.                     0.38     537.2    21.750   31.3     694.5  77.4%    43.6%    0.214
Heritage Propane
Partners, L.P.           0.43     176.9    23.000    8.4     196.7  89.9%    47.3%    0.226
National Propane
Partners, L.P.           0.34     141.0    19.688   11.2     225.7  62.5%    38.5%    0.209
Star Gas Partners, L.P.   0.29      96.0    21.375    6.2     135.8  70.7%    41.4%    0.170
Suburban Propane
Partners, L.P.           0.35     428.2    19.063   28.7     558.8  76.6%    43.4%    0.198

---------------------------
Comparable group's average unlevered                Pro forma capitalization--
beta:                                        0.23  at market (b)
Pro forma debt-to-equity ratio (b):         103.5%   Total debt                       $319.0    50.8%
Pro forma debt as a percent of total
capital (b):                                50.8%   Total equity                      308.3    49.2%
------   -----
Comparable group's beta relevered for
Pro forma capital structure:                0.377                                    $627.3   100.0%
=======

DERIVATION OF WEIGHTED AVERAGE COST OF CAPITAL:            MARKET RISK OF PREMIUM RANGE (D)
- -----------------------------------------------            --------------------------------
11.3%  12.3%    13.3%
Pro forma theoretical levered beta:                 0.377
Assumed % of equity in Pro forma capital structure
(b):                                                49.2%
Risk-free rate of return (c):                         5.7%
Pro forma cost of equity range (at various market
risk premiums):                                                9.9%  10.3%    10.7%
====   ====     ====
Pro forma assumed tax rate:                          35.0%
Assumed % of debt in capital structure (b):          50.8%
Pro forma estimated cost of debt (e):                 8.2%
Pro forma estimated after-tax cost of debt:           5.3%      5.3%   5.3%     5.3%
--------  -----    -----
Pro forma weighted average cost of capital range
(f):                                                           7.6%   7.8%     8.0%
--------  -----    -----

- ------
(a) Source: Bloomberg. 143 week (maximum weekly time period allowed, or the
number of weeks available, which may be less than 143) adjusted beta
relative to the S&P 500 index.
(b) Market value of long-term debt is assumed to be equal to the book value.
(c) Ten-year Treasury rate on May 15, 1998.
(d) Ibbotson Associates 1997. Total returns for small company stocks of 17.7%
minus the risk-free rate.
(e) Based on Pro forma current debt structure.
(f) Calculation based upon use of the Capital Asset Pricing Model (CAPM).

PAGE 13

PRO FORMA WEIGHTED AVERAGE COST OF CAPITAL DERIVATION FOR 
SENIOR SUBORDINATED UNITS
($ IN MILLIONS)

====================================================================================================================================
Total                                Implied      Total       Total
Market      Unit          Total       Market      Debt/      Debt as %      Un- 
Levered     Val. Debt   Price at        Units      Value of     Total      of Total     levered
Comparable Company                  Beta(a)     (Bk = Mt)   (5/15/98)     Out. (Mil)    Equity     Equity       Capital       Beta
- ------------------------------------------------------------------------------------------------------------------------------------

AmeriGas Partners, L.P.                0.50        $701.7     $24.688           41.9   $1,055.2      66.5%         39.9%      0.300 
Cornerstone Propane Partners, L.P.     0.40         237.1      21.875           19.8      422.7      53.6%         34.9%      0.260
Ferrellgas Partners, L.P.              0.38         537.2      21.750           31.3      694.5      77.4%         43.6%      0.214 
Heritage Propane Partners, L.P.        0.43         176.9      23.000            8.4      196.7      89.9%         47.3%      0.226 
National Propane Partners, L.P.        0.34         141.0      19.688           11.2      225.7      62.5%         38.5%      0.209 
Star Gas Partners, L.P.                0.29          96.0      21.375            6.2      135.8      70.7%         41.4%      0.170
Suburban Propane Partners, L.P.        0.35         428.2      19.063           28.7      558.8      76.6%         43.4%      0.198 

--------------------------------------------------------
Pro forma capitalization - at market (b)                
Comparable group's average unlevered beta:                       0.23       Total debt                         $558.0         89.0%
Pro forma debt-to-equity ratio (b):                             805.5%      Total equity                         69.3         11.0%
------        ----- 
Pro forma debt as a percent of total capital (b):                89.0%                                         $627.3        100.0%
---------------------------------------------------------
Comparable group's beta relevered for Pro forma                       
capital structure:                                              1.406 
=====

DERIVATION OF WEIGHTED AVERAGE COST OF CAPITAL:
- -----------------------------------------------
Market Risk Premium Range (d)  
----------------------------------------------- 
11.3%               12.3%               13.3%   
----------------------------------------------- 
Pro forma theoretical levered beta:                                1.406                                                        
Assumed % of equity in Pro forma capital structure (b):             11.0%                                                       
Risk-free rate of return (c):                                        5.7%                                                       
Pro forma cost of equity range (at various market risk premiums):               21.6%               23.0%               24.4%   
====                ====                ====    
-----------------------------------------------  

___________________________
(a) Source: Bloomberg. 143 week (maximum weekly time period allowed, or the
number of weeks available, which may be less than 143) adjusted beta
relative to the S&P 500 index.
(b) Market value of long-term debt is assumed to be equal to the book value;
debt includes the market value of pro forma common and GP units; equity
includes the value of senior sub and sub units.
(c) Ten - year Treasury rate on May 15, 1998.
(d) Ibbotson Associates 1997. Total returns for small company stocks of 17.7% 
minus the risk-free rate.

Page 14

IMPLIED UNIT VALUES

====================================================================================================
1999       2000      2001      THEREAFTER          COST OF EQUITY
------     ------    ------     ----------         ----------------      

COMMON UNIT
Indicated Distribution       $ 2.30      $2.30     $2.30        $ 2.30      
---------- 
10.3 % 
Discount Factor                1.10       1.22      1.34          1.34                 10.3%

--------       
NPV of future distributions       $22.32
--------       

SENIOR SUBORDINATED UNIT
Indicated Distribution       $ 2.30      $2.30     $2.30        $ 2.30 
----------
10.3 %
Discount Factor                1.23       1.51      1.86          1.86                 23.0%

--------         
NPV of future distributions       $16.63
--------         

DPU
Indicated Distribution       $ 0.00      $0.77     $1.53        $ 2.30                 
----------
10.3 %
Discount Factor                1.23       1.51      1.86          1.86                 23.0%

--------         
NPV of future distributions       $13.34        
--------       

Page 15

EQUITY PURCHASE PRICE CALCULATION 
IMPLIED EQUITY VALUE OF OIL'S ASSETS WITH REVISED UNIT VALUES
(UNITS IN THOUSANDS, $ IN THOUSAND, EXCEPT PER UNIT AMOUNTS)

===================================================================================================================================

Purchase Price if Oil's Equity                      Purchase Price of Oil's Equity
------------------------------         -------------------------------------------------------
Value of Securities               Equity Value of Oil's          Value of Oil's GP and
Event                                   Paid to Oil Shareholders              Heating Oil Assets         Subordinated Units in Star
- ----------------------------------   ------------------------------         ---------------------        --------------------------

Issuance of Senior Subordinated
Units to Public Oil Shareholders         2,258     X     $16.63
------------------------------
$37,549                             $37,549                            -

Distribution of General Partner
Units to Inside Oil Shareholders           127     X     $22.13
------------------------------
$ 2,810                                  -                         $ 2,810

Distribution of Subordinated
Units to Inside Oil Shareholders           524     X     $16.63
------------------------------
$ 8,712                                  -                         $ 8,712

Issuance of General Partner
Units to Inside Oil Shareholders           162     X     $22.13                      
------------------------------
$ 3,584                             $ 3,584                             -

Issuance of Senior Subordinated
Units to Inside Oil Shareholders           461     X     $16.63
------------------------------
$ 7,659                             $ 7,659                             -

Issuance of DPUs                           909     X     $13.34           
------------------------------
$12,126                             $12,126

Retire Subordinated Units                                                                                   1,872     X      $16.00
--------------------------
($29,954)                       $29,954  

$30,964                        $41,476
-------------                               ------------------------------ 
Total including DPUs                            $72,439                                             $72,439

- ------------------------------------------------------------------
Divided by 26,563 shares of Oil's Common 
stock =                                         $  2.73 per share 
- ------------------------------------------------------------------

Total excluding DPUs                            $60,313  

- ------------------------------------------------------------------
Divided by 26,563 shares of Oil's Common             
stock =                                         $  2.27 per share 
- ------------------------------------------------------------------

Page 16

EQUITY PURCHASE PRICE CALCULATION
IMPLIED EQUITY VALUE OF OIL'S ASSETS WITH REVISED DPU VALUE ONLY
(UNITS IN THOUSANDS, $ IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)

- --------------------------------------------------------------------------------------------------------------------------  
Purchase Price of Oil's Equity            Purchase Price of Oil's Equity            
------------------------------  ----------------------------------------------------
Value of Securities        Equity Value of Oil's        Value of Oil's GP and  
Event                                   Paid to Oil Shareholders       Heating Oil Assets       Subordinated Units in Star
- -----                                 ------------------------------  ---------------------     --------------------------

Issuance of Senior Subordinated                                                                                           
Units to Public Oil Shareholders                  2,258  x  $19.00                                                               
--------------------                                                             
$42,900                       $42,900                          -            

Distribution of General Partner                                                                                           
Units to Inside Oil Shareholders             127  x  $22.13                                                               
--------------------                                                             
$2,810                           -                          $2,810         

Distribution of Subordinated                                                                                              
Units to Inside Oil Shareholders             524  x  $16.00                                                               
--------------------                                                             
$8,382                           -                          $8,382         

Issuance of General Partner                                                                                               
Units to Inside Oil Shareholders             162  x  $22.13                                                               
--------------------                                                             
$3,584                        $3,584                          -            

Issuance of Senior Subordinated                                                                                           
Units to Inside Oil Shareholders             461  x  $19.00                                                               
--------------------                                                             
$8,750                       $8,750                          -            

Issuance of DPUs                             909  x  $13.34                                                               
--------------------                                                             
$12,124                      $12,124                          -            

Retire Subordinated Units                                                                             1,872  x  $16.00    
------------------   
($29,954)                      ($29,954)       

$37,404                        $41,146        

--------------------                   ------------------------------            
Total including DPUs                           $78,550                                      $78,550                        

- -----------------------------------------------------------------
Divided by 26,563 shares of Oil's Common stock = $2.96 per share
- ----------------------------------------------------------------- 

Total excluding DPUs                           $66,426

- -----------------------------------------------------------------
Divided by 26,563 shares of Oil's Common stock = $2.50 per share
- ----------------------------------------------------------------- 

Page 17

PREMIUM PAID ANALYSIS

===================================================================================================================== 
Dollars        
Stock Price Premium Analysis (a)               in thousands    Notes                                                         
- -------------------------------------------------   ------------    -------------------------------------------------             

Equity purchase price of Oil                         $ 66,426       $2.50 share price x 26,563 shares.    

Premium to stock price one day prior                     33.3%      $1.875 close on May 15, 1998.                                   
Premium to stock price one month prior                   56.9%      
Premium to stock price three months prior                -2.4%   
Premium to stock price six months prior                 -18.4%   

Purchase Price                                         
- -------------------------------------------------                

Equity purchase price of heating oil assets                      
including DPUs                                    $ 37,404       DPU value revised only. See page 17. 

Debt assumption value (b)                             326,120    
--------    
Aggregate purchase price of heating oil assets       $363,524    
========     

Multiples                                                                                                      
- -------------------------------------------------                   -------------                                             
Multiples     Notes                                         
-------------   ----------------------------------------------

1997 Revenue                                         $548,141            0.7 x      As a multiple of aggregate transaction value. 
1997 EBITDA (c)                                        36,010           10.1        As a multiple of aggregate transaction value. 
1997 EBIT (d)                                           6,264           58.0        As a multiple of aggregate transaction value. 
1997 Net loss to common shares (d)                    (19,338)            NM        As a multiple of equity value.                
Equity (c)                                           (177,033)            NM        As a multiple of equity value.                

1997 Adjusted EBITDA (c)                               43,040            8.4 x      As a multiple of aggregate transaction value. 
Revised 1998 EBITDA budget (c)                         45,689            8.0        As a multiple of aggregate transaction value. 
Adjusted 1998 EBITDA budget (c)                        37,455            9.7        As a multiple of aggregate transaction value. 
1999P EBITDA (c)                                       49,606            7.3        As a multiple of aggregate transaction value. 

________________________________
(a)  Updated through May 15, 1998.
(b)  Includes cost of debt at assumed redemption value, preferred stock at 
assumed redemption value, net of excess cash. See page 19.
(c)  Calculated as gross profit minus SG&A expense and direct delivery expense.
(d)  Excludes restructuring charge, pension curtailment expense, provision for 
supplemental benefits and corporate identity expenses.
(e)  As of 12/31/97.

Page 18

TRANSACTION MULTIPLE ANALYSIS 
FIRM VALUATION
($ IN THOUSANDS)

=============================================================================================================================

Equity Purchase Price of Heating Oil Assets including DPUs      $37,404            Revised DPU Value 
------
+  Cost of Debt at Redemption Value                             290,992 

+  Cost of Preferred stock at Redemption Value                   34,375
326,120
-------
+  Off-Balance Sheet Pension and Tax Liability                    8,500

- -  Cash (a) 

Required cash on hand                  (500)
Required Additional Surplus          (7,247)             (7,747)      
------  

---------
Firm Value                                                     $ 363,524
=========
- -----------------------------------------------------------------------------------------------------------------------------

(a)   Assumes that $500,000 plus an additional surplus of $1.10 per new commom
unit issued is funded by Oil and delivered to Gas at closing.
Page 19

TRANSACTION MULTIPLE ANALYSIS 
TRANSACTION MULTIPLES FOR FIRM VALUATION
($ IN THOUSANDS)

==============================================================================
EBITDA
---------------------------------------  
Purchase Price           Year                  Amount            Multiple Paid 
- --------------     --------------        -----------------      -------------- 

$363,524        1997 Adjusted              $43,040                8.4x

$363,524        Revised 1998 Budget        $45,689                8.0x

$363,524        Adjusted 1998 Budget       $37,455                9.7x

$363,524        1999 Projected             $49,606                7.3x

Page 20

TRANSACTION MULTIPLE ANALYSIS
DISTRIBUTION OF VALUE

=====================================================================================================
OIL                                                

1997 Adjusted        EBITDA                         
EBITDA           Multiple         Purchase Price
-------------       ---------        --------------

$43,040             8.4x              $363,524  

ABILITY TO FURTHER CONSOLIDATE HEATING OIL INDUSTRY             CORE BUSINESS                                              
---------------------------------------------------             -------------                                              

Acquisition                                   EBITDA                  $  43,040          
EBITDA          Multiple            Purchase Price           EBITDA Decline Rate          7.75% (a)     
------------      -----------          --------------                                                      
WACC                         7.79% (b)     

$6,316            4.8x                $ 30,000                                                          

Decline Rate                                 7.75% (a)                                                     
WACC                                         7.79% (b)                                                     
Perpetuity                               $ 40,637                                                          
Purchase Price                           $ 30,000                                                          
--------------                                                      
Net Present Value of the                                                                                   
Heating Oil Acq.                        $ 10,637                                                          

Value in perpetuity of Ability to                                                                          
--------------                                   ---------      
Consolidate Heating Oil Industry       $136,506               Value of Core Business  $ 276,925      
==============                                   =========     

-------------+-----------------------------------                            

----------------------------------------------------------------------------                                                      
Implied Total Valuation                                          $413,431                                                         

% of Valuation attributable to core business                         67.0%                                                        

% of Valuation attributable to consolidation opportunities           33.0%                                                        
----------------------------------------------------------------------------                                                      

(a)  A.G. Edwards' estimate of the decline rate of EBITDA based on a 4.1%    
attribution rate.                                                       
(b)  See page 13.                          

Page 21

TRANSACTION MULTIPLE ANALYSIS
TRANSACTION MULTIPLES FOR EXISTING HEATING OIL BUSINESS
($ IN THOUSANDS)

================================================================================
Revised                            EBITDA
------------------------------------- 
Purchase Price(a)               Year                 Amount       Multiple Paid
- -----------------        --------------------   --------------   ---------------

$243,496             1997 Adjusted               $43,040            5.7x

$243,496             Revised 1998 Budget         $45,689            5.3x 

$243,496             Adjusted 1998 Budget        $37,455            6.5x 

$243,496             1999 Projected              $49,606            4.9x

________________________________________________________________________________
(a) Represents A.G. Edwards' estimate of the portion of the $363.5 million price
being paid for Oil's heating oil business that can be attributable to its 
core business. Calculation: $363.5 million X 67.0%. See page 21.

Page 22

RELATIVE CONTRIBUTION ANALYSIS(a)
($ IN THOUSANDS)

GAS' AVERAGE EBITDA 
CONTRIBUTION

96-97     35.4%
EBITDA(b)
98-99     33.4%
[PIE CHART APPEARS HERE]
96-99     34.3%

FOR GAS' CONTRIBUTION 
OF APPROXIMATELY 34% OF                IMPLIED FIRM VALUE
THE COMBINED ENTITY'S                  SEPTEMBER 30, 1998 
EBITDA, IT WILL RECEIVE 
APPROXIMATELY 41% OF               [PIE CHART APPEARS HERE] 
THE IMPLIED FIRM VALUE.

_______________________________
(a) For purposes of its analysis, A.G. Edwards converted Oil's historical
December 31st fiscal year-end to a September 30th fiscal year-end for
comparison purposes. Oil's projections are based on a December 31st calendar
year end. Other measures of relative contribution analysis are non-
meaningful.
(b) Includes only heating oil EBITDA for Oil.
(c) Implied firm value of only Oil's heating oil assets.

Page 23

ACCRETION/DILUTION ANALYSIS
VARIATIONS IN MARGIN GROWTH RATES AND ACQUISITION ASSUMPTIONS

=============================================================================================================
$2.50 PER SHARE OF PETRO
---------------------------------------------------------------------
GAS         $0.005 MARGIN GROWTH               $0.00 MARGIN GROWTH                
STAND-ALONE    $30.0MM AT 4.75X ACQUISITIONS      $30.0MM AT 5.25X ACQUISITIONS      
-----------    -----------------------------      ----------------------------------

DCF PER UNIT
1998E (a)               $1.220               $1.580                             $1.580
1998N (b)                1.760                2.420                              2.420
1999P                    1.900                2.730                              2.440 

ACCRETION/DILUTION
1998E (a)                                      29.5%                              29.5%
1998N (b)                                      37.5%                              37.5%
1999P                                          43.7%                              28.4%

COMMON UNIT COVERAGE
1998E (a)                 0.90x                0.94x                              0.94x
1998N (b)                 1.30                 1.44                               1.44  
1999P                     1.34                 1.54                               1.37  

TOTAL UNIT COVERAGE
1998E (a)                 0.55x                0.72x                              0.72x
1998N (b)                 0.80                 1.10                               1.10
1999P                     0.86                 1.19                               1.06

LEVERAGED UNIT COVERAGE (c)
1998E (a)                 0.94x                0.97x                              0.97x     
1998N (b)                 1.15                 1.20                               1.20
1999P                     1.17                 1.25                               1.17
- -------------------------------------------------------------------------------------------------------------

=============================================================================================================
$2.25 PER SHARE OF PETRO
---------------------------------------------------------------------
$0.005 MARGIN GROWTH               $0.00 MARGIN GROWTH                
$30.0MM AT 4.75X ACQUISITIONS      $30.0MM AT 5.25X ACQUISITIONS      
---------------------------------  ----------------------------------

DCF PER UNIT                 
1998E (a)                         $1.620                             $1.620
1998N (b)                          2.480                              2.480
1999P                              2.800                              2.500 

ACCRETION/DILUTION                    
1998E (a)                           32.8%                              32.8%
1998N (b)                           40.9%                              40.9%
1999P                               47.4%                              31.6%

COMMON UNIT COVERAGE                  
1998E (a)                           0.94x                              0.94x
1998N (b)                           1.44                               1.44  
1999P                               1.54                               1.38  

TOTAL UNIT COVERAGE                   
1998E (a)                           0.74x                              0.74x
1998N (b)                           1.13                               1.13
1999P                               1.22                               1.09

LEVERAGED UNIT COVERAGE (c)           
1998E (a)                           0.97x                              0.97x     
1998N (b)                           1.20                               1.20
1999P                               1.25                               1.17
- -------------------------------------------------------------------------------------------------------------

(a)  1998 estimate assumes no acquisitions for either company, and is adjusted
to reflect actual results through 3/31/98.
(b)  1998 budgeted.
(c)  Defined as (DCF + Int)/[((GP units + common units)* MQD) + Int)]

Page 24

PUBLIC COMPANY ANALYSIS

[_]A.G. Edwards compared certain financial and market information of Gas on a
historical and pro forma basis to that of certain public master limited
partnerships which A.G. Edwards deemed relevant for the purposes of this
analysis. A.G. Edwards reviewed the trading multiples from a total of 6
public propane master limited partnerships.

[_]The selected propane master limited partnerships are as follows:
- AmeriGas Partners, L.P.                   - Heritage Propane Partners,
- Cornerstone Propane Partners,             L.P.
L.P.                                        - National Propane Partners,
- Ferrell Gas Partners, L.P.                L.P.
- Suburban Propane Partners,
L.P.

[_]No company used in the analysis is identical to Gas.

PUBLIC COMPARABLE COMPANIES (a)

- -------------------------------------------------------------------------------

PUBLIC      PUBLIC
PRO FORMA  COMPANY    COMPANY
GAS         GAS     MEDIANS     RANGES
----------- ----------- ------- --------------

Yield                           10.3%       10.8%         9.5%  8.7% to 10.7%
Firm value/LTM EBITDA           12.2x(b)    10.7x(b)     12.3x  9.1x to 18.5x
Firm value/1998 normalized
EBITDA                          8.8x(c)     8.0x(c)     11.0x  10.2x to 13.7x
Equity Market Cap/LTM DCF       17.6x(d)    14.0x(d)     16.0x  8.6x to 24.8x
Equity Market Cap/1998
normalized DCF                 10.4x(e)     7.8x(e)     13.6x  11.6x to 16.6x
LTM common unit coverage         0.9x(f)     0.9x(f)      1.4x   0.6x to  1.5x
1998E common unit coverage       1.3x(g)     1.6x(g)      1.4x   0.9x to  1.8x
LTM total unit coverage          0.6x(f)     0.7x(f)      0.7x   0.4x to  1.1x
1998E total unit coverage        0.9x(g)     1.2x(g)      0.7x   0.7x to  1.0x
1998E leveraged unit coverage   1.2x(g)(h)  1.3x(g)(h)   1.1x   0.9x to  1.3x

- --------
(a) Public comparable companies include: APU, CNO, FGP, HPG, CNL and SPH.
(b) Firm value/adjusted 1998 budget EBITDA.
(c) Firm value/1999 estimated EBITDA.
(d) Equity market cap/adjusted 1998 budget EBITDA.
(e) Equity market cap/1999 estimated DCF.
(f) Adjusted 1998 budget.
(g) 1999 estimates.
(h) Defined as (DCF + interest)/(((GP units + common units)*MQD)+interest).

Page 25

PUBLIC COMPANY ANALYSIS
($ IN MILLIONS, EXCEPT PER UNIT DATA)

- ------------------------------------------------------------------------------------------------------------------------------------
CLOSING          IMPLIED         IMPLIED                                 COMMON
PRICE ON       MARKET VALUE       FIRM    DISTRIBUTION                   UNITS/
COMPANY                                TICKER     (5/15/98)       OF EQUITY         VALUE     PER UNIT       YIELD       TOTAL UNITS
- ------------------------------------------------------------------------------------------------------------------------------------

Gas                                (a)            $21.375        $  135.8        $  223.6       $2.20         10.3%         60.3%

AmeriGas Partners, L.P.                APU         24.688         1,055.2         1,746.1        2.20          8.9%         52.8%
Cornerstone Propane Partners, L.P. (d) CNO         21.875           442.7           673.7        2.16          9.9%         66.7%
Ferrellgas Partners, L.P.          (e) FGP         21.750           694.5         1,220.2        2.00          9.2%         47.0%
Heritage Propane Partners, L.P.        HPG         23.000           196.7           370.8        2.00          8.7%         55.8%
National Propane Partners, L.P.        NPL         19.688           225.7           365.9        2.10         10.7%         59.6%
Suburban Propane Partners, L.P.    (f) SPH         19.063           558.8           925.1        2.00         10.5%         75.1%

- ------------------------------------------------------------------------------------------------------------------------------------
MEAN                                                                                                           9.6%         59.5%
MEDIAN                                                                                                         9.5%         57.7%
- ------------------------------------------------------------------------------------------------------------------------------------

PRO FORMA                                         $21.375        $  308.3 (G)    $  604.5 (H)   $2.30         10.8%         75.5% 

- ------------------------------------------------------------------------------------------------------------------------------------
LTM COMMON              LTM TOTAL          FY98E         FY98E COMMON        FY98E TOTAL
COMPANY                                  UNIT COVERAGE          UNIT COVERAGE       DCF/UNIT       UNIT COVERAGE       UNIT COVERAGE
- ------------------------------------------------------------------------------------------------------------------------------------

Gas                                (a)    0.9x (b)                 0.6x (b)          $1.90 (c)       1.3x (c)              0.9x (c)

AmeriGas Partners, L.P.                   1.5x                     0.8x               1.88           1.6x                  0.9x
Cornerstone Propane Partners, L.P. (d)    0.8x                     0.5x               1.47           1.1x                  0.7x
Ferrellgas Partners, L.P.          (e)    1.4x                     0.7x               1.34           1.4x                  0.7x
Heritage Propane Partners, L.P.           1.3x                     0.8x               2.00           1.8x                  1.0x
National Propane Partners, L.P.           0.6x                     0.4x               1.60           1.3x                  0.8x
Suburban Propane Partners, L.P.    (f)    1.5x                     1.1x               1.41           0.9x                  0.7x

- ------------------------------------------------------------------------------------------------------------------------------------
MEAN                                      1.2x                     0.7x                              1.4x                  0.8x
MEDIAN                                    1.4x                     0.7x                              1.4x                  0.7x
- ------------------------------------------------------------------------------------------------------------------------------------

PRO FORMA                                 0.9x (B)                 0.7x (B)           2.73 (C)       1.6x (C)              1.2x (C)

_____________________________________________
1998 estimates per A.G. Edwards' research, except for Gas, Oil, and Pro Forma.

Implied Firm Value equals common, subordinated and GP units, multiplied by the 
market price of common units plus debt, less cash.

(a) Pro forma for the Pearl Gas acquisition and the common unit offering, Fiscal
1997 maintenance capital expenditure used as LTM figure.

(b) For Gas and Pro forma only, LTM DCF figures are adjusted 1998 budget DCF 
estimates.

(c) For Gas and Pro forma only, FY98E DCF figures are 1999 DCF estimates.

(d) Financial information pro forma for common unit offering. Maintenance 
capital expenditures assumed to be 8% of EBITDA due of lack of disclosure.

(e) Maintenance capital expenditures assumed to be 8% of EBITDA due to lack of 
disclosure.

(f) Financial figures exclude $5.1 million gain from sale of minority interest.

(g) 14,425 units x $21.375.

(h) $308.3 in equity plus $318.989 pro forma debt, less $13.506 cash and $9.350 
in cash collateral.

Page 26

PUBLIC COMPANY ANALYSIS

-------------------------------------------------------------------------------------------------------------------------------

LTM               1998E           LONG TERM         LTM      FIRM VALUE/   FIRM VALUE/
LEVERAGED          LEVERAGED            DEBT/        EBITDA/       LTM           1998E 
UNIT COVERAGE(A)    UNIT COVERAGE(A)     FIRM VALUE     INT. EXP.     EBITDA        EBITDA
---------------------------------------------------------------------------------------------

GAS                                     0.9x (b)           1.2x (c)           42.9%        2.3x (d)     12.2x (d)     8.8x (e)

AmeriGas Partners, L.P.                 1.2x               1.3x               39.8%        2.2x         11.8x        11.3x    
Cornerstone Propane Partners, L.P.      0.9x               1.0x               34.6%        2.4x         14.7x        13.7x    
Ferrellgas Partners, L.P.               1.2x               1.1x               40.6%        2.1x         12.8x        12.3x    
Heritage Propane Partners, L.P.         1.1x               1.3x               46.2%        2.6x         10.9x        10.5x    
National Propane Partners, L.P.         0.8x               1.1x               37.6%        2.7x         18.5x        10.7x    
Suburban Propane Partners, L.P.         1.3x               0.9x               46.3%        3.1x          9.1x        10.2x     

-------------------------------------------------------------------------------------------------------------------------------
MEAN                                    1.1x               1.1x               40.8%        2.5x         13.0x        11.5x  
MEDIAN                                  1.1x               1.1x               40.2%        2.5x         12.3x        11.0x  
-------------------------------------------------------------------------------------------------------------------------------

PRO FORMA                               1.0x (b)           1.3x (c)           52.8%        2.0x (d)     10.7x (d)     8.0x (e)

------------------------------------------------------------------
Equity          Equity         
Market Cap/     Market Cap/     
LTM DCF         1998E DCF      
-----------------------------

GAS                                    17.6x (f)       10.4x (g)     

AmeriGas Partners, L.P.                14.8x           13.4x          
Cornerstone Propane Partners, L.P.     19.5x           16.4x          
Ferrellgas Partners, L.P.              16.4x           16.6x          
Heritage Propane Partners, L.P.        15.6x           11.6x          
National Propane Partners, L.P.        24.8x           12.6x          
Suburban Propane Partners, L.P.         8.6x           13.8x           

------------------------------------------------------------------
MEAN                                   16.6x           14.1x
MEDIAN                                 16.0x           13.6x
------------------------------------------------------------------  

PRO FORMA                              14.0x (f)        7.8x (g)

_______________________________
EBITDA is defined as net income (loss) before extraordinary items plus 
interest, income taxes, depreciation and amortization, impairment  
expense, and other non-recurring and non-operating items.
(a) Defined as (DCF + interest)/(((GP units + common units)*MQD)+interest).
(b) For Gas and Pro forma only, LTM leveraged unit coverage figures use
adjusted 1998 budget estimates.
(c) For Gas and Pro forma only, 1998E leveraged unit coverage figures use 
1999 estimates.
(d) For Gas and Pro forma only, LTM EBITDA figures are adjusted 1998 
budget estimates.
(e) For Gas and Pro forma only, 1998E EBITDA figures are 1999 estimates.
(f) For Gas and Pro forma only, LTM DCF figures are adjusted 1998 budget 
DCF estimates.
(g) For Gas and Pro forma only, 1998E DCF figures are 1999 DCF estimates.

Page 27

DISCOUNTED CASH FLOW ANALYSIS
GAS - STAND ALONE
($ in thousands)

===========================================================================================================================       
INCOME STATEMENT SUMMARY (a):                                    1998       1999       2000    2001     2002      TERMINAL       
- ----------------------------                                    ------    -------    -------  -------  -------   ----------      

EBITDA                                                          18,279     25,299     26,728   28,157   29,586                   
% increase                                                                 38.4%       5.6%     5.3%     5.1%                  

Net income                                                      (1,321)     2,489      2,396    2,601    2,818                   

CASH FLOW SUMMARY:                                                                                                               
- ------------------                                                                            
After-tax EBI                                                              11,494     12,011   12,696   13,380

Depreciations and amortization                                             13,780     14,693   15,435   16,182                   

Maintenance capital expenditures                                           (3,185)    (3,242)  (3,301)  (3,360)                  

Working capital increases                                                    (500)      (500)    (500)    (500)                  
-------    -------  -------  -------                   
Net operating cash flow (free cash flow)                                   21,589     22,962   24,330   25,702                   
---------- 
WEIGHTED AVERAGE COST OF CAPITAL (b)               7.8%                                                                          
---------- 
---------- 
TERMINAL EBITDA MULTIPLE (c)                       10.3x                          
----------          
Discount factor (d)                                                        0.9630     0.8930   0.8281   0.7679     0.7395        

Terminal value (e)                                                                                               $304,736        

---------- 
PRESENT VALUE                                 $ 306,529                   $20,790    $20,505  $20,148  $19,737   $225,350        
----------                  -------    -------  -------  -------   --------        
Current net debt (f)                          $(113,629)
---------- 
NET PRESENT VALUE OF EQUITY                   $ 192,900
==========  
Common units/Total units (g)                       60.3%
---------- 
EQUITY VALUE TO COMMON UNITS (h)              $ 116,310       
----------             

______________________________________________________________
(a) Based on management projections.
(b) Based on comparable companies' WACC.
(C) Gas' current firm value of $223.6 million/$21.730 million 
normalized 1998 EBITDA = 10.3x, which represents a multiple of 
current year normalized EBITDA.
(d) Discount factor calculated using half-year convention.
(e) Terminal value calculated using EBITDA multiple. 
(f) Represents total projected debt less cash as of 9/30/98
(g) Total units include common, subordinated and GP units.
(h) Current market value of common units is 3,832 units *$21.375 unit price 
= $81,909

Page 28

DISCOUNTED CASH FLOW ANALYSIS
GAS - PRO FORMA PAINEWEBBER MODEL (a)
($ in thousands)

====================================================================================================================================
INCOME STATEMENT SUMMARY (b):                             1998            1999         2000       2001         2002        Terminal
- -----------------------------                            -------        --------     -------    --------     -------       --------

EBITDA                                                   56,234         75,405        80,900      86,317       91,668           
% increase                                                              34.1%          7.3%        6.7%         6.2%
Net income                                              (13,029)           210        (2,387)     (5,180)      (8,137)

CASH FLOW SUMMARY:
- -----------------

After-tax EBI                                                           28,886        28,639      28,306       27,897
Depreciation and amortization                                           45,995        51,736      57,486       63,245
Maintenance capital expenditures                                        (6,826)       (6,956)     (7,089)      (7,224)
Working capital increases (c)                                           (1,000)       (1,000)     (1,000)      (1,000)  
--------      -------     -------      -------
Net operating cash flow (free cash flow)                                67,055        72,419      77,703       82,918
----------
WEIGHTED AVERAGE COST OF CAPITAL (d)               7.8%
----------  
----------
TERMINAL EBITDA MULTIPLE (e)                      10.3x
----------
Discount factor (f)                                                     0.9632        0.8936      0.8290       0.7690     0.7407
Terminal value  (g)                                                                                                     $944,180
----------
PRESENT VALUE                                 $956,846                 $64,586       $64,710     $64,413      $63,767   $699,370
-----------              ----------    ----------  ----------   ---------- ----------
Less net debt (h)                            ($296,133)
----------
NET PRESENT VALUE OF EQUITY                   $660,713
==========
Original common units/Total units (i)             26.6%
----------
EQUITY VALUE TO COMMON UNITS (J)              $175,506
----------

_____________________________________________________
(a) Scenario assumes 4.1% steady attrition, $0.005 margin improvement, and 
$30 million in acquisitions at 4.75 multiple.
(b) Based on management projections.
(c) A.G. Edwards' assumption.
(d) Based on comparable companies' WACC.
(e) Gas' current firm value of $223.6 million/$21.730 million normalized 1998 
EBITDA=10.3x, which represents a multiple of current year normalized EBITDA.
(f) Discount factor calculated using half-year convention.
(g) Terminal value calculated using EBITDA multiple.
(h) Represents total proforma projected debt less cash and cash collateral as 
of 9/30/98.
(i) Total units include common, newly issued common, senior subordinated, 
subordinated and GP units.
(j) Current market value of common units is 3,832 units *$21.375 unit price = 
$81,909

Page 29

CAPITAL STRUCTURE ANALYSIS
GAS - PRO FORMA AS OF 9/30/98
($ in thousands)

======================================================================================================
Pro forma    
Gas           Oil        Adjustments           Gas       
----------    ----------    -------------      -----------   

Debt:                                                                                                  
8.04% First Mortgage Notes            $ 85,000           -              -            $ 85,000     
7.25% WC Revolver                        7,457           -              -               7,457     
7.25% Acquisition Facility              10,673           -              -              10,673     
7.17% First Mortgage Notes              11,000           -              -              11,000     

11.96% Senior Notes                        -        $ 60,000       ($60,000)              -       
14.10% Senior Notes                        -           3,100         (3,100)              -       
14.10% Subordinated Notes                  -           3,100         (3,100)              -       
10.13% Sub Notes & Sr Notes                -          50,000        (50,000)              -       
9.38% Sub Notes & Sr Notes                -          75,000        (75,000)              -       
12.25% Sub Notes & Sr Notes                -          81,250        (81,250)              -       
8.00% Existing Acq Notes Payable          -          13,859            -              13,859     

8.46% Exchange Debt                       -             -           66,000            66,000     
8.50% New Debt                            -             -          125,000           125,000     
----------    ----------    -------------      -----------   
TOTAL DEBT:                                $114,130      $286,309       ($81,450)         $318,989     

WEIGHTED AVERAGE COST OF DEBT                                                                  8.2%    

PREFERRED STOCK:                                                                                       
14.33% Preferred Stock               $      0      $  4,167        ($4,167)         $      0     
12.88% Preferred Stock                    -          30,000        (30,000)              -       
----------    ----------    -------------      -----------   
-        $ 34,167       ($34,167)              -       

COMMON EQUITY                              $ 67,041     ($210,015)      $115,204          ($27,770)     

------------------------------------------------------------------------------------------------------ 

Page 30

SPECIAL COMMITTEE               DRAFT 5/26/98
STAR GAS PARTNERS, L.P.
REVISED PROPOSAL

After careful consideration of the Proposed Transaction and the views 
expressed by Petro and PaineWebber, the Special Committee and its advisors 
recommend that further refinement and evaluation of the Proposed Transaction is 
appropriate.

Subject to further diligence and assuming no material adverse changes in 
Star or Petro, or in market conditions, the Special Committee proposes that the 
transaction contain the following safeguards for the benefits of Star's common 
unitholders;

(A)  Star Partnership Agreement.   Appropriate steps should be initiated
--------------------------
to amend the Star Partnership Agreement as of the closing date
(assumed to be September 30, 1998) in order to include as a minimum:

(A-1)  authorizing the creation of new classes of senior subordinated
units and deferred partnership units, which shall be junior to
all present and future common units;

(A-2)  prohibiting the payment of any distributions to senior
subordinated unitholders and to subordinated unitholders except
from net distributable cash flow available from the preceding
twelve months after first paying $2.30 per unit to the common
unitholders for such period plus any cumulative common unit
arrearages from prior period(s); and

(A-3)  providing a surplus available for common unit distributions
equal to $1.10 per new common unit, as part of the Refinancing
Transaction (described below).

(B)  Definitive Transaction Agreement. A draft of the definitive
--------------------------------
transaction agreement should be prepared by Petro for the Special
Committee's careful consideration (and for future submission to the
Board of Directors and common unitholders of Star and to the Board of
Directors and shareholders of Petro for approval) setting forth at
least the following steps:

(B-1)  At closing of the Transaction, Star shall be obligated to 
deliver to Petro's common shareholders the following:

(a)  2,718,000 new senior subordinated units of Star;
(b)  524,000 subordinated units of Star; the balance must be 
delivered to Star free and clear for retirement;

(c)  289,000 GP units of Star; and

(d)  909,000 new deferred partnership units of Star, convertible
into senior subordinated units at 33 1/3% per annum for each
year in which Petro's after-tax income contributes accretion
to every Star unit in excess of $0.50.

(B-2)  The Closing shall be contingent upon the successful completion of
the following (collectively, the "Refinancing Transaction"):

(a)  The issuance of no more than 6,588,000 new common units at a
price per unit of at least $21 with a gross spread of no
greater than 5.0%, and

(b)  The issuance of $125,000,000 of a new debt with an interest
rate no higher than 8.5% with a gross spread of no greater
than 3.0%.

The use of proceeds of the Refinancing Transaction shall be
solely to refinance certain of the outstanding indebtedness
assumed from Petro.

(B-3)  Prior to the closing of the Transaction, Petro shall represent, 
warrant and agree that:

(a)  Prior to the Refinancing Transaction, Petro shall have a
balance of debt and preferred stock (at redemption value),
less any cash balance in excess of such amounts required in 
(B-3) (b) below, of no more than $331,367,000.

(b)  Petro shall have a minimum cash balance of $500,000, a
positive working capital balance, and a total stockholders'
deficit on its balance sheet of no greater than
$210,000,000, all as of the Closing (assumed to be September
30, 1998).

(c)  Petro shall set up appropriate reserves and fund all of the
following transactions costs: the gross spread on the
issuance of the new debt referred to in (B-2) (b); financial
advisory fees and fairness opinions for Petro and Star;
legal, accounting and printing fees for Petro and Star; all
exchange and solicitation fees related to the retirement or
redemption of Petro's debt and preferred stock; all
appraisals and environmental reports; all rating agencies
and bank fees; and all other out-of-pocket costs and
expenses associated with the Transaction.

(B-4)  Prior to the Closing of the Transaction, Petro shall not declare 
or distribute any cash dividends to its common shareholders.

SPECIAL COMMITTEE             DRAFT 7/28/98
STAR GAS PARTNERS, L.P.
REVISED PROPOSAL

Subject to further due diligence, and assuming no material adverse changes 
in Star, Petro or market conditions, the Special Committee of Star proposes that
an acquisition of Petro by Star contain the following:

(A)  Star Partnership Agreement. Appropriate steps should be initiated to
--------------------------
amend the Star Partnership Agreements as of the closing date in order
to include, as a minimum:

(A-1)  authorizing the creation of a new class of senior subordinated
units, which shall be junior to all present and future common
units;

(A-2)  subordinating the GP units in terms of their distribution
rights to equal those of the subordinated units, which in turn
shall be junior to all present and future common and senior
subordinated units;

(A-3)  increasing the MQD and actual distribution to $2.30 per unit on
an annualized basis;

(A-4)  prohibiting the payment of any distributions to senior
subordinated, subordinated and GP units from anything but
Adjusted Operating Surplus (i.e. what is "earned") over the
latest twelve months after first paying the MQD per unit to the
common unitholders for such period plus any cumulative common
units arrearages from prior period(s); and

(A-5)  an increase in the Operating Surplus basket equal to:

$6.0 million                  New common units       
------------
Common units                  issued in the          
Outstanding as of             Refinancing            
7/27/98                x      Transaction            

(B)  Definitive Transaction Agreement. A draft of the definitive
--------------------------------
transaction agreement should be prepared by Petro for the Special
Committee's careful consideration (and for future submission to the
Board of Directors and common unitholders of Star and to the Board of
Directors and shareholders of Petro for approval) setting forth at
least the following steps:

(B-1)  At closing of the transaction, Star shall be obligated to deliver
to Petro's common shareholders the following:

(a)  2,809,000 new senior subordinated units of Star;

(b)  537,000 subordinated units of Star; the balance must be 
delivered to Star free and clear for retirement;

(c)  GP units of Star equaling no greater than 2% of the total 
units outstanding at closing, and

(d)  special distribution rights limited to an aggregate of
909,000 senior subordinated units. A special distribution of
303,000 senior subordinated units will be granted to the 
senior subordinated, subordinated and GP unitholders each
time Petro Accretion (to be subsequently defined) exceeds
$0.50 per unit for the latest twelve months. The first test
will be twelve months after the closing, and such tests will
not be more often than once every twelve months. If the
tests are not met within four years after the closing, then
the right to earn the special distribution will lapse.

(B-2)  The closing shall be contingent upon the successful completion of
the following (collectively, the "Refinancing Transaction"):

(a)  the issuance of no more than an aggregate of $140 million of
new common and/or subordinated units, excluding any
overallotment option of no greater than 15% associated with
a common unit offering, with a gross spread of no greater
than 5.0%; and

(b)  the issuance of no more than $120 million of new debt with a
gross spread of no greater than 3.0%.

The use of proceeds of the Refinancing Transaction shall be
solely to refinance certain of the outstanding indebtedness
assumed from Petro.

Further, the cost of capital from the equity and debt raised in
the Refinancing Transaction may not exceed $27.5 million on an
annual basis. "The cost of capital from the equity and debt
raised in the Refinancing Transaction on an annual basis" shall
be calculated as follows: (A) the number of new units issued in
(B-2)(a) multiplied by $2.30 per unit, plus (B) the amount of new
debt issued in (B-2)(b) multiplied by the offering yield of such
new debt.

(B-3)  Prior to the closing of the transaction, Petro shall represent, 
warrant and agree that:

(a)  Prior to the Refinancing Transaction, the sum of the pro forma
principal amount of Petro debt which is restructured plus the
redemption/repurchase price of all debt and preferred stock
redeemed in the transaction (including the value of Petro stock
issued in connection with the redemption option), less any cash
balance in excess of such amounts required in (B-3) (b) below,
shall be no greater than $331,367,000.

(b)    Petro shall have a minium cash balance of $500,000, a positive
working capital balance, and a total stockholders' defict on its
balance sheet on closing if no greater than Maximum Stockholders'
Deficit (to be subsequently defined based on updated projections
and anticipated closing dates).

(c)    Petro shall set up appropriate reserves and fund all of the
following transactions costs: the gross spread on the issuance of
the new debt referred to in (B-2) (b); financial advisory fees
and fairness opinions for Petro and Star; legal, accounting and
printing fees for Petro and Star; all exchange and solicitation
fees related to the retirement or redemption of Petro's debt and
preferred stock; all appraisals and environmental reports; all
rating agencies and bank fees; and all other out-of-pocket costs
and expenses associated with the transaction.

(B-4)  Prior to the closing of the transaction, Petro shall not declare
or distribute any cash dividends to it common shareholders.

FAIRNESS OPINION PRESENTATION TO THE
SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS OF
STAR GAS CORPORATION

Confidential

A.G.EDWARDS & SONS, INC.
INVESTMENT BANKING

October 16, 1998

TABLE OF CONTENTS                                                                     

Section         
-------         

Introduction.....................................................        I            

Review of Events to Date.........................................       II            

Summary of the Transaction.......................................      III            

Summary Observations and Conclusions.............................       IV            

Appendices are separately bound:                                                      

Appendix I      Analyses Performed Under 30-Year Weather Scenario                     

Appendix II     Analyses Performed Under 15-Year Weather Scenario                      

Introduction

TRANSACTION PROPOSAL  [_]   During 1997, Star Gas Partners Corporation (the
"General Partner") and Petroleum Heat and Power Co.,
Inc. ("Petro") discussed the idea of a possible
acquisition of Petro by Star Gas Partners, L.P.
("Star Gas" or the "Partnership"). The overall
transaction (the "Transaction") consists of the
following four principal parts:

-    The acquisition of Petro by the Partnership;

-    Public offerings of debt and equity by the
Partnership and the redemption of certain debt
and preferred stock of Petro (the
"Financings");

-    The withdrawal of Star Gas Corporation as the
general partner of the Partnership and Star Gas
Propane, L.P. (the "Operating Partnership"),
and the election of Star Gas LLC as the new
general partner; and

-    Amending the Agreement of Limited Partnership
of the Partnership and the Operating
Partnership in order to consummate the
Transaction.

A.G.EDWARDS'          [_]   By letter engagement, dated March 23, 1998, A.G.
ENGAGEMENT                  Edwards & Sons, Inc. ("A.G. Edwards") was engaged by
the Special Committee (the "Special Committee") of
the Board of Directors of the General Partner (the
"Board") to act as its financial advisor with
respect to the Transaction and to issue to the
Special Committee an opinion as to the fairness,
from a financial point of view, to the public common
unitholders of Star (the "Public Common
Unitholders"), of the Transaction (the "Fairness
Opinion").

[_]   The preparation of a fairness opinion is not
susceptible to partial analyses or summary. In
rendering its Fairness Opinion, A.G. Edwards applied
its judgment to a variety of complex analyses and
assumptions. A.G. Edwards may have given various
analyses more or less weight than other analyses,
and may have deemed various assumptions more or less
probable than other assumptions. The assumptions
made and the judgments applied by A.G. Edwards in
rendering its opinion are not readily susceptible to
description beyond that set forth in the written
text of the Fairness Opinion itself.

INTRODUCTION
(continued)

AS PART OF ITS ENGAGEMENT,   [_]   A review of the Form S-4 Registration
A.G. EDWARDS' ACTIVITIES           Statement and exhibits thereto, including the
INCLUDED, BUT WERE NOT             Agreement and Plan of Merger, the Exchange
LIMITED TO, THE FOLLOWING:         Agreement, the Amended and Restated Agreement
of Limited Partnership and the Conveyance and
Contribution Agreements.

[_]   A review of certain publicly-available
Partnership and Petro historical audited
financial statements and certain unaudited
interim financial statements;

[_]   A review of certain financial analyses and
forecasts of the Partnership prepared by and
reviewed with management of the General
Partner and the views of management of the
General Partner regarding the Partnership's
past and current business operations, results
thereof, financial condition and future
prospects, including the impact of the
Transaction, as well as information relating
to the retail propane distribution industry
and the potential strategic, financial and
operational benefits and challenges
anticipated from the Transaction;

[_]   A review of certain financial analyses and
forecasts of Petro prepared by and reviewed
with management of Petro and the views of
management of Petro regarding Petro's past
and current business operations, results
thereof, financial condition and future
prospects, including the impact of the
Transaction, as well as information relating
to the retail home heating oil distribution
industry and the potential strategic,
financial and operational benefits and
challenges anticipated from the Transaction;

[_]   A review of the pro forma impact of the
Transaction on the Partnership and Petro;

[_]   A review of the publicly reported historical
price and trading activity for the
Partnership's Common Units and Petro's Class
A Common Stock, including a comparison of
certain financial and stock market
information for the Partnership with similar
publicly available information for certain
other companies, the securities of which are
publicly traded;

INTRODUCTION
(continued)

[_]   A review of the current market environment
generally, and the retail propane
distribution environment and the retail home
heating oil distribution environment in
particular;

[_]   A review of information relating to the
financial terms of certain transactions,
including selected mergers and acquisition
transactions;

[_]   Conversations with PaineWebber regarding the
nature and extent of development of the terms
of the Transaction; and

[_]   A review of such other information, financial
studies, analyses and investigations, and
financial, economic and market criteria that
A.G. Edwards considered relevant.

NATURE OF INFORMATION        [_]   In rendering its Fairness Opinion, A.G.
REVIEWED AND PRESENTED             Edwards has relied upon and assumed, without
independent verification, the completion of
the Financings and the Transaction in
accordance with the Agreement and Plan of
Merger, and the accuracy and completeness of
all financial and other information, publicly
available, furnished to, or otherwise
discussed with A.G. Edwards for the purposes
of the Fairness Opinion. With respect to
financial projections and other information
provided to or otherwise discussed with A.G.
Edwards, A.G. Edwards assumed and was advised
by the management of the General Partner and
Petro, respectively, that such projections
and other information were reasonably
prepared on a basis that reflects the best
currently available estimates and judgments
of the management of the General Partner and
Petro, respectively. A.G. Edwards did,
however, review numerous sets of projections
for Petro and analyzed what it believed were
certain of the major assumptions embedded
within Petro's projections. A.G. Edwards used
two sets of projections for Petro to perform
its analyses. A.G. Edwards used a set of
projections based on 30-year weather and a
set of projections based on 15-year weather.
The Special Committee did not, however,
engage A.G. Edwards to, and therefore A.G.
Edwards did not, verify the accuracy or
completeness of any such information. A.G.
Edwards has relied upon the assurances of the
management of the General Partner and Petro
that the respective managements are not aware
of any facts that would make such information
inaccurate or misleading.

INTRODUCTION
(continued)

[  ]   In performing its analyses, A.G. Edwards made numerous
assumptions with respect to the retail propane distribution
industry and the retail home heating oil distribution
industry, and general business and economic conditions
which are beyond the control of the Partnership and Petro.
The analyses performed by A.G. Edwards are not necessarily
indicative of actual values or actual future results, which
may be significantly more or less favorable than suggested
by such analyses. Such analyses were prepared solely as
part of A.G. Edwards' analysis of the fairness, from a
financial point of view, to the Public Common Unitholders
of the Transaction.

[  ]   This presentation is for the private use of the Special
Committee and may not be distributed to any other parties
without A.G. Edwards' written permission. THE ANALYSES
PRESENTED HEREIN RELATE TO THE FAIRNESS OPINION TO BE
ISSUED BY A.G. EDWARDS, BUT DO NOT COMPRISE THE FAIRNESS
OPINION.

[  ]   A.G. Edwards' Fairness Opinion, in any event, is limited to
the fairness, from a financial point of view, to the Public
Common Unitholders of the Transaction. The Fairness Opinion
does not constitute a recommendation to any Public Common
Unitholders as to how to vote with respect to the
Transaction. The Fairness Opinion does not represent tax or
legal advice. The summary description of the analysis
described herein, is qualified in its entirety by reference
to the full text of the Fairness Opinion.

[  ]   The Fairness Opinion is necessarily based upon financial
and other conditions and circumstances existing and
disclosed to it as of October 16, 1998. A.G. Edwards has
been requested to update its Fairness Opinion to a date
prior to the mailing of the Form S-4 Registration
Statements by Petro and the Partnership. No assurance can
be given that future market conditions will permit A.G.
Edwards to deliver an updated Fairness Opinion.

ASSUMPTIONS    [  ]  In rendering it Fairness Opinion, A.G. Edwards has assumed
that the Transaction will be consummated on the terms
contained in the Form S-4 Registration Statement and
exhibits thereto, including the Agreement and Plan of
Merger, the Exchange Agreement, the Amended and Restated
Agreement of Limited Partnership and the Conveyance and
Contribution Agreements, without any waiver of any material
terms or conditions by the Partnership or Petro. The
assumption that the Financings are consummated in
accordance with the closing conditions of the Agreement and
Plan of Merger is a material assumption. 

Page 4

Review of Events to Date

FEBRUARY 11      [  ]   A.G. Edwards presented its qualifications to the Special
Committee and its legal counsel, Baker & Botts.

MARCH 23         [  ]   Special Committee engaged A.G. Edwards.

MARCH 23         [  ]   A.G. Edwards met with members of the Partnership's
management and Petro's management and submitted a
preliminary data request list.

[  ]   A.G. Edwards began due diligence review with management
and other representatives of the Partnership and of
Petro.

MARCH 30         [  ]   A.G. Edwards received data related to its preliminary
data request list.

APRIL 28         [  ]   Special Committee and A.G. Edwards met to discuss the
Transaction.

MAY 4            [  ]   A.G. Edwards submitted a preliminary status report (the
"Preliminary Status Report") to the Special Committee.

MAY 7            [  ]   Special Committee and A.G. Edwards met with Petro's
management and PaineWebber to discuss the Transaction
and the Preliminary Status Report.

MAY 8            [  ]   A.G. Edwards continued onsite diligence at Petro.

MAY 19           [  ]   A.G. Edwards met with PaineWebber and Petro's management
to discuss the Transaction.

MAY 20           [  ]   Special Committee, Baker & Botts and A.G. Edwards met
telephonically to discuss the Transaction.

MAY 26           [  ]   A.G. Edwards, submitted a revised proposal (the
"Preliminary Draft Proposal") to the Special Committee,
which was subsequently forwarded to Petro at the
Committee's request.

Page 5

REVIEW OF EVENTS TO DATE
(continued)

JULY 28                 [  ]  A.G. Edwards submitted another revised proposal
(the "Revised Proposal") on the behalf of the
Special Committee to the Board, the Petro Board
and PaineWebber.

AUGUST 11               [  ]  The Special Committee approved the Revised
Proposal.

AUGUST 13               [  ]  The Petro Board approved the Revised Proposal.

AUGUST 14               [  ]  The Partnership and Petro announced the agreement
in principle.

AUGUST AND SEPTEMBER    [  ]  The Special Committee, with assistance from Baker
& Botts and A.G. Edwards, negotiated the terms of
a definitive Agreement and Plan of Merger and
Exchange Agreement with Petro, Andrews & Kurth and
PaineWebber.

OCTOBER 16              [  ]  Special Committee meeting to review documents and
consider and act upon the legal agreements
necessary to implement the Transaction.

-  The Committee had the opportunity to review,
with Baker & Botts and A.G. Edwards, the
following:

[  ]  Draft dated October 13, 1998 of the Form
S-4 Registration Statement
[  ]  Draft dated October 8, 1998 of the
Agreement and Plan of Merger
[  ]  Draft dated October 6, 1998 of the
Amended and Restated Agreement of Limited
Partnership
[  ]  Draft dated October 7, 1998 of the
Exchange Agreement
[  ]  Draft dated October 9, 1998 of the
Conveyance and Contribution Agreements

Page 6

SUMMARY OF THE TRANSACTION
PRO FORMA STAR GAS UNITS OUTSTANDING
(in thousands)

[  ]   There are currently 6,383 Star Gas units outstanding comprised of 3,859
common units, 2,396 subordinated units and 128 implied general partner
("GP") units. The subordinated units and GP units are currently assets
of Petro.

[  ]   There are currently 26,574 shares of Petro common stock outstanding
held by public shareholders and "affiliates." The public holds 14,327
Class A shares, 11 Class B shares and 282 Class C shares. The
"affiliates" hold 11,953 shares which include 9,638 Class A shares and
2,315 Class C shares.

[  ]   Each shareholder of Petro will receive a certain number of units in
Star Gas such that the implied consideration paid for each Petro share
averages $2.43 based on A.G. Edwards' estimates of the value of the
units being offered to Petro as consideration.

[  ]   All of the publicly held 14,327 Class A shares and 282 Class C shares,
and a portion of the "affiliate" held Class A shares (5,243) and Class
C shares (1,328) will receive .13064 units of newly created senior
subordinated units for each share (1,908 units to the public and 859
units to the "affiliates", 2,767 units in total) with an attached
Contingent Unit ("CU"). See the following page for a discussion of the
Contingent Units. A.G. Edwards estimates an implied value for these
units of $18.52/unit. The remaining "affiliates" of Petro not receiving
senior subordinated units, who hold a total of 5,382 shares, will
receive .15920 units for a total of 857 junior subordinated and GP
units, both of which will also include attached CUs. A.G. Edwards
estimates an implied value for these units of $15.41/unit.

[  ]   The 2,396 subordinated units and 128 GP units currently owned by Petro
will effectively be retired in the Transaction.

Page 7

SUMMARY OF THE TRANSACTION
PRO FORMA STAR GAS UNITS OUTSTANDING
(in thousands)
(continued)
DESCRIPTION OF CONTINGENT UNITS

[  ]   During the five year period, beginning with the first full four
quarters following the Merger, the senior subordinated units, junior
subordinated units and general partner interests will have the right to
receive up to 909,000 senior subordinated units upon Petro meeting a
"Contingent Unit Test." Each time the Contingent Unit Test is met, (but
not more frequently than once every four quarter period), the senior
subordinated units, junior subordinated units and general partner
interests will receive an aggregate of 303,000 senior subordinated
units, subject to a maximum of 909,000 senior subordinated units. The
Contingent Unit Test will be met during any four quarter period when
distributable cash flow per unit attributable to Petro exceeds $2.90
which is 32% higher than the current annualized MQD of $2.20 and 26%
higher than the proposed MQD of $2.30.

Page 8

SUMMARY OF THE TRANSACTION
ALLOCATION OF CURRENT PETRO SHARES OUTSTANDING
(IN THOUSANDS)

---------------------------------------------------------------------------
Class A     Class B     Total
-------     -------    --------

Groups Receiving Senior Sub        
---------------------------
Public                                       14,327         282     14,609
Affiliates                                    5,243       1,328      6,572
-------     -------    -------
Total Receiving Senior Sub                   19,570       1,610     21,181

Groups Receiving Junior Sub and GP
----------------------------------
Affiliates                                    4,395         987      5,382
-------     -------    -------

Sub Total                                    23,965       2,598     26,562
=======     =======

Class B                                                                 11
-------

Total Shares including Class B                                      26,574
=======

Page 9

SUMMARY OF THE TRANSACTION
PRO FORMA STAR GAS UNITS OUTSTANDING
PRE-FINANCING ASSUMPTIONS
(IN THOUSANDS)

-----------------------------------------------------------------------------------
Issued to Petro                        
-------------------                        
Type of Units                  Current    Public   Affiliates    Retired   Pro Forma     
-------------                  -------    ------   ----------    -------   ---------      

Common                          3,859          -          -           -        3,859       

Senior Subordinated                 -      1,908        859           -        2,767       

Subordinated                    2,396          -          -      (2,396)           - 

Junior Subordinated
& New General Partner            -          -        857           -          857

Old General Partner               128          -          -        (128)           -
------                                      ---------       
6,383                                          7,482

Page 10

SUMMARY OF THE TRANSACTION
EQUITY PURCHASE PRICE CALCULATION
Implied Equity Value of Petro's Assets
(units in thousands, $ in thousands, except per unit amounts)

- --------------------------------------------------------------------------------
Value of Securities
Event                                           Issued to and Retired from Petro
- --------------------------------------------------------------------------------

Issuance of Senior Subordinated
Units to Public Petro Shareholders                          1,908    x    $18.52
---------------------
$35,337

Issuance of Senior Subordinated
Units to Affiliate Petro Shareholders                         859    x    $18.52
---------------------
$15,900

Issuance of Junior Subordinated
& General Partner Units to Affiliate Petro Shareholders       857    x    $15.41
---------------------
$13,203

------------
PURCHASE PRICE OF PETRO'S EQUITY                                  $64,439

- -------------------------------------------------------------------------------------
Divided by 26,562 shares of Petro's Common stock =                  $2.43 per share
(Excludes 11 Class B Shares)
- -------------------------------------------------------------------------------------

Retire Subordinated Units held by Petro                    (2,396)   x    $15.41   
---------------------
($36,924)

Retire Old General Partner Units held by Petro               (128)   x    $15.41
--------------------- 
($1,967)

------------
EQUITY VALUE OF PETRO'S HEATING OIL ASSETS                        $25,549     

Page 11

SUMMARY OBSERVATIONS AND CONCLUSIONS

POTENTIAL STRUCTURAL AND    [_]  Advantages to Public Common Unitholders
QUALITATIVE ADVANTAGES           -  Increase in cash available for distribution
AND DISADVANTAGES TO             -  Increase in the MQD to $2.30
THE PUBLIC COMMON                -  Priority in payment of MQD and arrearages
UNITHOLDERS.                        over Senior Subordinated, Junior 
Subordinated and G.P. unitholders during 
subordination period
-  Distributions on Senior Subordinated, Junior
Subordinated and General Partner units 
limited to amount of distributable cash 
generated during subordination period
-  Distributions on Senior Subordinated, Junior
Subordinated and General Partner Units and
conversion of Special Incentive Rights based
on actual results versus adjusted for normal
weather
-  Earliest date on which the subordination 
period would end extended to July 2002
-  Acquisition growth opportunities in retail 
home heating oil distribution industry at 
historically lower multiples than retail
propane distribution industry
-  Increase in market capitalization with 
potential for more liquidity
-  Diversifies geographic customer base

[_]  Disadvantages to Public Common Unitholders
-  Petro is several times the Partnership's 
size, thus changing the nature of the 
Partnership's business
-  Petro's history of operational and financial
difficulties
-  Increases seasonality and weather risk
-  Taxable income will increase at a greater 
rate
-  No assurance that Petro can continue 
improvements (reduce attrition and improve 
profit margins) while making attractive 
acquisitions
-  Potential dilution in the event that the 
Partnership pro forma for the Transaction
fails to meet its projections

Page 12

SUMMARY OF OBSERVATIONS AND CONCLUSIONS
(continued)

IMPLIED UNIT     [_]  A.G. Edwards calculated a range of values for the Senior
VALUE ANALYSIS        Subordinated, Junior Subordinated and General Partner
units, based on a required rate of return, trading yield,
and discount to the common units. (See Appendix D -
"Implied Unit Value Analysis")

----------------------------------------------------------
Estimated Unit Prices Summary

Senior Subordinated Units
--------------------------------------------------------------------------------

Range
----------------------
Required rate of return (a)        20.0% - 30.0%              $17.90 - 22.28
Trading yield (b)                  11.5% - 13.5%              $17.04 - 20.00
Discount to common units (c)       10.0% - 20.0%              $16.21 - 18.23

Range                        $16.21 - 22.28
Adjusted Range (d)           $17.04 - 20.00

----------------------
Assumed value (e)                $18.52
----------------------

Junior Subordinated and GP Units
--------------------------------------------------------------------------------

Range
----------------------
Required rate of return (a)       35.0% - 45.0%               $14.52 - 16.84
Trading yield (b)                 14.0% - 16.0%               $14.38 - 16.43
Discount to common units (c)      25.0% - 35.0%               $13.17 - 15.19

Range                       $13.17 - 16.84
Adjusted Range (d)          $14.38 - 16.43

----------------------
Assumed value (f)               $15.41
----------------------

(a)  Represents required rate of return during subordination period, which is 
assumed for the minimum three years. Thereafter, the rate of return is
assumed to equal that of the common units, for a blended required rate of
return of 12.4% to 15.3% for the Senior sub and 16.25% to 18.7% for the
Junior sub and GP units. 
(b)  Based on a $2.30 annualized MQD.
(c)  Based on a discount to the common unit's average closing price for the last
20 trading days ended 10/14/98 of $20.26.
(d)  Represents the middle value of both the range of highs and lows.
(e)  Implied required rate of return, trading yield and discount to common at a
unit price of $18.52 are 28.1% during subordination (14.7% blended), 12.4%,
and 8.6%, respectively.
(f)  Implied required rate of return, trading yield and discount to common at a
unit price of $15.41 are 39.4% during subordination (17.6% blended), 14.9%,
and 23.9%, respectively.

Page 13

SUMMARY OBSERVATIONS AND CONCLUSIONS
(continued)

PRO FORMA MERGER     [_]   A.G. Edwards analyzed the impact of the Transaction
ANALYSIS                   on the Partnership's distributable cash flow per 
unit, the related accretion, common unit coverage and
total unit coverage on a pro forma basis. (See
Appendix E -"Pro Forma Merger Analysis")

-----------------------------------------------------

15-Year Weather                      30-Year Weather
---------------------------         ---------------------------
Star Gas                           Star Gas
Stand-alone      Pro Forma          Stand-alone      Pro Forma
-----------      ----------         -----------      ----------

DCF per unit  
1998 Adjusted for Actual       $ 1.27           $ 1.53             $ 1.27           $ 1.53
1998 Normalized (a)              1.62             2.15               1.84             2.40
1999 Projected                   1.77             2.31               2.02             2.60

Accretion / Dilution
1998 Adjusted for Actual                        $ 0.26                              $ 0.26
1998 Normalized (a)                               0.53                                0.56
1999 Projected                                    0.54                                0.58

Common unit coverage
1998 Adjusted for Actual         0.96x            0.89x              0.96x            0.89x
1998 Normalized (a)              1.22             1.25               1.38             1.39
1999 Projected                   1.30             1.33               1.51             1.51

Total unit coverage    
1998 Adjusted for Actual         0.58x            0.66x              0.58x            0.66x
1998 Normalized (a)              0.74             0.94               0.84             1.05
1999 Projected                   0.81             1.00               0.92             1.13

_____________________________________________________

(a)  Adjusted to represent normal weather.

Page 14

SUMMARY OF OBSERVATIONS AND CONCLUSIONS
(continued)

MERGER PREMIUMS TO            [_]  A.G. Edwards analyzed the premium of the
MARKET VALUE ANALYSIS              consideration to be received by Petro Common
Stockholders and compared the premium to
Petro's current and historical prices. These
premiums were compared to premiums paid in
acquisitions of majority or remaining
interests announced and completed between
January 1, 1996 and October 7, 1998 where the
target's share price one week prior to the
announcement date was either (i) equal to or
less than $5, (ii) greater than $5 and less
than $10, or (iii) equal to or greater than
$10. (See Appendix F - "Merger Premiums to
Market Value Analysis")

[_]  Premiums were calculated one day, one week,
four weeks, three months and one year prior
to the announcement of the agreement in
principle for each merger.

=================================================================================================== 
COMPARISON OF PREMIUMS PAID                                                                          
===================================================================================================  
Petro at      Mean of Transactions     Mean of Transactions    
Premium to stock price prior       $2.43 per Unit        Equal to or            Greater Than $5      
to announcement on August 14th:    Offer Price         Less Than $5          and Less Than $10      
---------------------------------------------------------------------------------------------------  

One Day prior:                         29.6%               39.7%                     34.3%           
One week prior:                        38.9%               48.8%                     42.3%           
Four weeks prior:                      17.8%               55.4%                     48.5%          
Three months prior:                    52.5%               67.1%                     58.0%       
One year prior:                       -19.0%               53.8%                     45.8%       
-------------------------------------------------------------------------------
Maximum           52.5%               67.1%                     58.0%         
Minimum          -19.0%               39.7%                     34.3%         
===============================================================================

--------------------------------------------------------------
COMPARISON OF PREMIUMS PAID                                   
--------------------------------------------------------------
Mean of Transactions   
Premium to stock price prior                Equal to or       
to announcement on August 14th:        Greater Than $10      
--------------------------------------------------------------

One Day prior:                             28.1%              
One week prior:                            32.7%              
Four weeks prior:                          39.6%              
Three months prior:                        77.9%              
One year prior:                            53.2%              
------------------------------------------
Maximum               77.9%              
Minimum               28.1%              
========================================== 

[_]   A.G. Edwards observed that the means of
transactions equal to or less than $5 were
higher than the Petro premiums and higher
than a majority of the means of other
transactions.

[_]  The premium to Petro's current stock price
($1.031 as October 14, 1998) was 135.6%.

Page 15

SUMMARY OF OBSERVATIONS AND CONCLUSIONS
(continued)

RELATIVE CONTRIBUTION         [_]  A.G. Edwards analyzed the relative pro forma
ANALYSIS                           contribution of both Star Gas and Petro to
the ownership of capital in the pro forma
entity based on Star Gas' and Petro's
historical results from operations and their
respective projections. (See Appendix G -
"Relative Contribution Analysis")

[_]  During 1996 -1997, Star Gas would have
contributed approximately 26.7% and 35.4% to
the combined entity's gross profit and
EBITDA, respectively.

[_]  On a pro forma basis during 1998-1999, using
30-year weather, Star Gas is projected to
contribute approximately 28.8% and 32.8% to
the combined entity's gross profit and
EBITDA, respectively (or 29.0% and 32.4%,
respectively, assuming 15-year weather).

[_]  For its gross profit and EBITDA
contributions, Star Gas is expected to
receive approximately 37.1% of the pro forma
implied firm value.

IMPLIED FIRM VALUE

[GRAPH APPEARS HERE]

----------------------------
[_] Petro       [_] Star Gas
----------------------------
Page 16

SUMMARY OF OBSERVATIONS AND CONCLUSIONS
(continued)

DISCOUNTED CASH FLOW           [_] A.G. Edwards performed discounted cash flow
ANALYSIS                           analyses for Petro, Star Gas and Star Gas
Pro Forma using projected tax-adjusted
operating cash flows for 1999 through 2002,
terminal values calculated on 2002 EBITDA,
and discount rates based on the related
weighted average cost of capital. (See
Appendix H -"Discounted Cash Flow Analysis")

=================================================================
PETRO STAND ALONE
-----------------------------------------------------------------
15 YEAR              TERMINAL VALUE EBITDA MULTIPLE
-------------------------------------------------
6.0x      6.5x      7.0x     7.5x        8.0x      
----------------------------------------------------------------- 

13.4%     $49,406   $65,422   $81,439   $97,455   $113,472    

WACC 13.6%      47,103    62,984    78,865    94,746    110,628    

13.9%      44,822    60,570    76,317    92,064    107,812    
----------------------------------------------------------------- 

----------------------------------------------------------------- 
30 YEAR               TERMINAL VALUE EBITDA MULTIPLE                      
------------------------------------------------------- 
6.0x      6.5x      7.0x      7.5x       8.0x        
----------------------------------------------------------------- 

13.4%     $64,921   $81,662   $98,403  $115,143   $131,884     

WACC  13.6%      62,511    79,110    95,709   112,308    128,908     

13.9%      60,124    76,583    93,042   109,502    125,961     
-----------------------------------------------------------------

[_] A.G. Edwards noted that the Petro Stand Alone
discounted cash flow values were greater than
the implied equity value being paid for
Petro's heating oil assets of $25.5 million,
as calculated on page C-5 of Appendix I.

Page 17

SUMMARY OF OBSERVATIONS AND CONCLUSIONS
(continued)

DISCOUNTED CASH FLOW                                           STAR GAS STAND ALONE                        
-------------------------------------------------------------------   
ANALYSIS (continued)                   15 YEAR        TERMINAL VALUE EBITDA MULTIPLE                        
-------------------------------------------------
9.0x       9.5x      10.0x      10.5x     11.0x         
-------------------------------------------------------------------    

6.8%      $92,914   $99,255   $105,597  $111,939  $118,281      

WACC    7.0%       91,847    98,141    104,436   110,730   117,024      

7.2%       90,790    97,037    103,284   109,532   115,779      
-------------------------------------------------------------------     

-------------------------------------------------------------------     
30 YEAR   TERMINAL VALUE EBITDA MULTIPLE                       
-------------------------------------------------
9.0x      9.5x      10.0x     10.5x     11.0x        
-------------------------------------------------------------------     

6.8%      $103,675  $110,428  $117,181  $123,935  $130,688     

WACC    7.0%       102,537   109,240   115,942   122,645   129,347     

7.2%       101,410   108,062   114,714   121,367   128,019     
-------------------------------------------------------------------     

STAR GAS PRO FORMA                       
-------------------------------------------------------------------     
15 YEAR   TERMINAL VALUE EBITDA MULTIPLE                        
-------------------------------------------------   
9.0x      9.5x      10.0x     10.5x     11.0x         
-------------------------------------------------------------------  

7.3%      $128,663  $136,782  $144,902  $153,021  $161,141      

WACC     7.5%       127,328   135,389   143,449   151,510   159,570      

7.7%       126,006   134,008   142,010   150,012   158,014      
------------------------------------------------------------------- 

------------------------------------------------------------------- 
30 YEAR   TERMINAL VALUE EBITDA MULTIPLE                       
------------------------------------------------
9.0x      9.5x      10.0x     10.5x     11.0x        
------------------------------------------------------------------- 

7.3%      $139,743  $148,282  $156,820  $165,358  $173,896     

WACC     7.5%       138,338   146,815   155,291   163,767   172,243     

7.7%       136,946   145,360   153,775   162,190   170,605     
------------------------------------------------------------------- 

[_]   A.G. Edwards noted that the Star Gas Pro
Forma discounted cash flow values were
greater than (1) the Star Gas Stand Alone
discounted cash flow values and (2) the
current equity market value of Star Gas of
$124.9 million as of October 14, 1998.

Page 18

SUMMARY OF OBSERVATIONS AND CONCLUSIONS
(continued)

COMPARABLE               [_]  A.G. Edwards noted that public disclosure 
TRANSACTIONS ANALYSIS         regarding transactions in the retail home heating 
oil distribution industry was extremely limited.

[_]  A.G. Edwards analyzed the financial terms 
related to divestitures by Petro of certain of 
its retail home heating oil branches and 
compared them to the implied multiples of the 
aggregate purchase price of Petro's heating oil 
assets.

[_]  Petro has sold three branches for an average 
EBITDA multiple of 9.0x.
-----------------------

[_]  A.G. Edwards calculated the purchase price of 
Petro's heating oil assets and calculated 
multiples based on Petro's EBITDAs. (See 
Appendix I - "Comparable Transaction Analysis")

-------------------------------------------------------

Purchase Price of Heating Oil Assets
-------------------------------------

Equity purchase price of heating oil assets
including SIRs                                           $ 25,549
Cost of debt to be Redeemed ($206,250 + $2,844 premium)      209,094
Cost of Debt to be Assumed                                    69,646
Cost of Preferred stock at Redemption Value                   31,767
Consent Fees                                                   2,110
Transaction Fees                                              19,343
--------
Aggregate purchase price of heating oil assets              $357,509
--------

Multiples
-------------------------------------------------------

Notes
--------------------------------

15 - Year           30 - Year      
----------------   ---------------

1997 Normalized EBITDA (a)               -         -     43,040   8.3x     As a multiple of aggregate 
transaction value.
Normalized 1998 EBITDA budget (a)   44,749      8.0x     46,900   7.6x     As a multiple of aggregate 
transaction value.
1999 Projected EBITDA (a)           46,463      7.7x     48,706   7.3x     As a multiple of aggregate
transaction value.

______________________________________________________
(a)  Calculated as gross profit minus SG&A expense and 
direct delivery expense.

Page 19

SUMMARY OF OBSERVATIONS AND CONCLUSIONS
(continued)

PUBLIC COMPANY         [_]  A.G. Edwards compared certain financial and market
ANALYSIS                    information of Star Gas on a historical and pro 
forma basis to that of certain public propane 
master limited partnerships which A.G. Edwards 
deemed relevant for the purposes of this analysis.
A.G. Edwards reviewed the trading multiples of a
total of six master limited partnerships. (See 
Appendix J - "Public Company Analysis")

[_]  The selected propane master limited partnerships 
are as follows:

-  AmeriGas Partners, L.P.               -  Heritage Propane Partners, L.P.
-  Cornerstone Propane Partners, L.P.    -  National Propane Partners, L.P.
-  Ferrellgas Partners, L.P.             -  Suburban Propane Partners, L.P.

[_]  No partnership used in the analysis is identical to 
Star Gas.

========================================================================================================
PUBLIC COMPARABLE COMPANIES (a)
========================================================================================================
Star           Pro Forma Star    Public Company   Public Company
-----------------  ------------------
15-Year   30-Year   15-Year   30-Year     Medians           Ranges   
--------------------------------------------------------------------------------------------------------

Yield                           11.2%     11.2%     11.8%     11.8%       10.1%        9.1%  to  23.3%
Firm value/LTM EBITDA (b)       12.5x     12.5x     10.0x     10.0x       11.6x        9.0x  to  12.7x
Firm value/1999E EBITDA         10.2x      9.6x      8.1x      7.7x        9.2x        8.4x  to  11.1x
Equity Market Cap/LTM DCF (c)   15.4x     15.4x     12.5x     12.5x       13.4x        8.1x  to  15.3x
Equity Market Cap/1999E DCF     10.6x      9.6x      8.1x      7.4x        9.8x        4.9x  to  12.2x 
--------------------------------------------------------------------------------------------------------

(a) Public comparable companies include: APU, CNO, FGP, 
HPG, NPL and SPH.
(b) Firm value/adjusted for actual 1998 budget EBITDA for
Star and Pro Forma Star.
(c) Equity market cap/adjusted for actual 1998 budget 
EBITDA for Star and Pro Forma Star.

Page 20

Appendix I to

FAIRNESS OPINION PRESENTATION TO THE
SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS OF
STAR GAS CORPORATION

Analyses performed under 30-year weather scenario

CONFIDENTIAL

A.G. EDWARDS & SONS, INC.
INVESTMENT BANKING

October 16, 1998

TABLE OF CONTENTS

Section
-------

Overview of Petroleum Heat and Power Co., Inc....................     A

Overview of Star Gas Partners, L.P...............................     B

Summary of the Transaction.......................................     C

Implied Unit Value Analysis......................................     D

Pro Forma Merger Analysis........................................     E

Merger Premiums to Market Value Analysis.........................     F

Relative Contribution Analysis...................................     G

Discounted Cash Flow Analysis....................................     H

Comparable Transactions Analysis.................................     I

Public Company Analysis..........................................     J

Pro Forma Model..................................................     K

Overview of Petroleum Heat and Power Co., Inc. ("Petro")
Selected Financial Data
($ in thousands)

- ------------------------------------------------------------------------------------------------------------------------------------
Historical Years Ended December 31,
-------------------------------------------------------------------------------------------------------------
1993         %        1994(a)      %        1995(a)      %        1996         %        1997         %
- ------------------------------------------------------------------------------------------------------------------------------------

Net sales             $538,526    100.0%    $546,677    100.0%    $609,507    100.0%    $608,161    100.0%    $548,141    100.0%
% Growth                                       1.5%                 11.5%                 -0.2%                 -9.9%
Cost of sales          366,810     68.1%     362,981     66.4%     387,825     63.6%     427,388     70.3%     379,748     69.3%
------------------    ------------------    ------------------    ------------------    ------------------
Gross profit           171,717     31.9%     183,696     33.6%     221,682     36.4%     180,773     29.7%     168,393     30.7%
SG&A expenses           93,379     17.3%      95,314     17.4%     128,295     21.0%     105,601     17.4%     102,377     18.7%
Direct delivery       
expense                29,902      5.6%      32,995      6.0%      36,634      6.0%      33,102      5.4%      30,006      5.5%
Restructuring         
charges                   -                     -                     -                   1,150      0.2%       2,850      0.5%
Corporate             
identity             
expenses                  -                     -                     -                   2,659      0.4%       4,136      0.8%
Pension               
curtailment          
expense                   -                     -                     -                     557      0.1%         654      0.1%
Amortization          
of customer          
lists                  23,183      4.3%      19,748      3.6%      20,527      3.4%      18,611      3.1%      17,903      3.3%
Depreciation          
of plant and         
equipment               5,933      1.1%       6,469      1.2%      12,374      2.0%       6,574      1.1%       7,204      1.3%
Amortization of       
deferred charges        5,548      1.0%       6,177      1.1%       6,142      1.0%       4,760      0.8%       4,639      0.8%
Provision for         
supplemental         
benefits                  264      0.0%         373      0.1%       1,407      0.2%         873      0.1%         565      0.1%
------------------    ------------------    ------------------    ------------------    ------------------
Operating income      
(loss)                 13,509      2.5%      22,619      4.1%      16,303      2.7%       6,886      1.1%      (1,941)    -0.4%

Interest expense, 
net                   (20,508)    -3.8%     (23,766)    -4.3%     (38,792)    -6.4%     (32,412)    -5.3%     (31,668)    -5.8%
Other income 
(expense)                (165)     0.0%         109      0.0%         218      0.0%       1,842      0.3%      11,445      2.1%
------------------    ------------------    ------------------    ------------------    ------------------
Loss before income    
taxes, equity        
interest and         
extraordinary item     (7,164)    -1.3%      (1,038)    -0.2%     (22,271)    -3.7%     (23,684)    -3.9%     (22,164)    -4.0%
Income taxes               400      0.1%         600      0.1%         500      0.1%         500      0.1%         500      0.1%
------------------    ------------------    ------------------    ------------------    ------------------
Loss before equity    
interest and         
extraordinary item     (7,564)    -1.4%      (1,638)    -0.3%     (22,771)    -3.7%     (24,184)    -4.0%     (22,664)    -4.1%
Share of income       
(loss) of Gas             -        0.0%      (1,973)    -0.4%         728      0.1%       2,283      0.4%         235      0.0%
------------------    ------------------    ------------------    ------------------    ------------------
Extraordinary         
item-loss on early   
extinguishment of    
debt                     (867)    -0.2%        (655)    -0.1%      (1,436)    -0.2%      (6,414)    -1.1%         -
------------------    ------------------    ------------------    ------------------    ------------------
Net loss                (8,431)    -1.6%      (4,266)    -0.8%     (23,479)    -3.9%     (28,315)    -4.7%     (22,899)    -4.2%
Preferred stock       
dividends              (3,367)    -0.6%      (3,510)    -0.6%      (3,263)    -0.5%      (2,389)    -0.4%      (4,644)    -0.8%
------------------    ------------------    ------------------    ------------------    ------------------
Net loss to common    ($11,798)    -2.2%     ($7,776)    -1.4%    ($26,742)    -4.4%    ($30,704)    -5.0%    ($27,543)    -5.0%
==================    ==================    ==================    ==================    ==================

Net loss per share      ($0.55)               ($0.36)               ($1.06)               ($1.20)               ($1.06)
=========             =========             =========             =========             =========

Weighted average      
shares out-          
standing (b)           21,538                21,745                25,309                25,581                26,039

EBITDA (c)             $48,437      9.0%     $55,387     10.1%     $56,753      9.3%     $42,070      6.9%     $36,010      6.6%
Adjusted net loss     
to common             (10,931)    -2.0% (d)  (7,121)    -1.3% (e) (25,306)    -4.2% (f) (22,583)    -3.7% (g) (35,439)    -6.5% (h)

Adjusted net loss
per share              ($0.51)               ($0.33)               ($1.00)               ($0.88)               ($1.36)
=========             =========             =========             =========             =========

Acquisition
capital
expenditures          $15,399               $26,411               $26,438               $28,493               $16,252
Maintenance
capital
expenditures (i)        3,000                 3,000                 3,000                 3,000                 3,000
EBITDA/total
assets                  18.9%                 13.9%                 15.9%                 15.3%                 14.5%
Distributable
cash flow              24,528                28,020                14,461                 6,158                   842

- --------------------------------------------------------------------------------
(a) Star Gas operations consolidated into Petro.
(b) Weighted shares do not include Class B shares.
(c) Calculated as gross profit minus SG&A expense and direct delivery expense.
(d) Excludes $867 for early extinguishment of debt.
(e) Excludes $655 for early extinguishment of debt.
(f) Excludes $1,436 for early extinguishment of debt.
(g) Excludes $6,414 for early extinguishment of debt.
(h) Excludes $11,400 gain on sale of TLC.
(i) Management's estimates.

Page A-1

OVERVIEW OF PETRO
EBITDA RECONCILIATION: 1997(a)
($) IN THOUSANDS)

================================================================================
PETRO
-----

1997 Actual EBITDA                                                       $36,010

NORMALIZING ADJUSTMENTS:

Weather was 3.8% warmer than 30-year normal 

3.8% of 1997 budgeted retail gallons          13,482 gallons

Gross profit margin                                  $0.4545

Delivery and garage cost savings                    ($0.0814)
------

Net impact per gallon                                $0.3731

$ impact                                                              5,030

Insurance reserve                                                          2,000
------

1997 Normalized EBITDA                                                   $43,040
======

- --------------------------------------------------------------------------------

(a)  Management's assumptions.

Page A-2

OVERVIEW OF PETRO
EBITDA RECONCILIATION: 1997 - 1998 (a)
($ in thousands)

============================================================================================
PETRO
-----

1997 Normalized EBITDA                                                               $43,040

Volume Adjustments for 1998 

Sale of TLC Division in 1997                      (16,926) gallons

Attrition in 1998 (4.1%)                          (17,375)

1997 Acquisitions                                   9,828
-----

(24,473) gallons
@
$0.1700/gallon (b)        (4,159)
Gross Profit Margin Increase      $0.006 per gallon on 395,086 gallons (c)        2,371
Inflation                                                                        (3,662)

Operating Cost Reductions (d)                                                     5,850

Non-Budgeted Operating Expense 
Eliminations (e)                                                                  3,460
------
Normalized 1998 EBITDA Budget                                                        $46,900
======
- --------------------------------------------------------------------------------------------

(a)  Management's assumptions.
(b)  Represents the average gross profit per gallon ($.4700 per gallon) offset 
by $.30 per gallon reduction in operating expenses.
(c)  Actual gross profit margin increase achieved in first quarter of 1998 was 
$5.9 million (156 million gallons @ $0.037/gallon).
(d)  Represents already accomplished reductions as of 12/31/97 in branch,
regional and corporate expenses in excess of normal indexing related to
volume reductions as well as 1% productivity improvements.
(e)  Represent specific operating expense eliminations that have already been 
accomplished.

Page A - 3

OVERVIEW OF PETRO
EBITDA RECONCILIATION:  NON-BUDGETED OPERATING EXPENSE ELIMINATIONS
($ IN THOUSANDS)

BASE EXPENSE
------------

Exton PA Facility Rent                            $   500

Corporate Staff Reductions - Salary & Benefits  
Alex Tyshovnytsky                                  310
Allen Levenson                                     279
Joe Massoud                                        310

Total Staff Reductions                                900

Wage Freeze - Non-Union                             1,373

Wage Freeze - Union                                   687
------------
Total                                             $ 3,460

Page A-4

OVERVIEW OF PETRO
EBITDA RECONCILIATION: 1998 (a)
($ in thousands)

=====================================================================
PETRO
-----

Normalized 1998 EBITDA Budget                                $46,900
Actual Differential between first seven months of 
Fiscal 1998 vs. Budget                                      (11,741)  
Revised margin improvement based on results from the 
first seven months of Fiscal 1998                             2,471
-------
Adjusted for Actual 1998 EBITDA Budget                       $37,630    
=======

- ---------------------------------------------------------------------
(a) Management's assumptions.

Page A-5

OVERVIEW OF PETRO
EBITDA RECONCILIATION:  1998-1999 (a)
($ in thousands)

- --------------------------------------------------------------------------------------------------------------
PETRO 
----- 

Normalized 1998 EBITDA Budget                                                                       $46,900

Attrition (3.8%) and Inflation (3.0%) partially offset by $0.01 Margin Increase in 1999             (1,352)

Acquisition Growth                                                                                         
$30,000 of acquisitions at 4.75 x multiple using half-year convention (b)                        3,158 
-------

1999 Projected                                                                                      $48,706 

_______________________________________________________________
(a)  Management's assumptions.
(b)  A.G. Edwards' assumption.

Page A-6

OVERVIEW OF PETRO
EBITDA SUMMARY
($ in thousands)

---------------------------------------------------------

PETRO
-----

1997 Actual                                     $36,010
1997 Normalized                                 $43,040

Normalized 1998 Budget                          $46,900

Adjusted for Actual 1998 Budget                 $37,630

1999 Projected                                  $48,706
- ---------------------------------------------------------------

Page A-7

OVERVIEW OF PETRO
EBITDA PROJECTIONS
($ IN THOUSANDS)

-----------------------------------------------------------------------------

ADJUSTED FOR 
ACTUAL        NORMALIZED              PROJECTED
-----------------------------------
1998            1998        1999     2000     2001     2002
----------------------------------------------------------------

EBITDA       $37,630         $46,900     $48,706  $51,196  $53,390  $55,385

- --------------------------------------------------------------------------------

MAJOR ASSUMPTIONS FOR 1999 - 2002
---------------------------------

[_]   30 Year Weather

[_]   Flat Attrition.

[_]   $30 million of acquisitions at 4.75x EBITDA multiple using half-year
convention.

[_]   Increase in gross profit margin of $0.01 in 1999 and $0.005 annually in
2000 to 2002.

Page A-8

OVERVIEW OF PETRO
ATTRITION ANALYSIS

====================================================================================================================
Average Accounts            Absolute Account Losses         Loss Rate               Gains 
------------------------------  ----------------------------   ---------------     ---------------------
Base Business,                Base Business,                                
Year        Total     excl. Acquisitions   Total    excl. Acquisitions   Total     Base       Accounts        %    
- ---------   ---------   ------------------  -------  -------------------   -----    ------     ----------    -------

1993       391,454         352,576         70,127         56,459         17.9%     16.0%       47,090       12.0%          
1994       386,235         354,786         57,442         46,386         14.9%     13.1%       35,380        9.2%
1995       381,842         344,342         59,550         46,366         15.6%     13.5%       34,516        9.0%
1996       386,398         354,471         60,084         48,860         15.5%     13.8%       39,192       10.1%     
1997       366,421         342,738         60,407         52,581         16.5%     15.3%       39,561       10.8%

- --------------------------------------------------------------------------------------------------------------------
Mean         382,470         349,783         61,522         50,130         16.1%     14.3%       39,148       10.2%     
- --------------------------------------------------------------------------------------------------------------------

6/98 YTD     342,065         328,112         48,485         43,967         14.2%     13.4%       38,296       10.8%  

Net Attrition Rate
-----------------------------                    
Base
Year            Total          Business     
- ---------      -----------    --------------

1993              -5.9%          -4.0%
1994              -5.7%          -3.9%
1995              -6.6%          -4.5%
1996              -5.4%          -3.7%
1997              -5.8%          -4.5%

- --------------------------------------------
Mean                -5.9%          -4.1%
- --------------------------------------------

6/98 YTD            -5.8%          -2.6%

Page A-9

Overview of Petro
Acquisition History
($ in thousands)

Date                                                                  EBITDA          Acquired         Cost per
Acquired      Company               Purchase Price      EBITDA         Multiple         Gallonage         Gallon       
- --------      -------               --------------      ------         --------         ---------        --------

1/26/93       Houck Service             $663.9          $245.0           2.7x             807.2           $0.823
1/28/93       Harris and Gans          1,607.9           475.0           3.4x           2,599.6            0.619
5/28/93       Goodrich                 2,397.7           672.0           3.6x           4,156.0            0.577
6/4/93        Warren                   2,965.0           712.0           4.2x          14,448.3            0.205
6/23/93       Savin                    1,655.4           403.0           4.1x           2,769.0            0.598
6/25/93       Baylis and Baylis          989.3           251.0           3.9x           1,224.7            0.808
7/28/93       Agway                    1,660.6           315.0           5.3x           2,708.5            0.613
9/28/93       Garden State             1,015.2           312.0           3.3x           1,408.0            0.721
9/29/93       Essex                      866.3           234.0           3.7x           2,649.4            0.327
---------         -------        -------         ---------          -------
1993  Totals                      $13,821          $3,619           3.8x            32,771           $0.422
=========         =======        =======         =========          =======

1/7/94        Petrilla Oil              $189.5           $53.4           3.5x             329.0           $0.576
3/8/94        Rettig                   1,813.0           466.0           3.9x           4,930.0            0.368
6/30/94       Deblois Oil             15,374.6         2,909.0           5.3x          19,869.0            0.774
7/26/94       Herbert Fuel             5,133.0           882.0           5.8x           6,103.0            0.841
7/28/94       Trico Fuel               3,126.3           930.0           3.4x           4,091.0            0.764
9/1/94        Stickley                 1,261.4           355.0           3.6x           1,702.0            0.741 
9/13/94       Sinkler                  4,880.0           948.0           5.1x           7,433.0            0.657
12/1/94       Ryan                     2,954.3           528.0           5.6x           4,804.0            0.615
12/2/94       Fowler                     182.8            37.4           4.9x             354.0            0.516
---------         -------        -------         ---------          -------
1994 Totals                       $34,915          $7,109           4.9x            49,615           $0.704
=========         =======        =======         =========          =======

3/30/95       Reliable Oil            $6,065.6        $1,183.0           5.1x          10,102.2           $0.600
5/24/95       Rosetta (Waldman)        3,413.2           684.0           5.0x           5,153.6            0.662
5/24/95       Rosetta (Price)            789.4           153.0           5.2x           1,309.5            0.603
7/27/95       Slocum                     643.8           198.0           3.3x             742.6            0.867
8/23/95       Contex                   1,856.8           448.0           4.1x           2,503.2            0.742
8/31/95       Rackliffe                  546.2           139.0           3.9x             904.0            0.604
9/1/95        A-One                    5,184.2         1,164.0           4.5x           5,900.0            0.879
9/11/95       Reading Merchants        4,260.0           656.0           6.5x           3,613.0            1.179
10/25/95      Franklin Fuel              293.5            76.0           3.9x             445.0            0.660
11/17/95      Home Fuel                2,158.9           430.0           5.0x           6,072.3            0.356
12/19/95      Texaco                   3,854.8         1,071.0           3.6x           5,845.1            0.659
---------         -------        -------         ---------          -------
1995 Totals                      $29,066           $6,202           4.7x            42,590           $0.682
=========         =======        =======         =========          =======

Overview of Petro
Acquisition History
($ in thousands)
(continued)  ---------------------------------------------------------------------------------------------------------------

Date                                                                     EBITDA          Acquired          Cost per
Acquired           Company           Purchase Price     EDITDA           Multiple         Gallonage          Gallon  
--------           -------           --------------     ------           --------         ---------         --------

1/11/96            Garrison           $5,242.5        $1,154.0           4.5x             6,017.0           $0.871 
1/19/96            Cibro               4,367.6         1,087.0           4.0x             6,200.0            0.704 
2/1/96             Seaman              7,133.7         1,552.0           4.6x             7,522.0            0.948 
4/1/96             McDowell            2,723.5           669.0           4.1x             2,675.0            1.018 
9/11/96            Flynn               1,038.0           232.0           4.5x             1,316.0            0.789 
9/24/96            Farren                263.6            69.0           3.8x               481.0            0.548 
10/18/96           Bergen              3,202.5           718.0           4.5x             5,933.0            0.540 
10/18/96           Hightstown            233.5            62.0           3.8x               500.0            0.467 
10/31/96           Hy-Test               813.4           177.0           4.6x             1,468.0            0.554 
12/18/96           Dexter                331.9            99.0           3.4x               796.0            0.417 
12/26/96           Sherman               492.5           103.0           4.8x               564.0            0.873 
12/27/96           Malco                 369.2            97.0           3.8x               988.0            0.374 
12/30/96           Grasso                422.9           116.0           3.6x             1,212.0            0.349 
--------        --------         --------          --------         --------
1996 Total            $26,635          $6,135           4.3x              35,672           $0.747 
========        ========         ========          ========         ========
1/15/97            Oils Inc             $747.6          $188.0           4.0x             1,189.0           $0.629 
4/14/97            Mugullian Fuel      2,801.9           638.0           4.4x             3,000.0            0.934 
5/14/97            Alderfer Heating      401.1           111.0           3.6x               787.0            0.510 
6/26/97            Bellomo             1,488.8           443.0           3.4x             1,657.0            0.898 
7/10/97            Good                  521.4           117.0           4.5x             1,200.0            0.434 
8/29/97            Oil Burner          2,633.1           603.0           4.4x             3,500.0            0.752 
9/10/97            Romary              2,252.5           545.0           4.1x             2,348.0            0.959 
9/29/97            T.W. Perry          1,619.3           439.0           3.7x             2,118.0            0.765 
10/1/97            Millbrook             527.5           112.0           4.7x               908.0            0.581 
11/24/97           Shreve              1,457.0           300.0           4.9x             2,425.0            0.601 
12/18/97           Genovese            1,010.8           281.0           3.6x             1,522.0            0.664 
========        ========         ========          ========         ========
1997 Totals            $15,461          $3,777           4.1x              20,654           $0.749 
========        ========         ========          ========         ========
5 YEAR TOTALS                       $119,898         $26,842           4.5x             181,302           $0.661 
========        ========         ========          ========         ========

Overview of Petro
Divestiture History
($ in thousands)

-------------------------------------------------------------------------------------------------------

A.G. Edwards noted that     Date                                                                     EBITDA     Acquired   Cost per 
public disclosure           Divested   Branch            Purchaser           Purchase Price  EBITDA  Multiple   Gallonage   Gallon
regarding transactions      --------   ------            ---------           --------------  ------  --------   ---------   ------
in the retail home          3/30/95  New Hampshire  Bellemore Heating Oil, Inc.     $1,477     $150    9.8x       6,060     $0.244
heating oil distribution    6/28/96  Punderson      Ultramar Energy, Inc.           $4,073     $443    9.2x       6,900     $0.590
industry was extremely      11/4/97  TLC            Heating Oil Partners, L.P.     $16,100   $2,005    8.0x      23,000     $0.700
limited.  A.G. Edwards                                                                                 ----
analyzed the financial      
terms related to the                                                                         Mean:     9.0x
divestitures by Petro of                                                                               ----
certain of its retail home 
heating oil branches.

Page A-12

Overview of Petro
Margin Analysis
(Volume in gallons; gallons and $ in thousands, except margins)

- ---------------------------------------------------------------------------------------------------------
Fiscal Years Ended December 31,
---------------------------------------------------------------
1993         1994         1995         1996          1997
----------   -----------  ----------   -----------   ----------

RETAIL (a)                                 
Volume                                   355,347       360,207     343,759       375,121

338,478
Margin                                  $ 0.4883      $ 0.5030    $ 0.5027      $ 0.4993      $ 0.5196
--------      --------    --------      --------      --------

Gross profit                            $173,501      $181,202    $172,811      $187,290      $175,867

COMMERCIAL
Volume                                    81,515        79,514      75,476        81,020        71,813
Margin                                  $ 0.2301      $ 0.2416    $ 0.2458      $ 0.2471      $ 0.2452
--------      --------    --------      --------      --------

Gross profit                            $ 18,755      $ 19,214    $ 18,554      $ 20,018      $ 17,607

PROPANE
Volume                                     6,625         7,435       5,538         --            --
Margin                                  $ 0.5352      $ 0.5730    $ 0.5805      $ 0.0000      $ 0.0000
--------      --------    --------      --------      --------

Gross profit                            $  3,546      $  4,260    $  3,215         --            --

OTHER PETROLEUM PRODUCTS
Volume                                    36,406        35,709      31,228        32,026        29,855
Margin                                  $ 0.1424      $ 0.1417    $ 0.1481      $ 0.1401      $ 0.1424
--------      --------    --------      --------      --------

Gross profit                            $  5,183      $  5,061    $  4,624      $  4,487      $  4,251

TOTAL PETROLEUM PRODUCTS
Volume                                   479,893       482,865     456,001       488,167       440,146
Margin                                  $ 0.4188      $ 0.4344    $ 0.4368      $ 0.4339      $ 0.4492
--------      --------    --------      --------      --------

Gross profit                            $200,985      $209,737    $199,204      $211,795      $197,725
--------      --------    --------      --------      --------

DISCOUNTS                                 $  1,294      $  1,200    $    944      $  1,084      $    802
--------      --------    --------      --------      --------

Net service loss                          ($34,243)     ($37,941)   ($33,822)     ($37,386)     ($35,184)
Net installation income                      3,681         4,944       4,364         5,280         5,050
--------      --------    --------      --------      --------

Gross profit (loss)                     ($30,562)     ($32,997)   ($29,458)     ($32,106)     ($30,134)
--------      --------    --------      --------      --------

GAS GROSS PROFIT                             --         $  5,756    $ 50,992         --            --

Total gross profit                        $171,717      $183,696    $221,682      $180,773      $168,393
========      ========    ========      ========      ========

- ---------------------------------------
(a) Includes protected price ventures 

Overview of Petro
Discounted Cash Flow Analysis
Weighted Average Cost of Capital Derivation
($ in millions)

- ----------------------------------------------------------------------------------------------------------------------------------

Total                                Implied     Total     Total
Market         Unit       Total       Market     Debt/    Debt as %    Un-
Levered    Val. Debt     Price at     Units      Value of    Total    of Total   levered
Comparable Company                       Beta (a)   (Bk = Mkt)   (10/14/98)   Out (Mil)    Equity     Equity   Capital    Beta
- ----------------------------------------------------------------------------------------------------------------------------------

AmeriGas Partners, L.P.                  0.42       $711.1       $24.125      41.9        $1,031.2     69.0%   40.8%      0.249
Cornerstone Propane Partners, L.P.       0.45        240.9        18.000      19.9           365.2     66.0%   39.8%      0.271
Ferrellgas Partners, L.P.                0.46        504.1        20.000      31.3           638.6     78.9%   44.1%      0.257
Heritage Propane Partners, L.P.          0.42        177.8        20.813       8.5           180.0     98.8%   49.7%      0.211
National Propane Partners, L.P.          0.61        145.5         9.438      11.2           108.2    134.5%   57.4%      0.260
Star Gas Partners, L.P.                  0.39        109.8        19.563       6.3           124.9     87.9%   46.8%      0.208
Suburban Propane Partners, L.P.          0.40        427.9        19.625      28.7           575.3     74.4%   42.7%      0.229

Comparable group's average unlevered beta:                              0.24
Petro's debt - to - equity ratio:                                     1123.5%
Petro's debt as a percent of total capital:                             91.8%
Comparable group's beta relevered for Petro's capital structure:       2.945
======

Petro's capitalization at market
Total debt (b)      $310.0      91.8%
Common equity         27.6       8.2%
------    ------
100.0%   $337.6 

Derivation of Weighted Average Cost of Capital:
- -----------------------------------------------                                                                          
Market Risk Premium Range (e)   
-----------------------------  
Petro's theoretical levered beta (d):                             2.945                       11.3%     12.3%     13.3%  
Assumed % of equity in Petro's capital structure:                   8.2%                  -----------------------------  
Risk - free rate of return (c):                                     4.6%                                                    
Petro's cost of equity range (at various market risk premiums):                               37.9%     40.8%     43.8%           
Petro's assumed tax rate:                                           0.0%                      =====     =====     =====  
Assumed % of debt in capital structure (b):                        91.8%                                                 
Petro's estimated cost of debt (f):                                11.2%                  
Petro's estimated after-tax cost of debt:                          11.2%                      11.2%     11.2%     11.2%  
-----------------------------   
Petro's weighted average cost of capital range (g):                                           13.4%     13.6%     13.9%  
- ---------------------------------------------------------------                           -----------------------------  

(a) Source: Bloomberg. 143 week (maximum weekly time period allowed, or the
number of weeks available, which may be less than 143) adjusted beta
relative to the S&P 500 index.
(b) Includes preferred stock; not net of cash.
(c) Ten - year Treasury rate on October 14, 1998.
(d) Bloomberg's reported beta for Petro is .60.
(e) Ibbotson Associates 1997.  Total returns for small company stocks of 17.7% 
minus the risk-free rule.
(f) Based on Petro's current debt structure.
(g) Calculation based upon use of the Capital Asset Pricing Model (CAPM).

Page A-14

Overview of Petro
Summary of Capital Structure
($ in thousands)

------------------------------------------------------------------------------------------------------------------
6/30/98                   10/14/98                     
Book Value     Coupon     Market Price     Market Value  
------------  ----------  --------------  ----------------

Debt:                                                                                                            
Credit Agreement                                                                                                 
Working Capital facility                               $       0        7.75%           NA          $       0 
Acquisition facility                                           0        7.75%           NA                  0  
Notes payable
Notes payable for fuel oil dealer purchases, etc.         14,528   8.0%-10.0%           NA             14,528
11.85%, 12.17%, 12.18% Senior Notes                       60,000       11.96%           NA             60,000
14.1% Subordinated and Senior                              6,200       14.10%           NA              6,200
10.125% Subordinated                                      50,000       10.13%       92.50%             46,250
9.375% Subordinated Debentures                            75,000        9.38%       92.50%             69,375   
12.25% Subordinated Debentures                            81,250       12.25%       92.50%             76,781

Total debt                                           $ 286,978                                    $ 273,134
Effective cost of debt                                                                                 11.0%

Preferred Stock:
Redeemable preferred stock                                $   8,334       14.34%           NA              8,334
12.875% Exchangeable preferred stock                         30,000       12.88%           NA             30,000
Adjustment to balance sheet                                  (1,480)                       NA             (1,480)

Total preferred stock                                $  36,854                                     $ 38,854  
Effective cost of preferred stock                                                                      13.2% 
Total Debt and Preferred Stock                            $ 323,832                                     $309,988
Effective cost of debt and preferred stock                                                             11.2% 

Page A-15

OVERVIEW OF PETRO
SUMMARY OF CAPITAL STRUCTURE
($ IN THOUSANDS EXCEPT PER SHARE)
(continued)

======================================================================================================
9/30/98                10/14/98                                
SHARES OUT            MARKET PRICE             MARKET VALUE     
----------            ------------             ------------     

EQUITY:                                                                                               
Common Stock                                                                                          
Class A                          23,964,962              $ 1.031                  $24,714         
Class B                              11,228               17.776 (a)                  200         
Class C                           2,597,519                   NA (b)                2,679         

TOTAL EQUITY                                                                      $27,592         
EFFECTIVE COST OF EQUITY                                                             40.8%        

TOTAL CAPITALIZATION                                                                  $337,580        
WACC                                                                                 13.6%       
Less: Cash                                                                         33,223

NET CAPITALIZATION                                                                    $304,357        

NET MARKET             MARKET VALUE     
% OF OWNERSHIP        VALUE OF STAR GAS         OF INTEREST        
--------------        -----------------        ------------
LESS:
Interest in Star Gas                  40.7%             $234,147                  $95,204

TOTAL CAPITALIZATION OF PETRO WITHOUT INTEREST IN STAR GAS                            $242,376

(a)  Market price is calculated as: $17.50+$0.276
(b)  Market price is assumed to equal that of the Class A shares, since the
Class C shares do not trade.

Page A-16

OVERVIEW OF PETRO

Price and Volume 
12/15/95 - 12/31/97

[GRAPH APPEARS HERE]

Page A-17

OVERVIEW OF PETRO

Price and Volume 
1/1/98 - 10/14/98

[GRAPH APPEARS HERE]

Page A-18

Overview of Petro
Class A Common Stock Trading History -- Volume Distribution
1995-1998(a)

Market Price
Pre-Announcement Price
Implied Offer Price

-----------------------------------------------------------------------------------------------------------------------------
1995                1996                  1997                1998(a)            1995-1998(a)
------------------   ------------------   ------------------   -------------------   -----------------
Price Per Share        Volume      %        Volume      %        Volume      %        Volume      %        Volume      %
--------------------   ------------------   ------------------   ------------------   -------------------   -----------------

Greater Than  $9.400
9.200   9.400         600  100.00%                                                                         600  99.42%
9.000   9.200           0   99.99%                                                                              99.42%
8.800   9.000      49,200   99.99%                                                                      49,200  99.42%
8.600   8.800       6,800   99.41%                                                                       6,800  99.26%
8.400   8.600      67,500   99.33%                                                                      67,500  99.24%
8.200   8.400     289,100   98.54%                                                                     289,100  99.02%
8.000   8.200     161,500   95.13%       1,600  100.00%                                                163,100  98.07%
7.800   8.000     873,500   93.22%      47,400   99.96%                                                920,900  97.54%
7.600   7.800     245,800   82.92%     236,200   98.87%                                                482,000  94.52%
7.400   7.600     193,300   80.02%     185,000   93.44%                                                378,300  92.94%
7.200   7.400   1,154,800   77.74%     822,300   89.19%                                              1,977,100  91.70%
7.000   7.200   5,190,500   64.12%   1,507,100   70.28%                                              6,697,600  85.23%
6.800   7.000     246,000    2.90%     815,700   35.63%                                              1,061,700  63.30%
6.600   6.800                          498,500   16.88%                                                498,500  59.82%
6.400   6.600                          129,300    5.42%     417,300  100.00%                           546,600  58.19%
6.200   6.400                           37,600    2.45%     526,900   96.34%                           564,500  56.40%
6.000   6.200                           44,100    1.58%     417,700  91.72%                            461,800  54.55%
5.800   6.000                           24,700    0.57%     110,200  88.06%                            134,900  53.04%
5.600   5.800                                               868,000  87.09%                            868,000  52.60%
5.400   5.600                                               143,300  79.48%                            143,300  49.76%
5.200   5.400                                                92,600  78.22%                             92,600  49.29%
5.000   5.200                                               940,500  77.41%                            940,500  48.98%
4.800   5.000                                               142,200  69.16%                            142,200  45.90%
4.600   4.800                                                20,200  67.92%                             20,200  45.44%
4.400   4.600                                                13,900  67.74%                             13,900  45.37%
4.200   4.400                                                   -    67.62%                                -    45.33%
4.000   4.200                                                   -    67.62%                                -    45.33%
3.800   4.000                                               117,100  67.62%                            117,100  45.33%
3.600   3.800                                               370,600  66.59%                            370,600  44.94%
3.400   3.600                                               250,900  63.34%                            250,900  43.73%
3.200   3.400                                             1,236,200  61.14%                          1,236,200  42.91%
3.000   3.200                                             1,652,500  50.30%                          1,652,500  38.86%
2.800   3.000                                             2,785,300  35.81%      130,000   100.00%   2,915,300  33.45%
2.600   2.800                                               788,500  11.39%      249,100    97.94%   1,037,600  23.90%
--------------------------------------------------------------------------------------------------------------------- 
2.400   2.600                                                430,100   4.47%      270,800    93.99%     700,900  20.50%
--------------------------------------------------------------------------------------------------------------------- 
2.200   2.400                                                79,800   0.70%      964,300    89.70%   1,044,100  18.21%
2.000   2.200                                                                    345,000    74.40%     345,000  14.79%
--------------------------------------------------------------------------------------------------------------------- 
1.800   2.000                                                                  1,789,900    68.93%   1,789,900  13.66%
--------------------------------------------------------------------------------------------------------------------- 
1.600   1.800                                                                    804,500    40.55%     804,500   7.80%
1.400   1.600                                                                  1,542,400    27.80%   1,542,400   5.16%
1.200   1.400                                                                     34,800     3.34%      34,800   0.11%
--------------------------------------------------------------------------------------------------------------------- 
1.000   1.200                                                                    175,900     2.79%     175,900   0.58%
--------------------------------------------------------------------------------------------------------------------- 
Less Than  $1.000  
---------            ---------           ----------            ---------            ----------
Total Stock for Period        8,478,600            4,349,500           11,403,800            6,306,700            30,538,600
Cumulative % of Total Traded              27.76%               14.24%               37.34%                20.65%             100.00%
% Traded of Current Stock 
Out.(b)                                 35.38%               18.15%               47.59%                26.32%             127.43%
% Traded of Current Float(c)              91.99%               47.19%              123.73%                68.43%             331.34%
Wtd. Average Stock Price          $7.31                $7.07                $3.90               $1.90                 $4.89

- --------------
(a) Through October 14, 1998.
(b) Based on 23,964,962 Class A shares outstanding.
(c) Based on 9,216,760 Class A shares held by institutional and retail public 
holders.

Page A-19

Overview of Petro
Shareholder Analysis (a)

- ------------------------------------------------------------------------------------------------------------------------------------
Class A                         % of Total
Institutions (b)                     Shrs. Held      % of Total      Voting Power
- ----------------------------------  ------------    ------------     ------------

Dimensional Fund Adv.                   639,700         2.7%            1.3%
CNA Financial Group                     360,900         1.5%            0.7%
Barclays Bank plc                       340,573         1.4%            0.7%
Deltec Asset Mgmt.                      230,810         1.0%            0.5%
Vanguard Group                          215,500         0.9%            0.4%
Robert Fleming Holdings                 200,000         0.8%            0.4%
Bear, Stearns & Co.                     148,238         0.6%            0.3%
Mellon Bank                             119,904         0.5%            0.2%
Northern Trust                           84,611         0.4%            0.2%
ANB Investment Mgmt.                     51,100         0.2%            0.1%
Prudential Insurance                     48,200         0.2%            0.1%
First Source Bank                        40,000         0.2%            0.1%
World Asset Management                   33,937         0.1%            0.1%
IBM Retirement Funds                     16,300         0.1%            0.0%
DLJ Corp.                                 4,502         0.0%            0.0%
Legg Mason                                2,000         0.0%            0.0%
------------    ------------     ------------
All Institutions (c)                  2,536,275        10.6%            5.1%

Class A        % of    Class C         % of          Total           % of Total
Directors and Officers (c)      Title           Shrs. Held      Total  Shrs. Held       Total      Voting Power      Voting Power
- -----------------------------   --------------  ----------     ------  ----------      ------      ------------      ------------

Audrey L. Sevin                 Director and   
Secretary of
Petro and Star 1,876,863       7.8%     477,716        18.4%       6,654,023           13.3%
Irik P. Sevin                   Chairman, CEO 
and Director
of Petro         740,438       3.1%     201,641         7.8%       2,756,848            5.5%
Philip Ean Cohen                Director of
Petro            679,262       2.8%     113,423         4.4%       1,813,492            3.6%
Thomas J. Edelman               Director of
Petro and Star   653,312       2.7%     129,019         5.0%       1,943,502            3.9%
Vincent De Palma                VP and GM of
New York
Region             5,000       0.0%         -           0.0%           5,000            0.0%
Hanseatic Corporation
(d) (e)                                        1,777,279       7.4%     298,717        11.5%       4,764,449            9.5%
Tortosa (d)                                           -         0.0%     298,717        11.5%       2,987,170            6.0%
Hubertus Langen (d)                               734,473       3.1%       9,038         0.3%         824,853            1.7%
Wolfgang Traber (e)             Director of
Petro and Star       -         0.0%       9,038         0.3%          90,380            0.2%
Paul Biddelman (e)              Director of
Petro and Star     2,386       0.0%         -           0.0%           2,386            0.0%
-----------    ------- -----------      -------    -------------      ------------
Total Directors &
Officers Holdings                              6,469,013      27.0%   1,537,309        59.2%      21,842,103           43.7%

Class A        % of    Class C         % of          Total           % of Total
5% Beneficial Owners and Affiliates             Shrs. Held      Total  Shrs. Held       Total      Voting Power      Voting Power
- -----------------------------------             ----------     ------  ----------      ------      ------------      ------------

Frank Russell Company (f)                       2,611,000      10.9%         -           0.0%       2,611,000            5.2%
Schneider Capital                               2,491,165      10.4%         -           0.0%       2,491,165            5.0%
Richard O'Connell                               1,128,745       4.7%     302,461        11.6%       4,153,355            8.3%
Brentwood Corp.                                   681,873       2.8%     120,985         4.7%       1,891,723            3.8%
Barcel Corporation                                605,151       2.5%     151,231         5.8%       2,117,461            4.2%
Gabes S.A.                                        597,617       2.5%     124,314         4.8%       1,840,757            3.7%
United Capital Corp.                               90,000       0.4%         -           0.0%          90,000            0.2%
Minneford Corp.                                    73,638       0.3%      12,000         0.5%         193,638            0.4%
Fernando Montero                                      -         0.0%      35,287         1.4%         352,870            0.7%
M.M. Warburg & Co.                                    -         0.0%      31,808         1.2%         318,080            0.6%
-----------    ------- -----------      -------    -------------      ------------
Total 5% Beneficial Holdings                    8,279,189      34.5%     778,086        30.0%      16,060,049           32.2%

- ------------------------------------------------------------------------------------------------------------------------------------
Summary
- -------
% of                    % of          Total           % of Total
Class A        Total   Class C         Total      Voting Power      Voting Power
-----------     ------  ----------      ------     -------------     -------------

Insider Holdings
Directors and Officers as a Group              6,469,013      27.0%   1,537,309        59.2%      21,842,103           43.7%
5% Beneficial Owners and Affiliates            8,279,189      34.5%     778,086        30.0%      16,060,049           32.2%
-----------    ------- -----------      -------    -------------      ------------
14,748,202      61.5%   2,315,395        89.1%      37,902,152           75.9%

Public Holdings
Institutional                                  2,536,275      10.6%                                2,536,275            5.1%
Retail                                         6,680,485 (g)  27.9%     282,124        10.9%       9,501,725           19.0%
-----------    ------- -----------      -------    -------------      ------------
9,216,760      38.5%     282,124        10.9%      12,038,000           24.1%

Total                                          23,964,962     100.0%   2,597,519       100.0%      49,940,152          100.0%

- ------------------------------------------------------------------------------------------------------------------------------------

- ------------------------------------------
(a) Based on shares outstanding, most recently available data as of 10/14/98 and
does not include options to purchase and Class B shares.
(b) Source: Bloomberg and Petro's Proxy.
(c) Does not include 5% beneficial ownership institutions.
(d) Hanseatic Corporation holds shared voting power in Tortosa. Tortosa is owned
and controlled by Mr. Langen.
(e) Mr. Traber and Mr. Biddelman are executive officers of Hanseatic 
Corporation.
(f) Frank Russell Company shares beneficial ownership of 1,943,835 Class A with 
Schneider Capital.
(g) AGE has 29,080 Class A shares in its system.

[CAPTION] 

Overview of Petro
Research Coverage

While Petro had decent      Research Coverage                    Date Published               Estimates Updated
coverage in 1996, it has    -----------------                    --------------               -----------------    
not had much support                                                                                    
in recent months.           
Published Research Reports
Freeman Securities*                   8/17/98                           --
KDP Investment Advisors*              8/1/98                            --
SAMCO Capital Markets*                8/1/98                            --
Bear  Stearns                         9/5/96                         10/18/96
DLJ                                   8/2/96                            --
PaineWebber                          7/16/96                         11/11/97

Additional Research
Jefferies - Hold

Earnings Estimates              Number of Estimates     Mean 1998     Mean 1999
------------------              -------------------     ---------     ---------

IBES                                     1               ($1.25)          NA
Nelson                                   1               ($1.25)          NA

-----------------------
*Fixed income research.

Page A-21

Overview of Star Gas Partners, L.P. ("Star Gas")
Selected Financial Data
($ in thousands)

- -------------------------------------------------------------------------------------------------------------------------      
Historical Years Ended September 30,                         
----------------------------------------------------------------------------      
1996          %           1997          %          1997(a)           %         
- -------------------------------------------------------------------------------------------------------------------------      

Sales                                         $119,634      100.0%      $135,159      100.0%      $149,766       100.0%        
% growth                                       17.0%                     13.0%                     25.2% (b)                
Cost of sales                                   58,557       48.9%        72,211       53.4%        80,370        53.7%        
-------------------       -------------------       --------------------          
Gross profit                                    61,077       51.1%        62,948       46.6%        69,396        46.3%    
Operating expenses                              41,207       34.4%        43,245       32.0% (c)    46,408        31.0%    
Net (loss) on sales of assets                     (260)      -0.2%          (295)      -0.2%          (265)       -0.2%    
Depreciation and amortization                    9,808        8.2%        10,405        7.7%        11,495         7.7%    
-------------------       -------------------       --------------------          
Operating income                                 9,802        8.2%         9,003        6.7%        11,228         7.5%    

Interest expense, net                            7,124        6.0%         6,966        5.2%         7,766         5.2%    
-------------------       -------------------       --------------------          
Income (loss) before income taxes                2,678        2.2%         2,037        1.5%         3,462         2.3%    

Income taxes                                        85        0.1%            25        0.0%            25         0.0%    

General Partners' interest                          --        0.0%            40        0.0%            69         0.0%    
-------------------       -------------------       --------------------          
Net income                                    $  2,593        2.2%      $  1,972        1.5%      $  3,368         2.2%
===================       ===================       ====================          
Net income per limited partner unit           $   0.49                  $   0.37                  $   0.54
========                  ========                  ======== 
Weighted average L.P. unit outstanding           5,271                     5,271                     6,228

EBITDA (d)                                    $ 19,870       16.6%      $ 19,703       14.6%      $ 22,988        15.3%

Capital expenditures                          $  5,332                  $  5,279                  $  5,579
Maintenance capital expenditures                 2,300                     3,100                     3,400
Distributable cash flow                         10,361                     9,612                    11,797
Distributable cash flow per unit              $   1.97                  $   1.82                  $   1.89
Common distribution coverage                       1.8x                      1.5x                      1.4x
Total distribution coverage                        0.9x                      0.8x                      0.8x
EBITDA/total assets                               12.7%                     13.4%                     12.8%

- ------------------------------------------------------
(a) Proforma for December 16, 1997 common unit offering and the acquisition of 
Pearl Gas Co.
(b) Growth over 1996.
(c) Includes $350 in special project expenses.
(d) Excludes loss from sale of assets.

Page B-1

Overview of Star Gas
EBITDA Reconciliation: 1997(a)
($ in thousands)

-------------------------------------------------------------------------------------
Star Gas
-------- 

1997 Actual EBITDA                                                        $19,703(b)

NORMALIZING ADJUSTMENTS:

Weather
Residential - 1,125 gallons @ 0.7106 margin                                799
Commercial - 277 gallons @ 0.4459 margin                                   124

Margin
Residential - 50,832 gallons @ (0.7106 - 0.6995)                          (564)
Commercial - 19,864 gallons @ (0.4454 - 0.4348)                           (220)
Wholesale - 38,404 gallons @ (0.0975 - 0.0675)                          (1,152)

Compensation                                                                  (56)

Elimination of strategic expense                                              902(c)

Pearl Gas EBITDA                                                            3,012

Pearl Gas acquisition adjustments                                             273(d)
-------

1997 Adjusted EBITDA                                                      $22,821
=======

-------------------------------------------------------------------------------------

(a)  Management's assumptions.
(b)  Not pro forma for Pearl Gas acquisition.
(c)  Certain expenses including the exploration of strategic 
alternatives by Morgan Stanley.
(d)  Certain cost savings, primarily salary and benefit expenses 
of certain selling shareholders.

Page B-2

Overview of Star Gas
EBITDA Reconciliation:  1997 - 1999(a)
($ in thousands)

-------------------------------------------------------------------
Star Gas
--------
Normalized 1998 EBITDA Budget                              $22,135

Approximate Differential between first ten
months of Fiscal 1998 vs. Budget                         (3,354)
-------
Adjusted for Actual 1998 EBITDA Budget                     $18,781
=======
Normalized 1998 EBITDA Budget                              $22,135

Acquisition Growth
1998 acquisitions                                          1,585

$10 million of acquisitions at 6.5x multiple
completed on 4/1/99 using half-year
convention                                               771
-------
1999 EBITDA Projected                                      $24,491
=======
--------------------------------------------------------------------
(a)  Management's assumptions.

Page B-3

Overview of Star Gas 
EBITDA Projections 
($ in thousands)

--------------------------------------------------------------------------------------------
Adjusted for
Actual        Normalized                         Projected
-----------------------------------------------
1998            1998             1999        2000       2001        2002
--------------------------------------------------------------------------------   

EBITDA     $18,781         $22,135          $24,491     $26,029    $27,566     $29,104 

-------------------------------------------------------------------------------------------- 

Major Assumptions for 1999 - 2002
---------------------------------

[_]    30 Year Weather

[_]    No growth in base business.

[_]    $10 million of acquisitions at 6.5x EBITDA multiple
using half-year convention.

[_]    No increase in gross profit margin.

Page B-4

OVERVIEW OF STAR GAS
ACQUISITION HISTORY
($ IN THOUSANDS)

- -----------------------------------------------------------------------------------------
DATE                                                     EBITDA     ACQUIRED   COST PER
ACQUIRED  COMPANY              PURCHASE PRICE    EBITDA   MULTIPLE   GALLONAGE   GALLON
--------  -------              -------------     ------   --------   ---------   ------

6/15/94   Loveland                 $   700       $  127     5.5x          433    $1.616  
11/24/94  Baystate                 $ 1,450       $  209     6.9x          769    $1.886 
9/12/95   Debolt                   $   950       $  151     6.3x          852    $1.115
3/22/96   Bob White L.P. Gas/
Mitchell Bottle Gas     $ 1,500       $  263     5.7x          898    $1.671
7/22/96   Fuzzy Moore              $   850       $  147     5.8x          454    $1.871 
10/22/97  Pearl Gas Co.            $24,126       $3,288     7.3x       14,000    $1.723
2/20/98   Tri-County Gas           $   550       $  108     5.1x          320    $1.720    
5/28/98   Knowles LP Gas           $ 3,000       $  426     7.0x        1,021    $2.939
5/28/98   Tioga Petroleum          $ 1,200       $  257     4.7x          668    $1.795
7/30/98   Lowe Bros & Dad          $ 3,750       $  602     6.2x        1,965    $1.908
8/11/98   Myers Propane            $ 1,200       $  191     6.3x          572    $2.099
-----------       ------   ------     --------    ------    
4 YEAR TOTALS                      $39,276       $5,769     6.8x       21,952    $1.789
===========       ======   ======     ========    ======

Page B-5

OVERVIEW OF STAR GAS 
MARGIN ANALYSIS
(volume in gallons, gallons and $ in thousands, except margins)

- ------------------------------------------------------------------------------------------------------------------------------------
Fiscal Years Ended September 30,
------------------------------------------------------------------------------------------------------
1993           1994         1995         1996           1997             1997             1997   
------------     --------     --------     --------     ------------     ------------     ------------ 

Stand Alone       Pro Forma    Pro Forma Pearl and
Weather          Weather
Residential
Volume                    44,590       48,430       45,235       54,336           49,707           50,832           62,630
Margin                  $ 0.6902     $ 0.6861     $ 0.6677     $ 0.6592         $ 0.7106         $ 0.7106        $  0.6554
------------     --------     --------     --------     ------------     ------------     ------------
Gross profit            $ 30,777     $ 33,228     $ 30,203     $ 35,818         $ 35,322         $ 36,121        $  41,049

Commercial
Volume                    17,617       19,875       18,831       21,194           19,587           19,864           20,936
Margin                  $ 0.4614     $ 0.4611     $ 0.4271     $ 0.4202         $ 0.4459         $ 0.4459        $  0.4399
------------     --------     --------     --------     ------------     ------------     ------------
Gross profit            $  8,129     $  9,164     $  8,043     $  8,906         $  8,734         $  8,858        $   9,209

Argriculture
Volume                    23,291       16,053       15,080       12,567           17,338           17,338           18,275
Margin                  $ 0.2349     $ 0.2630     $ 0.2357     $ 0.2556         $ 0.2694         $ 0.2694        $  0.2678
------------     --------     --------     --------     ------------     ------------     ------------
Gross profit            $  5,471     $  4,222     $  3,554     $  3,212         $  4,671         $  4,671        $   4,895

Motor Fuel & other
Volume                     7,581        8,060        8,056        8,197            8,024            8,024            8,391
Margin                  $ 0.4922     $ 0.5359     $ 0.5271     $ 0.5215         $ 0.5765         $ 0.5765        $  0.5926 
------------     --------     --------     --------     ------------     ------------     ------------
Gross profit            $  3,731     $  4,319     $  4,246     $  4,275         $  4,626         $  4,626        $   4,973

Wholesale
Volume                    51,493       45,318       38,941       39,025           38,404           38,404           38,532
Margin                  $ 0.0619     $ 0.0680     $ 0.0568     $ 0.0704         $ 0.0975         $ 0.0975        $  0.0972 
------------     --------     --------     --------     ------------     ------------     ------------
Gross profit            $  3,189     $  3,082     $  2,212     $  2,747         $  3,743         $  3,743        $   3,744

Total Propane
Volume                   144,572      137,736      126,143      135,319          133,060          134,462          148,764
Margin                  $ 0.3548     $ 0.3922     $ 0.3826     $ 0.4061         $ 0.4291         $ 0.4315        $  0.4293
------------     --------     --------     --------     ------------     ------------     ------------     
Total propane           
gross profit            $ 51,297     $ 54,015     $ 48,258     $ 54,958         $ 57,096         $ 58,019        $  63,870
------------     --------     --------     --------     ------------     ------------     ------------

Appliances/other
Revenue                 $  9,237     $  9,454     $  7,536     $  8,269         $  8,043         $  8,403        $   8,760
Cost                       3,232        3,187        1,935        2,150            2,191            2,191            2,303
------------     --------     --------     --------     ------------     ------------     ------------
Gross Profit            $  6,005     $  6,267     $  5,601     $  6,119         $  5,852         $  5,852        $   6,457

Total gross profit        $ 57,302     $ 60,282     $ 53,859     $ 61,077         $ 62,948         $ 63,871        $  70,327
============     ========     ========     ========     ============     ============     ============

Page B-6

OVERVIEW OF STAR GAS
DISCOUNTED CASH FLOW ANALYSIS
WEIGHTED AVERAGE COST OF CAPITAL DERIVATION
($ IN MILLIONS)

- ------------------------------------------------------------------------------------------------------------------------------------
Total                                   Implied   Total      Total
Market        Unit         Total        Market    Debt/     Debt as %     Un-
Levered     Val. Debt     Price at     Units        Value of  Total     of Total    levered
Comparable Company                   Beta (a)    (Bk = Mkt)   (10/14/98)    Ont. (Mil)   Equity    Equity    Capital       Beta
- ------------------------------------------------------------------------------------------------------------------------------------

AmeriGas Partners, L.P.                0.42        $711.1       $24.125       41.9       $1,031.2   69.0%     40.8%       0.249
Cornerstone Propane Partners, L.P.     0.45         240.9        18.000       19.9          365.2   66.0%     39.8%       0.271
Ferrellgas Partners, L.P.              0.46         504.1        20.000       31.3          638.6   78.9%     44.1%       0.257
Heritage Propane Partners, L.P.        0.42         177.8        20.813        8.5          180.0   98.8%     49.7%       0.211
National Propane Partners, L.P.        0.61         145.5         9.438       11.2          108.2  134.5%     57.4%       0.260
Star Gas Partners, L.P.                0.39         109.8        19.563        6.3          124.9   87.9%     46.8%       0.208
Suburban Propane Partners, L.P.        0.40         427.9        19.625       28.7          575.3   74.4%     42.7%       0.229

Comparable group's average                                            ----------------------------------------------     
unlevered beta:                                          0.24       Star's capitalization-at market (b)                
Star's debt-to-equity ratio(b):                           87.9%                                                             
Star's debt as a percent of total                                     Total debt              $109.8          46.8%      
capital(b):                                             46.8%       Common                   124.9          53.2%      
Comparable group's beta relevered                                                             ------         ------      
for Star's capital structure:                           0.378                               $234.6         100.0%      
=====       ----------------------------------------------      

Derivation of Weighted Average Cost of Capital:                                                    Market Risk Premium Range (d)
- ----------------------------------------------                                                -------------------------------------

11.3%     12.3%        13.3%
Star's theoretical levered beta:                                             0.378            ------------------------------------- 
Assumed % of equity in Star's capital structure(b):                           53.2%
Risk-free rate of return(c):                                                   4.6%
Star's cost of equity range (at various market risk premiums):                                       8.9%      9.3%         9.6%
====      ====         ====
Star's assumed tax rate:                                                      35.0%
Assumed % of debt in capital structure(b):                                    46.8%
Star's estimated cost of debt(e):                                              6.9%
Star's estimated after-tax cost of debt:                                       4.5%                  4.5%      4.5%         4.5%
------------------------------------- 
Star's weighted average cost of capital range(f):                                                    6.8%      7.0%         7.2%
-------------------------------------

- -----------------
(a) Source: Bloomberg. 143 week (maximum weekly time period allowed, or the
number of weeks available, which may be less than 143) adjusted beta
relative to the S&P 500 index.
(b) Market value of debt is assumed to equal book value; debt is not net of 
cash.
(c) Ten-year Treasury rate on October 14, 1998.
(d) Ibbotson Associates 1997. Total returns for small company stocks of 17.7% 
minus the risk-free rate.
(e) Based on Star current debt structure.
(f) Calculation based upon use of the Capital Asset Pricing Model (CAPM).

Overview of Star Gas
Summary of Capital Structure
($ in thousands)

9/30/98              10/14/98
Book Value  Coupon   Market Price   Market Value
----------  ------   ------------   ------------
Debt:
Credit Agreement
Working Capital facility      $4,785    7.25%   Not applicable    $4,785 
Acquisition facility           9,000    7.25%   Not applicable     9,000
Notes payable
8.04% First Mortgage Notes    85,000    8.04%         NA          85,000
7.17% First Mortgage Notes    11,000    7.17%         NA          11,000

Total debt:                                                     $109,785
Effective cost of debt                                               6.9%
After-tax cost of debt                                               4.5%

9/30/98                10/14/98
Shares Out             Market Price  Market Value
----------             ------------  ------------
Equity:
Common units                   3,858,999                $19,563      $75,492
Subordinated units             2,396,078                   NA   (a)   46,873
General Partner                                                        2,497 (b)

Total Equity                                                    $124,862
Effective cost of equity                                             9.3%

Total Capitalization                                                $234,647
WACC                                                                 7.0%
Less: Cash                                                          $500

Net Capitalization                                                  $234,147

(a) Market price assumed to equal common units.
(b) Implied 2% general partner interest.

Page B-8 

Overview of Star Gas 

Price and Volume
12/15/95 - 12/31/97

[GRAPH APPEARS HERE]

Page B-9

OVERVIEW OF STAR GAS 

Price and Volume
1/1/98 - 10/14/98

[GRAPH APPEARS HERE]

Page B-10

Overview of Star Gas
Common Unit Trading History - Volume Distribution
1995 - 1998 (a)

- ------------------------------------------------------------------------------------------------------------------------------------
Dec. 15-31 1995             1996                  1997                 1998(a)            1995-1998(a)
-----------------   --------------------  --------------------  --------------------  --------------------
Price Per Unit       Volume         %    Volume           %    Volume           %    Volume           %    Volume           %
----------------------- -----------------   --------------------  --------------------  --------------------  --------------------

Greater Than   $24.600
24.400    24.600                        32,400   100.00%                                                  32,400   100.00%
24.200    24.400                        55,300    99.34%      26,000   100.00%      75,500    99.69%     156,800    99.73%
24.000    24.200                        27,200    98.20%      25,800    99.24%         -      97.19%      53,000    98.44%
23.800    24.000                       436,500    97.65%      38,400    98.49%         -      97.19%     474,900    98.00%
23.600    23.800                       119,200    88.71%       3,000    97.37%     131,200    97.19%     253,400    94.08%
23.400    23.600                        79,500    86.27%      56,900    97.28%      85,600    92.83%     222,000    91.98%
23.200    23.400                       105,000    84.64%     194,500    95.62%     173,700    89.99%     473,200    90.15%
23.000    23.200                       396,900    82.49%     148,000    89.94%      51,400    84.22%     596,300    86.24%
22.800    23.000                       229,200    74.36%     102,100    85.62%      36,200    82.52%     367,500    81.32%
22.600    22.800                        96,100    69.67%     184,500    82.64%      42,700    81.32%     323,300    78.28%
22.400    22.600                       273,800    67.70%     145,500    77.26%     192,300    79.90%     611,600    75.61%
22.200    22.400  33,400   100.00%     430,500    62.09%     128,000    73.01%     710,900    73.51%   1,302,800    70.56%
22.000    22.200 762,000    95.80%     510,900    53.28%     217,500    69.27%     256,500    49.91%   1,746,900    59.80%
21.800    22.000                       400,400    42.82%     411,600    62.92%     395,800    41.40%   1,207,800    45.37%
Pre-
Announcement
-----------------------------------------------------------------------------------------------------------------------------
Price    21.600    21.800                       422,600    34.62%     302,200    50.91%     243,600    28.26%     968,400    35.40%
-----------------------------------------------------------------------------------------------------------------------------
21.400    21.600                       259,400    25.96%     290,200    42.09%     161,600    20.17%     711,200    27.40%
21.200    21.400                       214,300    20.65%     372,800    33.62%     106,200    14.80%     693,300    21.53%
21.000    21.200                       388,000    16.26%     499,100    22.74%     151,500    11.28%   1,038,600    15.80%
20.800    21.000                       110,900     8.32%     108,000     8.17%      64,700     6.25%     283,600     7.22%
20.600    20.800                       137,500     6.05%      34,300     5.01%      33,000     4.10%     204,800     4.88%
20.400    20.600                        41,900     3.23%      16,000     4.01%      21,600     3.00%      79,500     3.19%
20.200    20.400                        62,800     2.38%      46,500     3.55%      19,000     2.29%     128,300     2.53%
20.000    20.200                        53,200     1.09%      22,000     2.19%         -       1.66%      75,200     1.47%
19.800    20.000                                              24,400     1.55%         -       1.66%      24,400     0.85%
19.600    19.800                                              28,600     0.83%         -       1.66%      28,600     0.65%
Market
-----------------------------------------------------------------------------------------------------------------------------
Price    19.400    19.600                                                                       -       1.66%         -       0.41%
-----------------------------------------------------------------------------------------------------------------------------
19.200    19.400                                                                       -       1.66%         -       0.41%
19.000    19.200                                                                       -       1.66%         -       0.41%
18.800    19.000                                                                    16,700     1.66%      16,700     0.41%
18.600    18.800                                                                    33,200     1.10%      33,200     0.27%
18.400    18.600                                                                     9,200     0.31%
Less Than    18.400

---------           -----------           -----------           -----------          ------------
Total Units for Period    795,400             4,883,500             3.425,900             3,012,100            12,107,700
Cumulative % of 
Total Traded                         6.57%                40.33%                28.30%                24.88%               100.00%
% Traded of Current 
Units Out. (b)                      20.61%               126.55%                88.78%                78.05%               313.75%
Wtd. Average Unit Price    $22.11                $22.25                $21.89                $22.14                $22.12

- ----------------------------------
(a) Through October 14, 1998.
(b) Based on 3,858,999 common units outstanding.

OVERVIEW OF STAR GAS
SHAREHOLDER ANALYSIS (a)

====================================================================================================================================
Common                                                                                              
Institutions (b)              Units Held     % of Total     
- ----------------              ----------     ----------     

Bear, Stearns & Co.               53,200           1.4%     
Graver Bokhof                     28,900           0.7%     
DLJ Corp.                         24,950           0.6%     
The Vanguard Group                13,800           0.4%     
Advest Group, Inc.                12,015           0.3%     
PaineWebber Group                  9,870           0.3%     

Legg Mason Wood Walker               500           0.0%     
U.S. Trust Co. NY                    500           0.0%     
Cullen/Frost Bankers                 300           0.0%     
----------     ----------     
All Institutions                 144,035           3.7%     

Common                      Subordinated
Directors and Officers                  Title                             Units Held     % of Total      Units Held    % of Total 
- ----------------------                  --------------------------------  ----------     ----------     ------------   ---------- 

Wolfgang Traber                         Star Director and Petro Director      10,400           0.3%               -          0.0% 
Richard F. Ambury                       V.P. of Finance                          525           0.0%               -          0.0% 
Total Directors & Officers Holdings                                       ----------     ----------     ------------   ---------- 
10,925           0.3%               -          0.0% 

General Partner                                                             Common                      Subordinated              
- ---------------                                                           Units Held     % of Total      Units Held    % of Total 
Petro                                                                     ----------     ----------     ------------   ---------- 
60,727           1.6%       2,396,078        100.0% 

- ------------------------------------------------------------------------  -------------------------------------------------------- 
Summary                                                                     Common                      Subordinated              
- -------                                                                      Units       % of Total        Units       % of Total 
----------     ----------     ------------   ---------- 

Insider Holdings                                                                                                                   
Directors and Officers as a Group                                           10,925           0.3%               -          0.0%  
General Partner                                                             60,727           1.6%       2,396,078        100.0%  
----------     ----------     ------------   ----------  
71,652           1.9%       2,396,078        100.0%  
Public Holdings                                                                                                                    
Institutional                                                              144,035           3.7%                                
Retail                                                                   3,643,312 (c)      94.4%                                
----------     ----------                                
3,787,347          98.1%                                
Total Units Outstanding                                                    3,858,999         100.0%       2,396,078        100.0%  
========================================================================  

================================================================================================================================= 

________________________________________
(a)  Based on units outstanding and most recently available data as of 10/14/98.
(b)  Source: Bloomberg.
(c)  AGE has 362,910 Common Units in its system.

Page B-12

OVERVIEW OF STAR GAS
RESEARCH COVERAGE

Star Gas has ongoing         
research coverage by 
two firms.                  Research Coverage                      Date Published                       Estimates Updated 
-----------------                      --------------                       -----------------

Published Research Reports                                                                       
A.G. Edwards - Buy                    1/5/98                                  8/25/98      
PaineWebber - Attractive             12/30/97                                  8/3/98       
Lehman                                2/7/96                                  11/4/96 

Earnings Estimates                  Number of Estimates       Mean 1998            Mean 1999 
------------------                  -------------------       ---------            --------- 

IBES                                        2                   NA                    NA
Nelson                                      2                ($0.14)                $0.65
Zacks                                       2                ($0.19)                $0.48

Page B-13

SUMMARY OF THE TRANSACTION
PRO FORMA STAR GAS UNITS OUTSTANDING
(IN THOUSANDS EXCEPT PER SHARE AND PER UNIT)

[_]   There are currently 6,383 Star Gas units
outstanding comprised of 3,859 common units, 2,396
subordinated units and 128 implied general partner
("GP") units. The subordinated units and GP units
are currently assets of Petro.

[_]   There are currently 26,574 shares of Petro common
stock outstanding held by public shareholders and
"affiliates." The public holds 14,327 Class A
shares, 11 Class B shares and 282 Class C shares.
The "affiliates" hold 11,953 shares which include
9,638 Class A shares and 2,315 Class C shares.

[_]   Each shareholder of Petro will receive a certain
number of units in Star Gas such that the implied
consideration paid for each Petro share averages
$2.43 based on A.G. Edwards' estimates of the
value of the units being offered to Petro as
consideration.

[_]   All of the publicly held 14,327 Class A shares and
282 Class C shares, and a portion of the
"affiliate" held Class A shares (5,243) and Class
C shares (1,328) will receive .13064 units of
newly created senior subordinated units for each
share (1,908 units to the public and 859 units to
the "affiliates", 2,767 units in total) with an
attached Contingent Unit ("CU"). See the following
page for a discussion of the Contingent Units.
A.G. Edwards estimates an implied value for these
units of $18.52/unit (see page D-3). The remaining
"affiliates" of Petro not receiving senior
subordinated units, who hold a total of 5,382
shares, will receive .15920 units for a total of
857 junior subordinated and GP units, both of
which will also include attached CUs. A.G. Edwards
estimates an implied value for these units of
$15.41/unit (see page D-6).

[_]   The 2,396 subordinated units and 128 GP units
currently owned by Petro will effectively be
retired in the Transaction.

Page C-1

SUMMARY OF THE TRANSACTION
PRO FORMA STAR GAS UNITS OUTSTANDING
(IN THOUSANDS)
(continued)

DESCRIPTION OF CONTINGENT UNITS

[_]   During the five year period, beginning with the
first full four quarters following the Merger, the
senior subordinated units, junior subordinated
units and general partner interests will have the
right to receive up to 909,000 senior subordinated
units upon Petro meeting a "Contingent Unit Test."
Each time the Contingent Unit Test is met, (but
not more frequently than once every four quarter
period), the senior subordinated units, junior
subordinated units and general partner interests
will receive an aggregate of 303,000 senior
subordinated units, subject to a maximum of
909,000 senior subordinated units. The Contingent
Unit Test will be met during any four quarter
period when distributable cash flow per unit
attributable to Petro exceeds $2.90 which is 32%
higher than the current annualized MQD of $2.20
and 26% higher than the proposed MQD of $2.30.

Page C-2

SUMMARY OF THE TRANSACTION                    
ALLOCATION OF CURRENT PETRO SHARES OUTSTANDING
(IN THOUSANDS)                                

--------------------------------------------------------------------------------
Class A      Class C       Total   
-----------    ---------    --------- 

Groups Receiving Senior Sub                                                    
---------------------------                                                    
Public                                       14,327          282       14,609  
Affiliates                                    5,243        1,328        6,572  
-----------    ---------    --------- 
Total Receiving Senior Sub                   19,570        1,610       21,181  

Groups Receiving Junior Sub and GP                                             
----------------------------------                                             
Affiliates                                    4,395          987        5,382  
-----------    ---------    --------- 

Sub Total                                    23,965        2,598       26,562   
===========    =========              

Class B                                                                    11  
---------  

Total Shares including Class B                                         26,574  
========= 

Page C-3

SUMMARY OF THE TRANSACTION
PRO FORMA STAR GAS UNITS OUTSTANDING
PRE-FINANCING ASSUMPTIONS
(IN THOUSANDS)    
----------------------------------------------------------

Issued to Petro                        
-----------------                       
Types of Units              Current    Public    Affiliates   Retired  Pro Forma    
-----------------------   ---------  --------- ------------ --------- ----------   

Common                      3,859          -           -         -      3,859    

Senior Subordinated             -      1,908         859         -      2,767    

Subordinated                2,396          -           -    (2,396)         -    

Junior Subordinated                                                              
& New General Partner          -          -         857         -        857    

Old General Partner           128          -           -      (128)         -    
---------                                   ----------    
6,383                                       7,482      

Page C-4

SUMMARY OF THE TRANSACTION
EQUITY PURCHASE PRICE CALCULATION
IMPLIED EQUITY VALUE OF PETRO'S ASSETS
($ AND UNITS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)

--------------------------------------------------------------------------------------------------
Value of Securities
Event                                                            Issued to and Retired from Petro
--------------------------------------------------------     -------------------------------------

Issuance of Senior Subordinated
Units to Public Petro Shareholders                                    1,908     x    $18.52
------------------------------
$35,337

Issuance of  Senior Subordinated
Units to Affiliate Petro Shareholders                                   859     x    $18.52
------------------------------
$15,900

Issuance of Junior Subordinated
& General Partner Units to Affiliate Petro Shareholders                 857     x    $15.41
------------------------------
$13,203

---------
Purchase Price of Petro's Equity                                            $64,439

-----------------------------------------------------------------------------------------------
Divided by 26,562 shares of Petro's Common stock =                            $2.43 per share 
(Excludes 11 Class B Shares)
-----------------------------------------------------------------------------------------------

Retire Subordinated Units held by Petro                              (2,396)    x    $15.41
------------------------------
($36,924)

Retire Old General Partner Units held by Petro                         (128)    x    $15.41
------------------------------
($1,967)

---------
Equity Value of Petro's Heating Oil Assets                                  $25,549

Page C-5

SUMMARY OF THE TRANSACTION 
PRO FORMA CAPITAL STRUCTURE
PROJECTED 9/30/98
($ IN THOUSANDS)

---------------------------------------------------------------------------------------------
Pro forma
Star Gas       Petro     Adjustments       Star Gas
----------     -------   --------------   ----------

Debt:
8.04% First Mortgage Notes             $85,000         -           -             $85,000
7.25% WC Revolver                        4,785         -           -               4,785
7.25% Acquisition Facility               9,000         -           -               9,000
7.17% First Mortgage Notes              11,000         -           -              11,000

11.96% Senior Notes                       -          $60,000     ($60,000)           -
14.10% Senior Notes                       -            3,100       (3,100)           -
14.10% Subordinated Notes                 -            3,100       (3,100)           -
10.13% Sub Notes & Sr Notes               -           50,000      (50,000)           -
9.38% Sub Notes & Sr Notes                -           75,000      (75,000)           -
12.25% Sub Notes & Sr Notes               -           81,250      (81,250)           -
8.00% Existing Acq Notes Payable          -           14,508         -            14,508
11.5% Exchanged Debt                      -             -           6,520          6,520
9.0% Exchanged Debt                       -             -          63,126         63,126
9.0% New Debt                             -             -         120,000        120,000
----------     --------     ---------      ---------
Total Debt                              $109,785       $286,958     ($82,804)      $313,939

Weighted average cost of Debt                                                           8.6%

Preferred Stock:
14.33% Preferred Stock              $      0         $4,167      ($4,167)       $     0      
12.88% Preferred Stock                   -           30,000      (30,000)           -
-----------    ---------    ----------     ----------
-          $34,167     ($34,167)           -

Common Equity:                           $57,206      ($210,486)    $115,389       ($37,891)

Estimated Equity Value:
Pro Forma       Estimated                    Estimated
Units Out.      Unit Price                 Market Value
-----------      ----------                 ------------

Common                                  10,841   (a)      $19.56  (c)               $212,086
Senior Subordinated                      2,767   (b)       18.52                      52,246
Junior Subordinated and GP                 857             15.41                      13,206
----------                                   ----------- 
14,466                                      $276,538

Total Capitalization:                                                               $590,477
Less: Cash and Cash Collateral                                                     21,942
-----------
Net Capitalization                                                                  $568,535

(a) Comprised of 3,858 currently outstanding units, 6,879
units to be issued in common unit offering to close
concurrent with the Merger, and 104 units issued as a
consent fee in the Refinancing Transaction.
(b) Includes 2,767 units issued to the Petro shareholders.
(c) Current price of Star Gas (10/14/98) $19,563   

Page C - 6

IMPLIED UNIT VALUE ANALYSIS
COMMON UNITS

[_] A.G. Edwards calculated a range of values for the Senior Subordinated,
Junior Subordinated and General Partner units, based on a required rate of
return, trading yield, and discount to the common units.

=====================================================================================================
1999      2000      2001      2002      Thereafter
------    ------    ------    ------    ------------

COMMON UNIT

Indicated Distribution                      $ 2.30     $2.30     $2.30     $2.30         $2.30
Cost of Equity (a)                             9.3%      9.3%      9.3%      9.3%          9.3%
------
NPV of future distributions                 $24.65  
------

1999      2000      2001      2002      Thereafter
------    ------    ------    ------    ------------

COMMON UNIT

Indicated Distribution                      $ 2.30     $2.30     $2.30     $2.30         $2.30
Cost of Equity (a)                             9.8%      9.8%      9.8%      9.8%          9.8%
------ 
NPV of future distributions                 $23.59 
------ 

1999      2000      2001      2002      Thereafter
------    ------    ------    ------    ------------
COMMON UNIT

Indicated Distribution                      $ 2.30     $2.30     $2.30     $2.30         $2.30
Cost of Equity (a)                            10.2%     10.2%     10.2%     10.2%         10.2% 
------ 
NPV of future distributions                 $22.62
------

----------------------------------------------------        -----------------------------------
AVERAGE PRICE OF LAST 20 TRADING DAYS:      $20.26          CURRENT PRICE (10/14/98    $19.56
IMPLIED YIELD (B):                           11.4%          CURRENT YIELD (B):          11.8%
----------------------------------------------------        -----------------------------------

(a)  Per Cost of Capital analysis on page D-2.
(b)  Assumes a $2.30 distribution.

[_] Certain analysis included in this presentation, including the calculations
of the implied value of the senior subordinated, junior subordinated and GP
units, require an estimate of the future price of the common units at
Closing. To serve as a proxy for this future price, A.G. Edwards used the
average common unit closing price for the last 20 trading days ended October
14, 1998. Such price is 10.4% to 17.8% lower than the common units' implied
unit value per the above analysis, and 3.6% greater than the common units'
most recent closing price on October 14, 1998.

Page D-1

IMPLIED UNIT VALUE ANALYSIS 
THEORETICAL PRO FORMA COST OF EQUITY FOR COMMON UNITS
($ in millions)

- ------------------------------------------------------------------------------------------------------------------------------------

Total                                        Implied    Total        Total
Market           Unit           Total        Market     Debt/       Debt as %     Un-
Levered   Val. Debt       Price at         Units       Value of    Total       of Total   levered
Comparable Company                 Beta (a)   (Bk=Mkt)      (10/14/98)      Out. (Mil)     Equity     Equity       Capital     Beta
- ------------------------------------------------------------------------------------------------------------------------------------

AmeriGas Partners, L.P.             0.42     $711.1         $24.125          41.9       $1,031.2      69.0%       40.8%        0.249
Cornerstone Propane Partners, L.P.  0.45      240.9          18.000          19.9          365.2      66.0%       39.8%        0.271
Ferrellgas Partners, L.P.           0.46      504.1          20.000          31.3          638.6      78.9%       44.1%        0.257
Heritage Propane Partners, L.P.     0.42      177.8          20.813           8.5          180.0      98.8%       49.7%        0.211
National Propane Partners, L.P.     0.61      145.5           9.438          11.2          108.2     134.5%       57.4%        0.260
Star Gas Partners, L.P.             0.39      109.8          19.563           6.3          124.9      87.9%       46.8%        0.208
Suburban Propane Partners, L.P.     0.40      427.9          19.625          28.7          575.3      74.4%       42.7%        0.229

---------------------------------------------------------
Pro forma capitalization - at market (b)                 
Comparable group's average unlevered beta:                     0.24        Total debt                              $313.9    53.2%
Pro forma debt-to-equity ratio (b):                           113.5%       Total equity                             276.5    46.8%
------   ------
Pro forma debt as a percent of total capital (b):              53.2%                                               $590.5   100.0%
=========================================================
Comparable group's beta relevered for Pro forma                        
capital structure:                                            0.418  

Derivation of Weighted Average Cost of Capital:                                         Market Risk Premium Range (d)  
- -----------------------------------------------                                       --------------------------------- 
11.3%      12.3%   13.3%    
---------------------------------      

Pro forma theoretical levered beta:                                         0.418                                                  
Assumed % of equity in Pro forma capital structure (b)                       46.8%                                                 
Risk-free rate of return (c):                                                 4.6%                                                 
Pro forma cost of equity range (at various market risk premiums):                           9.3%       9.8%   10.2%         
Pro forma assumed tax rate:                                                                 ===        ===    ====          
Assumed % of debt in capital structure (b):                                  35.0%                                            
Pro forma estimated cost of debt (e):                                        53.2%                                            
Pro forma estimated after-tax cost of debt:                                   8.6%                                            
5.6%          5.6%       5.6%    5.6%           
---------------------------------
Pro forma weighted average cost of capital range (f):                                       7.3%       7.5%    7.7%      
---------------------------------       
__________________________________________
(a)  Source: Bloomberg, 143 week (maximum weekly time period allowed, or the 
number of weeks available, which may be less than 143) adjusted beta
relative to the S&P 500 index.
(b)  Market value of debt is assumed to equal book value. See Page C-6 for 
equity calculation.
(c)  Ten-year Treasury rate on October 14, 1998.
(d)  ?????? Associates 1997. Total returns for small company stocks of 17.7% 
?????? the risk-free rate.
(e)  Based on Pro forma debt structure.
(f)  Calculation based upon use of the Capital Asset Pricing Model (CAPM).

Page D-2

IMPLIED UNIT VALUE ANALYSIS
SENIOR SUBORDINATED UNITS

- -----------------------------------------------------------------------------
Range
--------------     
Required rate of return (a)      20.0% - 30.0%          $17.90 - 22.28 
Trading yield (b)                11.5% - 13.5%          $17.04 - 20.00
Discount to common units (c)     10.0% - 20.0%          $16.21 - 18.23

Range                  $16.21 - 22.28
Adjusted Range (d)     $17.04 - 20.00

--------------   
Assumed value (e)          $18.52
--------------

(a)  Represents required rate of return during subordination period, which is 
assumed for the minimum three years. 
Thereafter, the rate of return is assumed to equal that of the common
units, for a blended required rate of return of 12.4% to 15.3%. Cost per
unit calculations provided on page D-4.
(b)  Based on a $2.30 annualized MQD.
(c)  Based on a discount to the common unit's average closing price for the
last 20 trading days ended 10/14/98 of $20.26, as referenced on
page D-1.
(d)  Represents the middle values of both the range of highs and lows.
(e)  Implied required rate of return, trading yield and discount to common 
at a unit price of $18.52 are 28.1% during subordination (14.7% blended), 
12.4%, and 8.6%, respectively.

Page D-3

IMPLIED UNIT VALUE ANALYSIS
SENIOR SUBORDINATED UNITS
REQUIRED RATE OF RETURN
===============================================================================

1999     2000      2001      2002(a)   Thereafter(a)
------   ------    ------    ---------  -------------

Senior Subordinated Unit (without CU)

Indicated Distribution                                         $  2.30    $ 2.30    $ 2.30    $ 2.30      $  2.30
Cost of Equity                                                    20.0%     20.0%     20.0%      9.8%         9.8% 
-------    
NPV of future distributions                                    $ 18.50   
-------

CONTINGENT UNIT                                                 

Indicated Distribution (b)                                     $     0    $  697    $1,394    $2,091      $ 2,091
Cost of equity                                                    20.0%     20.0%     20.0%      9.8%         9.8%
-------
NPV of future distributions                                    $13,699
-------

-------
UNIT VALUE OF SENIOR SUBORDINATED UNIT WITH ATTACHED CU          $ 22.28
-------
(Each Unit has claim to 1/3,624 of the Contingent Unit.)       

1999      2000       2001    2002(a)   Thereafter(a)
-------   -------     -------  -------   -------------
SENIOR SUBORDINATED UNIT (WITHOUT CU)

Indicated Distribution                                         $  2.30    $ 2.30     $2.30      $2.30      $2.30
Cost of Equity                                                    30.0%     30.0%     30.0%       9.8%       9.8%
---------
NPV of future distributions                                    $ 14.91
---------
CONTINGENT UNIT

Indicated Distribution (b)                                    $      0    $  697    $1,394     $2,091     $2,091
Cost of Equity                                                    30.0%     30.0%     30.0%       9.8%       9.8%
---------
NPV of future distributions                                   $ 10,806
---------

---------
UNIT VALUE OF SENIOR SUBORDINATED UNIT WITH ATTACHED CU         $  17.90
---------
(Each Unit has claim to 1/3,624 of the Contingent Unit.)

(a) Distributions made after 2001 are discounted at the cost of equity for the
Common Units, estimated at 9.8%, due to the end of the Subordination
Period.

(b) Assumes that the Contingent Units Test is met in each of the first three 
years.

Page D-4

IMPLIED UNIT VALUE ANALYSIS
THEORETICAL PRO FORMA COST OF EQUITY FOR SENIOR SUBORDINATED UNITS
($ in millions)

- ------------------------------------------------------------------------------------------------------------------------------------
Total                              Implied    Total      Total                    
Market      Unit        Total      Market     Debt/    Debt as %     Un-          
Levered  Val. Debt   Price at      Units     Value of    Total     of Total   Levered        
Comparable Company                 Beta (a) (Bk=Mkt)   (10/14/98)   Out. (Mil)   Equity     Equity    Capital      Beta         
- -----------------------------------------------------------------------------------------------------------------------------------

AmeriGas Partners, L.P.              0.42     $711.1    $ 24.125         41.9    $1,031.2    69.0%     40.8%      0.249         
Cornerstone Propane Partners, L.P.   0.45      240.9      18.000         19.9       365.2    66.0%     39.8%      0.271         
Ferrellgas Partners, L.P.            0.46      504.1      20.000         31.3       638.6    78.9%     44.1%      0.257         
Heritage Propane Partners, L.P.      0.42      177.8      20.813          8.5       180.0    98.8%     49.7%      0.211         
National Propane Partners, L.P.      0.61      145.5       9.438         11.2       108.2   134.5%     57.4%      0.260         
Star Gas Partners, L.P.              0.39      109.8      19.563          6.3       124.9    87.9%     46.8%      0.208         
Suburban Propane Partners, L.P.      0.40      427.9      19.625         28.7       575.3    74.4%     42.7%      0.229         

-----------------------------------------------------------------
Pro forma capitalization - at market (b)               
Comparable group's average unlevered beta:                  0.24     Total debt                                    $526.0     89.1%
Pro forma debt - to - equity ratio (b):                    816.1%    Total equity                                    64.5     10.9%
------    ------
Pro forma debt as a percent of total capital (b):           89.1%                                                  $590.5    100.0%
=================================================================
Comparable group's beta relevered for Pro forma            1.518             
capital structure:                                         =====   

Derivation of Weighted Average Cost of Capital:                                                     Market Risk Premium Range (d)   
- -----------------------------------------------                                                 ------------------------------------
11.3%       12.3%       13.3% 
------------------------------------
Pro forma theoretical levered beta:                                     1.518                                                   
Assumed % of equity in Pro forma capital structure (b):                 10.9%                                         
Risk-free rate of return (c):                                            4.6%                                                   
Pro forma cost of equity range (at various market risk premiums):                                     21.8%       23.3%       24.8% 
=====       =====       =====
------------------------------------

_________________________________________
(a)  Source: Bloomberg. 143 week (maximum weekly time period allowed, or the
number of weeks available, which may be less than 143) adjusted beta
relative to the S&P 500 index.
(b)  Market value of debt is assumed to equal book value; debt includes the
market value of pro forma common units; equity includes the value of
senior sub, junior sub units, and GP units.
(c)  Ten - year Treasury rate on October 14, 1998.
(d)  Ibbotson Associates 1997. Total returns for small company stocks of 17.7% 
minus the risk-free rate.

Page D-5

IMPLIED UNIT VALUE ANALYSIS
JUNIOR SUBORDINATED AND GP UNITS 

------------------------------------------------------------------------
Range
-----------------

Required rate of return (a)     35.0% - 45.0%         $14.52 - 16.84 
Trading yield (b)               14.0% - 16.0%         $14.38 - 16.43
Discount to common units (c)    25.0% - 35.0%         $13.17 - 15.19

Range                 $13.17 - 16.84
Adjusted Range (d)    $14.38 - 16.43 

-----------------
Assumed value (e)         $15.41
-----------------

(a) Represents required rate of return during subordinated period, which
is assumed for the minimum three years. 
Thereafter, the rate of return is assumed to equal that of the
common units, for a blended required rate of return of 16.2% to
18.7%. Cost per unit calculations provided on page D-7.
(b) Based on a $2.30 annualized MQD.
(c) Based on a discount to the common unit's average closing price for
the last 20 trading days ended 10/14/98 of $20.26, as referenced on
page D-1.
(d) Represents the middle values of both the range of highs and lows. 
(e) Implied required rate of return, trading yield and discount to
common at a unit price of $15.41 are 39.4% during subordination
(17.6% blended), 14.9%, and 23.9%, respectively.

Page D-6

IMPLIED UNIT VALUE ANALYSIS
JUNIOR SUBORDINATED AND GP UNITS
REQUIRED RATE OF RETURN

- --------------------------------------------------------------------------------

1999      2000      2001     2002(A)   THEREAFTER(A)      
--------   -------   -------   --------  --------------

JUNIOR SUBORDINATED AND GP UNITS                                                                                              
Indicated Distribution                                        $  2.30     $2.30   $ 2.30    $2.30       $ 2.30           
Cost of Equity                                                   35.0%     35.0%    35.0%     9.8%         9.8%          
---------
NPV of future distributions                                   $ 13.49                                                    
---------

CONTINGENT UNIT                                                                                                               
Indicated Distribution (b)                                    $     0     $ 697   $1,394   $2,091       $2,091  
Cost of Equity (c)                                               25.0%     25.0%    25.0%     9.8%         9.8%
---------
NPV of future distributions                                   $12,138                                                     
---------

---------    
UNIT VALUE OF JUNIOR SUBORDINATED AND GP UNIT WITH ATTACHED CU     $ 16.84
---------
(Each Unit has claim to 1/3,624 of the Contingent Unit.)

1999      2000      2001     2002(A)   THEREAFTER(A)      
--------   -------   -------   --------  --------------

JUNIOR SUBORDINATED AND GP UNITS                                                                                              
Indicated Distribution                                        $  2.30     $2.30   $ 2.30    $2.30       $ 2.30           
Cost of Equity                                                   45.0%     45.0%    45.0%     9.8%         9.8%          
---------
NPV of future distribution                                    $ 11.17                                                     
---------

CONTINGENT UNIT                                                                                                               
Indicated Distribution (b)                                    $     0     $ 697   $1,394   $2,091       $2,091  
Cost of Equity (c)                                               25.0%     25.0%    25.0%     9.8%         9.8%
---------
NPV of future distribution                                    $12,138
---------

---------    
UNIT VALUE OF JUNIOR SUBORDINATED AND GP UNIT WITH ATTACHED CU     $ 14.52
---------
(Each Unit has claim to 1/3,624 of the Contingent Unit.)

(a) Distributions made after 2001 are discounted at the cost of equity for the 
Common Units, estimated at 9.8%, due to the end of the Subordination Period.
(b) Assumes that the Contingent Units Test is met in each of the first three 
years.
(c) Utilized senior subordinated discount rate as CUs convert to senior 
subordinated units.

Page D-7

IMPLIED UNIT VALUE ANALYSIS
THEORETICAL PRO FORMA COST OF EQUITY FOR JUNIOR SUBORDINATED AND GP UNITS
($ in millions)

===================================================================================================================================
TOTAL                                IMPLIED   TOTAL     TOTAL
MARKET       UNIT        TOTAL       MARKET    DEBT/    DEBT AS %   UN-
LEVERED   VAL. DEBT   PRICE AT      UNITS      VALUE OF   TOTAL    OF TOTAL  LEVERED
COMPARABLE COMPANY                      BETA (A)  (BK = MKT)  (10/14/98)  OUT. (MIL)    EQUITY    EQUITY    CAPITAL   BETA
- ----------------------------------------------------------------------------------------------------------------------------

AmeriGas Partners, L.P.                  0.42       $711.1      $24.125        41.9    $ 1,031.2   69.0%    40.8%    0.249
Cornerstone Propane Partners, L.P.       0.45        240.9       18.000        19.9        365.2   66.0%    39.8%    0.271 
Ferrellgas Partners, L.P.                0.46        504.1       20.000        31.3        638.6   78.9%    44.1%    0.257 
Heritage Propane Partners, L.P.          0.42        177.8       20.813         8.5        180.0   98.8%    49.7%    0.211 
National Propane Partners, L.P.          0.61        145.5        9.438        11.2        108.2  134.5%    57.4%    0.260 
Star Gas Partners, L.P.                  0.39        109.8       19.563         6.3        124.9   87.9%    46.8%    0.208 
Suburban Propane Partners, L.P.          0.40        427.9       19.625        28.7        575.3   74.4%    42.7%    0.229 

--------------------------------------------------
Pro forma Capitalization-at market (b)
Comparable group's average unlevered beta:                            0.24        Total debt                       $577.3    97.8%
Pro forma debt-to-equity ratio (b):                                 4371.2%       Total equity                       13.2     2.2%
------   -----
$590.5   100.0%
--------------------------------------------------
Pro forma debt as a percent of total capital (b):                     97.8%
Comparable group's beta relevered for Pro forma capital structure:   7.080 
===== 

DERIVATION OF WEIGHTED AVERAGE COST OF CAPITAL:                                                MARKET RISK PREMIUM RANGE (D)
- ----------------------------------------------                                            --------------------------------------
11.3%       12.3%       13.3%
--------------------------------------
Pro forma theoretical levered beta:                                           7.080
Assumed % of equity in Pro forma capital structure (b):                         2.2%
Risk-free rate of return (c):                                                   4.6%
Pro forma cost of equity range (at various market risk premiums):                              84.6%       91.7%       98.8%  
=====       =====       =====
--------------------------------------

____________________________________________
(a)  Source: Bloomberg. 143 week (maximum weekly time period allowed, or the
number of weeks available, which may be less than 143) adjusted beta
relative to the S&P 500 index.
(b)  Market value of debt is assumed to equal book value; debt includes the
market value of common and senior subordinated units; equity includes the
value of junior sub and GP units.
(c)  Ten-year Treasury rate on October 14, 1998.
(d)  Ibbotson Associates 1997. Total returns for small company stocks of 17.7% 
minus the risk-free rate.

Page D-8

PRO FORMA MERGER ANALYSIS

[_]     A.G. Edwards analyzed the impact of the Transaction on the
Partnership's distributable cash flow per unit, the related accretion,
common unit coverage and total unit coverage on a pro forma basis.

------------------------------------------------------------------  
STAR GAS        STAR GAS   
STAND-ALONE      PRO FORMA      
-------------    -----------     

DCF PER UNIT                                                           
1998 Adjusted for Actual (a)          $1.27           $1.53       
1998 Normalized (b)                    1.84            2.40       
1999 Projected                         2.02            2.60       

ACCRETION/DILUTION                                                     
1998 Adjusted for Actual (a)                          $0.26       
1998 Normalized (b)                                    0.56    
1999 Projected                                         0.58    

COMMON UNIT COVERAGE                                                
1998 Adjusted for Actual (a)           0.96x           0.89x
1998 Normalized (b)                    1.38            1.39    
1999 Projected                         1.51            1.51    

TOTAL UNIT COVERAGE                                                 
1998 Adjusted for Actual (a)           0.58x           0.66x   
1998 Normalized (b)                    0.84            1.05    
1999 Projected                         0.92            1.13    

__________________________________________________________________
(a) Projected results are adjusted for the year to date actual
performance.
(b) Adjusted to represent normal weather.

Page E-1

Merger Premiums to Market Value Analysis

[_]  A.G. Edwards analyzed the premium of the consideration to be
received by Petro Common Shareholders and compared the
premium to Petro's current and historical prices. These
premiums were compared to premiums paid in acquisitions of
majority or remaining interests announced and completed
between January 1, 1996 and October 7, 1998 where the
target's share price one week prior to the announcement date
was either (i) equal to or less than $5, (ii) greater than
$5 and less than $10, or (iii) equal to or greater than $10.

[_]  Premiums were calculated one day, one week, four weeks,
three months and one year prior to the announcement of the
agreement in principle for each merger.

--------------------------------------------------------------------------------------------------------------------
Comparison of Premium Paid
--------------------------------------------------------------------------------------------------------------------
Petro at    Mean of Transactions  Mean of Transactions  Mean of Transactions 
Premium to stock price prior to     $2.43 per Unit     Equal to or         Greater Than $5         Equal to or
announcement on August 14th:         Offer Price      Less Than $5        and Less Than $10     Greater Than $10
--------------------------------------------------------------------------------------------------------------------

One day prior:                       29.6%           39.7%                   34.3%                 28.1%   
One week prior:                      38.9%           48.8%                   42.3%                 32.7%   
Four weeks prior:                    17.8%           55.4%                   48.5%                 39.6%    
Three months prior:                  52.5%           67.1%                   58.0%                 77.9%    
One year prior:                     -19.0%           53.8%                   45.8%                 53.2%    

-----------------------------------------------------------------------------------
Maximum      52.5%           67.1%                   58.0%                 77.9% 
Minimum     -19.0%           39.7%                   34.3%                 28.1%    
-----------------------------------------------------------------------------------

[_]  The premium to Petro's current stock price ($1.031 as of 
October 14, 1998) was 135.6%.

Page F-1

Merger Premiums to Market Value Analysis
Mergers with Target Price Equal to or Less than $5 per Share
Announced and Completed 1/1/96-10/9/98

- ------------------------------------------------------------------------------------------------------------------------------------
Date      Date                                                                     
Announced Effective Target Name                    Target Business Description     Acquiror Name
- ------------------------------------------------------------------------------------------------------------------------------------

01/10/96  06/26/96  American Resource Corp         Gold mining company             REA Gold Corp                  
01/18/96  08/23/96  AMSERV Healthcare Inc          Pvd temp nursing employment     Star Multi Care Services Inc   
01/23/96  05/09/96  Portage Industries Corp        Mnfr extruded plastic sheets    Spartech Corp                  
02/05/96  09/30/96  Customedix Corp                Mnfr dental, medical products   CUS Acquisitions Inc           
02/13/96  07/12/96  Medical Innovations Inc        Pvd home health care services   Horizon/CMS Healthcare Corp    
02/15/96  04/29/96  LDI Corp                       Computer equip leasing svcs     NationsBank Corp, Charlotte, NC
02/28/96  07/11/96  Salton/Maxim Housewares Inc    Mnfr electric housewares, fans  Windmere Corp                  
03/13/96  09/27/96  DeSoto Inc                     Mnfr paints and detergents      Keystone Consolidated Inds Inc 
04/16/96  05/31/96  CIS Technologies Inc           Manufacture computers           National Data Corp             
04/22/96  06/04/96  Cornerstone Natural Gas Co     Natural gas distribution svcs   El Paso Field Svcs(El Paso)    
05/03/96  03/17/98  Homeowners Group Inc           Real estate, insurance agency   Cross Country Group Inc        
05/06/96  09/03/96  Transcisco Industries Inc      Mnfr, service railroad equip    Trinity Industries Inc         
05/07/96  09/03/96  NMR of America Inc             Pvd. medical equip leasing svcs Medical Resources Inc          
05/13/96  08/30/96  MDT Corp                       Mnfr sterility assurance equip  Getinge Industries AB          
05/15/96  09/10/96  Carlisle Plastics Inc          Mnfr, whl plastic prods, resins Tyco International Ltd         
06/03/96  01/09/97  Bio-Dental Technologies Corp   Provide dental research svcs    Zila Inc                       
06/10/96  07/22/96  SysteMed Inc                   Pvd medical services            Merck-Medco Managed Care Inc   
06/11/96  09/03/96  Computer Identics Corp         Manufacture bar code scanners   Robotic Vision Systems Inc     
06/17/96  10/07/96  Scanforms Inc                  Mnfr business forms             Big Flower Press Holdings Inc  
06/21/96  08/23/96  Computer Petroleum Corp        Information retrieval svcs      United Communications Group    
06/24/96  12/05/96  MEM Co Inc.                    Manufacture toiletries          Renaissance Cosmetics Inc      
07/31/96  11/13/96  Calgene Inc                    Own and operate greenhouse      Monsanto Co                    
08/13/96  02/27/97  LaTex Resources Inc            Oil and gas expln, prodn        Alliance Resources PLC         
09/10/96  01/03/97  GreenStone Industries Corp     Manufacture stationery          Louisiana-Pacific Corp         
09/11/96  03/04/97  Chempower Inc                  Insulation, asbestos abatement  American Eco Corp              
09/16/96  12/06/96  Proler International Corp      Whl scrap metals & metals       Schnitzer Steel Industries Inc 
09/26/96  01/24/97  General Physics Corp           Provide training services       National Patent Development    
10/02/96  12/27/96  Software Publishing Corp       Develop software                Allegro New Media              
10/03/96  11/12/97  Pittencrieff Communications    Pvd radiotelephone commun svcs  Nextel Communications Inc      
10/04/96  12/31/96  Pet Food Warehouse Inc         Own, op pet food stores         Petco Animal Supplies Inc      
10/30/96  12/20/96  Pacific Rehab & Sports Med     Own, op rehab hospital          Horizon/CMS Healthcare Corp    
11/05/96  03/14/97  Panatech Research &                                                                           
Development                    Manufacture semiconductors      Harbour Group Ltd              
11/25/96  02/28/97  American Studios Inc           Pvd photography services        PCA International Inc          
12/06/96  03/18/97  MaxServ Inc (Sears Roebuck)    Pvd technical info support svc  Sears Roebuck & Co             
12/09/96  02/28/97  Houston Biotechnology Inc      Mnfr monoclonal antibodies      Medarex Inc                    
01/24/97  07/02/97  INCSTAR Corp (Sorin                                                                           
Biomedical)                    Mnfr diagnostic substances      American Standard Inc          
01/28/97  05/21/97  Calgene Inc (Monsanto Co)      Own and operate greenhouse      Monsanto Co                    
01/30/97  08/12/97  AST Research Inc               Mnfr computers; dvlp software   Samsung Electronic Co Ltd      
02/07/97  08/01/97  MS Financial (MS Diversified)  Pvd financial credit services   Search Financial Services Inc  
02/11/97  07/31/97  Serv-Tech Inc                  Maintenance and cleaning svcs   Philip Environmental Inc       
03/04/97  06/27/97  Audio King Corp                Own, op consumer electn stores  Ultimate Electronic Inc        
04/15/97  06/30/97  Kurzweil Applied Intelligence  Electronic computing equip      Lernout & Hauspic Speech       
04/30/97  07/25/97  Arden Industrial Products Inc  Whl fasteners                   Park-Ohio Industries Inc       
05/01/97  08/01/97  Cryenco Sciences Inc           Mnfr liquid gas storage tanks   Chart Industries Inc           
05/08/97  09/10/97  Imex Medical Systems Inc       Mnfr fetal diagnostic instr     Nicolet Biomedical Inc         
06/16/97  09/30/97  Frederick's of Hollywood, Inc  Women's clothing stores         Investor Group                 
06/24/97  07/25/97  Jillians Entertainment Corp    Own, op billiard clubs          JW Childs Equity Partners LP   
07/23/97  12/02/97  Rudy's Restaurant Group        Own and operate restaurants     Benihana Inc                   
08/01/97  09/26/97  Community Care of America Inc  Own, op nursing homes           Integrated Health Services Inc 
08/07/97  12/02/97  Magnetic Technologies Corp     Manufacture copiers, printers   SPS Technologies Inc           
08/14/97  12/31/97  Allied Capital Advisers Inc    Investment advisory svcs        Allied Capital Lending Corp    
09/02/97  12/03/97  Ground Round Restaurants       Own and operate restaurants     GRR Holdings LLC               
09/04/97  12/30/97  Cinergi Pictures Entertainment Pvd motion picture prodn svcs   Investor Group                 
09/26/97  09/26/97  Laclede Steel Co               Own, operate steel works        Birmingham Steel Corp          
10/10/97  01/07/98  Puro Water Group Inc           Whl bottled water               United States Filter Corp      
10/13/97  03/19/98  Integrated Brands Inc          Produce ice cream               Yogen Furz World-Wide Inc       
11/03/97  02/25/98  Individual Inc                 Pvd on-line info retrieval svc  Desktop Data Inc               
11/04/97  01/12/98  ComputerVision Corp            Mnfr computers, peripherals     Parametric Technology Corp     
11/12/97  03/03/98  PureTec Corp                   Manufacture plastic products    Tekni-Plex Inc                 
11/24/97  01/07/98  General Host Corp              Own, op specialty retail stores Cypress Group LLC              
12/02/97  03/17/98  Staodyn Inc                    Mnfr electromedical equipment   Rehabilicare Inc               
12/12/97  02/13/98  Impact Systems Inc             Paper prodn control systems     Voith Sulzer Paper Technology  
12/12/97  09/10/98  Timber Lodge Steakhouse Inc    Own, op restaurants             Santa Barbara Restaurant Group 
12/15/97  02/24/98  MetroGolf Inc                  Own, op golf courses            Family Golf Centers Inc        
12/22/97  05/20/98  Artistic Greetings Inc         Mnfr personalized stationery    MDC Communications Corp        

- ------------------------------------------------------------------------------------------------------------------------------------
Value of         Enter-
Trans-           prise
Date      Date                                      Acquiror                                action           Value
Announced Effective Target Name                     Business Description                    ($ mil)         ($ mil)
- ------------------------------------------------------------------------------------------------------------------------------------

01/10/96  06/26/96  American Resource Corp           Gold mining company                      77.5           76.353 
01/18/96  08/23/96  AMSERV Healthcare Inc            Pvd home health care services             9.2            7.895 
01/23/96  05/09/96  Portage Industries Corp          Manufacture plastic products             15.8           17.540 
02/05/96  09/30/96  Customedix Corp                  Investment company                        3.6           15.103 
02/13/96  07/12/96  Medical Innovations Inc          Pvd nursing care services                30.3           41.725 
02/15/96  04/29/96  LDI Corp                         Bank hldg co; pvd finl svcs              28.1          288.893 
02/28/96  07/11/96  Salton/Maxim Housewares Inc      Mnfr personal care appliances            21.1           53.442 
03/13/96  09/27/96  DeSoto Inc                       Manufacture steel wire                   36.1           40.529 
04/16/96  05/31/96  CIS Technologies Inc             Pvd info, transaction svcs               99.3          112.471 
04/22/96  06/04/96  Cornerstone Natural Gas Co       Own, op oil and gas pipelines            96.6           97.614 
05/03/96  03/17/98  Homeowners Group Inc             Pvd homeowner membership svcs            11.4           14.968 
05/06/96  09/03/96  Transcisco Industries Inc        Mnfr transp equip,parts                  44.7           51.126 
05/07/96  09/03/96  NMR of America Inc               Own,op diagnostic imaging ctrs           40.4           57.369 
05/13/96  08/30/96  MDT Corp                         Mnfr sterilizing equipment               70.3           69.457 
05/15/96  09/10/96  Carlisle Plastics Inc            Mnfr fire protection systems            122.4          273.282 
06/03/96  01/09/97  Bio-Dental Technologies Corp     Mnfr,whl pharmaceuticals                 40.3           48.477 
06/10/96  07/22/96  SysteMed Inc                     Health insurance company                 64.8           60.646 
06/11/96  09/03/96  Computer Identics Corp           Mnfr 2-D,3-D vision-based sys            42.0           40.881 
06/17/96  10/07/96  Scanforms Inc                    Pvd advertising,marketing svcs           27.5           15.661 
06/21/96  08/23/96  Computer Identics Corp           Publish newsletters                      12.0           11.548 
06/24/96  12/05/96  MEM Co Inc                       Investor group                           38.2           29.577 
07/31/96  11/13/96  Calgene Inc                      Mnfr agro chems,manmade fibers           50.0          584.080 
08/13/96  02/27/97  LaTex Resources Inc              Oilo and gas exploration, prodn          27.1           44.759 
09/10/96  01/03/97  GreenStone Industries Corp       Mnfr lumber,plywood,pulp                 29.2           40.823 
09/11/96  03/04/97  Chempower Inc                    Pvd engineering services                 50.0           36.189 
09/16/96  12/06/96  Proler International Corp        Manufacture steel products               42.5           68.146 
09/26/96  01/24/97  General Physics Corp             Mnfr contact lenses                      261.           70.360 
10/02/96  12/27/96  Software Publishing Corp         Pvd software services                    25.2            8.786 
10/03/96  11/12/97  Pittencrieff Communications      Pvd cellular telephone svcs             158.4          159.860 
10/04/96  12/31/96  Pet Food Warehouse Inc           Own and operate pet stores               60.7           55.986 
10/30/96  12/20/96  Pacific Rehab & Sports Med       Pvd nursing care services                72.7           75.706 
11/05/96  03/14/97  Panatech Research &                                                                             
Development                      Mnfr steel cutting tools                 29.2           26.218 
11/25/96  02/28/97  American Studios Inc             Pvd photo processing services            66.3           67.650 
12/06/96  03/18/97  MaxServ Inc (Sears Roebuck)      Department stores; finl svcs             46.0           87.263  
12/09/96  02/28/97  Houston Biotechnology Inc        Manufacture pharmaceuticals               8.6            8.700 
01/24/97  07/02/97  INCSTAR Corp (Sorin                                                                             
Biomedical)                      Transportation, building prod           106.3          102.865 
01/28/97  05/21/97  Calgene Inc (Monsanto Co)        Mnfr agro chems, manmade fibers         242.6          567.548 
01/30/97  08/12/97  AST Research Inc                 Mnfr consumer electronics               495.8          558.108 
02/07/97  08/01/97  MS Financial (MS Diversified)    Pvd business credit services             17.2          102.602 
02/11/97  07/31/97  Serv-Tech Inc                    Provide waste management svcs            73.4           54.956 
03/04/97  06/27/97  Audio King Corp                  Own, op radio, TV, electn stores          6.0           12.363 
04/15/97  06/30/97  Kurzweil Applied Intelligence    Mnfr speech tech products                51.3           50.852 
04/30/97  07/25/97  Arden Industrial Products Inc    Mnfr forged and machined parts           42.0           44.995 
05/01/97  08/01/97  Cryenco Sciences Inc             Mnfr process control instmnts            19.2           27.904 
05/08/97  09/10/97  Imex Medical Systems Inc         Investment company                        9.3           10.238 
06/16/97  09/30/97  Frederick's of Hollywood, Inc    Investor group                           69.4           57.007 
06/24/97  07/25/97  Jillians Entertainment Corp      Investment company                        4.7            7.007 
07/23/97  12/02/97  Rudy's Restaurant Group          Own and operate restaurants              18.8           18.936 
08/01/97  09/26/97  Community Care of America Inc    Pvd specialty healthcare svcs            94.0           89.996 
08/07/97  12/02/97  Magnetic Technologies Corp       Mnfr industrial fasteners                16.8           15.984 
08/14/97  12/31/97  Allied Capital Advisers Inc      Closed-end mgmt investment co            49.5           44.111 
09/02/97  12/03/97  Ground Round Restaurants         Investment company                       17.5           56.945 
09/04/97  12/30/97  Cinergi Pictures Entertainment   Investor group                           16.3           59.794 
09/26/97  09/26/97  Laclede Steel Co                 Manufacture steel, steel prod            15.0          131.767 
10/10/97  01/07/98  Puro Water Group Inc             Mnfr water treatment equip               25.7           30.186 
10/13/97  03/19/98  Integrated Brands Inc            Produce frozen yogurt                    46.8           51.274 
11/03/97  02/25/98  Individual Inc                   Pvd info retrieval svcs                  86.8           79.390 
11/04/97  01/12/98  ComputerVision Corp              Develop, wholesale software             250.3          460.128 
11/12/97  03/03/98  PureTec Corp                     Mnfr plastic                            324.6          281.484 
11/24/97  01/07/98  General Host Corp                Investment bank                         326.2          278.128 
12/02/97  03/17/98  Staodyn Inc                      Mnfr electromedical equip                22.5           22.867 
12/12/97  02/13/98  Impact Systems Inc               Provide paper tech dvlp svcs             28.6           28.467 
12/12/97  09/10/98  Timber Lodge Steakhouse Inc      Own, op fast food restaurants            30.4           30.925 
12/15/97  02/24/98  MetroGolf Inc                    Own and operate golf courses              6.6           18.428 
12/22/97  05/20/98  Artistic Greetings Inc           Provide marketing services               33.6           35.618 

- ------------------------------------------------------------------------------------------------------------------------------------
Premium
----------------------------------------------------------------------------------
Date      Date                                     1 Day Prior     1 Week Prior    4 Weeks Prior  3 Months Prior    1 Year Prior   
Announced Effective Target Name                   to Annc. Date   to Annc. Date    to Annc. Date  to Annc. Date     to Annc. Date 
- ------------------------------------------------------------------------------------------------------------------------------------

01/10/96  06/26/96  American Resource Corp         30.77             23.50           27.03                                   
01/18/96  08/23/96  AMSERV Healthcare Inc          14.56             27.29           20.59           -4.67            20.42  
01/23/96  05/09/96  Portage Industries Corp        46.67             78.98           78.98          134.67           193.33  
02/05/96  09/30/96  Customedix Corp                22.58             26.67            5.56           19.00           -18.98  
02/13/96  07/12/96  Medical Innovations Inc        13.85             18.40            5.71            5.71            37.67  
02/15/96  04/29/96  LDI Corp                       31.20             21.48           49.09           26.15             5.81  
02/28/96  07/11/96  Salton/Maxim Housewares Inc    -0.19             12.84            3.81            1.65            -9.05  
03/13/96  09/27/96  DeSoto Inc                     65.41             53.00           80.00          118.57            53.00  
04/16/96  05/31/96  CIS Technologies Inc           50.50             30.16           30.16           -5.57            33.78  
04/22/96  06/04/96  Cornerstone Natural Gas Co     28.00             29.73          100.00          134.15           182.35  
05/03/96  03/17/98  Homeowners Group Inc           22.07             26.77           93.88          135.43            17.71  
05/06/96  09/03/96  Transcisco Industries Inc      15.56             36.84           28.40           57.58           271.43  
05/07/96  09/03/96  NMR of America Inc             41.43             86.79           90.39           98.08            37.56  
05/13/96  08/30/96  MDT Corp                       12.82             22.22            4.76           15.79            -6.38  
05/15/96  09/10/96  Carlisle Plastics Inc          38.20             38.20           41.83           73.94            31.51  
06/03/96  01/09/97  Bio-Dental Technologies Corp   64.99             43.28          109.42          194.49            65.09  
06/10/96  07/22/96  SysteMed Inc                   -4.00              4.35            9.09          -23.81           -56.36  
06/11/96  09/03/96  Computer Identics Corp         63.11             54.53           54.53           72.71            19.84  
06/17/96  10/07/96  Scanforms Inc                  61.40             61.40           58.62           70.37           130.00  
06/21/96  08/23/96  Computer Petroleum Corp        28.33             46.67           71.11          105.33           208.00  
06/24/96  12/05/96  MEM Co Inc                     13.21             81.82           90.48           93.55           114.29  
07/31/96  11/13/96  Calgene Inc                    64.10             80.28           39.13           31.96            14.29  
08/13/96  02/27/97  LaTex Resources Inc           181.14            202.77          181.14          228.00           107.16  
09/10/96  01/03/97  GreenStone Industries Corp     33.33             52.73           58.49           42.37            50.00  
09/11/96  03/04/97  Chempower Inc                  48.06             48.06           45.88           50.30            65.33  
09/16/96  12/06/96  Proler International Corp     132.26            125.00          148.28           33.33             9.09  
09/26/96  01/24/97  General Physics Corp           16.57             31.61           36.00           23.64            45.71  
10/02/96  12/27/96  Software Publishing Corp       14.86             10.90           60.80          -88.09                   
10/03/96  11/12/97  Pittencrieff Communications     8.95             14.40           30.74          -13.08            29.14  
10/04/96  12/31/96  Pet Food Warehouse Inc         22.93             26.00           48.24           48.24            57.50  
10/30/96  12/20/96  Pacific Rehab & Sports Med     67.74             62.50           48.57           60.00             6.12  
11/05/96  03/14/97  Panatech Research &                                                                      
Development                    55.56             55.56           51.35                                   
11/25/96  02/28/97  American Studios Inc           90.48            110.53          166.67          -65.28           -73.33  
12/06/96  03/18/97  MaxServ Inc (Sears Roebuck)    19.23             67.57           55.00           67.57           129.63  
12/09/96  02/28/97  Houston Biotechnology Inc      52.00             62.13           52.00          -93.01           -92.05  
01/24/97  07/02/97  INCSTAR Corp (Sorin                                                                      
Biomedical)                    42.93             53.21           68.53                                   
01/28/97  05/21/97  Calgene Inc (Monsanto Co)      62.03             60.00           60.00           60.00            42.22  
01/30/97  08/12/97  AST Research Inc               16.76              8.00           20.00           23.43           -31.43  
02/07/97  08/01/97  MS Financial (MS Diversified)  20.00             46.67           10.00            1.54           -70.67  
02/11/97  07/31/97  Serv-Tech Inc                  32.00             60.00           88.57          129.57            12.34  
03/04/97  06/27/97  Audio King Corp                60.00             68.00           68.00           68.00           -18.05  
04/15/97  06/30/97  Kurzweil Applied Intelligence  83.83             69.69           66.49           84.00            63.56  
04/30/97  07/25/97  Arden Industrial Products Inc  41.18             50.00           37.14           20.00            26.32  
05/01/97  08/01/97  Cryenco Sciences Inc           69.23             76.00           72.55           41.94           -26.67  
05/08/97  09/10/97  Imex Medical Systems Inc        7.90              2.76            2.76          -30.32           -32.50  
06/16/97  09/30/97  Frederick's of Hollywood, Inc  48.85             44.47           25.95           93.75            85.07  
06/24/97  07/25/97  Jillians Entertainment Corp    14.29             77.78           45.46          220.00           166.67  
07/23/97  12/02/97  Rudy's Restaurant Group        50.94             70.21           72.04           60.00             5.26  
08/01/97  09/26/97  Community Care of America Inc  23.08             18.52           88.24           68.42           -48.39  
08/07/97  12/02/97  Magnetic Technologies Corp     25.00             25.00           33.33           42.86            33.33  
08/14/97  12/31/97  Allied Capital Advisers Inc    10.41              4.68           10.41            8.97           -28.00  
09/02/97  12/03/97  Ground Round Restaurants       10.00             10.00           -5.71           14.78           -34.00  
09/04/97  12/30/97  Cinergi Pictures Entertainment 26.90             24.75           56.60          236.00            26.00  
09/26/97  09/26/97  Laclede Steel Co              106.45            106.45          106.45          113.33            88.24  
10/10/97  01/07/98  Puro Water Group Inc           33.95             47.69           44.00           44.00                   
10/13/97  03/19/98  Integrated Brands Inc          69.94            106.35          167.50          501.33           381.07  
11/03/97  02/25/98  Individual Inc                  0.92             14.93           -7.02           47.71            -6.00  
11/04/97  01/12/98  ComputerVision Corp            28.31             69.92           18.63           14.33           -55.09  
11/12/97  03/03/98  PureTec Corp                   28.74             34.94           31.77          143.48            69.70  
11/24/97  01/07/98  General Host Corp              60.00             62.96           79.59           51.72            77.69  
12/02/97  03/17/98  Staodyn Inc                    47.38             47.38           89.49          100.45           152.95  
12/12/97  02/13/98  Impact Systems Inc             57.14             49.15           44.26           69.23           109.52  
12/12/97  09/10/98  Timber Lodge Steakhouse Inc    74.13             74.13           81.19           94.32           139.43  
12/15/97  02/24/98  MetroGolf Inc                  20.00             20.00          -11.11          -25.00           -75.51  
12/22/97  05/20/98  Artistic Greetings Inc         28.45             47.10           52.00           47.10            21.60  

Page F-10

Merger Premiums to Market Value Analysis
Mergers with Target Price Equal to or Less than $5 per Share
Announced and Completed 1/1/96-10/9/98
(continued)

- ------------------------------------------------------------------------------------------------------------------------------------

Date      Date                                                                     
Announced Effective Target Name                     Target Business Description     Acquiror Name
- ------------------------------------------------------------------------------------------------------------------------------------

12/23/97  03/20/98  American Paging Inc            Pvd wireless messaging svcs      Telephone and Data Systems Inc  
12/23/97  01/27/98  Hi-Lo Automotive Inc           Own, op auto parts stores        O'Reilly Automotive Inc         
01/13/98  07/31/98  Bird Corp                      Manufacture building products    CertainTeed Corp               
01/16/98  02/26/98  Ophthalmic Imaging Systems Inc Mnfr, design, market imaging sys Premier Laser Systems           
01/26/98  05/06/98  TransAmerican Waste Industries Pvd waste management services    USA Waste Services Inc          
02/09/98  06/18/98  American Waste Services        Provide waste management svcs    USA Waste Services Inc          
02/23/98  06/26/98  CompScript Inc                 Pvd pharmaceutical mgmt svcs     Omnicare Inc                    
03/02/98  04/30/98  First Alert Inc                Mnfr fire and burglar alarms     Sunbeam Corp                    
03/31/98  06/29/98  IBAH Inc                       Mnfr pharmaceutical products     Omnicare Inc                    
04/09/98  07/29/98  Spec's Music Inc               Record and video retail stores   Camelot Music Holdings          
04/10/98  06/26/98  Dataflex Corp                  Whl microcomputer equipment      CompuCom Systems Inc (Safeguard)
04/22/98  06/29/98  AccelGraphics Inc              Mnfr graphics accelerators       Evans & Sutherland Computer     
04/23/98  07/31/98  Morrison Restaurants Inc       Own, operate eating places       Piccadilly Cafeterias Inc       
05/05/98  09/25/98  Allied Digital Technologies Co Mnfr multi media software prod   Investor Group                  
05/07/98  07/31/98  Innovative Tech Systems Inc    Dvlp facilities mgmt software    Peregine Systems Inc            
05/11/98  07/14/98  Micronics Computers Inc        Mnfr system boards               Diamond Multimedia Systems Inc  
05/12/98  08/24/98  Virus Research Institute Inc   Mnfr biological products         T Cell Sciences Inc             
05/20/98  09/15/98  InnoServ Technologies          Pvd med equip repair svcs        GE Medical Systems              
05/22/98  07/22/98  Pete's Brewing Co              Produce beer                     Gambinus Co.                    
05/29/98  08/17/98  Arch Petroleum Inc             Oil, gas mining                  Pogo Producing Co               
06/09/98  06/09/98  Lincoln Snack Co (Noel Group)  Produce, whl pre-poped popcorn   Brynwood Partners III LP         
06/22/98  10/02/98  GT Bicycles Inc                Manufacture, wholesale bicycles  Schwinn Holdings Corp           
07/07/98  09/21/98  Republic Engineered Steels     Mnfr cold-finished steel prods   Investor Group                  
07/14/98  09/18/98  DEP Corp                       Manufacture personal care prod   Henkel KGaA                     
07/20/98  10/01/98  US SerVis Inc                  Dvp, design, whl software        HBO & Co                        
07/29/98  09/11/98  E-Z Serve Corp                 Whl and retail gasoline          EBC Texas Acquisition Corp      

- ------------------------------------------------------------------------------------------------------------------------------------
Value of    Enter-
Trans-      prise
Date      Date                                      Acquiror                        action      Value
Announced Effective Target Name                     Business Description            ($ mil)    ($ mil)
- ------------------------------------------------------------------------------------------------------------------------------------

12/23/97  03/20/98  American Paging Inc              Pvd telecommunications svcs         9.1    217.941 
12/23/97  01/27/98  Hi-Lo Automotive Inc             Own, op auto supply stores         42.5     89.690 
01/13/98  07/31/98  Bird Corp                        Mnfr asbestos, fiberglass prods    39.2     27.821 
01/16/98  02/26/98  Ophthalmic Imaging Systems Inc   Mnfr, whl laser sys alarms          1.3      7.006 
01/26/98  05/06/98  TransAmerican Waste Industries   Pvd waste disposal services       142.3    156.717 
02/09/98  06/18/98  American Waste Services          Pvd waste disposal services       122.1    106.919 
02/23/98  06/26/98  CompScript Inc                   Whl, retail pharmaceuticals        68.4     68.415 
03/02/98  04/30/98  First Alert Inc                  Mnfr, whl household appliances    129.2    171.213 
03/31/98  06/29/98  IBAH Inc                         Whl, retail pharmaceuticals       154.3    153.807 
04/09/98  07/29/98  Spec's Music Inc                 Own, op chain record stores        26.8     25.276 
04/10/98  06/26/98  Dataflex Corp                    Manufacture computer equipment     25.2     46.850 
04/22/98  06/29/98  AccelGraphics Inc                Mnfr computer graphics system      55.9     36.284 
04/23/98  07/31/98  Morrison Restaurants Inc         Own and operate cafeterias         46.2            
05/05/98  09/25/98  Allied Digital Technologies Co   Investoer group                    69.2    110.009 
05/07/98  07/31/98  Innovative Tech Systems Inc      Dvlp service desk software         75.7     72.285 
05/11/98  07/14/98  Micronics Computers Inc          Manufacture multimedia systems     31.7     12.967 
05/12/98  08/24/98  Virus Research Institute Inc     Mnfr vaccines, related products    62.6     60.225 
05/20/98  09/15/98  InnoServ Technologies            Mnfr diagnostic imaging equip      13.1     11.596 
05/22/98  07/22/98  Pete's Brewing Co                Produce, wholesale beer            69.4     51.299 
05/29/98  08/17/98  Arch Petroleum Inc               Oil and gas exploration, prodn    114.0    100.081 
06/09/98  06/09/98  Lincoln Snack Co (Noel Group)    Investment firm                     7.1      8.981 
06/22/98  10/02/98  GT Bicycles Inc                  Mnfr bicycles; holding company    149.6    170.494 
07/07/98  09/21/98  Republic Engineered Steels       Investor group                    417.8    409.392 
07/14/98  09/18/98  DEP Corp                         Mnfr, whl chemicals, detergents    89.7     90.606 
07/20/98  10/01/98  US SerVis Inc                    Dvlp healthcare software           47.4     29.160 
07/29/98  09/11/98  E-Z Serve Corp                   Investment firm                    43.2    107.882 

- ------------------------------------------------------------------------------------------------------------------------------------
Premium
----------------------------------------------------------------------------------
Date      Date                                     1 Day Prior     1 Day Prior    4 Weeks Prior  3 Months Prior    1 Year Prior   
Announced Effective Target Name                   to Annc. Date   to Annc. Date   to Annc. Date  to Annc. Date     to Annc. Date 
- ------------------------------------------------------------------------------------------------------------------------------------

12/23/97  03/20/98  American Paging Inc                  17.65          33.33          29.03          17.65          (47.37) 
12/23/97  01/27/98  Hi-Lo Automotive Inc                (14.07)         12.26          24.29          17.97           74.00  
01/13/98  07/31/98  Bird Corp                            25.71          18.92          29.41          37.50           (8.33) 
01/16/98  02/26/98  Ophthalmic Imaging Systems Inc       16.67          27.27          40.00          75.00          (63.16) 
01/26/98  05/06/98  TransAmerican Waste Industries       51.42          36.57          78.59          55.02           70.15  
02/09/98  06/18/98  American Waste Services             100.00         156.00         166.67         166.67           77.78  
02/23/98  06/26/98  CompScript Inc                       26.56          67.24          52.70          80.10          (57.69) 
03/02/98  04/30/98  First Alert Inc                      68.00          90.91         110.00         104.88           71.43  
03/31/98  06/29/98  IBAH Inc                             12.20          61.40          58.62          53.33           (9.80) 
04/09/98  07/29/98  Spec's Music Inc                     30.37          65.00          65.00         340.00          230.00  
04/10/98  06/26/98  Dataflex Corp                         8.43           9.33          23.77          21.48           49.09  
04/22/98  06/29/98  AccelGraphics Inc                    13.58          22.67          21.05          62.83          (38.67) 
04/23/98  07/31/98  Morrison Restaurants Inc             45.56          73.91          81.82          77.78            8.11  
05/05/98  09/25/98  Allied Digital Technologies Co       14.29          14.29          37.93          86.05          158.06  
05/07/98  07/31/98  Innovative Tech Systems Inc           8.04          10.88          25.78          62.15          301.52  
05/11/98  07/14/98  Micronics Computers Inc              37.54          15.29          50.77          30.67          (16.60) 
05/12/98  08/24/98  Virus Research Institute Inc         91.64          75.67          81.72          46.44            9.83  
05/20/98  09/15/98  InnoServ Technologies                30.77          32.04          41.67          21.43          130.51  
05/22/98  07/22/98  Pete's Brewing Co                     6.25          39.73          42.66          45.83            6.33  
05/29/98  08/17/98  Arch Petroleum Inc                    0.13           5.47          (3.53)          4.00          (17.67) 
06/09/98  06/09/98  Lincoln Snack Co (Noel Group)         6.67           3.23                          3.23           42.22  
06/22/98  10/02/98  GT Bicycles Inc                      68.42          77.78          36.17          31.96            0.00  
07/07/98  09/21/98  Republic Engineered Steels           56.76          68.12          45.00          87.10          427.27  
07/14/98  09/18/98  DEP Corp                             31.25          93.35          78.72          75.00          236.00  
07/20/98  10/01/98  US SerVis Inc                       151.62          85.98         151.62         289.09          256.67  
07/29/98  09/11/98  E-Z Serve Corp                       37.14          20.00          20.00          20.00          (20.00) 
Mean:     39.7%          48.8%          55.4%          67.1%           53.8%

Source: Securities Data Company, Inc; Three month and one-year premiums 
calculated using security prices 
from FactSet Research Systems, Inc. Commercial banks and other similar 
financial institutions were excluded 
for the purpose of this analysis.

Page F-3

Merger Premiums to Market Value Analysis
Mergers with Target Price Between $5 and $10 per Share
Announced and Completed 1/1/96-10/9/98
(continued)

- ------------------------------------------------------------------------------------------------------------------------------------

Date      Date                                                                     
Announced Effective Target Name                     Target Business Description     Acquiror Name
- ------------------------------------------------------------------------------------------------------------------------------------

01/03/96  08/28/96  International Jensen Inc        Mnfr radios and televisions     Recoton Corp                    
01/08/96  05/31/96  Medalist Industries Inc         Mnfr screws, bolts              Illinois Tool Works Inc         
01/11/96  07/30/96  Golf Enterprises Inc            Own, op golf course, club, shop National Golf Properties Inc    
01/16/96  02/26/96  Concord Health Group            Pvd healthcare mgmt services    Multicare Cos Inc               
01/16/96  04/10/96  Orthopedic Technology Inc       Manufacture surgical supplies   Depuy Inc (Corange Ltd)         
01/24/96  03/29/96  TGV Software Inc                Develop software                Cisco Systems Inc               
01/29/96  04/08/96  Varitronic Systems Inc          Mnfr typewriters                WH Brady Co                     
02/08/96  07/31/96  Citizens Security Group Inc     Insurance holding company       Meridian Insurance Group        
03/04/96  06/27/96  Storage Properties Inc          Own and operate warehouses      Public Storage Inc              
03/13/96  04/18/96  CAPCO Automotive Products Corp  Mnfr automobile parts           Eaton Corp                      
04/03/96  06/17/96  E&B Marine Inc                  Ret, whl marine accessories     West Marine Inc                 
04/15/96  11/22/96  Multi-Market Radio Inc          Own, op radio broadcasting stns SFX Broadcasting Inc            
04/22/96  07/18/96  Duplex Products Inc             Manufacture business forms      Reynolds & Reynolds Co          
04/22/96  08/07/96  Ideon Group Inc                 Operate ret mail order house    CUC International Inc           
04/25/96  10/01/96  Sterling Chemicals Inc          Mnfr commodity chemicals        Investor Group                  
04/29/96  09/09/96  Crocker Realty Trust Inc        REIT                            Highwoods Properties Inc        
05/16/96  08/20/96  Professional Sports Care Mngmt  Own, op physical therapy clinic HealthSouth Corp                
05/20/96  08/29/96  Financing for Science Intl Inc  Pvd business credit services    Finova Group Inc                
05/22/96  08/02/96  Network Express Inc             Mnfr telecommunication equip    Cabletron Systems Inc           
05/24/96  09/04/96  Clinton Gas Systems Inc         Oil and gas exploration, prodn  Joint Energy Dven Investments   
06/10/96  08/23/96  Bailey Corp                     Manufacture rubber products     Venco Acquisition Corp          
06/14/96  09/13/96  Bugaboo Creek Steak House Inc   Own, op restaurants             Longhorn Steaks Inc             
06/21/96  09/26/96  Applied Bioscience Intl (IMS)   Provide medical testing svcs    Phamaceutical Product Dvlp      
07/01/96  09/25/96  Brooktree Corp                  Manufacture semiconductors      Rockwell International Corp     
07/03/96  09/05/97  Golden Poultry Co Inc           Produce, wholesale poultry      Gold Kist Inc                   
07/11/96  10/11/96  Fay's Inc                       Own and operate drug stores     Thrift Drug Inc (JC Penney Co)  
07/12/96  10/10/96  ADCO Technologies Inc           Mnfr adhesives and sealants     Astor Chemicals                 
07/12/96  10/23/96  Supercuts Inc                   Operate barber shops            Regis Corporation               
07/19/96  08/30/96  FluoroScan Imaging Systems      Mnfr, whl x-ray imaging device  Hologic Designs                 
08/02/96  11/07/96  Colonial Data Technologies      Manufacture telcommun equip     US Order Inc                    
08/26/96  12/20/96  Home Shopping Network (Liberty) Own. op TV broadcasting statn   Silver King Communications Inc  
09/09/96  09/23/96  Crooker realty Trust Inc        REIT                            Highwoods Properties Inc        
09/10/96  12/05/96  Acquitron Medical Inc           Manufacture apnca monitors      Nellcor Puritan-Bennett          
09/11/96  12/02/96  ReadiCare Inc                   Own and operate HMO's           HealthSouth Corp                
09/16/96  11/07/97  Centerior Energy Corp           Electric utility holding co     Ohio Edison Co                  
09/24/96  01/02/97  Datalogix International         Develop business software       Oracle Corp                     
10/01/96  04/25/97  Cosmetic Center Inc             Operate cosmetic stores         Prestige Fragance & Cosmetics   
10/10/96  02/12/97  Knogo North America Inc         Mnfr search, navigation equip   Video Sentry Corp              
10/10/96  11/27/96  WCI Steel Inc (Renco Group Inc) Manufacture steel               Renco Group Inc                 
10/17/96  02/27/97  Triad Systems Corp              Develop turnkey computer sys    Investor Group                  
11/06/96  03/07/97  Midland Financial Group Inc     Fire, marine, casualty ins co   Progressive Corp                
11/06/96  12/11 96  Union Switch & Signal Inc       Manufacture railroad equip      Ansaldo Transporti SpA          
11/11/96  03/17/97  AHI Healthcare Systems Inc      Pvd physician contracting svcs  FPA Medical Management Inc      
11/13/96  12/17/96  Edmark Corp                     Develop educational software    IBM Corp                        
11/18/96  03/27/97  Tyco Toys Inc                   Manufacture and wholesale toys  Mattel Inc                      
12/10/96  04/01/97  Softdesk Inc                    Develop, wholesale CAD software Autodesk Inc                    
12/23/96  05/09/97  StarSight Telecast Inc          Pvd cable programming svcs      Gemstar International Group     
12/26/96  04/16/97  Royce Laboratories Inc          Mnfr pharmaceuticals products   Watson Pharmaceuticals Inc      
01/17/97  04/24/97  American Recreation Centers     Own, op bowling, rec centers    AMF Bowling Centers (AMF Group) 
01/27/97  07/24/97  Cardiometrics Inc               Mnfr surgical, medical equip    EndoSonics Corp                 
02/11/97  05/29/97  Fractal Design Corp             Develop graphics software       MetaTools Inc                   
02/11/97  03/24/97  Innotech Inc                    Mnfr electro-medical prods      Johnson & Johnson               
02/18/97  07/01/98  Contour Medical (Retirement)    Mnfr surgical supplies          Sun Healthcare Group Inc        
02/18/97  07/01/98  Retirement Care Associates Inc  Own, operate nursing homes      Sun Healthcare Group Inc        
03/06/97  07/31/97  Allwaste Inc                    Pvd asbestos treatment svcs     Philip Environmental Inc        
03/06/97  08/13/97  Crop Growers Corp               Insurance agency                Fireman's Fund Insurance Co     
03/11/97  04/15/97  TPC Corp                        Pvd gas transmission svcs       PacifiCorp Holdings Inc         
03/21/97  06/12/97  CrossComm Corp                  Mnfr computer networking equip  Olicom A/S                      
03/27/97  03/27/97  Strober Organization Inc        Wholesale building materials    Hamilton Acquisition LLC        
03/31/97  06/03/97  Peak Technologies Group Inc     Whl integrated systems          Moore Corp Ltd                  
04/10/97  06/13/97  ERO Inc                         Manufacture toys                Hedstrom Corp (Hedstrom Hldgs)  
04/10/97  06/26/97  Microcom Inc                    Mnfr data comm products         Company Computer Corp           
04/18/97  07/10/97  LIVE Entertainment Inc          Whl, retail recorded music      Investor Group                  
05/30/97  07/09/97  Integrated Living Communities   Pvd nursing, personal care svcs Whitehall Street Real Estate    
05/30/97  10/16/97  National Picture and Frame Co   Mnfr picture, mirror frames     Colonnade Capital LLC            
06/03/97  09/08/97  Physician Corp of America       Own and operate HMO's           Humana Inc                      

- ------------------------------------------------------------------------------------------------------------------------------------
Value of   Enter-
Trans-     prise
Date      Date                                      Acquiror                         action    Value
Announced Effective Target Name                     Business Description             ($ mil)   ($ mil)
- ------------------------------------------------------------------------------------------------------------------------------------

01/03/96  08/28/96  International Jensen Inc        Mnfr audio, video equipment       109.1   109.595  
01/08/96  05/31/96  Medalist Industries Inc         Mnfr indl fasteners, tools         55.4    91.567  
01/11/96  07/30/96  Golf Enterprises Inc            Real estate investment trust       82.9   141.614  
10/16/96  02/26/96  Concord Health Group            Own, op nursing care facilities   126.9   126.755  
01/16/96  04/10/96  Orthopedic Technology Inc       Mnfr orthopedic devices            45.2    44.871  
01/24/96  03/29/96  TGV Software Inc                Mnfr inter-networking systems      92.4     71.54  
01/29/96  04/08/96  Varitronic Systems Inc          Mnfr indl labeling machines        42.5    43.333  
02/08/96  07/31/96  Citizens Security Group Inc     Insurance holding company          22.6    26.703  
03/04/96  06/27/96  Storage Properties Inc          Real estate investment trust       22.8 1,293.505  
03/13/86  04/18/96  CAPCO Automotive Products Corp  Manufacture automotive parts      128.9   140.935  
04/03/96  06/17/96  E&B Marine Inc                  Own, op boat dealerships           30.6    49.597  
04/15/96  11/22/96  Multi-Market Radio Inc          Own, op radio bdcstg stations     104.4    89.166  
04/22/95  07/18/96  Duplex Products Inc             Pvd comp sys bus forms svcs        90.1     85.54  
04/22/96  08/07/96  Ideon Group Inc                 Provide discount club svcs        381.8   382.225  
04/25/96  10/01/96  Sterling Chemicals Inc          Investor group                    798.4   791.162  
04/29/96  09/09/96  Crocker Realty Trust Inc        Real estate investment trust      537.5    531.94  
05/16/96  08/20/96  Professional Sports Care Mngmt  Own, op outpatient surgery ctr     64.8    54.952  
05/20/96  08/29/96  Financing for Science Inl Inc   Pvd financial services             39.2   193.919  
05/22/95  08/02/96  Network express Inc             Mnfr, whl, install LAN, WAN       118.4   112.039  
05/24/96  09/04/96  Clinton Gas Systems Inc         Investment firm                    38.4    52.887  
06/10/96  08/23/96  Bailey Corp                     Investment holding company         47.8   106.359  
06/14/96  09/13/96  Bugaboo Creek Steak House Inc   own and operate steakhouses        48.5    55.641  
06/21/96  09/26/96  Applied Bioscience Inc (IMS)    Pvd comm phy research svcs        491.5   483.418  
07/01/96  09/25/96  Brooktree Corp                  Mnfr aircraft defense systems     261.8   273.377  
07/03/96  09/05/97  Golden Poultry Co Inc           Produce, wholesale poultry         52.1   209.708  
07/11/96  10/11/96  Fay's Inc                       Own and operate drug stores       277.9   352.368  
07/12/96  10/10/96  ADCO Technologies Inc           Mnfr specialty chemicals           53.8    54.141  
07/12/96  10/23/96  Supercuts Inc                   Operate hairstyling salons        175.1   174.379  
07/19/96  08/30/96  FluoroScan Imaging Systems      Mnfr and whl X-ray systems         59.1    53.882  
08/02/96  11/07/96  Colonial data Technologies      Pvd equip rental, leasing svcs    186.5   176.021  
08/26/96  12/20/96  Home Shopping Network (Liberty) Operate television stations     1,216.9 1,069.458  
09/09/96  09/23/96  Crooker realty Trust Inc        Real estate investment trust       76.1   557.561  
09/10/96  12.05/96  Acquitron Medical Inc           Mnfr electn patient monitors       56.6    56.176  
09/11/96  12/02/96  ReadiCare Inc                   Own, op outpatient surgery ctr     73.9    70.736  
09/16/96  11/07/97  Centerior Energy Corp           Electric utility                1,612.6 6,202.925  
09/24/96  01/02/97  Datalogix International         Develop database software          80.0    63.045  
10/01/96  04/25/97  Cosmetic Center Inc             Own and op retail stores           32.8     30.68  
10/10/96  02/12/97  Knogo North America Inc         Provide electrical services        48.8    45.572  
10/10/96  11/27/96  WCI Stell Inc (Renco Group Inc) Mnfr steel products                56.5   437.182  
10/17/96  02/27/97  Triad Systems Corp              Investor group                    193.1   225.973  
11/06/96  03/07/97  Midland Financial Group Inc     Insurance holding company          47.2    72.692  
11/06/96  12/11 96  Union Switch & Signal Inc       Mnfr train and transp equip        27.1   135.632  
11/13/96  03/17/97  All Healthcare Systems Inc       Pvd health care mgmt services     117.0   103.179  
11/13/96  12/17/96  Edmark Corp                     Mnfr computers, office equip      123.8    81.322  
11/18/96  03/27/97  Tyco Toys Inc                   Mnfr, whl games, toys             737.4 1,073.147  
12/10/96  04/01/97  Softdesk Inc                    Design drafting software           91.7    88.442  
12/23/96  05/05/97  StarSight Telecast Inc          Mnfr simplified VCR programmer    273.1   266.569  
12/26/96  04/16/97  Royce Laboratories Inc          Mnfr pharmaceutical products       84.2    81.639  
01/17/96  04/24/97  American Recreation Centers     Own, op bowling centers            70.7     63.83  
01/27/97  07/24/97  Cardiometrics Inc               Mnfr image processing equip        56.8    37.872  
02/11/97  05/29/97  Fractal Design Corp             Develop software                  140.2   136.069  
02/11/97  03/24/97  Innotech Inc                    Mnfr medical equip and prods      135.6   116.561  
02/18/97  07/01/98  Contour Medical (Retirement)    Pvd long-term healthcare svcs      55.2    72.823  
02/18/97  07/01/98  Retirement Care Associates Inc  Pvd long-term healthcare svcs     305.9   292.435  
03/06/97  07/03/97  Allwaste Inc                    Provide waste management svcs     506.7   534.883  
03/06/97  08/13/97  Crop Growers Corp               Insurance company                  82.1    89.061  
03/11/97  04/15/97  TPC Corp                        Pvd telephone commun services     408.5   398.392  
03/21/97  06/12/97  CrossComm Corp                  Mnfr communications equipment      84.6    77.829  
03/27/97  03/27/97  Strober Organization Inc        Investment company                 33.4    30.937  
03/03/97  06/03/97  Peak Technologies Group Inc     Mnfr manifold business forms      169.8    192.09  
04/10/97  06/13/97  ERO Inc                         Manufacture games and toys        203.6   201.739  
04/10/97  06/26/97  Microcom Inc                    Manufacture personal computers    267.6   273.087  
04/18/97  07/10/97  LIVe Entertainment Inc          Investor group                     53.1    98.981  
05/30/97  07/09/97  Integrated Living Communities   Real estate development finn       79.7    78.553  
05/30/97  10/16/97  National Picture and Frame Co   Private equity firm                60.3    67.073  
06/03/97  09/08/97  Physician Corp of America       Own and operate HMO's             405.1   260.352  

- ------------------------------------------------------------------------------------------------------------------------------------
Premium
----------------------------------------------------------------------------------
Date      Date                                     1 Day Prior     1 Day Prior    4 Weeks Prior  3 Months Prior    1 Year Prior   
Announced Effective Target Name                   to Annc. Date   to Annc. Date   to Annc. Date  to Annc. Date     to Annc. Date 
- ------------------------------------------------------------------------------------------------------------------------------------

01/03/96  08/28/96  International Jensen Inc           29.41         57.14            49.15           46.67           12.82  
01/08/96  05/31/96  Medalist Industries Inc           127.20         136.67           110.37         (43.20)         (43.20)
01/11/96  07/30/96  Golf Enterprises Inc               37.14         45.46            45.46           (7.69)           6.67  
10/16/96  02/26/96  Concord Health Group               25.11         43.42            58.92           50.77           40.00  
01/16/96  04/10/96  Orthopedic Technology Inc          26.45         43.89            49.03                                  
01/24/96  03/29/96  TGV Software Inc                   41.55         70.63            73.00           73.00                  
01/29/96  04/08/96  Varitronic Systems Inc             79.49         79.49            62.79           94.44           89.19  
02/08/96  07/31/96  Citizens Security Group Inc        88.68        108.33           117.39           25.00           25.00  
03/04/96  06/27/96  Storage Properties Inc             10.94         16.44            15.29          (58.88)         (50.59) 
03/13/86  04/18/96  CAPCO Automotive Products Corp     66.67         72.41            78.57           24.22          (13.04) 
04/03/96  06/17/96  E&B Marine Inc                     (4.76)        20.00             7.14          100.00            3.45  
04/15/96  11/22/96  Multi-Market Radio Inc             11.11         29.87            19.05           28.21           56.25  
04/22/95  07/18/96  Duplex Products Inc                 1.05         28.86            36.17           48.84           41.18  
04/22/96  08/07/96  Ideon Group Inc                    38.46         54.29            36.71           38.46          (22.30) 
04/25/96  10/01/96  Sterling Chemicals Inc             29.73         47.69            47.69           29.73           (7.69) 
04/29/96  09/09/96  Crocker Realty Trust Inc           10.20         11.60            13.03           24.17                  
05/16/96  08/20/96  Professional Sports Care Mngmt     13.74         29.05            34.21          620.95          (36.92) 
05/20/96  08/29/96  Financing for Science Inl Inc       4.49          6.67            12.53           17.70          108.98  
05/22/95  08/02/96  Network express Inc               (10.64)        19.97            39.01          119.00          (20.36) 
05/24/96  09/04/96  Clinton Gas Systems Inc             3.85         14.89            31.71           12.50           80.00  
06/10/96  08/23/96  Bailey Corp                         5.46          6.06            11.11           55.56           68.67  
06/14/96  09/13/96  Bugaboo Creek Steak House Inc       9.19         16.02            10.82          (60.93)         (30.62) 
06/21/96  09/26/96  Applied Bioscience Inc (IMS)       75.34         82.86            77.78           77.78          204.76  
07/01/96  09/25/96  Brooktree Corp                     42.86         64.38            16.51           71.43          (13.04) 
07/03/96  09/05/97  Golden Poultry Co Inc              52.00         50.00            39.02           29.55          142.55  
07/11/96  10/11/96  Fay's Inc                          27.50         61.91            61.91           82.14           72.88  
07/12/96  10/10/96  ADCO Technologies Inc              28.13         51.85            57.69          368.57          105.00  
07/12/96  10/23/96  Supercuts Inc                      55.29         53.04            60.00           99.25           50.86  
07/19/96  08/30/96  FluoroScan Imaging Systems        116.00        109.35            70.10          134.62          131.63  
08/02/96  11/07/96  Colonial data Technologies         20.00         33.33            (6.80)         (45.86)          13.68  
08/26/96  12/20/96  Home Shopping Network (Liberty)    38.95         62.46            62.46           (6.55)          27.23  
09/09/96  09/23/96  Crooker realty Trust Inc           18.80         20.30            21.85            5.02           58.40  
09/10/96  12.05/96  Acquitron Medical Inc              18.06         21.53            40.07           23.34           22.43  
09/11/96  12/02/96  ReadiCare Inc                      66.79         55.42            55.42           66.83          120.65  
09/16/96  11/07/97  Centerior Energy Corp              42.82         40.52            42.82           50.21            2.49  
09/24/96  01/02/97  Datalogix International            28.00         42.22            56.10           14.19          (55.24) 
10/01/96  04/25/97  Cosmetic Center Inc                17.39         45.33           103.47           64.97           (3.11)  
10/10/96  02/12/97  Knogo North America Inc            (3.38)        13.31             7.45                                  
10/10/96  11/27/96  WCI Steel Inc (Renco Group Inc)    17.65         29.03            77.78           90.48          105.13  
10/17/96  02/27/97  Triad Systems Corp                 68.18         60.87            89.74           72.09           68.18  
11/06/96  03/07/97  Midland Financial Group Inc        30.91         24.14                0           (2.70)          (5.26) 
11/06/96  12/11 96  Union Switch & Signal Inc           3.57          3.57                0           (6.45)           9.43  
11/11/96  03/17/97  AHI Healthcare Systems Inc         10.90         34.00            23.69           34.00          (34.37) 
11/13/96  12/17/96  Edmark Corp                        35.52         63.16            31.92            5.08          (61.73) 
11/18/96  03/27/97  Tyco Toys Inc                      73.69         80.12            94.53          (33.82)         (26.30) 
12/10/96  04/01/97  Softdesk Inc                       60.00         66.76           146.67          111.43          (32.73) 
12/23/96  05/09/97  StarSight Telecast Inc             17.86         20.84            44.28           16.22           94.60  
12/26/96  04/16/97  Royce Laboratories Inc              0.57         22.91            18.52           30.95          (36.21) 
01/17/96  04/24/97  American Recreation Centers        15.25         33.33            70.00           58.14           33.33  
01/27/97  07/24/97  Cardiometrics Inc                  18.28         13.81            47.12           82.79            2.24  
02/11/97  05/29/97  Fractal Design Corp                44.97         40.44             0.99           (6.82)         (18.25) 
02/11/97  03/24/97  Innotech Inc                       54.93         64.18            54.93          400.00          (50.95) 
02/18/97  07/01/98  Contour Medical (Retirement)       21.43         47.83            58.14                                  
02/18/97  07/01/98  Retirement Care Associates Inc     19.44         14.67            21.13           91.11            3.79  
03/06/97  07/03/97  Allwaste Inc                       48.22         63.35            95.22          122.44          128.80  
03/06/97  08/13/97  Crop Growers Corp                  20.59         15.49            41.38           57.69           (2.38) 
03/11/97  04/15/97  TPC Corp                           52.17         65.05            55.48          652.84          946.63  
03/21/97  06/12/97  CrossComm Corp                     74.32         70.17            70.17           70.10           (9.57) 
03/27/97  03/27/97  Strober Organization Inc               0          3.23             2.13            4.35           37.14  
03/03/97  06/03/97  Peak Technologies Group Inc       108.70         97.26            65.52           50.00           (1.37) 
04/10/97  06/13/97  ERO Inc                            12.50         16.88            30.44           47.54           73.08  
04/10/97  06/26/97  Microcom Inc                       54.76         91.18            35.42           35.42          (43.48) 
04/18/97  07/10/97  LIVE Entertainment Inc              6.67          6.67            50.00                                  
05/30/97  07/09/97  Integrated Living Communities      26.90         21.05            50.82           73.58                  
05/30/97  10/16/97  National Picture and Frame Co      31.51         28.00            28.00           22.29           18.52  
06/03/97  09/08/97  Physician Corp of America          12.00         12.00            23.08           65.93          (45.63) 

Page F-4

Merger Premiums to Market Value Analysis
Mergers with Target Price Between $5 and $10 per Share
Announced and Completed 1/1/96-10/9/98
(continued)

- ------------------------------------------------------------------------------------------------------------------------------------

Date      Date                                                                     
Announced Effective Target Name                     Target Business Description     Acquiror Name
- ------------------------------------------------------------------------------------------------------------------------------------

06/05/97  07/14/97  DIGEX Inc                       Develop Internet software        Intermedia Communicaitons Inc  
06/20/97  10/23/97  Convest Energy Corp             Oil and gas exploration, prodn   Forcenergy Inc                 
07/02/97  10/28/97  Calnetics Corp                  Manufacture plastic products     Summa Industries Inc           
07/03/97  09/26/97  Krystal Co                      Own, op fast food restaurants    Port Royal Holdings Inc        
07/10/97  11/18/97  Airways Corp                    Passenger airline                AirTran Holdings Inc           
07/14/97  10/28/97  Katz Media Group                Advertising agency               Investor Group                 
07/24/97  10/28/97  Astrotech International Corp    Pvd storage tank maintenance     ITEQ Inc                       
07/25/97  12/01/97  Homegate Hospitality Inc        Own and operate hotels           Prime Hospitality Corp         
07/25/97  08/28/97  Imo Industries Inc              Mnfr industrial controls, pumps  Constellation Capital Partners 
07/31/97  09/29/97  Interactive Group Inc           Dvlp, whl comp integrated sys    DataWorks Corp                 
08/04/97  12/31/97  Belmont Homes Inc               Mnfr prefabricated Houses        Cavalier Homes Inc             
08/04/97  11/19/97  Gyncare Inc                     Pvd biotech prod dvlp services   Johnson & Johnson              
08/14/97  12/18/97  Technology Service Group Inc.   Mnfr cellular telephones         Elcotel                        
08/25/97  10/03/97  BioWhitaker Inc                 Mnfr, whl medical testing prods  Cambrex Corp                   
08/25/97  01/23/98  PerSeptive Biosystems Inc       Mnfr chromatography equipment    Perkin-Elmer Corp              
09/17/97  12/12/97  Designer Holdings (New Rio LLC) Dvlp, mkt designer sportswear    Warnaco Group Inc              
09/23/97  01/22/98  El Chico Restaurants Inc        Own and operate restaurants      Investor Group                 
09/26/97  02/03/98  Sagebrush Inc                   Own and operate eating places    WSMP Inc                       
09/26/97  04/28/98  Skyline Chili Inc               Operate, franchise restaurants   Investor Group                 
09/29/97  11/26/97  CompuRAD Inc                    Pvd Healthcare software          Lumisys Inc                    
10/01/97  12/05/97  Alpine Lace Brands Inc          Whl dairy products, cheese       LandO'Lakes Inc                
10/15/97  11/21/97  Thompson PBE Inc                Whl automotive paint, supplies   FinishMaster Inc (Lacey Distn) 
10/20/97  01/29/98  Cruise America Inc              Own, op trailer dealership       Budget Group Inc               
11/07/97  05/28/98  Medicus Systems Corp            Develop, whl medical software    QuadraMed Corp                 
11/17/97  03/10/98  Shared Technologies Fairchild   Mnfr telecommunications equip    Intermedia Communications Inc  
11/17/97  03/02/98  Visigenie Software Inc          Dvlp database access software    Borland International Inc      
11/21/97  01/20/98  New Jersey Steel (Von Roll)     Mnfr steel reinforcing bars      Co-Steel Inc                   
11/24/97  02/03/98  Communicaitons Central Inc      Pvd telecommunications svcs      Davel Communications Inc       
12/19/97  06/03/98  Eclipse Telecommunicaitons Inc  Pvd radiotelecommunication svc   IXC Communications Inc         
12/29/97  03/17/98  Heartstream Inc                 Mnfr defibrillators              Hewlett-Packard Co             
01/06/98  03/02/98  DBA Systems Inc                 Dvlp digital imaging systems     Titan Corp                     
01/14/98  06/02/98  Meridian Point Realty Trust     Real estate investment trust     EastGroup Properties           
01/15/98  06/11/98  OHM Corp                        Operate hazardous waste sites    International Technology Corp  
01/16/98  02/25/98  Checkmate Electronics Inc       Mnfr, whl payment systems        International Verifact Inc     
01/21/98  05/15/98  BKC Semiconductors Inc          Mnfr semiconductor devices       Microsemi Corp                 
01/22/98  09/29/98  BT Office Products Intl Inc     Whl office stationary, supples   Buhrmann NV                    
01/28/98  03/05/98  Sun Coast Industries Inc        Mnfr plastic products            Kerr Group Inc                 
01/29/98  06/05/98  Monroe Inc                      Mnfr, whl concrete, sand, gravel US Aggregates Inc              
01/29/98  05/21/98  ProSource Inc (Onex Corp)       Wholesale groceries              AmeriServe Food Distribution   
02/04/98  06/09/98  TresCom International Inc       Pvd communicaitons svcs          Primus Telecommunications      
02/10/98  06/30/98  Ryan Beck & Co, Livingston, NJ  Securities brokerage firm        BankAtlantic Bancorp, Florida  
02/17/98  08/17/98  Bell Sports Corp                Mnfr bicycle equip, accessories  HB Acquisition Corp            
02/24/98  05/04/98  Somatogen Inc                   Dvlp human blood substitutes     Baxter International Inc       
03/02/98  04/30/98  Signature Brands USA Inc        Mnfr, whl consumer housewares    Sunbean Corp                   
03/05/98  05/20/98  Intelligent Electronics Inc     Whl, ret computer systems        Xerox Corp                     
03/06/98  04/30/98  Proxima Corp                    Mnfr PC liq crys display prods   ASK AS                         
03/10/98  06/19/98  Corcom Inc                      Manufacture radio filters        Communications Instruments Inc 
03/16/98  07/10/98  International Murex Tech Corp   Mnfr in-vitro test systems       Abbott Laboratories            
04/03/98  07/21/98  Bertucci's Inc                  Own and operate restaurants      NE Restaurant Co Inc           
04/15/98  05/29/98  Simulation Sciences Inc         Dvlp simulation software         Siche PLC                      
04/28/98  07/20/98  Hein-Werner Corp                Mnfr automotive service equip    Snap-On Inc                    
04/29/98  09/25/98  Group I Software Inc            Develop software                 COMNET Corp                    
05/04/98  06/10/98  Farah Inc                       Mnfr, ret family apparel         Tropical Sportswear Intl Corp  
05/07/98  06/30/98  InTime Systems International    Pvd systems integration svcs     Aris Corp                      
05/29/98  08/06/98  Mid-America Realty Investments  Real estate investment trust     Bradley Real Estate Inc        
06/01/98  08/28/98  PST Vans Inc                    Trucking company                 US Xpress Enterprises Inc      
06/11/98  07/02/98  Imo Industries Inc              Mnfr industrial controls, pumps  Constellation Capital Partners 
07/28/98  09/10/98  CyberMedia Inc                  Dvlp, whl support software prod  Network Associates Inc         
09/14/98  09/14/98  Icon CMT Corp                   Pvd Internet computer svcs       Qwest Commun Int Inc           

- ------------------------------------------------------------------------------------------------------------------------------------
Value of   Enter-
Trans-     prise
Date      Date                                      Acquiror                        action    Value
Announced Effective Target Name                     Business Description            ($ mil)   ($ mil)
- ------------------------------------------------------------------------------------------------------------------------------------

06/05/97  07/14/97  DIGEX Inc                       Pvd telecommunications svcs     171.6 166.838 
06/20/97  10/23/97  Convest Energy Corp             Oil, gas exploration and prodn  102.0 101.521 
07/02/97  10/28/97  Calnetics Corp                  Mnfr plastic conveyor parts      23.4  26.363 
07/03/97  09/26/97  Krystal Co                      Investment company              145.4 145.677 
07/10/97  11/18/97  Airways Corp                    Passenger airline                63.7  75.936 
07/14/97  10/28/97  Katz Media Group                Investor group                  371.9 362.128 
07/24/97  10/28/97  Astrotech International Corp    Prvd, treatment for liqds, gas  116.7 147.176 
07/25/97  12/01/97  Homegate Hospitality Inc        Own, operate, franchise hotels  133.2 123.069 
07/25/97  08/28/97  Imo Industries Inc              Investment company              117.3 430.169 
07/31/97  09/29/97  Interactive Group Inc           Dvlp computer integrated sys     55.0  59.004 
08/04/97  12/31/97  Belmont Homes Inc               Manufacture mobile homes         74.0  68.986 
08/04/97  11/19/97  Gyncare Inc                     Mnfr medical equip and prods     70.5   65.68 
08/14/97  12/18/97  Technology Service Group Inc.   Mnfr public commun products      32.9  35.485 
08/25/97  10/03/97  BioWhitaker Inc                 Mnfr specialty chemicals        130.5 130.017 
08/25/97  01/23/98  PerSeptive Biosystems Inc       Mnfr analytical instruments     288.1 339.306 
09/17/97  12/12/97  Designer Holdings (New Rio LLC) Mnfr women's intimate apparel   353.6 290.492 
09/23/97  01/22/98  El Chico Restaurants Inc        Investor group                   49.2   58.65 
09/26/97  02/03/98  Sagebrush Inc                   Produce prepared sandwiches      39.4  41.395 
09/26/97  04/28/98  Skyline Chili Inc               Investor group                   22.9  26.661 
09/29/97  11/26/97  CompuRAD Inc                    Mnfr medical imaging equipment   25.0  23.321 
10/01/97  12/05/97  Alpine Lace Brands Inc          Produce butter, milk and meats   48.4  59.309 
10/15/97  11/21/97  Thompson PBE Inc                Whl automotive paint, coatings   69.3 116.683 
10/20/97  01/29/98  Cruise America Inc              Pvd passenger car rental svcs    59.3 144.263 
11/07/97  05/28/98  Medicus Systems Corp            Pvd info sys for healthcare      23.3   46.93 
11/17/97  03/10/98  Shared Technologies Fairchild   Pvd telecommunications svcs     503.6 585.377 
11/17/97  03/02/98  Visigenie Software Inc          Develop software                148.4 130.467 
11/21/97  01/20/98  New Jersey Steel (Von Roll)     Mnfr steel and steel products   173.5 176.789 
11/24/97  02/03/98  Communicaitons Central Inc      Pvd pay telephone commun svcs   102.4 133.097 
12/19/97  06/03/98  Eclipse Telecommunicaitons Inc  Pvd long distance tele svcs     122.2 122.055 
12/29/97  03/17/98  Heartstream Inc                 Mnfr computers, testing equip   130.6  110.93 
01/06/98  03/02/98  DBA Systems Inc                 Pvd computer sys design svcs     37.9  28.993 
01/14/98  06/02/98  Meridian Point Realty Trust     Real estate investment trust     51.7  45.053 
01/15/98  06/11/98  OHM Corp                        Pollution control engineering   326.8  343.15 
01/16/98  02/25/98  Checkmate Electronics Inc       Mnfr, whl electn payment sys     47.2  46.947 
01/21/98  05/15/98  BKC Semiconductors Inc          Mnfr semi-conductor products     13.3  15.905 
01/22/98  09/29/98  BT Office Products Intl Inc     Mnfr folding paperboard boxes   138.1 689.726 
01/28/98  03/05/98  Sun Coast Industries Inc        Mnfr plastic packaging prods     45.5  63.493 
01/29/98  06/05/98  Monroe Inc                      Manufacture building products    50.3  60.961 
01/29/98  05/21/98  ProSource Inc (Onex Corp)       Wholesale packaged frozed food  343.3  293.91 
02/04/98  06/09/98  TresCom International Inc       Pvd telecommunications svcs     134.7 142.626 
02/10/98  06/30/98  Ryan Beck & Co, Livingston, NJ  Savings and loan                 35.9  36.324 
02/17/98  08/17/98  Bell Sports Corp                Investment firm                 165.7 228.365 
02/24/98  05/04/98  Somatogen Inc                   Mnfr health care products       232.9 175.471 
03/02/98  04/30/98  Signature Brands USA Inc        Mnfr, whl household appliances   81.7  246.68 
03/05/98  05/20/98  Intelligent Electronics Inc     Mnfr business machine, fin co   341.6 298.084 
03/06/98  04/30/98  Proxima Corp                    Mnfr liquid crystal displays     82.9  70.022 
03/10/98  06/19/98  Corcom Inc                      Mnfr, whl relay systems          51.7   44.47 
03/16/98  07/10/98  International Murex Tech Corp   Mnfr pharmaceuticals, med equip 232.7 126.361 
04/03/98  07/21/98  Bertucci's Inc                  Own, operate restaurants         96.5 104.175 
04/15/98  05/29/98  Simulation Sciences Inc         Mnfr aappliance controls        146.5 100.093 
04/28/98  07/20/98  Hein-Werner Corp                Manufacture tools                37.5  32.296 
04/29/98  09/25/98  Group I Software Inc            Pvd dat processing svcs          11.8  64.592 
05/04/98  06/10/98  Farah Inc                       Mnfr, whl mens sportswear        93.6 144.521 
05/07/98  06/30/98  InTime Systems International    Pvd computer related services    44.9  39.672 
05/29/98  08/06/98  Mid-America Realty Investments  Real estate investment trust    153.2 148.756 
06/01/98  08/28/98  PST Vans Inc                    Trucking company                 83.9  88.376 
06/11/98  07/02/98  Imo Industries Inc              Investment company                9.1         
07/28/98  09/10/98  CyberMedia Inc                  Develop network software        130.1  108.15 
09/14/98  09/14/98  Icon CMT Corp                   Pvd telephone commun svcs       190.6 171.891 

- ------------------------------------------------------------------------------------------------------------------------------------
Premium
----------------------------------------------------------------------------------
Date      Date                                     1 Day Prior     1 Day Prior    4 Weeks Prior  3 Months Prior    1 Year Prior   
Announced Effective Target Name                   to Annc. Date   to Annc. Date   to Annc. Date  to Annc. Date     to Annc. Date 
- ------------------------------------------------------------------------------------------------------------------------------------

06/05/97  07/14/97  DIGEX Inc                         19.54          35.95           31.65           20.93                   
06/20/97  10/23/97  Convest Energy Corp               11.06          11.06           18.93           84.20            89.99  
07/02/97  10/28/97  Calnetics Corp                    30.67          33.64           25.11           20.00           (13.53) 
07/03/97  09/26/97  Krystal Co                       132.00         169.77          176.19          169.77           182.93  
07/10/97  11/18/97  Airways Corp                      26.74          29.76           32.93           (7.66)          (39.47) 
07/14/97  10/28/97  Katz Media Group                  44.26          69.23           93.41          225.93           120.00  
07/24/97  10/28/97  Astrotech International Corp      45.70          63.40           78.41           96.49           149.83  
07/25/97  12/01/97  Homegate Hospitality Inc          30.25          33.77           28.56           83.26                   
07/25/97  08/28/97  Imo Industries Inc                18.74          20.00           22.61          116.92            44.62  
07/31/97  09/29/97  Interactive Group Inc             54.40          44.75           71.56          137.54           131.60  
08/04/97  12/31/97  Belmont Homes Inc                (17.90)          0.65            9.47            2.30           (42.22)  
08/04/97  11/19/97  Gyncare Inc                       (2.82)          1.66           37.67           37.67            73.89  
08/14/97  12/18/97  Technology Service Group Inc.     (4.55)          7.14           41.89           23.48           (34.40) 
08/25/97  10/03/97  BioWhitaker Inc                   17.77          38.87           47.68            8.19            63.23  
08/25/97  01/23/98  PerSeptive Biosystems Inc         16.80          24.88           50.42           92.78            68.27  
09/17/97  12/12/97  Designer Holdings (New Rio LLC)   17.28          50.36           58.49            7.32           (51.65) 
09/23/97  01/22/98  Il Chico Restaurants Inc          64.52          75.86          104.00           39.73            54.55  
09/26/97  02/03/98  Sagebrush Inc                     15.87          13.38           21.20                                   
09/26/97  04/28/98  Skyline Chili Inc                     0           1.89            5.88            8.00            18.68  
09/29/97  11/26/97  CompuRAD Inc                       1.32           3.43            1.32            3.50            (4.46) 
10/01/97  12/05/97  Alpine Lace Brands Inc            15.87          48.98           46.00           60.53            43.22  
10/15/97  11/21/97  Thompson PBE Inc                  25.49          33.33           42.22           45.45            10.34  
10/20/97  01/29/98  Cruise America Inc                17.95          13.70           39.87           36.28            64.67  
11/07/97  05/28/98  Medicus Systems Corp              36.36          39.54           25.00           87.50            50.00  
11/17/97  03/10/98  Shared Technologies Fairchild     66.67         106.90          163.74                                   
11/17/97  03/02/98  Visigenie Software Inc            92.00          64.00           92.00           19.27           (41.45) 
11/21/97  01/20/98  New Jersey Steel (Von Roll)      162.86         170.59          166.67          148.65           411.11  
11/24/97  02/03/98  Communicaitons Central Inc        30.23          25.37           12.00           20.00            71.43  
12/19/97  06/03/98  Eclipse Telecommunicaitons Inc    18.02          19.92           14.39           (7.10)           16.13  
12/29/97  03/17/98  Heartstream Inc                   (6.71)         18.17           (8.64)          10.80           (13.10) 
01/06/98  03/02/98  DBA Systems Inc                   38.40          44.29           25.58            5.59            57.77  
01/14/98  06/02/98  Meridian Point Realty Trust       38.78          65.85           88.89                                   
01/15/98  06/11/98  OHM Corp                          24.21          45.08                           26.77            31.36  
01/16/98  02/25/98  Checkmate Electronics Inc          4.83           9.37           37.52           10.22           (29.86) 
01/21/98  05/15/98  BKC Semiconductors Inc            66.73          59.48           66.73          (58.79)          (33.31) 
01/22/98  09/29/98  BT Office Products Intl Inc       32.53          78.86           78.86           30.18            44.74  
01/28/98  03/05/98  Sun Coast Industries Inc          56.36          62.26           84.95          115.00           244.00  
01/29/98  06/05/98  Monroe Inc                         5.07          10.46            6.37           (3.19)           74.06  
01/29/98  05/21/98  ProSource Inc (Onex Corp)        126.42         106.90          100.00                                   
02/04/98  06/09/98  TresCom International Inc         25.17          30.86           51.52            5.37            39.35  
02/10/98  06/30/98  Ryan Beck & Co, Livingston, NJ    23.21          21.29           25.20           38.57           104.21  
02/17/98  08/17/98  Bell Sports Corp                  13.89          13.10            8.61           15.49            90.70  
02/24/98  05/04/98  Somatogen Inc                     35.85          39.81           92.00           58.24           (31.43) 
03/02/98  04/30/98  Signature Brands USA Inc          57.14          60.98          106.25           73.68           103.08  
03/05/98  05/20/98  Intelligent Electronics Inc        5.74          19.22           34.37           44.76           125.19  
03/06/98  04/30/98  Proxima Corp                      31.34          25.71           23.94           58.56            44.26  
03/10/98  06/19/98  Corcom Inc                        33.33          31.65           36.84           36.84            62.50  
03/16/98  07/10/98  International Murex Tech Corp     21.64          38.21           50.73          (97.44)          (96.56) 
04/03/98  07/21/98  Bertucci's Inc                    35.48          35.48           35.48           58.49            86.67  
04/15/98  05/29/98  Simulation Sciences Inc           24.03          16.79           11.11          (26.61)            6.67  
04/28/98  07/20/98  Hein-Werner Corp                  52.73          65.25           80.00           83.27            96.00  
04/29/98  09/25/98  Group I Software Inc              71.60          61.51           71.60          115.37            80.07  
05/04/98  06/10/98  Farah Inc                         33.33          44.00           39.81           60.00           (10.00) 
05/07/98  06/30/98  InTime Systems International      18.80          14.97           28.43                                   
05/29/98  08/06/98  Mid-America Realty Investments     5.00           6.33            2.44            1.20             9.09  
06/01/98  08/28/98  PST Vans Inc                      32.80          35.82           10.67           24.50           159.83  
06/11/98  07/02/98  Imo Industries Inc                (1.05)          4.44            2.55                                   
07/28/98  09/10/98  CyberMedia Inc                    25.62          38.18          117.14            8.57           (34.48) 
09/14/98  09/14/98  Icon CMT Corp                     65.52          60.00           (4.00)         (25.87)                   
Mean:    34.3%          42.3%           48.5%           58.0%            45.8%  

Source: Securities Data Company, Inc.; Three month and one-year premiums 
calculated using security prices from FactSet Research Systems, Inc. Commercial 
banks and other similar financial institutions were excluded for the purpose of 
this analysis. 
Page F-5

Merger Premiums to Market Value Analysis
Mergers with Target Price Equal to or Greater than $10 per Share
Announced and Completed 1/1/96-10/9/98

- ------------------------------------------------------------------------------------------------------------------------------------

Date      Date                                                                     
Announced Effective Target Name                    Target Business Description     Acquiror Name
- ------------------------------------------------------------------------------------------------------------------------------------

01/05/96  07/01/96  Safety Fund Corp               Closed-end investment fund     CFX Corp, Keene, New Hampshire       
01/08/96  04/30/96  Loral Corp                     Mnfr defense electronics       Lockheed Martin Corp            
01/08/96  03/04/96  US Delivery Systems Inc.       Pvd courier services           Corporate Express Inc           
01/09/96  04/30/96  Technalysis Corp               Develop software               CompuWare Corp                  
01/18/96  07/02/96  Corvita Corp                   Manufacture medical equipment  Pfizer Inc.                     
01/22/96  04/11/96  Premier Industrial Corp        Whl electronic parts and equip Farnell Electronics PLC         
01/24/96  08/08/96  National Lodging Corp          Own and operate casinos        Chartwell Leisure Associates    
01/25/96  06/12/96  Dual Drilling (Mosvold Shippg) Oil and gas drilling           ENSCO International Inc         
01/30/96  05/31/96  Daig Corporation               Mnfr pacemakers                St Jude Medical Inc             
01/31/96  03/04/96  Tivoli Systems Inc             Dvlp systems mgmt software     IBM Corp                        
02/01/96  04/12/96  Health Wise of America Inc     Own and operate HMO            United HealthCare Corp          
02/05/96  04/30/96  DiMark Inc.                    Pvd database marketing svcs    Harte-Hanks Inc.                
02/07/96  05/07/96  Pyxis Corp                     Provide med equip leasing svcs Cardinal Health Inc             
02/12/96  05/01/96  Duracraft Corp                 Mnfr electric housewares       Honeywell Inc                   
02/13/96  09/18/96  Citicasters(American Finl Grp) Own, op TV, radio stations     Jacor Communications Inc        
02/14/96  03/20/96  Helene Curtis Industries Inc   Mnfr perfumes, cosmetics       Unilever NV                     
02/15/96  05/14/96  Andros Inc                     Mnfr infared gas analyzers     Genstar Capital Partners II LP  
02/16/96  05/30/96  Circle K Corp                  Operate convenience stores     Tosco Corp                      
02/16/96  06/13/96  Forum Group Inc                Own, operate nursing homes     Marriott International Inc       
02/20/96  07/24/96  Davidson & Associates Inc.     Develop educational software   CUC International Inc.          
02/20/96  07/24/96  Sierra On-Line Inc             Develop software for games     CUC International Inc           
02/23/96  07/01/96  Cray Research Inc              Manufacture supercomputers     Silicon Graphics Inc            
02/26/96  09/16/96  Sterile Concepts Inc           Mnfr sterilized surgical trays Maxxim Medical Inc              
02/26/96  06/18/96  Tide West Oil Co               Oil and gas exploration, prodn HS Resources Inc                
02/27/96  05/24/96  Brandon Systems Corp           Personnel agency, consulting   Interim Services Inc            
02/29/96  07/10/96  Big O Tires Inc                Own, operate tire stores       TBC Corp                        
03/04/96  04/08/96  Guardsman Products Inc         Mnfr coatings, cleaning prod   Lilly Industries, Inc           
03/07/96  07/03/96  Acme-Cleveland Corp            Mnfr metal cutting tools       Danaher Corp                    
03/11/96  08/02/96  Life Partners Group Inc        Life insurance holding company Conseco Inc                     
03/18/96  07/01/96  Athena Neurosciences Inc       Manufacture pharmaceuticals    Elan Corp PLC                   
03/18/96  08/30/96  Microtek Medical Inc           Mnfr, whl surgical supplies    Isolyser Co Inc                 
03/25/96  07/01/96  InStent Inc                    Mfr surgical instrumentation   Medtronic Inc                   
03/26/96  08/09/96  DeBartolo Realty Corp          Real estate investment trust   Simon Property Group Inc.       
03/28/96  08/01/96  Stop & Shop Cos                Own, op supermarkets           Koninklijke Ahold NV            
03/29/96  04/26/96  Great American Mgmt & Invt Inc Invt advice and financial svcs Equity Holdings, Chicago, IL    
03/29/96  07/02/96  Hayes Wheels International Inc Mnfr motor vehicle parts       Motor Wheel Corp                
03/29/96  08/07/96  MediSense Inc                  Mnfr blood monitoring systems  Abbot Laboratories              
03/29/96  09/03/96  Regional Acceptance Corp       Pvd consumer financing svcs    Southern Natl, Winston-Salem, NC
04/01/96  04/01/97  Pacific Telesis Group          Pvd telecommun svcs; hldg co   SBC Communications Inc          
04/01/96  07/19/96  US Healthcare Inc              Own and operate HMO's          Aetna Life & Casualty Co        
04/02/96  08/15/96  Teledyne Inc                   Manufacture aviation products  Allegheny Ludlum Corp           
04/08/96  08/16/96  Cellular Communications Inc    Operate cellular telephone sys AirTouch Communications         
04/10/96  10/15/96  Waterhouse Investor Services   Discount brokerage holding co  Toronto-Dominion Bank           
04/17/96  07/31/96  Tucker Drilling Co Inc         Oil & gas contract drilling    Patterson Energy Inc            
04/22/96  07/10/96  StrataCom Inc                  Manufacture telecommun equip   Cisco Systems Inc               
04/22/96  06/03/96  Westcott Communicatons Inc     Pvd motion picture prodn svcs  K-III Communications Corp       
04/30/96  08/12/96  UUNet Technologies Inc         Internet service provider      MFS Communications Co Inc       
05/01/96  06/28/96  Quantum Health Resources Inc   Provide home health care svcs  Olsten Corp                     
05/01/96  08/21/96  Uniroyal Chemical Co           Mnfr pesticides, rubber chems  Crompton & Knowles Corp         
05/07/96  07/03/96  Guaranty National Corp         Insurance company              Orion Capital Corp              
05/07/96  08/14/96  Kahler Realty Corp             Real estate investment trust   Tiger Real Estate Fund LP       
05/10/96  08/22/96  CyCare Systems Inc             Provide accounting services    HBO & Co                        
05/10/96  12/11/96  Transnational Re Corp          Property reinsurance company   PXRE Corp                       
05/13/96  08/15/96  MICOM Communications Corp      Mnfr communications equipment  Northern Telecom Ltd(BCE Inc.) 
05/14/96  09/05/96  Caremark International Inc     Pvd home health care services  MedPartners/Mullikin Inc        
05/15/96  08/23/96  Davis Water & Waste Industries Water distn and treatment prod United StatesFilter Corp        
05/16/96  11/15/96  A+ Network Inc                 Pvd paging servics             Metrocall Inc
05/20/96  07/23/96  AmeriData Technologies Inc     Whl computers, peripherals     General Electric Capital Svces  
05/20/96  12/30/96  Continental Waste Industries   Pvd waste disposal services    Republic Industries Inc         
05/20/96  10/31/96  Sterling Healthcare Group Inc  Own, op doctor's offices.      FPA Medical Management Inc      
05/24/96  07/02/96  Masland Corp                   Mnfr motor vehicle parts       Lear Corp                       
05/27/96  02/16/97  SyStemix Inc(Novartis AG)       Mnfr, dvlp cellular processes  Norvartis AG                    
05/31/96  12/19/96  Addington Resources Inc        Bituminous coal mining         Republic Industries Inc         
05/31/96  08/30/96  Image Industries Inc.          Pvd plastic recycling svcs     Maxim Group Inc                 
06/03/96  08/05/96  Heltel Broadcasting Corp       Own, op radio bdcstg stations  Clear Channel Communications   
06/03/96  09/30/96  Univar Corp                    Whl chemicals, pesticides      Pakhoed Holding NV             

- ------------------------------------------------------------------------------------------------------------------------------------
Value of         Enter-
Trans-           prise
Date      Date                                      Acquiror                          action           Value
Announced Effective Target Name                     Business Description              ($ mil)          ($ mil)
- ------------------------------------------------------------------------------------------------------------------------------------

01/05/96  07/01/96  Safety Fund Corp                 Savings and loan                     28.30          206.25
01/08/96  04/30/96  Loral Corp                       Mnfr aerospace systems, prod      8,762.40        8,322.78
01/08/96  03/04/96  US Delivery Systems Inc.         Retail office supplies              428.70          456.04
01/09/96  04/30/96  Technalysis Corp                 Dvlp, whl software systems           32.60           28.79
01/18/96  07/02/96  Corvita Corp                     Manufacture pharmaceuticals          78.50           78.53
01/22/96  04/11/96  Premier Industrial Corp          Mnfr, whl electronic components   2,722.70        2,720.93
01/24/96  08/08/96  National Lodging Corp            Own and operate hotels               57.00           21.75
01/25/96  06/12/96  Dual Drilling (Mosvold Shippg)   Pvd oil, gas drilling svcs.         224.70          352.22
01/30/96  05/31/96  Daig Corporation                 Mnfr heart valves, x-ray equip      441.30          419.98
01/31/96  03/04/96  Tivoli Systems Inc               Mnfr computers, office equip        709.80          688.03
02/01/96  04/12/96  Health Wise of America Inc       Own and operate HMOs                271.10          268.54
02/05/96  04/30/96  DiMark Inc.                      Pvd direct marketing services       151.80          145.08
02/07/96  05/07/96  Pyxis Corp                       Whl pharmaceutical products         907.30          870.02
02/12/96  05/01/96  Duracraft Corp                   Mnfr automation, control sys        286.70          295.83
02/13/96  09/18/96  Citicasters(American Finl Grp)   Own, op radio bdcstg stations       767.60          746.54
02/14/96  03/20/96  Helene Curtis Industries Inc     Produce foods; holding company      737.40          882.13
02/15/96  05/14/96  Andros Inc                       Investment firm                      92.60           61.21
02/16/96  05/30/96  Circle K Corp                    Petroleum refining                  983.00          951.57
02/16/96  06/13/96  Forum Group Inc                  Own, op hotels, restaurants         622.30          598.84
02/20/96  07/24/96  Davidson & Associates inc.       Provide discount club svcs        1,145.00        1,141.54
02/20/96  07/24/96  Sierra On-Line Inc               Provide discount club svcs          911.00          964.42
02/23/96  07/01/96  Cray Research Inc                Manufacture computer systems        770.00          776.92
02/26/96  09/16/96  Sterile Concepts Inc             Mnfr surgical instruments           140.20          145.64
02/26/96  06/18/96  Tide West Oil Co                 Oil and gas exploration, prodn      201.30          199.61
02/27/96  05/24/96  Brandon Systems Corp             Pvd human resource solutions        165.20          162.70
02/29/96  07/10/96  Big O Tires Inc                  Whl tires, automobile parts          56.60           69.32
03/04/96  04/08/96  Guardsman Products Inc           Mnfr industrial finishings          227.80          247.93
03/07/96  07/03/96  Acme-Cleveland Corp              Mnfr tools, control equipment       204.40          193.81
03/11/96  08/02/96  Life Partners Group Inc          Insurance holding company           838.80          721.52
03/18/96  07/01/96  Athena Neurosciences Inc         Mnfr drug delivery systems          601.30          477.78
03/18/96  08/30/96  Microtek Medical Inc             Mnfr surgical supplies              108.60          104.86
03/25/96  07/01/96  InStent Inc                      Mnfr medical technology prods       233.70          204.11
03/26/96  08/09/96  DeBartolo Realty Corp            Real estate investment trust      2,962.10        2,782.11
03/28/96  08/01/96  Stop & Shop Cos                  Own, operate supermarkets         2,870.80        3,029.71
03/29/96  04/26/96  Great American Mgmt & Invt Inc   Investment firm                      63.30          746.41
03/29/96  07/02/96  Hayes Wheels International Inc   Manufacture automotive parts        563.80          695.07
03/29/96  08/07/96  MediSense Inc                    Mnfr pharmaceuticals, med equip     821.60          797.41
03/29/96  09/03/96  Regional Acceptance Corp         Bank holding company                160.70          261.86
04/01/96  04/01/97  Pacific Telesis Group            Provide telecommun services      16,490.00       22,421.02
04/01/96  07/19/96  US Healthcare Inc                Insurance Company                 8,939.00        7,793.34
04/02/96  08/15/96  Teledyne Inc                     Mnfr specialty materials, metal   2,097.50        2,442.37
04/08/96  08/16/96  Cellular Communications Inc      Pvd telecommunications svcs       1,657.40        2,910.44
04/10/96  10/15/96  Waterhouse Investor Services     Bank holding company                526.00          551.24
04/17/96  07/31/96  Tucker Drilling Co Inc           Pvd contract drilling services       23.30           15.86
04/22/96  07/10/96  StrataCom Inc                    Mnfr inter-networking systems     4,833.50        4,728.08
04/22/96  06/03/96  Westport Communicatons Inc       Publish magazines                   438.90          421.64
04/30/96  08/12/96  UUNet Technologies Inc           Pvd telephone communs svcs        2,060.90         2037.02
05/01/96  06/28/96  Quantum Health Resources Inc     Pvd temporary personnel svcs        270.20          301.17
05/01/96  08/21/96  Uniroyal Chemical Co             Mnfr chemicals, dyes, flavors     1,463.40        1,326.16
05/07/96  07/03/96  Guaranty National Corp           Insurance company; holding co        85.10          361.07
05/07/96  08/14/96  Kahler Realty Corp               Real estate investment trust        222.70          212.81
05/10/96  08/22/96  CyCare Systems Inc               Dvlp healthcare software            277.10          252.05
05/10/96  12/11/96  Transnational Re Corp            Reinsurance company                 133.10          165.35
05/13/96  08/15/96  MMICOM Communications Corp       Mnfr telecommunications equip       138.30          144.31
05/14/96  09/05/96  Caremark Internation Inc         Pvd management health services    2,707.80        3,139.10
05/15/96  08/23/96  Davis Water & Waste Industries   Mfr water treatment equip           100.80          109.50
05/16/96  11/15/96  A+Network Inc                    Pvd local paging services           345.10          342.75
05/20/96  07/23/96  AmeriData Technologies Inc       Pvd financing services              454.80          734.65
05/20/96  12/30/96  Continental Waste Industries     Provide waste disposal svcs         345.40          360.35
05/20/96  10/31/96  Sterling Healthcare Group Inc    Pvd health care mgmet services      157.50          172.34
05/24/96  07/02/96  Masland Corp                     Mnfr automobile seats               413.50          444.87
05/27/96  02/16/97  SyStemix Inc(Novartis AG)        Manufacture pharmaceuticals         107.60          401.60
05/31/96  12/19/96  Addington Resources Inc          Provide waste disposal svcs         317.80          358.73
05/31/96  08/30/96  Image Industries Inc.            Own, op floor covering fran         105.10          152.44
06/03/96  08/05/96  Heltel Broadcasting Corp         Own, op TV, radio bdcstg station    315.30          370.10
06/03/96  09/30/96  Univar Corp                      Pvd freight transp services         331.80          605.30

- ------------------------------------------------------------------------------------------------------------------------------------
Premium
----------------------------------------------------------------------------------
Date      Date                                     1 Day Prior     1 Week Prior    4 Weeks Prior  3 Months Prior    1 Year Prior   
Announced Effective Target Name                   to Annc. Date   to Annc. Date    to Annc. Date  to Annc. Date     to Annc. Date 
- ------------------------------------------------------------------------------------------------------------------------------------

01/05/96  07/01/96  Safety Fund Corp                  3.53          10.06                          145.06           60.04 
01/08/96  04/30/96  Loral Corp                        4.83           7.42            8.19                                 
01/08/96  03/04/96  US Delivery Systems Inc.          9.57           8.62           32.63          123.01           30.57 
01/09/96  04/30/96  Technalysis Corp                 12.00          16.67           16.67           30.23            9.80 
01/18/96  07/02/96  Corvita Corp                     -2.38           2.50           -2.38          148.48           24.24 
01/22/96  04/11/96  Premier Industrial Corp          37.17          35.75           34.37           65.64           18.63 
01/24/96  08/08/96  National Lodging Corp            34.12          26.67                           42.50           46.15 
01/25/96  06/12/96  Dual Drilling (Mosvold Shippg)    8.86          13.19           23.65           72.36           51.68 
01/30/96  05/31/96  Daig Corporation                 20.17          22.72           26.77                                 
01/31/96  03/04/96  Tivoli Systems Inc               25.83          25.00           41.79                           49.31 
02/01/96  04/12/96  Health Wise of America Inc        8.35           9.07           18.63           15.26           32.13 
02/05/96  04/30/96  DiMark Inc.                       1.70           1.70            0.84           33.93           16.50 
02/07/96  05/07/96  Pyxis Corp                       53.27          60.93           66.48           10.35           67.93 
02/12/96  05/01/96  Duracraft Corp                   58.18          50.00           68.12           16.78           82.20 
02/13/96  09/18/96  Citicasters(American Finl Grp)    9.26          15.69           28.26          337.04          349.52 
02/14/96  03/20/96  Helene Curtis Industries Inc     18.64          30.23           71.78                                 
02/15/96  05/14/96  Andros Inc                       16.13          24.14           35.85            4.35           12.50 
02/16/96  05/30/96  Circle K Corp                    45.85          42.47           68.82          830.11          548.63
02/16/96  06/13/96  Forum Group Inc                   4.00           8.33           44.44                                 
02/20/96  07/24/96  Davidson & Associates inc.       72.30          87.50           67.76          129.77           30.12 
02/20/96  07/24/96  Sierra On-Line Inc               69.33          71.70           90.38          160.60           65.51 
02/23/96  07/01/96  Cray Research Inc                18.81          21.21           20.60           83.21           34.83 
02/26/96  09/16/96  Sterile Concepts Inc             53.85          60.00           55.34                                 
02/26/96  06/18/96  Tide West Oil Co                 44.64          44.64           51.52           74.36           27.28 
02/27/96  05/24/96  Brandon Systems Corp             32.21          39.41           29.77          758.54          554.88 
02/29/96  07/10/96  Big O Tires Inc                   5.60           7.32           12.82           22.22           23.36 
03/04/96  04/08/96  Guardsman Products Inc           32.37          32.37           57.27                                 
03/07/96  07/03/96  Acme-Cleveland Corp              50.00          55.84           56.86                                 
03/11/96  08/02/96  Life Partners Group Inc          35.48          34.40           55.56           -1.75           69.70 
03/18/96  07/01/96  Athena Neurosciences Inc         20.66          16.80           40.39          220.88           73.81 
03/18/96  08/30/96  Microtek Medical Inc             37.50          40.63           43.90          201.85          129.19 
03/25/96  07/01/96  InStent Inc                       1.03           9.14            5.87                          228.93 
03/26/96  08/09/96  DeBartolo Realty Corp            11.59          16.57           25.54           15.54           23.17 
03/28/96  08/01/96  Stop & Shop Cos                  25.23          27.01           45.65                                 
03/29/96  04/26/96  Great American Mgmt & Invt Inc    2.56           4.17            3.63           41.34            2.04 
03/29/96  07/02/96  Hayes Wheels International Inc   29.29          33.33           43.02           62.03           24.88 
03/29/96  08/07/96  MediSense Inc                    48.76          48.76           39.00          123.60           42.29 
03/29/96  09/03/96  Regional Acceptance Corp          9.33           6.60           25.41            6.60            9.33 
04/01/96  04/01/97  Pacific Telesis Group            38.70          36.24           33.88           27.24           14.04 
04/01/96  07/19/96  US Healthcare Inc                24.25          21.28           18.75           28.81           23.91 
04/02/96  08/15/96  Teledyne Inc                    113.55         115.12          108.97           39.31           35.44 
04/08/96  08/16/96  Cellular Communications Inc       7.45           7.84            6.28           87.23           94.69 
04/10/96  10/15/96  Waterhouse Investor Services     15.15          19.69           65.22                                 
04/17/96  07/31/96  Tucker Drilling Co Inc            4.68           7.13           10.05           71.68           34.13 
04/22/96  07/10/96  StrataCom Inc                    48.39          59.72           79.69          192.99           57.00 
04/22/96  06/03/96  Westport Communicatons Inc       43.33          57.80           56.36           45.15           37.05 
04/30/96  08/12/96  UUNet Technologies Inc           27.59          39.91          125.91                           58.86 
05/01/96  06/28/96  Quantum Health Resources Inc     23.65          29.32           60.18            9.27           54.90 
05/01/96  08/21/96  Uniroyal Chemical Co             27.66          44.58           55.84           25.00           64.38 
05/07/96  07/03/96  Guaranty National Corp           15.63          15.63           22.31           12.98           26.50 
05/07/96  08/14/96  Kahler Realty Corp                9.68          13.33            9.68           88.89           46.24 
05/10/96  08/22/96  CyCare Systems Inc                6.33           8.99           61.02          101.69           79.49 
05/10/96  12/11/96  Transnational Re Corp            12.47          16.52            8.70           22.75            0.81 
05/13/96  08/15/96  MMICOM Communications Corp      -14.29           9.09           58.35           74.55           57.38 
05/14/96  09/05/96  Caremark Internation Inc          9.95          16.00           18.17           81.93           25.81 
05/15/96  08/23/96  Davis Water & Waste Industries   36.18          59.03           62.30          207.74          111.57 
05/16/96  11/15/96  A+Network Inc                    36.13          40.67           63.88           53.45           72.24 
05/20/96  07/23/96  AmeriData Technologies Inc        4.07          25.49           47.13          109.84           62.03 
05/20/96  12/30/96  Continental Waste Industries     66.73          62.18           82.04          223.19          117.56 
05/20/96  10/31/96  Sterling Healthcare Group Inc    -3.07           3.67           13.09                                 
05/24/96  07/02/96  Masland Corp                      6.12          18.18           30.00           84.07           77.78 
05/27/96  02/16/97  SyStemix Inc(Novartis AG)         4.70          69.57           59.18           59.18           39.29 
05/31/96  12/19/96  Addington Resources Inc          24.88          43.93           50.30           58.73           69.84 
05/31/96  08/30/96  Image Industries Inc.            17.00          15.84           23.16                                 
06/03/96  08/05/96  Heltel Broadcasting Corp          2.22           4.55            2.22          253.85          162.86 
06/03/96  09/30/96  Univar Corp                      57.17          54.06           58.78           55.60           80.93 

Page F-6

Merger Premiums to Market Value Analysis
Mergers with Target Price Equal to or Greater than $10 per Share
Announced and Completed 1/1/96-10/9/98
(continued)

- ------------------------------------------------------------------------------------------------------------------------------------

Date      Date                                                                     
Announced Effective Target Name                     Target Business Description     Acquiror Name
- ------------------------------------------------------------------------------------------------------------------------------------

06/04/96  09/20/96  HomeTown Buffet Inc             Own and operate restaurants     Buffets Inc.                    
06/06/96  10/10/96  AT&T Capital Corp (AT&T Corp)   Pvd leasing, financing services Investor Group                  
06/06/96  12/18/96  Bally Entertainment Corp        Own, op casino hotels           Hilton Hotels Corp              
06/06/96  07/09/96  FinishMaster Inc (Maxco Inc)    Whl automotive paint, coatings  Lacy Distribution Inc (LDI Ltd) 
06/10/96  08/23/96  Orbit Semiconductor Inc         Manufacture semiconductors      DII Group Inc                   
06/11/96  07/23/96  Community Health Systems Inc    Own and operate hospitals       Forstmann Little & Co           
06/14/96  08/23/96  Brenco Inc                      Ball and roller bearings        Varlen Corp                     
06/17/96  11/19/96  Penril DataComm Networks Inc    Mnfr data communications equip  Bay Networks Inc                
06/18/96  09/30/96  Builders Warehouse Assn Inc     Pvd LAN design services         Osicom Technologies Inc         
06/20/96  12/31/96  Infinity Broadcasting Corp      Own, op radio broadcasting stns Westinghouse Electric Corp      
06/20/96  09/16/96  Public Storage Properties X     Pvd warehousing, storage svcs   Public Storage Inc              
06/20/96  09/16/96  Public Storage Properties XII   Rent storage space              Public Storage Inc              
06/24/96  09/03/96  Sanifill Inc                    Provide waste management svcs   USA Waste Services Inc          
06/28/96  10/02/96  National Re Corp                Fire, casualty insurance co     General Re Corp                 
06/28/96  09/27/96  Salem Corp                      Whl industrial mach and equip   Investor Group                  
07/01/96  10/04/96  Landmark Graphics Corp          Dvlp CAE sys for geoscientists  Halliburton Co                  
07/01/96  03/25/97  Renaissance Commun Corp         Own and operate TV stations     Tribune Co                      
07/02/96  08/08/96  Ambar Inc                       Pvd oil and gas field services  Beacon Group Energy Investment  
07/17/96  01/22/97  New World Common Grp (Mafco)    Operate television stations     News Corp Ltd                   
07/19/96  07/01/97  Portland General Corp           Electric utility holding co     Enron Corp                      
07/19/96  08/27/97  Rexene Corp                     Mnfr petrochemical products     Huntsman Corp                   
07/22/96  10/03/96  Global Natural Resources Inc    Oil and gas exploration, prodn  Seagull Energy Corp             
07/22/96  10/25/96  Telchit Corp                    Mnfr data transmission equip    Cisco Systems Inc               
07/22/96  07/29/97  United Cities Gas Co            Gas utility                     Atmos Energy Corp               
07/23/96  02/19/97  Osborn Communications Corp      Own, op radio and TV stations   Capstar Broadcasting Partners   
07/24/96  10/11/96  PCI Services Inc                Pvd product packaging services  Cardinal Health Inc             
08/02/96  11/29/96  First Colony Corp               Insurance holding company       General Electric Capital Corp   
08/05/96  04/07/97  EZ Communications Inc           Own, operate radio stations     American Radio Systems Corp     
08/05/96  02/14/97  FHP International Corp          Own and operate HMOs            PacifiCare Health Systems Inc   
08/07/96  10/03/96  Douglas & Lomason Co            Wholesale motor vehicles        Magna International Inc         
08/08/96  09/17/96  Roto-Rooter Inc (Chemed Corp)   Provide Plumbing services, prod Chemed Corp                     
08/09/96  08/06/97  NorAm Energy Corp               Oil and gas exploration, prodn  Houston Industries Inc          
08/12/96  03/02/98  Atlantic Energy (Conoco)        Public utility holding co       Delmarva Power & Light          
08/14/96  11/25/96  American Re Corp                Property, casualty insurance co Muenchener Rueckversicherungs    
08/14/96  11/07/96  Payco American Corp             Credit collection services      OSI Holdings Corp               
08/14/96  10/24/96  Redman Industries Inc           Manufacture mobile homes        Champion Enterprises Inc        
08/15/96  09/26/96  Orchard Supply Hardware Stores  Own, op home improvement ctrs   Sears Roebuck & Co              
08/19/96  09/20/96  CasTech Aluminum Group Inc      Mnfr aluminum sheets            Commonwealth Aluminum Corp      
08/19/96  12/16/96  Griffin Gaming & Entertainment  Own, op gaming facilities       Sun International Hotels Ltd    
08/22/96  10/29/96  Meta Software Inc               Develop software                Avant! Corp                     
08/26/96  12/17/96  American Travellers Corp        Insurance company               Conseco Inc                     
08/26/96  12/31/96  Bankers Life Holding (Conseco)  Life ins co; holding company    Conseco Inc                     
08/26/96  03/04/97  Capitol American Financial      Pvd accident, life ins svcs     Conseco Inc                     
08/26/96  11/14/96  Career Horizons Inc             Pvd temporary personnel svcs    AccuStaff Inc                   
08/26/96  12/31/96  MFS Communications Co Inc       Pvd telephone communs svcs      WorldCom Inc                    
08/26/96  01/09/97  Spreckels Industries Inc        Produce sugar; mnfr indust prod Columbus McKinnon Corp          
08/28/96  11/08/96  Red Lions Hotels (Red Lion Inn) Own, op hotels                  Doubletree Corp                 
08/29/96  11/14/96  Amtrol Inc                      Mnfr plumbing, heating systems  Cypress Group LLC               
09/02/96  03/06/97  Arcadian Corp                   Mnfr phosphatic fertilizers     Potash Corp of Saskatchewan     
09/09/96  12/23/96  Big B Inc (Revco DS Inc)        Drug, grocery retail stores     Revco DS Inc                    
09/12/96  12/31/96  Duracell International Inc      Manufacture alkaline batteries  Gillette Co                     
09/23/96  12/04/96  Diamond Shamrock Inc            Mnfr, wholesale petroleum       Ultramar Corp                   
09/24/96  12/09/96  GMIS Inc                        Develop software                HBO & Co                        
09/26/96  02/28/97  Providence Journal Co           Own, op TV broadcasting stns    AH Belo Corp                    
09/26/96  12/23/96  Transport Holdings              Insurance holding company       Conseco Inc                     
09/30/96  06/27/97  Belden & Blake Corp             Oil and gas exploration, prodn  Texas Pacific Group Inc         
10/01/96  12/31/96  South West Property Trust Inc   Real estate investment trust    United Dominion Realty Tr Inc   
10/02/96  02/03/97  Baby Superstore Inc             Own, op children's wear stores  Toys 'R' Us Inc                 
10/02/96  02/07/97  TSX Corporation                 Mnfr communications equipment   ANTEC Corp                      
10/03/96  02/13/97  Kinder-Care Learning Centers    Operate day care centers        Kohlberg Kravis Roberts & Co    
10/03/96  12/31/96  LXE (Electromagnetic Sciences)  Mnfr microwave components       Electromagnetic Sciences Inc    
10/07/96  12/11/96  Augat Inc                       Mnfr electn, hardware prods     Thomas & Betts Corp             
10/07/96  12/02/96  Cheyenne Software Inc           Develop computer software       Computer Associates Intl Inc    
10/08/96  11/22/96  Super Food Services Inc         Wholesale food products         Nash Finch Co                   
10/10/96  01/31/97  Gelman Sciences Inc             Mnfr medical filter devices     Pall Corp                       
10/14/96  06/26/98  Pacific Enterprises Inc         Natural gas utility             Enova Corp                      

- ------------------------------------------------------------------------------------------------------------------------------------
Value of   Enter-
Trans-     prise
Date      Date                                      Acquiror                        action    Value
Announced Effective Target Name                     Business Description            ($ mil)   ($ mil)
- ------------------------------------------------------------------------------------------------------------------------------------

06/04/96  09/20/96  HomeTown Buffet Inc             Own and operate restaurants       174.00   195.94  
06/06/96  10/10/96  AT&T Capital Corp (AT&T Corp)   Investor group                   2128.60  9188.70  
06/06/96  12/18/96  Bally Entertainment Corp        Own, operate hotels              3138.10  3108.89  
06/06/96  07/09/96  FinishMaster Inc (Maxco Inc)    Whl industrial machinery equip     62.60   111.13  
06/10/96  08/23/96  Orbit Semiconductor Inc         Mnfr electronic components        118.30   105.05  
06/11/96  07/23/96  Community Health Systems Inc    Investment company               1080.00  1267.50  
06/14/96  08/23/96  Brenco Inc                      Mnfr custom tubular products      161.40   164.89  
06/17/96  11/19/96  Penril DataComm Networks Inc    Mnfr, whl data networking prods   117.60   124.14  
06/18/96  09/30/96  Builders Warehouse Assn Inc     Mnfr communications equipment      69.30    73.34  
06/20/96  12/31/96  Infinity Broadcasting Corp      Mnfr elec defense electn equip   4737.80  4153.30  
06/20/96  09/16/96  Public Storage Properties X     Real estate investment trust       50.20    39.48  
06/20/96  09/16/96  Public Storage Properties XII   Real estate investment trust       55.20    37.66  
06/24/96  09/03/96  Sanifill Inc                    Pvd waste disposal services      1236.90  1604.45  
06/28/96  10/02/96  National Re Corp                Insurance holding company         904.60  1110.32  
06/28/96  09/27/96  Salem Corp                      Investor group                     46.60    31.81  
07/01/96  10/04/96  Landmark Graphics Corp          Mnfr oil field machinery          586.70   531.76  
07/01/96  03/25/97  Renaissance Commun Corp         Publish newspaper, cable TV sys  1094.40  1118.68  
07/02/96  08/08/96  Ambar Inc                       Investment firm                    66.60    81.36  
07/17/96  01/22/97  New World Common Grp (Mafco)    Publish newspapers, magazines    2173.00  4241.94  
07/19/96  07/01/97  Portland General Corp           Own, operate gas pipelines       2901.70  2982.29  
07/19/96  08/27/97  Rexene Corp                     Mnfr petrochemicals               606.80   494.49  
07/22/96  10/03/96  Global Natural Resources Inc    Own, op gas pipelines             525.60   526.49  
07/22/96  10/25/96  Telchit Corp                    Mnfr inter-networking systems     196.30   196.20  
07/22/96  07/29/97  United Cities Gas Co            Natural gas distribution svcs     496.50   508.19  
07/23/96  02/19/97  Osborn Communications Corp      Own, operate radio stations        89.90   110.81  
07/24/96  10/11/96  PCI Services Inc                Whl pharmaceutical products       208.00   209.59  
08/02/96  11/29/96  First Colony Corp               Pvd consumer financing svcs      1799.20  2011.94  
08/05/96  04/07/97  EZ Communications Inc           Own, op radio bdcstg station      687.30   623.19  
08/05/96  02/14/97  FHP International Corp          Own and operate HMO's            2000.10  2161.89  
08/07/96  10/03/96  Douglas & Lomason Co            Mnfr auto parts, accessories      134.60   213.95  
08/08/96  09/17/96  Roto-Rooter Inc (Chemed Corp)   Mnfr chems, janitorial equip       93.60   220.33  
08/09/96  08/06/97  NorAm Energy Corp               Electric utility holding co      3648.80  3750.59  
08/12/96  03/02/98  Atlantic Energy (Conoco)        Electric and gas utility          951.10  2155.87  
08/14/96  11/25/96  American Re Corp                Provide reinsurance services     3967.80  3830.43  
08/14/96  11/07/96  Payco American Corp             Investment holding firm           161.90   154.65  
08/14/96  10/24/96  Redman Industries Inc           Mnfr single-family houses         341.90   319.85  
08/15/96  09/26/96  Orchard Supply Hardware Stores  Department stores; finl svcs      423.70   412.74  
08/19/96  09/20/96  CasTech Aluminum Group Inc      Manufacture aluminum prods        328.70   322.74  
08/19/96  12/16/96  Griffin Gaming & Entertainment  Own, operate hotels               309.60   345.20  
08/22/96  10/29/96  Meta Software Inc               Develop software                  139.30   136.90  
08/26/96  12/17/96  American Travellers Corp        Insurance holding company         868.30   968.71  
08/26/96  12/31/96  Bankers Life Holding (Conseco)  Insurance holding company         120.80  1534.75  
08/26/96  03/04/97  Capitol American Financial      Insurance holding company         715.50   695.10  
08/26/96  11/14/96  Career Horizons Inc             Provide staffing services        1010.30   835.76  
08/26/96  12/31/96  MFS Communications Co Inc       Pvd telecommunications svcs     13595.70 14885.50  
08/26/96  01/09/97  Spreckels Industries Inc        Mnfr industrial chains, hoists    259.40   248.37  
08/28/96  11/08/96  Red Lions Hotels (Red Lion Inn) Own, operate hotel mgt co        1174.10  1129.01  
08/29/96  11/14/96  Amtrol Inc                      Investment bank                   227.20   218.87  
09/02/96  03/06/97  Arcadian Corp                   Manufacture potash               1723.30  1424.49  
09/09/96  12/23/96  Big B Inc (Revco DS Inc)        Own, operate drug stores          335.40   401.15  
09/12/96  12/31/96  Duracell International Inc      Mnfr shaving razors and blades   7231.90  7764.78  
09/23/96  12/04/96  Diamond Shamrock Inc            Mnfr refined petroleum prods      860.90  1807.57  
09/24/96  12/09/96  GMIS Inc                        Dvlp healthcare software          242.60   235.10  
09/26/96  02/28/97  Providence Journal Co           Newspapers; radio, TV stations   1429.60  1617.14  
09/26/96  12/23/96  Transport Holdings              Insurance holding company         299.90   242.62  
09/30/96  06/27/97  Belden & Blake Corp             Investment holding company        405.70   404.19  
10/01/96  12/31/96  South West Property Trust Inc   Real estate investment trust      547.80   526.41  
10/02/96  02/03/97  Baby Superstore Inc             Own, op retail toy stores         382.20   501.92  
10/02/96  02/07/97  TSX Corporation                 Mnfr commun network products      254.30   214.63  
10/03/96  02/13/97  Kinder-Care Learning Centers    Leverage buyout firm              571.00   510.01  
10/03/96  12/31/96  LXE (Electromagnetic Sciences)  Mnfr microwave components          14.80    81.96  
10/07/96  12/11/96  Augat Inc                       Mnfr electronic connectors        570.10   611.78  
10/07/96  12/02/96  Cheyenne Software Inc           Develop applications software    1247.60  1199.60  
10/08/96  11/22/96  Super Food Services Inc         Wholesale groceries               164.20   262.84  
10/10/96  01/31/97  Gelman Sciences Inc             Mnfr filters, separations equip   297.70   292.22  
10/14/96  06/26/98  Pacific Enterprises Inc         Electric and gas utility         2870.00  4159.40  

- ------------------------------------------------------------------------------------------------------------------------------------
Premium
----------------------------------------------------------------------------------
Date      Date                                     1 Day Prior     1 Day Prior    4 Weeks Prior  3 Months Prior    1 Year Prior   
Announced Effective Target Name                   to Annc. Date   to Annc. Date   to Annc. Date  to Annc. Date     to Annc. Date 
- ------------------------------------------------------------------------------------------------------------------------------------

06/04/96  09/20/96  HomeTown Buffet Inc                (3.27)           7.38            2.67           20.66           25.85  
06/06/96  10/10/96  AT&T Capital Corp (AT&T Corp)      37.41           38.46           42.29                                  
06/06/96  12/18/96  Bally Entertainment Corp           59.03           74.81           72.18          175.95           81.78  
06/06/96  07/09/96  FinishMaster Inc (Maxco Inc)       30.42           27.76           42.27            9.82           42.27  
06/10/96  08/23/96  Orbit Semiconductor Inc            37.78           36.10           57.18          (22.50)          69.09  
06/11/96  07/23/96  Community Health Systems Inc       20.23           19.89           18.86           49.64           22.35  
06/14/96  08/23/96  Brenco Inc                         30.96           30.30           20.56           30.67           34.42  
06/17/96  11/19/96  Penril DataComm Networks Inc        7.50            2.99            6.17                                  
06/18/96  09/30/96  Builders Warehouse Assn Inc         9.67           15.95           35.32          370.00           37.08  
06/20/96  12/31/96  Infinity Broadcasting Corp         12.76           10.82           15.27           33.11            7.01  
06/20/96  09/16/96  Public Storage Properties X        13.85           13.08           10.83           20.40            5.26  
06/20/96  09/16/96  Public Storage Properties XII      14.56           14.56           15.30           27.66           15.30  
06/24/96  09/03/96  Sanifill Inc                       (1.02)           3.86            1.63           55.38           26.37  
06/28/96  10/02/96  National Re Corp                   45.21           65.63           60.61           60.61           57.04  
06/28/96  09/27/96  Salem Corp                         21.95           23.46           11.73          (11.50)          30.72  
07/01/96  10/04/96  Landmark Graphics Corp             65.51           77.00           68.80           24.94           93.09  
07/01/96  03/25/97  Renaissance Commun Corp            11.63           19.01           20.50          150.43          423.64  
07/02/96  08/08/96  Ambar Inc                          24.14           17.07           50.00          311.43           73.49  
07/17/96  01/22/97  New World Common Grp (Mafco)       67.66           71.68           60.15           28.53           49.06  
07/19/96  07/01/97  Portland General Corp              23.13           21.54           19.48           58.43           23.68  
07/19/96  08/27/97  Rexene Corp                        75.34           60.00           56.10           16.36           19.63  
07/22/96  10/03/96  Global Natural Resources Inc       11.23           13.04           13.04           73.80           17.83  
07/22/96  10/25/96  Telchit Corp                       22.76           22.76            4.71          196.67          101.51  
07/22/96  07/29/97  United Cities Gas Co               52.21           64.29           69.67           69.70           56.85  
07/23/96  02/19/97  Osborn Communications Corp         28.13           50.00           38.20          108.54           44.75  
07/24/96  10/11/96  PCI Services Inc                   44.00           42.89           23.84          158.00           16.10  
08/02/96  11/29/96  First Colony Corp                  37.71           32.66           39.04           45.33           41.07  
08/05/96  04/07/97  EZ Communications Inc              45.54           56.36           89.20          162.78          142.56  
08/05/96  02/14/97  FHP International Corp             19.37           27.37           19.10           41.20           24.96  
08/07/96  10/03/96  Douglas & Lomason Co               39.33           90.77          103.28          121.43          125.45  
08/08/96  09/17/96  Roto-Rooter Inc (Chemed Corp)      12.33           12.33           11.19           25.19           20.15  
08/09/96  08/06/97  NorAm Energy Corp                  35.72           46.52           41.69          143.32           48.23  
08/12/96  03/02/98  Atlantic Energy (Conoco)            5.34            3.83            3.09           (0.47)           5.34  
08/14/96  11/25/96  American Re Corp                   26.21           41.69           44.04           79.93           49.86  
08/14/96  11/07/96  Payco American Corp                19.15           17.90           60.00           77.78           64.71  
08/14/96  10/24/96  Redman Industries Inc               6.29           11.71           26.39          102.26           21.73  
08/15/96  09/26/96  Orchard Supply Hardware Stores     17.65           25.56           28.44          137.29            8.95  
08/19/96  09/20/96  CasTech Aluminum Group Inc         37.82           57.69           45.13            3.14           41.38  
08/19/96  12/16/96  Griffin Gaming & Entertainment     88.88           88.88           69.28           52.07           52.07  
08/22/96  10/29/96  Meta Software Inc                  18.00            0.48            1.48                          (27.49)
08/26/96  12/17/96  American Travellers Corp           30.09           37.35           81.17          230.54           61.36  
08/26/96  12/31/96  Bankers Life Holding (Conseco)     14.94           10.50           11.73           31.58           25.79  
08/26/96  03/04/97  Capitol American Financial         50.84           51.60           56.31           65.76           53.14  
08/26/96  11/14/96  Career Horizons Inc                34.40           33.80           63.98          145.64          147.63  
08/26/96  12/31/96  MFS Communications Co Inc          58.82           59.96           86.96          142.14           66.27  
08/26/96  01/09/97  Spreckels Industries Inc           23.87           24.68           29.73          178.26           45.45  
08/28/96  11/08/96  Red Lions Hotels (Red Lion Inn)    28.60           33.55           31.38                                  
08/29/96  11/14/96  Amtrol Inc                         71.21           56.94           56.94          137.89                  
09/02/96  03/06/97  Arcadian Corp                      24.66           20.99           26.96           36.21           30.18  
09/09/96  12/23/96  Big B Inc (Revco DS Inc)           36.63           66.27           58.62           10.40           68.29  
09/12/96  12/31/96  Duracell International Inc         19.84           29.75           30.11           37.31           33.80  
09/23/96  12/04/96  Diamond Shamrock Inc               (3.90)           1.11            5.71           15.70            0.68  
09/24/96  12/09/96  GMIS Inc                           56.35           57.50           86.26           64.80          125.52  
09/26/96  02/28/97  Providence Journal Co              58.38           64.43           65.49                          109.89  
09/26/96  12/23/96  Transport Holdings                 25.80           35.27           32.18                           41.52  
09/30/96  06/27/97  Belden & Blake Corp                32.52           27.81           31.71           42.11           21.35  
10/01/96  12/31/96  South West Property Trust Inc       9.31            9.31           13.39           18.98           12.37  
10/02/96  02/03/97  Baby Superstore Inc                17.99           21.82           25.07          (46.86)          43.21  
10/02/96  02/07/97  TSX Corporation                    10.00           18.63           26.04            3.16          (22.41)
10/03/96  02/13/97  Kinder-Care Learning Centers       17.83           18.75           26.67           34.51           22.58  
10/03/96  12/31/96  LXE (Electromagnetic Sciences)     22.09           14.13           19.32           28.10           23.58  
10/07/96  12/11/96  Augat Inc                          32.83           30.49           45.94           49.89           54.06  
10/07/96  12/02/96  Cheyenne Software Inc              32.61           34.81           30.48                                  
10/08/96  11/22/96  Super Food Services Inc            37.78           36.26           29.17           26.53           51.22  
10/10/96  01/31/97  Gelman Sciences Inc                80.47           57.91           49.42           58.81           65.43  
10/14/96  06/26/98  Pacific Enterprises Inc             7.43            8.72           11.87           98.59           76.24  

Page F-7

Merger Premiums to Market Value Analysis
Mergers with Target Price Equal to or Greater than $10 per Share
Announced and Completed 1/1/96-10/9/98
(continued)

- ------------------------------------------------------------------------------------------------------------------------------------

Date      Date                                                                     
Announced Effective Target Name                     Target Business Description     Acquiror Name
- ------------------------------------------------------------------------------------------------------------------------------------

10/14/96  12/12/96  Thrifty Payless Holdings Inc   Own, op drug store chain         Rite Aid Corp                   
10/15/96  06/03/97  Conrail Inc                    Own, op freight railroad lines   Investor Group                  
10/15/96  12/23/96  FlightSafety International     Mnfr flight simulators           Berkshire Hathaway Inc          
10/17/96  01/30/97  OrNda HealthCorp               Own, operate hospitals           Tenet Healthcare Corp           
10/21/96  03/31/97  Detroit & Canada Tunnel Corp   Pvd tunnel operation services    Investor Group                  
10/23/96  04/16/97  Syratech Corp                  Manufacture silver flatware      Thomas H Lee Equity Fund III    
10/28/96  05/07/97  Cooper & Chyan Technology Inc  Develop software                 Cadence Design Systems Inc      
10/28/96  01/15/97  Loctite Corp                   Mnfr adhesives & sealants        Henkel KGaA                     
10/28/96  05/29/97  Wireless Cable of Atlanta      Pvd wireless cable commons svc   BellSouth Corp                  
10/30/96  04/08/97  Vons Cos Inc                   Own and operate supermarkets     Safeway Inc                     
10/31/96  07/01/97  California Jockey Club/Bay     Own, op horse racing tracks      Patriot American Hospitality    
10/31/96  12/18/96  Kash N'Karry Food Stores Inc   Own and operate supermarkets     Food Lion Inc                   
11/04/96  02/27/97  Eckerd Corp                    Operate retail drug stores       JC Penney Co                    
11/11/96  04/30/97  PHH Corp                       Pvd auto, truck leasing svcs     HFS Inc                         
11/12/96  06/12/97  Leslie's Poolmart              Own, op swimming pool stores     Investor Group                  
11/12/96  02/27/97  SQA Inc                        Whl software                     Rational Software Corp          
11/13/96  01/20/97  Medex Inc                      Mnfr drug infusion products      FCY Inc                         
11/18/96  01/02/97  Sudbury Inc                    Mnfr automotive parts            Internet Corp                   
11/25/96  01/09/97  Opal Inc                       Mnfr special industry equip      Applied Materials Inc           
11/25/96  06/18/97  PanEnergy Corp.                Oil and gas exploration, prodn   Duke Power Co                   
11/26/96  12/30/96  Armor All Products (McKesson)  Mnfr cleaners and waxes          Clorox Co                       
11/27/96  03/27/97  Central Tractor Farm & Country Own, op tractor, hardware stores JW Childs Equity Partners LP    
11/27/96  12/27/96  Central Tractor Farm & Country Own, op tractor, hardware stores JW Childs Equity Partners LP    
11/27/96  01/16/97  Milgray Electronics Inc        Whl electronic equip             Bell Industries Inc             
11/27/96  03/19/97  Owen Healthcare Inc            Wholesale pharmaceuticals        Cardinal Health Inc             
11/29/96  04/30/97  Chicago Dock and Canal Trust   Real estate investment trust     CityFront Center LLC            
11/29/96  01/06/97  ElectroStar Inc                Mnfr printed circuit boards      Tyco International Ltd          
12/02/96  01/30/97  Eastbay Inc                    Own, operate mail order bus      Venator Group Inc               
12/02/96  03/03/97  Health Images Inc              Provide magnetic imaging svcs    HealthSouth Corp                
12/05/96  02/26/97  Barefoot Inc                   Provide lawn care services       ServiceMaster LP                
12/05/96  03/27/97  Cavco Industries Inc           Mnfr mobile homes                Centex Corp                     
12/05/96  04/11/97  Public Storage Properties XIV  Real estate investment trust     Public Storage Inc              
12/05/96  04/11/97  Public Storage Properties XV   Real estate investment trust     Public Storage Inc              
12/05/96  05/05/97  Santa Fe Pacific Gold Corp     Gold mining co                   Newmont Mining Corp             
12/05/96  01/10/97  Zycon Corp                     Mnfr printed circuit boards      Hadco Corp                      
12/11/96  02/21/97  Alexander & Alexander Services Pvd insurance brokerage svcs     Aon Corp                        
12/16/96  01/27/97  Eljer Industries Inc           Manufacture plumbing fixtures    Zurn Industries Inc             
12/16/96  04/16/97  Paragon Group Inc              Real estate investment trust     Camden Property Trust           
12/16/96  05/30/97  Pioneer Financial Services     Life, health, accident ins svcs  Conseco Inc                     
12/16/96  01/27/97  Tylan General Inc              Mnfr gas measure equipment       Millipore Corp                  
12/17/96  08/01/97  McDonnell Douglas Corp         Mnfr aerospace, defense equip    Boeing Co                       
12/19/96  03/25/97  IWC Resources Corp             Water utility holding company    NIPSCO Industries Inc           
12/24/96  04/16/97  Home Beneficial Corp           Insurance holding company        American General Corp           
12/30/96  05/29/98  LILCO                          Electric utility                 Brooklyn Union Gas Co           
01/07/97  02/25/97  American Medical Response Inc  Provide ambulance services       MedTrans Inc (Laidlaw Inc)      
01/07/97  02/10/97  Bonray Drilling Corp           On-shore oil and gas drilling    DLB Oil & Gas Inc               
01/13/97  04/25/97  OpenVision Technologies Inc    Mnfr software, pvd programming   Veritas Software Corp           
01/13/97  09/02/97  Zurich Reinsurance Centre      Insurance agency                 Zurich Versicherungs GmbH       
01/14/97  04/01/97  Oxford Resources Corp          Pvd passenger car leasing svcs   Barnett Banks, Jacksonville, FL 
01/14/97  04/30/97  Tencor Instruments Inc         Mnfr test instruments            KLA Instruments Corp            
01/15/97  08/06/97  Value Health Inc               Provide health plan services     Columbia/HCA Healthcare Corp    
01/16/97  02/28/97  Epic Design Technology Inc     Develop CAD software             Synposys Inc                    
01/16/97  05/30/97  Wellsford Residential Ppty     Real estate investment trust     Equity Residential Pptys Trust  
01/17/97  06/17/97  Avemco Corp                    Fire, marine, casualty ins co    HCC Insurance Holdings Inc      
01/17/97  04/11/97  Studio Plus Hotels Inc         Own, operate hotels, motels      Extended Stay America Inc       
01/20/97  06/27/97  First USA Inc                  Pvd credit card svcs             BANC ONE Corp, Columbus, Ohio   
01/20/97  04/08/97  Target Therapeutics Inc        Mnfr, whl mini-surgical devices  Boston Scientific Corp          
01/21/97  06/26/97  InPhyNet Medical Management    Pvd physician management svcs    MedPartners Inc                 
01/21/97  07/09/97  Mafco Consolidated Grp (Mafco) Mnfr cosmetics, beauty products  Mafco Holdings Inc              
01/22/97  03/05/97  Norand Corp                    Mnfr electronic info systems     Western Atlas Inc               
01/23/97  05/19/97  Amphenol Corp                  Manufactures connectors          Kohlberg Kravis Roberts & Co    
01/23/97  06/02/98  ESELCO Inc                     Electric utility                 Wisconsin Energy Corp           
01/27/97  03/07/97  Measure Corp                   Mnfr process control systems     Honeywell Inc                   
01/27/97  05/30/97  Revco DS Inc                   Own, operate drug stores         CVS Corp                        
02/03/97  03/10/97  Kysor Industrial Corp          Mnfr vehicle components          Scotsman Industries Inc         
02/05/97  05/31/97  Morgan Stanley Group Inc       Investment bank                  Dean Witter Discover & Co       
02/10/97  03/31/97  TheraTx Inc                    Own, op nursing care facilities  Vencor Inc                      
02/11/97  06/13/97  AMISYS Managed Care Systems    Pvd integrated systems svcs      HBO & Co                        

- ------------------------------------------------------------------------------------------------------------------------------------
Value of   Enter-
Trans-     prise
Date      Date                                      Acquiror                        action    Value
Announced Effective Target Name                     Business Description            ($ mil)   ($ mil)
- ------------------------------------------------------------------------------------------------------------------------------------

10/14/96  12/12/96  Thrifty Payless Holdings Inc   Own, operate drug stores          2,394.00  2,367.73  
10/15/96  06/03/97  Conrail Inc                    Investor group                   10,435.90 12,532.43  
10/15/96  12/23/96  FlightSafety International     Property, casualty insurance co   1,518.10  1,555.16  
10/17/96  01/30/97  OrNda HealthCorp               Own, op hospitals                 3,123.40  2,875.48  
10/21/96  03/31/97  Detroit & Canada Tunnel Corp   Investor group                       36.50     33.33  
10/23/96  04/16/97  Syratech Corp                  Pvd fund mgmt svcs                  304.40    335.62  
10/28/96  05/07/97  Cooper & Chyan Technology Inc  Develop CAD software                474.80    452.04  
10/28/96  01/15/97  Loctite Corp                   Mnfr, whl chemicals, detergents   1,289.10  2,118.28  
10/28/96  05/29/97  Wireless Cable of Atlanta      Pvd telecommunication svcs           44.70     37.95  
10/30/96  04/08/97  Vons Cos Inc                   Own, op grocery stores            2,251.60  3,092.97  
10/31/96  07/01/97  California Jockey Club/Bay     Real estate investment trust        199.70    185.79  
10/31/96  12/18/96  Kash N'Karry Food Stores Inc   Own and operate supermarkets        347.10    342.27  
11/04/96  02/27/97  Eckerd Corp                    Department stores                 3,298.50  3,216.53  
11/11/96  04/30/97  PHH Corp                       Own, op hotel franchises          1,809.50  6,273.96  
11/12/96  06/12/97  Leslie's Poolmart              Investor group                      112.80    124.19  
11/12/96  02/27/97  SQA Inc                        Dvlp component-based software       315.80    273.70  
11/13/96  01/20/97  Medex Inc                      Mnfr engineered polymer prods       150.60    147.44  
11/18/96  01/02/97  Sudbury Inc                    Ductile, gray iron castings         155.40    145.12  
11/25/96  01/09/97  Opal Inc                       Mnfr wafer fabrication systems      189.60    146.57  
11/25/96  06/18/97  PanEnergy Corp                 Electric utility                  7,666.80  9,955.41  
11/26/96  12/30/96  Armor All Products (McKesson)  Manufacture household bleach        410.10    355.10  
11/27/96  03/27/97  Central Tractor Farm & Country Investment company                   56.70    172.74  
11/27/96  12/27/96  Central Tractor Farm & Country Investment company                   81.00    166.96  
11/27/96  01/16/97  Milgray Electronics Inc        Mnfr electronic, computer prods     100.00    135.18  
11/27/96  03/19/97  Owen Healthcare Inc            Whl pharmaceutical products         544.10    481.67  
11/29/96  04/30/97  Chicago Dock and Canal Trust   Real estate investment trust        177.90    176.49  
11/29/96  01/06/97  ElectroStar Inc                Mnfr fire protection systems        111.00    119.21  
12/02/96  01/30/97  Easthay Inc                    Own, op variety stores              146.00    142.81  
12/02/96  03/03/97  Health Images Inc              Own, op outpatient surgery ctr.     263.70    259.67  
12/05/96  02/26/97  Barefoot Inc                   Pvd mgmt svcs                       230.90    246.11  
12/05/96  03/27/97  Cavco Industries Inc           Construct bldgs, RE dvlp firm        76.20    104.85  
12/05/96  04/11/97  Public Storage Properties XIV  Real estate investment trust         82.40     56.91  
12/05/96  04/11/97  Public Storage Properties XV   Real estate investment trusts        79.10     54.22  
12/05/96  05/05/97  Santa Fe Pacific Gold Corp     Gold, coal mining; oil, gas expl  2,505.50  2,862.14  
12/05/96  01/10/97  Zycon Corp                     Mnfr computer circuit boards        211.70    240.90  
12/11/96  02/21/97  Alexander & Alexander Services Insurance holding company         1,227.40  1,131.32  
12/16/96  01/27/97  Eljer Industries Inc           Mnfr environmental equipment        175.60    254.31  
12/16/96  04/16/97  Paragon Group Inc              Real estate investment trust        624.80    619.15  
12/16/96  05/30/97  Pioneer Financial Services     Insurance holding company           564.00    531.20  
12/16/96  01/27/97  Tylan General Inc              Mnfr analytical products            147.70    150.72  
12/17/96  08/01/97  McDonnell Douglas Corp         Mnfr aircraft, aerospace equip   13,359.00 15,830.06  
12/19/96  03/25/97  IWC Resources Corp             Electric, gas utility hldg co       290.60    418.56  
12/24/96  04/16/97  Home Beneficial Corp           Insurance holding company           665.10            
12/30/96  05/29/98  LILCO                          Gas utility                       4,725.50  8,325.51  
01/07/97  02/25/97  American Medical Response Inc  Pvd ambulance svcs                1,011.10  1,179.05  
01/07/97  02/10/97  Bonray Drilling Corp           Oil and gas exploration, prdn        12.70     13.61  
01/13/97  04/25/97  OpenVision Technologies Inc    Dvlp bus applications software      365.70    355.21  
01/13/97  09/02/97  Zurich Reinsurance Centre      Insurance holding company           319.00    932.99  
01/14/97  04/01/97  Oxford Resources Corp          Commercial bank                     561.00  2,075.95  
01/14/97  04/30/97  Tencor Instruments Inc         Mnfr measuring devices            1,343.60  1,268.04  
01/15/97  08/06/97  Value Health Inc               Own, operate hospitals            1,132.30  1,007.30  
01/16/97  02/28/97  Epic Design Technology Inc     Develop automation software         455.40    435.64  
01/16/97  05/30/97  Wellsford Residential Ppty     Real estate investment trust        995.50    792.15  
01/17/97  06/17/97  Avemco Corp                    Provide insurance services          246.80    295.32  
01/17/97  04/11/97  Studio Plus Hotels Inc         Own, op hotels                      295.90    261.22  
01/20/97  06/27/97  First USA Inc                  Bank holding company              7,304.30  7,972.55  
01/20/97  04/08/97  Target Therapeutics Inc        Manufacture catheters             1,218.30  1,183.39  
01/21/97  06/26/97  InPhyNet Medical Management    Pvd medical services to HMO's       369.70    364.33  
01/21/97  07/09/97  Mafco Consolidated Grp (Mafco) Mnfr toilet preparations            116.80    980.32  
01/22/97  03/05/97  Norand Corp                    Pvd oil, gas exploration svcs       320.80    316.14  
01/23/97  05/19/97  Amphenol Corp                  Leverage buyout firm              1,390.40  1,385.99  
01/23/97  06/02/98  ESELCO Inc                     Electric, gas utility; hldg co       74.30     95.65  
01/27/97  03/07/97  Measurex Corp                  Mnfr automation, control sys        597.00    587.36  
01/27/97  05/30/97  Revco DS Inc                   Own and operate drug stores       3,911.70  3,969.97  
02/03/97  03/10/97  Kysor Industrial Corp          Mnfr refrigeration equipment        359.20    385.36  
02/05/97   5/31/97  Morgan Stanley Group Inc       Securities brokerage firm        10,573.00 51,167.74  
02/10/97  03/31/97  TheraTx Inc                    Provide healthcare services         378.20    539.63  
02/11/97  06/13/97  AMISYS Managed Care Systems    Dvlp healthcare software            170.60    146.52  

- ------------------------------------------------------------------------------------------------------------------------------------
Premium
----------------------------------------------------------------------------------
Date      Date                                     1 Day Prior     1 Day Prior    4 Weeks Prior  3 Months Prior    1 Year Prior   
Announced Effective Target Name                   to Annc. Date   to Annc. Date   to Annc. Date  to Annc. Date     to Annc. Date 
- ------------------------------------------------------------------------------------------------------------------------------------

10/14/96  12/12/96  Thrifty Payless Holdings Inc       26.91          28.66          37.18                          62.23  
10/15/96  06/03/97  Conrail Inc                        61.97          60.28          60.28          61.40           74.24  
10/15/96  12/23/96  FlightSafety International         13.96          10.80          10.80                          
10/17/96  01/30/97  OrNda HealthCorp                    9.61          19.48          16.56          57.21           40.56  
10/21/96  03/31/97  Detroit & Canada Tunnel Corp       64.89          74.19          54.29         110.73           64.89  
10/23/96  04/16/97  Syratech Corp                      21.91          28.00          29.29          62.03           31.28  
10/28/96  05/07/97  Cooper & Chyan Technology Inc       2.54           1.73          31.84                          63.54  
10/28/96  01/15/97  Lucite Corp                        31.89          36.70          34.81          33.33           41.86  
10/28/96  05/29/97  Wireless Cable of Atlanta          89.88          80.83          80.83          83.04           20.57  
10/30/96  04/08/97  Vons Cos Inc                       26.80          21.52          25.71         115.49           32.96  
10/31/96  07/01/97  California Jockey Club/Bay         87.23          88.57         103.08         300.61          268.67  
10/31/96  12/18/96  Kash N'Karry Food Stores Inc        9.47          33.33           6.67          13.66           (7.96) 
11/04/96  02/27/97  Eckerd Corp                        21.21          28.44          29.63          67.66           56.42  
11/11/96  04/30/97  PHH Corp                           60.98          65.00          69.23         120.00           83.33  
11/12/96  06/12/97  Leslie's Poolmart                  26.09          31.82          31.82           5.45           13.73  
11/12/96  02/27/97  SQA Inc                            39.44          28.23          39.44                          73.06  
11/13/96  01/20/97  Medex Inc                          54.10          57.98          66.74         
11/18/96  01/02/97  Sudbury Inc                        19.05          25.00           9.89          53.85           14.94  
11/25/96  01/09/97  Opal Inc                           52.58          64.44         105.56         270.00           23.33  
11/25/96  06/18/97  PanEnergy                          18.34          22.70          30.29          80.18           48.15  
11/26/96  12/30/96  Armor All Products (McKesson)       9.09          13.97          13.97           4.60           27.27  
11/27/96  03/27/97  Central Tractor Farm & Country     17.53          17.53          18.75          67.65           42.50  
11/27/96  12/27/96  Central Tractor Farm & Country     15.46          15.46          16.67          64.71           40.00  
11/27/96  01/16/97  Milgray Electronics Inc             8.40          16.99          20.57                                 
11/27/96  03/19/97  Owen Healthcare Inc                64.89         100.86          87.25       
11/29/96  04/30/97  Chicago Dock and Canal Trust       22.32          22.70          22.70         150.00           68.07  
11/29/96  01/06/97  ElectroStar Inc                     7.69          27.27          16.67                          40.00  
12/02/96  01/30/97  Easthay Inc                        26.32          28.00          23.08                                 
12/02/96  03/03/97  Health Images Inc                   7.39          27.85          34.24         116.52           57.93  
12/05/96  02/26/97  Barefoot Inc                       25.49          28.00          42.22          31.96           60.00  
12/05/96  03/27/97  Cavco Industries Inc               13.23          20.23          30.49         130.11           39.87  
12/05/96  04/11/97  Public Storage Properties XIV      29.19          30.82          31.65          49.64           32.48  
12/05/96  04/11/97  Public Storage Properties XV       29.19          28.40          32.48          46.48           34.19  
12/05/96  05/05/97  Santa Fe Pacific Gold Corp         59.75          66.77          63.18          50.26           45.92  
12/05/96  01/10/97  Zycon Corp                         12.50          46.94          94.60          39.81          105.71  
12/11/96  02/21/97  Alexander & Alexander Services      6.06           8.53           9.38         (16.67)           8.53  
12/16/96  01/27/97  Eljer Industries Inc               77.78          84.62          90.10         146.15          140.00  
12/16/96  04/16/97  Paragon Group Inc                   9.71          12.25          14.00           7.29           19.61  
12/16/96  05/30/97  Pioneer Financial Services         47.37          50.34          63.50                                 
12/16/96  01/27/97  Tylan General Inc                  39.13          26.73          26.73          13.27           16.36  
12/17/96  08/01/97  McDonnell Douglas Corp              0.62          22.71          20.08          41.33           22.41  
12/19/96  03/25/97  IWC Resources Corp                 31.96          39.13          45.46          64.10           64.10  
12/24/96  04/16/97  Home Beneficial Corp                2.80          39.29          50.00          56.00           56.78  
12/30/96  05/29/98  LILCO                              32.28          33.14          28.96          56.52           49.66  
01/07/97  02/25/97  American Medical Response Inc      21.21          23.08          36.75          33.33           31.15  
01/07/97  02/10/97  Bonray Drilling Corp               11.11          11.11          30.44         179.07          105.13  
01/13/97  04/25/97  OpenVision Technologies Inc        43.67          46.46          50.86                          46.49  
01/13/97  09/02/97  Zurich Reinsurance Centre          17.07          18.52          11.63          20.50           18.03  
01/14/97  04/01/97  Oxford Resources Corp              10.03          23.53          28.05          76.86           52.37  
01/14/97  04/30/97  Tencor Instruments Inc             33.06          42.22          70.21         109.15          113.33  
01/15/97  08/06/97  Value Health Inc                    1.24           0.61              0         (22.64)          17.14  
01/16/97  02/28/97  Epic Design Technology Inc         (0.60)          8.52          23.63          23.01           30.09  
01/16/97  05/30/97  Wellsford Residential Ppty          7.58           9.21           9.77                                 
01/17/97  06/17/97  Avemco Corp                        47.74          55.78          89.26          86.21           80.35  
01/17/97  04/11/97  Studio Plus Hotels Inc             54.96          51.12          37.48          40.68           28.79  
01/20/97  06/27/97  First USA Inc                      43.16          53.05          50.85         126.89           80.64  
01/20/97  04/08/97  Target Therapeutics Inc            63.65          65.86          93.68          50.39           76.90  
01/21/97  06/26/97  InPhyNet Medical Management        (0.80)         12.84          25.38           8.77           43.30  
01/21/97  07/09/97  Mafco Consolidated Grp (Mafco)     23.50          23.50          27.62          69.62           36.04  
01/22/97  03/05/97  Norand Corp                        72.90          87.41          94.20         150.47           74.03  
01/23/97  05/19/97  Amphenol Corp                      12.43          16.85          26.06          16.85           31.65  
01/23/97  06/02/98  ESELCO Inc                         50.85          49.58          69.52                                 
01/27/97  03/07/97  Measurex Corp                      44.33          42.13          45.83          18.14           37.25  
01/27/97  05/30/97  Revco DS Inc                        7.57          11.47          17.69          50.79           40.73  
02/03/97  03/10/97  Kysor Industrial Corp              16.22          17.01          24.64          79.17           48.28  
02/05/97   5/31/97  Morgan Stanley Group Inc           11.08          12.80          13.81                                 
02/10/97  03/31/97  TheraTx Inc                        30.29          35.45          59.07          50.33           73.16  
02/11/97  06/13/97  AMISYS Managed Care Systems        38.58          44.26          43.09           8.64           62.96  

Page F-8

Merger Premiums to Market Value Analysis
Mergers with Target Price Equal to or Greater than $10 per Share
Announced and Completed 1/1/96-10/9/98
(continued)

- ------------------------------------------------------------------------------------------------------------------------------------

Date      Date                                                                     
Announced Effective Target Name                     Target Business Description     Acquiror Name
- ------------------------------------------------------------------------------------------------------------------------------------

02/13/97  05/20/97  Reflectone Inc                   Manufacture flight simulators     British Aerospace Holdings    
02/13/97  06/17/97  USLIFE Corp                      Life insurance company            American General Corp         
02/14/97  10/29/97  Horizon/CMS Healthcare Corp      Pvd nursing care services         HealthSouth Corp              
02/14/97  09/17/97  UNC Inc                          Mnfr aircraft components          Greenwich Air Services Inc    
02/14/97  06/25/97  Winthrop Resources Corp          Provide computer leasing svcs     TCF Finl Corp, Minneapolis, MN
02/18/97  06/27/97  Destec Energy Inc                Electric utility                  NGC Corp                      
02/20/97  12/09/97  NHP Inc (Apartment Investment)   Own, op apartment buildings       Apartment investment & Mgmt Co
02/24/97  07/01/97  Security-Connecticut Corp        Insurance holding company         ReliaStar Financial Corp, MN  
02/25/97  08/05/98  Fina Inc                         Mnfr petroleum refined prods      Petrofina SA                  
02/26/97  07/02/97  Petrolite Corp                   Mnfr fuel additives, waxes        Baker Hughes Inc              
02/26/97  06/12/97  US Robotics Corp                 Mnfr common products, systems     3Com Corp                     
02/27/97  06/13/97  Production Operators Corp        Provide oil and gas field svcs    Camco International Inc       
02/28/97  08/01/97  Healthsource Inc                 Own and operate HMO's             CIGNA Corp                    
03/03/97  05/30/97  BHC Financial Inc                Provide data processing svcs      Flserv Inc                    
03/07/97  08/01/97  Micro Bio-Medics Inc             Whl, mnfr medical equip           Henry Schein Inc              
03/10/97  09/02/97  Greenwich Air Services Inc.      Manufacture aircraft engines      General Electric Co           
03/14/97  06/26/97  Enterprise Systems Inc           Develop hospital mgmt software    HBO & Co                      
03/17/97  08/20/97  Heritage Media Corp              Own, op radio and TV stations     News Corp Ltd                 
03/19/97  07/11/97  American List Corp               Pvd mail advertising svcs         Snyder Communications Inc     
03/20/97  06/17/97  Falcon Building Products Inc     Manufacture air compressors       InvestCorp                    
03/24/97  08/29/97  Community Bankshares, NH         Bank holding company              CFX Corp, Keene, new Hampshire
03/24/97  04/28/97  MDL Information Systems          Pvd scientific info svcs          Elsevier Science              
03/24/97  08/05/97  OnTrak Systems Inc               Mnfrs semiconductor cap equip     Lam Research Corp             
03/25/97  05/07/97  Foodbrands America Inc           Produce sausages, prepared meat   IBP Inc (Occidental Petroleum)
03/25/97  07/10/97  Phamis Inc                       Pvd integrated systems design     IDX Systems Corp              
03/26/97  09/03/97  Argyle Television Inc            Own, op television stations       Hearst Broadcasting Group     
03/31/97  06/30/97  Cascade Communications Corp      Mnfr frame relays                 Ascend Communications Inc     
04/07/97  09/02/97  Alex.Brown Inc                   Securities brokerage firm         Bankers Trust New York Corp   
04/07/97  07/30/97  Pure Atria Corp                  Dvlp custom computer programs     Rational Software Corp        
04/08/97  06/12/97  Premiere Radio Networks Inc      Own, op radio bdcstg stations     Jacor Communications Inc      
04/09/97  06/24/97  Public Storage Properties XVI    Real estate investment trust      Public Storage Inc            
04/09/97  06/24/97  Public Storage Ppties XVIII      Real estate investmeht trust      Public Storage Inc            
04/09/97  06/24/97  Public Storage Properties XIX    Real estate investment trust      Public Storage Inc            
04/09/97  05/13/97  Stant Corp                       Mnfr, whl automotive parts        Tomkins PLC                   
03/09/97  97/21/97  Tambrands Inc                    Mnfr feminine hygiene products    Proctor & Gamble Co           
04/14/97  11/12/97  APL Ltd                          Shipping, trucking company        Neptune Orient Lines Ltd      
04/14/97  09/03/97  United Waste Systems Inc         Provide waste management svcs     USA Waste Services Inc        
04/14/97  01/05/98  Wyndham Hotel Corp               Own and operate hotels            Patriot Amer Hosp/Wyndham Intl
04/16/97  01/30/98  Steck Vaughn Publishing Corp     Publish books, magazines          Harcourt General Inc          
04/17/97  07/14/97  Drilex International Inc         Pvd prod, svcs used in drilling   Baker Hughes Inc              
04/18/97  04/21/97  Vitalink Pharmacy Services Inc   Pvd health and allied svcs        Manor Care Inc                
04/21/97  05/28/97  Goulds Pumps Inc                 Mnfr centrifugal pumps            ITT Industries Inc            
04/21/97  06/10/97  National Education Corp          Vocational training services      Harcourt General Inc          
04/22/97  09/04/97  International Family Ent Inc     Provide cable television svcs     Fox Kids Worldwide Inc.       
04/23/97  06/25/97  VeriFone Inc                     Electronic funds transfer mach    Hewlett-Packard Co            
04/30/97  06/03/97  GKN Sinter Metals Inc(GKN PLC)   Mnfr automotive, metal parts      GKN PLC                       
05/01/97  07/30/97  David White Inc                  Mnfr, whl surveying instruments   Choucroute Partners          
05/05/97  08/13/97  Fort Howard Corp                 Mnfr sanitary tissue products     James River Corp of Virginia  
05/05/97  08/01/97  Logicon Inc                      Pvd computer svcs to military     Northrop Grumman Corp         
05/05/97  08/19/97  Riser Foods Inc                  Own, op grocery stores            Giant Eagle Inc               
05/05/97  06/13/97  Vivra Inc                        Provide home health care svcs     Incentive AB                  
05/06/97  08/15/97  BBN Corp                         Mnfr computer integrated sys      GTE Corp                      
05/06/97  07/22/97  BW/IP Inc                        Mnfr fluid transfer equip         Durco International Inc       
05/06/97  01/05/98  Physicians Health Services Inc   Own and operate HMO's             Foundation Health Systems Inc 
05/06/97  07/25/97  Varsity Spirit                   Pvd cheerleading training svcs    Riddell Sports Inc            
05/07/97  06/03/98  Reliable Life Insurance Co       Insurance company                 Unitrin Inc                   
05/08/97  11/04/97  Living Centers of America Inc    Pvd long-term health care svcs    Apollo Management LP          
05/12/97  10/16/97  Dynamics Corp of America         Mnfr electrical appliances        CTS Corp                      
05/12/97  09/09/97  Smith's Food & Drug Centers      Own and operate supermarkets      Fred Meyer Inc                
05/13/97  08/26/97  Aurum Software Inc               Dvlp sales, mktg info software    Baan Co NV                    
05/13/97  08/28/97  Inbrand Corp                     Mfnr incontinence products        Tyco International Ltd        
05/14/97  11/18/97  Enron Global Power & Pipelines   Pvd gas transmission svcs         Enron Corp                    
05/20/97  09/02/97  Keystone International Inc       Mnfr indi flow control prod       Tyco International Ltd        
05/21/97  08/14/97  Howell Industries Inc            Mnfr automotive parts             Oxford Automotive Inc         
05/21/97  05/04/98  KU Energy Corp                   Electric utility holding co       LG&E Energy Corp              
05/22/97  07/31/97  Biopsys Medical Inc              Mnfr surgical, medical instr      Johnson & Johnson             

- ------------------------------------------------------------------------------------------------------------------------------------
Value of         Enter-
Trans-           prise
Date      Date                                      Acquiror                        action           Value
Announced Effective Target Name                     Business Description            ($ mil)         ($ mil)
- ------------------------------------------------------------------------------------------------------------------------------------

02/13/97  05/20/97  Reflectone Inc                   Whl aircraft ircraft, equip           41.10       98.00
02/13/97  06/17/97  USLIFE Corp                      Insurance holding company          2,374.40    2,353.34
02/14/97  10/29/97  Horizon/CMS Healthcare Corp      Own,op outpatient surgery ctr      1,651.30    1,612.88 
02/14/97  09/17/97  UNC Inc                          Manufacture aircraft engines         442.70      752.15
02/14/97  06/25/97  Winthrop Resources Corp          Savings and loan                     334.70      350.73
02/18/97  06/27/97  Destec Energy Inc                Wholesale natural gas products     1,222.40    1,235.07
02/20/97  12/09/97  NHP Inc (Apartment Investment)   Real estate investment trust         114.50      370.58
02/24/97  07/01/97  Security-Connecticut Corp        Insurance company                    545.40      503.52
02/25/97  08/05/98  Fina Inc                         Produce, whl petroleum               257.00    2,427.11
02/26/97  07/02/97  Petrolite Corp                   Mnfr oil, gas field machinery        710.90      709.81
02/26/97  06/12/97  US Robotics Corp                 Pvd network computer svcs          6,510.70    6,596.65
02/27/97  06/13/97  Production Operators Corp        Mnfr oil, gas field equipment        609.60      616.80
02/28/97  08/01/97  Healthsource Inc                 Insurance company                  1,652.70    1,545.42
03/03/97  05/30/97  BHC Financial Inc                Pvd finl data processing svcs        220.60      247.84
03/07/97  08/01/97  Micro Bio-Medics Inc             Whl med supplies                     136.10      113.12
03/10/97  09/02/97  Greenwich Air Services Inc.      Electrical, construction prod        519.20      789.39
03/14/97  06/26/97  Enterprise Systems Inc           Dvlp healthcare software             275.20      254.54
03/17/97  08/20/97  Heritage Media Corp              Publish newspapers, magazines      1,351.80    1,348.41
03/19/97  07/11/97  American List Corp               Pvd outsources marketing svcs        117.10      117.72
03/20/97  06/17/97  Falcon Building Products Inc     Investor group                       584.50      496.47
03/24/97  08/29/97  Community Bankshares, NH         Savings and loan                     101.60      514.34
03/24/97  04/28/97  MDL Information Systems          Publish scientific journals          310.70      299.21
03/24/97  08/05/97  OnTrak Systems Inc               Mnfr equip to mnfr semiconduct       217.90      200.19
03/25/97  05/07/97  Foodbrands America Inc           Produce beef and pork products       657.50      634.74
03/25/97  07/10/97  Phamis Inc                       Mnfr health care info systems        142.80      140.39
03/26/97  09/03/97  Argyle Television Inc            Own, op radio stations               322.20      487.37
03/31/97  06/30/97  Cascade Communications Corp      Dvlp comp network solutions        3,529.30    3,445.04
04/07/97  09/02/97  Alex Brown Inc                   Bank holding company               2,077.40    2,055.27
04/07/97  07/30/97  Pure Atria Corp                  Dvlp component-based software        958.40      949.50
04/08/97  06/12/97  Premiere Radio Networks Inc      Own, op radio bdcstg stations        208.90      155.81
04/09/97  06/24/97  Public Storage Properties XVI    Real estate investment trust          84.20       82.14
04/09/97  06/24/97  Public Storage Ppties XVIII      Real estate investment trust          78.60       82.66
04/09/97  06/24/97  Public Storage Properties XIX    Real estate investment trust          67.90       66.65
04/09/97  05/13/97  Stant Corp                       Mnfr, whl plumbing fixtures          574.00      593.71
03/09/97  97/21/97  Tambrands Inc                    Mnfr household prod, oil, coffee   2,003.90    1,978.69
04/14/97  11/12/97  APL Ltd                          Pvd deep sea oil transp svcs         878.50    1,482.22
04/14/97  09/03/97  United Waste Systems Inc         Pvd waste disposal services        1,682.20    1,899.63
04/14/97  01/05/98  Wyndham Hotel Corp               Real estate investment trust         773.10      731.68
04/16/97  01/30/98  Steck Vaughn Publishing Corp     Own, op movie theaters, stores        40.30      221.36
04/17/97  07/14/97  Drilex Internationsl Inc         Mnfr oil, gas field machinery        120.10      133.64
04/18/97  04/21/97  Vitalink Pharmacy Services Inc   Own, op nursing homes, hotels         30.00      278.46
04/21/97  05/28/97  Goulds Pumps Inc                 Mnfr brakes and chassis sys          922.10      913.49
04/21/97  06/10/97  National Education Corp          Own, op movie theaters, stores       776.10      874.09
04/22/97  09/04/97  International Family Ent Inc     Pvd motion picture prodn svcs      1,862.90    1,903,50
04/23/97  06/25/97  VeriFone Inc                     Mnfr computers, testing equip      1,245.10    1,142.30
04/30/97  06/03/97  GKN Sinter Metals Inc(GKN PLC)   Mnfr, whl auto parts, metals         469.70      523.10
05/01/97  07/30/97  David White Inc                  Investment company                     5.90        7.47
05/05/97  08/13/97  Fort Howard Corp                 Mnfr paper, paper-related prods    5,682.60    5,734.86
05/05/97  08/01/97  Logicon Inc                      Aircraft, aerospace products       1,027.50      949.94
05/05/97  08/19/97  Riser Foods inc                  Whl, retail grocery prods            468.50      415.19
05/05/97  06/13/97  Vivra Inc                        Mnfr medical instr, ind epuip      1,660.50    1,768.29
05/06/97  08/15/97  BBN Corp                         Pvd telecommunicatins svcs           713.80      678.34
05/06/97  07/22/97  BW/IP Inc                        Mnfr machinery, metal castings       530.70      537.88
05/06/97  01/05/98  Physicians Health Services Inc   Own, op HMO's; holding company       268.20      231.41
05/06/97  07/25/97  Varsity Spirit                   Manufacture football equip            91.00       89.64
05/07/97  06/03/98  Reliable Life Insurance Co       Insurance company                    261.10      145.97
05/08/97  11/04/97  Living Centers of America Inc    Investment management services     1,048.20    1,126.82
05/12/97  10/16/97  Dynamics Corp of America         Mnfr electronic components           244.60      255.74
05/12/97  09/09/97  Smith's Food & Drug Centers      Own, operate department stores     2,018.00    2,074.87
05/13/97  08/26/97  Aurum Software Inc               Develop software                     259.90      218.70
05/13/97  08/28/97  Inbrand Corp                     Mnfr fire protction systems          322.80      367.43
05/14/97  11/18/97  Enron Global Power & Pipelines   Own, operate gas pipelines           428.00      866.48
05/20/97  09/02/97  Keystone International Inc       Mnfr fire protection systems       1,361.50    1,426.76
05/21/97  08/14/97  Howell Industries Inc            Mnfr engineered metal prods           23.00       19.05
05/21/97  05/04/98  KU Energy Corp                   Electric utility                   1,539.40    2,112.89
05/22/97  07/31/97  Biopsys Medical Inc              Mnfr medical equip and prods         303.50      293.85

- ------------------------------------------------------------------------------------------------------------------------------------
Premium
----------------------------------------------------------------------------------
Date      Date                                     1 Day Prior     1 Day Prior    4 Weeks Prior  3 Months Prior    1 Year Prior   
Announced Effective Target Name                   to Annc. Date   to Annc. Date   to Annc. Date  to Annc. Date     to Annc. Date 
- ------------------------------------------------------------------------------------------------------------------------------------

02/13/97  05/20/97  Reflectone Inc                    20.00        18.52           25.49          33.33            28.00 
02/13/97  06/17/97  USLIFE Corp                       20.96         22.80          43.26          57.30            68.33 
02/14/97  10/29/97  Horizon/CMS Healthcare Corp       27.65         40.04          36.08          (0.66)          (32.28) 
02/14/97  09/17/97  UNC Inc                           37.93         41.18          36.36          96.72            66.67 
02/14/97  06/25/97  Winthrop Resources Corp            7.65         20.00          23.03                                 
02/18/97  06/27/97  Destec Energy Inc                 82.32         80.42          63.40          73.20            37.46 
02/20/97  12/09/97  NHP Inc (Apartment Investment)    28.26         25.21          16.86          12.69            16.00 
02/24/97  07/01/97  Security-Connecticut Corp         43.65         45.10          36.38         105.22            57.86 
02/25/97  08/05/98  Fina Inc                          19.70         18.52          21.52          23.39            25.33 
02/26/97  07/02/97  Petrolite Corp                    62.67         83.46          78.10         128.04            38.64 
02/26/97  06/12/97  US Robotics Corp                  11.38         13.22           0.37          16.35            (6.80) 
02/27/97  06/13/97  Production Operators Corp         22.90         13.02          15.93          79.22            25.65 
02/28/97  08/01/97  Healthsource Inc                  28.89         32.82          64.15         107.14           150.96 
03/03/97  05/30/97  BHC Financial Inc                 67.50         60.00          82.31          92.81           112.70 
03/07/97  08/01/97  Micro Bio-Medics Inc              12.19         12.19          10.44          14.93             3.94 
03/10/97  09/02/97  Greenwich Air Services Inc.       21.57         33.33          34.78         (16.78)           30.53 
03/14/97  06/26/97  Enterprise Systems Inc            15.29         13.75          30.00          16.88            51.67 
03/17/97  08/20/97  Heritage Media Corp               69.07         72.63          69.07          21.03            45.13 
03/19/97  07/11/97  American List Corp                17.32         28.05           8.81          27.27            (0.47) 
03/20/97  06/17/97  Falcon Building Products Inc      43.43         49.47          52.69          97.22            24.56 
03/24/97  08/29/97  Community Bankshares, NH          63.28         64.11          54.68         121.42           102.05 
03/24/97  04/28/97  MDL Information Systems           85.51         43.82          54.22          50.59            79.02 
03/24/97  08/05/97  OnTrak Systems Inc                -0.85          2.96          13.92          81.49            62.24 
03/25/97  05/07/97  Foodbrands America Inc            47.40         50.97          61.38          36.64            71.74 
03/25/97  07/10/97  Phamis Inc                        18.93         23.00          26.47          30.14            95.22 
03/26/97  09/03/97  Argyle Television Inc             15.22         16.48          14.60          22.54             8.16 
03/31/97  06/30/97  Cascade Communications Corp       28.28         46.70          21.08         (18.89)          (33.97) 
04/07/97  09/02/97  Alex.Brown Inc                    65.00         50.04          17.70                                 
04/07/97  07/30/97  Pure Atria Corp                   18.54         23.31          23.77         (40.10)          (23.49) 
04/08/97  06/12/97  Premiere Radio Networks Inc       17.37         19.23          19.23          36.58            32.96 
04/09/97  06/24/97  Public Storage Properties XVI      6.01          5.32           2.62          17.71             2.62 
04/09/97  06/24/97  Public Storage Ppties XVIII        4.97          7.12           2.90          15.00            (0.38) 
04/09/97  06/24/97  Public Storage Properties XIX      4.89          3.25           3.25          16.96            (2.82) 
04/09/97  05/13/97  Stant Corp                        29.32         48.28          49.57          79.17            40.98 
03/09/97  97/21/97  Tambrands Inc                      8.40         14.94          14.94           4.71            21.95 
04/14/97  11/12/97  APL Ltd                           55.81         65.43          42.55          43.32            40.31 
04/14/97  09/03/97  United Waste Systems Inc           0.71          1.05          (1.25)         53.09            13.95 
04/14/97  01/05/98  Wyndham Hotel Corp                48.02         44.52          48.93                           29.23 
04/16/97  01/30/98  Steck Vaughn Publishing Corp      21.65         32.58          24.21          55.26            27.57 
04/17/97  07/14/97  Drilex International Inc          31.44         37.88          59.82                           31.44 
04/18/97  04/21/97  Vitalink Pharmacy Services In     14.29          8.11          (4.19)         (8.05)          (17.53) 
04/21/97  05/28/97  Goulds Pumps Inc                  61.75         57.45          60.87          68.18            51.02 
04/21/97  06/10/97  National Education Corp           22.63         54.13          40.00          54.13            48.67 
04/22/97  09/04/97  International Family Ent Inc      94.44         95.80         107.41          61.38            15.94 
04/23/97  06/25/97  VeriFone Inc                      67.64         50.19          43.77          24.69            34.67 
04/30/97  06/03/97  GKN Sinter Metals Inc (GKN PLC)   37.04         38.32          32.74                                 
05/01/97  07/30/97  David White Inc                   11.63         14.29          18.52          (4.00)           52.38 
05/05/97  08/13/97  Fort Howard Corp                  16.31         27.92          43.30          92.95            33.18 
05/05/97  08/01/97  Logicon Inc                       75.68         84.23         102.65         134.48           102.66 
05/05/97  08/19/97  Riser Foods inc                   11.63         29.23          26.79         115.38            28.24 
05/05/97  06/13/97  Vivra Inc                         26.09         41.77          35.70          23.90            18.24 
05/06/97  08/15/97  BBN Corp                          26.09         32.57          64.54           5.45            26.09 
05/06/97  07/22/97  BW/IP Inc                         (5.48)        14.15          18.72         (10.60)           11.58 
05/06/97  01/05/98  Physicians Health Services In     23.50         26.97          51.68           8.65            46.75 
05/06/97  07/25/97  Varsity Spirit                    30.35         28.14          23.93          26.00            26.00 
05/07/97  06/03/98  Reliable Life Insurance Co        51.11         51.11          52.06                                 
05/08/97  11/04/97  Living Centers of America Inc     17.82         22.73          41.49           9.46            36.71 
05/12/97  10/16/97  Dynamics Corp of America          91.27         94.17         112.70         156.32           107.55 
05/12/97  09/09/97  Smith's Food & Drug Centers        9.93         16.48          26.99          63.23            62.85 
05/13/97  8/26/97   Aurum Software Inc                32.99         40.38          55.84                            9.19 
05/13/97  08/28/97  Inbrand Corp                      69.98         78.34         107.22         (81.87)          (38.18) 
05/14/97  11/18/97  Enron Global Power & Pipelin      11.83         13.70          19.74          38.08            12.30 
05/20/97  09/02/97  Keystone International Inc        84.19         85.31         102.49          73.73            92.30 
05/21/97  08/14/97  Howell Industries Inc             28.70         30.40          32.14          26.50           (21.90) 
05/21/97  05/04/98  KU Energy Corp                    34.01         31.84          35.69          38.59            32.93 
05/22/97  07/31/97  Biopsys Medical Inc                6.99          6.99          22.44          17.23            (6.61) 

Page F-9

Merger Premiums to Market Value Analysis
Mergers with Target Price Equal to or Greater than $10 per Share
Announced and Completed 1/1/96-10/9/98
(continued)

- ------------------------------------------------------------------------------------------------------------------------------------

Date      Date                                                                     
Announced Effective Target Name                    Target Business Description     Acquiror Name
- ------------------------------------------------------------------------------------------------------------------------------------

05/22/97  07/09/98  Chaparral Steel Co (Texas Ind)  Mnfr primary steel products       Texas Industries Inc          
05/22/97  11/20/97  Mail Boxes, Etc                 Pvd franchised postal services    US Office Products Co         
05/23/97  10/06/97  Palmer Wireless Inc             Pvd telephone services            Price Communications Corp     
05/27/97  08/08/97  Alamco Inc                      Oil & gas exploration, prod       Columbia Natural Resources Inc
05/27/97  12/18/97  HFS Inc                         Own, op hotel franchises          CUC International Inc         
05/28/97  02/10/98  CommNet Cellular Inc            Cellular telephone services       Blackstone Capital Partners   
05/28/97  07/03/97  Fibreboard Corp                 Mnfr fibreboard, paperboard       Owens Corning                 
06/02/97  07/15/97  Acordia Inc (Anthem Inc)        Pvd insurance brokerage svcs      Anthem Inc                    
06/03/97  01/15/98  Faulding Inc (FH Faulding & Co) Mnfr pharmaceuticals              FH Faulding & Co Ltd          
06/04/97  07/28/97  Maxis Inc                       Develop education software        Electronic Arts Inc           
06/06/97  10/14/97  Telco Communications Group Inc  Pvd switch-based telecom svcs     Excel Communications Inc      
06/09/97  10/01/97  American States Financial Corp  Fire and marine insurance co      SAFECO Corp                   
06/09/97  09/12/97  Amrion Inc                      Own, op food stores               Whole Foods Market Inc        
06/09/97  07/15/97  Prime Service Inc               Pvd const equip rental svcs       Atlas Copco North America Inc 
06/10/97  09/30/97  Numar Corp                      Mnfr imaging logging equip        Halliburton Co                
06/11/97  10/31/97  Pacific Greystone Corp          Pvd general contracting svcs      Lennar Corp                   
06/12/97  10/01/97  Giddings & Lewis Inc            Mnfr automated machine tools      Thyssen AG                    
06/13/97  03/26/97  Bally's Grand Inc               Own and operate casino hotels     Hilton Hotels Corp            
06/16/97  08/29/97  Core Industries Inc             Manufacture electronic equip      United Dominion Industries Ltd
06/16/97  10/10/97  Multicare Cos Inc               Own, op nursing care facilities   Genesis Eldercare             
06/17/97  07/24/97  McFarland Energy Inc            Oil and gas exploration, prodn    Monterey Resources Inc        
06/17/97  07/25/97  Seda Specialty Packaging Corp   Mnfr specialty packaging prods    CCL Industries Inc            
06/19/97  08/15/97  Advanced Logic Research Inc     Mnfr micro computer systems       Gateway 2000 Inc              
06/20/97  03/30/98  Wheelabrator Technologies Inc   Mnfr laboratory, medical equip    Waste Management Inc          
06/23/97  10/17/97  Integon Corp                    Insurance holding company         General Motors Acceptance (GM)
06/23/97  08/29/97  Tandem Computer Inc             Mnfr computers, network systems   Compaq Computer Corp          
06/24/97  10/14/97  American Exploration Co         Oil and gas exploration, prodn    Louis Dreyfus Natural Gas     
06/24/97  09/29/97  SMT Health Services Inc         Operate and outpatient facilities Three Rivers Holding Corp     
06/26/97  11/26/97  Rhone-Poulenc Rorer Inc         Manufacture pharmaceuticals       Rhone-Poulenc SA              
06/30/97  10/09/97  Fusion Systems Corp             Mnfr curing sys, semiconductors   Eaton Corp                    
06/30/97  12/23/97  Rykoff-Sexton Inc               Wholesale grocery products        JP Foodservice Inc            
09/23/97  American Filtrona Corp          Mnfr bonded fiber                 Bunzl PLC                     
07/03/97  08/05/97  Duty Free International Inc     Own, op duty free shops           BAA PLC                       
07/03/97  08/06/97  Wyle Electronics                Whl high tech electronic prods    Raab Karcher AG (VEBA AG)     
07/07/97  11/06/97  Cairn Energy USA Inc            Oil and gas exploration, prodn    Meridian Resource Corp        
07/07/97  10/21/97  RoTech Medical Corp             Pvd home health care svcs         Integrated Health Services Inc
07/08/97  10/24/97  Equitable of Iowa Cos           Life insurance company            ING Groep NV                  
07/09/97  09/23/97  Control Data Systems Inc        Mnfr computers, peripherals       CDSI Holding Corp             
07/09/97  12/23/97  Seaman Furniture Co             Own, op ret furniture stores      Investor Group                
07/10/97  11/18/97  Kinetic Concepts Inc            Mnfr medical treatment tables     Investor Group                
07/10/97  12/31/97  Reading & Bates Corp            Pvd oil, gas drilling services    Falcon Drilling Co            
07/15/97  10/02/97  DH Technology Inc               Mnfr, whl computer printers       Axiohn SA                     
07/15/97  10/28/97  Intl Imaging Materials          Mnfr thermal transfer ribbons     Paxar Corp                    
07/15/97  09/04/97  Ply-Gem Industries Inc          Manufacture wood products         Nortek Inc                    
07/17/97  10/22/97  Louisiana Land & Exploration    Oil and gas exploration, prodn    Burlington Resources Inc      
07/17/97  09/29/97  Octel Communications Corp       Mnfr voice processing systems     Lucent Technologies Inc       
07/23/97  12/18/97  Alliance Imaging Inc            Pvd diagnostic imaging svcs       Newport Investment LLC        
07/24/97  09/15/97  Nellcor Puritan-Bennett         Mnfr electn patient monitors      Mallinckrodt Inc              
07/28/97  02/02/98  Chips and Technologies Inc      Design, with integrated circuit   Intel Corp                    
07/28/97  11/17/97  Cyrix Corp                      Mnfr PC units, microprocessors    National Semiconductor Corp   
07/28/97  12/22/97  Freeport-McMoRan Inc            Own, op chem, fertilizer mines    IMC Global Inc                
07/28/97  10/08/97  Regency Health Services Inc     Pvd nursing services              Sun Healthcare Group Inc      
07/30/97  09/18/97  Amdahl Corp                     Develop computer sys, software    Fujitsu Ltd                   
07/30/97  02/02/98  Plasti-Line Inc                 Mnfr illuminated outdoor signs    PL Holdings Corp              
07/31/97  09/24/97  Bucyrus International Inc       Mnfr surface mining machinery     American Industrial Partners  
07/31/97  10/03/97  Delaware Otsego Corp            Own and operate railroad          Investor Group                
07/31/97  10/23/97  Sterling House Corp             Own, op nursing homes             Alternative Living Services   
08/04/97  10/24/97  Columbus Realty Trust           Real estate investment trust      Post Properties Inc           
08/04/97  12/23/97  Perkins Family Restaurant LP    Own, op franchised restaurants    Restaurant Co                 
08/04/97  11/12/97  Sullivan Dental Products Inc    Wholesale dental products         Henry Schein Inc              
08/08/97  12/22/97  Titan Holdings Inc              Auto, property, casualty ins co   USF&G Corp                    
08/11/97  12/19/97  Amscan Holdings Inc             Whl paper, plastic party goods    Confetti Acquisition Inc      
08/11/97  09/30/97  National Sanitary Supply Co     Sanitary maintenance supplies     Unisource Worldwide Inc       
08/11/97  12/22/97  Vacation Break USA Inc          Real estate development firm      Fairfield Communities Inc     
08/12/97  09/17/97  Isomedix Inc                    Pvd contract sterilization svc    Steris Corp                   
08/12/97  03/03/98  LIN Television Corp             Own, op TV bdcstg stations        Hicks Muse Tate & Furst Inc.  

- ------------------------------------------------------------------------------------------------------------------------------------
Value of         Enter-
Trans-           prise
Date      Date                                      Acquiror                        action           Value
Announced Effective Target Name                     Business Description            ($ mil)         ($ mil)
- ------------------------------------------------------------------------------------------------------------------------------------

05/22/97  07/09/98  Chaparral Steel Co (Texas Inc)   Mnfr cement, steel products          72.80        519.31 
05/22/97  11/20/97  Mail Boxes, Etc                  Whl, retail office supplies         354.80        324.21 
05/23/97  10/06/97  Palmer Wireless Inc              Own, op TV and radio stations       870.40        865.52 
05/27/97  08/08/97  Alamco Inc                       Operate natural gas pipeline        102.80         94.43 
05/27/97  12/18/97  HFS Inc                          Provide discount club svcs       11,342.90     11,759.19 
05/28/97  02/10/98  CommNet Cellular Inc             Investment bank                     631.20        745.35 
05/28/97  07/03/97  Fibreboard Corp                  Mnfr glass fiber products           631.20        478.00 
06/02/97  07/15/97  Acordia Inc (Anthem Inc)         Insurance company                   193.20        633.96 
06/03/97  01/15/98  Faulding Inc (FH Faulding & Co)  Mnfr, whl drugs, toiletries          77.30        206.01 
06/04/97  07/28/97  Maxis Inc                        Develop, wholesale software         127.50        116.95 
06/06/97  10/14/97  Telco Communications Group Inc   Pvd telephone commun svcs         1,046.50      1,017.65 
06/09/97  10/01/97  American States Financial Corp   Provide insurance services        3,127.10      3,110.92 
06/09/97  09/12/97  Amrion Inc                       Own, op natural foods stores        152.60        152.21 
06/09/97  07/15/97  Prime Service Inc                Mnfr compressors, machinery       1,112.00      1,110.54 
06/10/97  09/30/97  Numar Corp                       Mnfr oil field machinery            341.60        336.54 
06/11/97  10/31/97  Pacific Greystone Corp           Construct residential bldgs         459.30        452.05 
06/12/97  10/01/97  Giddings & Lewis Inc             Manufacture malleable iron          703.00        712.16 
06/13/97  03/26/97  Bally's Grand Inc                Own, operate hotels                  42.60        667.81 
06/16/97  08/29/97  Core Industries Inc              Mnfr structural metal               275.20        317.27 
06/16/97  10/10/97  Multicare Cos Inc                Own, op geriatric facilities      1,249.10      1,316.49 
06/17/97  07/24/97  McFarland Energy Inc             Oil and gas exploration, prodn      111.20        103.59 
06/17/97  07/25/97  Seda Specialty Packaging Corp    Mnfr pvd specialty packaging        182.60        192.18 
06/19/97  08/15/97  Advanced Logic Research Inc      Mnfr personal computers             206.80        148.06 
06/20/97  03/30/98  Wheelabrator Technologies Inc    Pvd chemical waste mgmt svcs        869.70      3,191.55 
06/23/97  10/17/97  Integon Corp                     Provide business finance svcs       517.10        668.02 
06/23/97  08/29/97  Tandem Computer Inc              Manufacture personal computers    2,780.40      2,873.86 
06/24/97  10/14/97  American Exploration Co          Oil & gas exploration, prodn        275.50        305.83 
06/24/97  09/29/97  SMT Health Services Inc          Investment company                   75.60         83.10 
06/26/97  11/26/97  Rhone-Poulenc Rorer Inc          Mnfr chemicals and cosmetics      4,831.60     16,358.07 
06/30/97  10/09/97  Fusion Systems Corp              Manufacture automotive parts        308.60        278.55 
06/30/97  12/23/97  Rykoff-Sexton Inc                Wholesale groceries               1,435.90      1,172.90 
09/23/97  American Filtrona Corp           Whl, mnfr paper, constn material    183.50        137.24 
07/03/97  08/05/97  Duty Free International Inc      Own, op airports, airfields         674.60        751.31 
07/03/97  08/06/97  Wyle Electronics                 Wholesale petroleum products        633.00        751.33 
07/07/97  11/06/97  Cairn Energy USA Inc             Oil and gas exploration, prodn      233.60        279.72 
07/07/97  10/21/97  RoTech Medical Corp              Pvd specialty healthcare svcs       918.90        828.27 
07/08/97  10/24/97  Equitable of Iowa Cos            Insurance Company                 2,626.40      2,586.78 
07/09/97  09/23/97  Control Data Systems Inc         Investment holding company          273.90        176.78 
07/09/97  12/23/97  Seaman Furniture Co              Investor Group                       45.60        130.12 
07/10/97  11/18/97  Kinetic Concepts Inc             Investor group                      776.70        814.20 
07/10/97  12/31/97  Reading & Bates Corp             Pvd contract drilling svcs        2,587.00      2,680.96 
07/15/97  10/02/97  DH Technology Inc                Mnfr, whl computer printers         169.50        167.60 
07/15/97  10/28/97  Intl Imaging Materials           Mnfr label systems                  244.40        267.86 
07/15/97  09/04/97  Ply-Gem Industries Inc           Mnfr AC, building, wood prods       476.30        388.57 
07/17/97  10/22/97  Louisiana Land & Exploration     Oil and gas exploration, prodn    2,954.30      2,911.54 
07/17/97  09/29/97  Octel Communications Corp        Mnfr telecom equip, software      1,824.80      1,772.96 
07/23/97  12/18/97  Alliance Imaging Inc             Investment company                  114.20        205.49 
07/24/97  09/15/97  Nellcor Puritan-Bennett          Mnfr diagnostic products          1,858.40      1,833.05 
07/28/97  02/02/98  Chips and Technologies Inc       Mnfr, whl microprocessors           422.90        391.35 
07/28/97  11/17/97  Cyrix Corp                       Mnfr semiconductors, circuits       566.40        623.21 
07/28/97  12/22/97  Freeport-McMoRan Inc             Mnfr phosphate fertilizers          790.70      1,233.54 
07/28/97  10/08/97  Regency Health Services Inc      Pvd long-term healthcare svcs       587.90        570.89 
07/30/97  09/18/97  Amdahl Corp                      Mnfr semiconductors, computers      924.80      1,563.05 
07/30/97  02/02/98  Plasti-Line Inc                  Investor group formed by mgmt        30.70         62.00 
07/31/97  09/24/97  Bucyrus International Inc        Pvd fund mgmt & fin adv svcs        193.30        262.15 
07/31/97  10/03/97  Delaware Otsego Corp             Investor group                       53.40         62.54 
07/31/97  10/23/97  Sterling House Corp              Pvd residential care svcs           170.00        151.79 
08/04/97  10/24/97  Columbus Realty Trust            Real estate investment trust        600.00        565.32 
08/04/97  12/23/97  Perkins Family Restaurant LP     Own, operate restaurants             76.30        215.01 
08/04/97  11/12/97  Sullivan Dental Products Inc     Whl med supplies                    312.80        314.55 
08/08/97  12/22/97  Titan Holdings Inc               Insurance holding company           278.10        277.43 
08/11/97  12/19/97  Amscan Holdings Inc              Investment company                  334.90        390.42 
08/11/97  09/30/97  National Sanitary Supply Co      Wholesale printing paper            155.90        149.31 
08/11/97  12/22/97  Vacation Break USA Inc           Construct vacation resorts          178.10        239.94 
08/12/97  09/17/97  Isomedix Inc                     Mnfr sterile processing sys         139.80        136.20 
08/12/97  03/03/98  LIN Television Corp                Leverage buyout firm              1,960.60    1,988.60 

- ------------------------------------------------------------------------------------------------------------------------------------
Premium
----------------------------------------------------------------------------------
Date      Date                                     1 Day Prior     1 Week Prior    4 Weeks Prior  3 Months Prior    1 Year Prior   
Announced Effective Target Name                   to Annc. Date   to Annc. Date    to Annc. Date  to Annc. Date     to Annc. Date 
- ------------------------------------------------------------------------------------------------------------------------------------

05/22/97  07/09/98  Chaparral Steel Co (Texas Ind)      20.39          25.25          29.17            5.08            29.17  
05/22/97  11/20/97  Mail Boxes, Etc                     39.20          40.99          38.31           52.84            33.27  
05/23/97  10/06/97  Palmer Wireless Inc                 45.08          55.56          64.71          (15.15)           27.27  
05/27/97  08/08/97  Alamco Inc                           7.69          11.50          16.67           44.83            11.50  
05/27/97  12/18/97  HFS Inc                              5.93           2.99           5.23           (3.97)          (12.17) 
05/28/97  02/10/98  CommNet Cellular Inc                21.78          28.64          39.81          449.62           605.88  
05/28/97  07/03/97  Fibreboard Corp                     15.79          22.22          49.66          120.00            65.41  
06/02/97  07/15/97  Acordia Inc (Anthem Inc)            12.68          11.50          25.98          317.39           207.69  
06/03/97  01/15/98  Faulding Inc (FH Faulding & Co)     25.58          22.73          45.95          111.76            56.52  
06/04/97  07/28/97  Maxis Inc                            2.27           2.27          40.63          (50.55)           18.42  
06/06/97  10/14/97  Telco Communications Group Inc      32.91          23.77          26.44                            61.32  
06/09/97  10/01/97  American States Financial Corp      45.74          48.62          57.32          104.35            41.89  
06/09/97  09/12/97  Amrion Inc                           8.12          19.22          47.04           68.37            43.69  
06/09/97  07/15/97  Prime Service Inc                   28.64          29.95          31.28                            60.00  
06/10/97  09/30/97  Numar Corp                          90.94          99.35          95.65          126.40           115.62  
06/11/97  10/31/97  Pacific Greystone Corp              75.27          83.30          98.45                           110.67  
06/12/97  10/01/97  Giddings & Lewis Inc                10.53           9.80           0.60           24.44            46.09  
06/13/97  03/26/97  Bally's Grand Inc                   27.88          29.85          31.06           32.70            66.14  
06/16/97  08/29/97  Core Industries Inc                 26.58          37.93          49.25           76.99            60.00  
06/16/97  10/10/97  Multicare Cos Inc                    9.27          13.71          34.94           38.27            55.56  
06/17/97  07/24/97  McFarland Energy Inc                11.58          41.33          44.78           89.04            57.87  
06/17/97  07/25/97  Seda Specialty Packaging Corp       31.82          36.47          52.63           40.61            68.12  
06/19/97  08/15/97  Advanced Logic Research Inc         29.17          30.53          34.78           87.88            67.57  
06/20/97  03/30/98  Wheelabrator Technologies Inc       26.92          28.16          30.69            4.76            15.79  
06/23/97  10/17/97  Integon Corp                       173.68          92.59          74.79           30.00            73.33  
06/23/97  08/29/97  Tandem Computer Inc                 49.33          51.86          51.86          113.33            99.11  
06/24/97  10/14/97  American Exploration Co             12.99          15.03          21.60           28.97            41.87  
06/24/97  09/29/97  SMT Health Services Inc              4.44           2.17           8.05           43.69            44.62  
06/26/97  11/26/97  Rhone-Poulenc Rorer Inc             22.11          22.79          29.33           44.51            29.12  
06/30/97  10/09/97  Fusion Systems Corp                 11.43           9.86          24.30           57.58            50.00  
06/30/97  12/23/97  Rykoff-Sexton Inc                   24.40          26.00          27.65           69.81            38.50  
09/23/97  American Filtrona Corp               8.82           2.24           3.38           53.79             3.38  
07/03/97  08/05/97  Duty Free International Inc                        39.13          50.00                                   
07/03/97  08/06/97  Wyle Electronics                    16.79          38.41          35.14           52.67            49.25  
07/07/97  11/06/97  Cairn Energy USA Inc                22.30          28.97          26.67           (5.84)           13.19  
07/07/97  10/21/97  RoTech Medical Corp                 19.79          12.70          22.22           25.61            15.95  
07/08/97  10/24/97  Equitable of Iowa Cos               18.52          20.35          21.70           86.30            38.78  
07/09/97  09/23/97  Control Data Systems Inc            29.08          30.65          35.00           28.57            31.71  
07/09/97  12/23/97  Seaman Furniture Co                 21.46          25.25          21.46           43.14            27.64  
07/10/97  11/18/97  Kinetic Concepts Inc                 6.94           7.69           9.22           24.19            32.76  
07/10/97  12/31/97  Reading & Bates Corp                16.55          14.52          30.47           53.19            69.09  
07/15/97  10/02/97  DH Technology Inc                   57.48          56.25          57.48            6.38            45.99  
07/15/97  10/28/97  Intl Imaging Materials              67.35          60.18          64.89           32.69            69.88  
07/15/97  09/04/97  Ply-Gem Industries Inc              20.00          16.42          19.08           30.00            48.57  
07/17/97  10/22/97  Louisiana Land & Exploration        20.76          25.47          39.98           17.72            48.08  
07/17/97  09/29/97  Octel Communications Corp           15.89          37.40          41.31           54.04            87.88  
07/23/97  12/18/97  Alliance Imaging Inc                 7.32           3.53          14.29          134.67            44.26  
07/24/97  09/15/97  Nellcor Puritan-Bennett             36.12          43.40          57.24           26.67            67.65  
07/28/97  02/02/98  Chips and Technologies Inc          25.00          32.08          68.68           77.22           115.38  
07/28/97  11/17/97  Cyrix Corp                          30.31          29.54          29.54           97.79            34.66  
07/28/97  12/22/97  Freeport-McMoRan Inc                14.35          13.55           5.20          (16.77)            5.21  
07/28/97  10/08/97  Regency Health Services Inc         34.35          50.43          43.09          104.65           107.06  
07/30/97  09/18/97  Amdahl Corp                          4.97          22.47          25.57                           (49.13) 
07/30/97  02/02/98  Plasti-Line Inc                     36.47          36.47          30.34           84.13            65.71  
07/31/97  09/24/97  Bucyrus International Inc           33.33          46.94          71.43          108.70            94.59  
07/31/97  10/03/97  Delaware Otsego Corp                    0          15.03          17.33          160.28            32.33  
07/31/97  10/23/97  Sterling House Corp                 30.36          29.47          40.46           48.69            88.44  
08/04/97  10/24/97  Columbus Realty Trust                4.23           4.23           4.51          247.75           191.08  
08/04/97  12/23/97  Perkins Family Restaurant LP        28.74          26.55          31.77           17.89             5.66  
08/04/97  11/12/97  Sullivan Dental Products Inc        28.85          40.71          66.20          186.70            79.19  
08/08/97  12/22/97  Titan Holdings Inc                  15.99          19.06          24.85           57.29            30.26  
08/11/97  12/19/97  Amscan Holdings Inc                 36.08          37.50          46.67                            23.36  
08/11/97  09/30/97  National Sanitary Supply Co         (6.67)         20.00          47.37                                   
08/11/97  12/22/97  Vacation Break USA Inc              41.57          39.09          95.75           80.18           147.75  
08/12/97  09/17/97  Isomedix Inc                         5.81          15.49          13.89           47.75            38.98  
08/12/97  03/03/98  LIN Television Corp                 15.85          18.75          18.01                                   

Page F-10

Merger Premiums to Market Value Analysis
Mergers with Target Price Equal to or Greater than $10 per Share
Announced and Completed 1/1/96-10/9/98
(continued)
- --------------------------------------------------------------------------------

Date       Date
Announced Effective Target Name                        Target Business Description     Acquiror Name
- ---------------------------------------------------------------------------------------------------------------------------------

08/14/97  12/13/97  Allied Capital Commercial Corp     Real estate investment trusts   Allied Capital Lending Corp   
08/14/97  12/31/97  Allied Capital Corp                Pvd bus, personal fin svcs      Allied Capital Lending Corp   
08/14/97  09/16/97  American Medserve Corp             Wholesale pharmaceuticals       Omnicare Inc                  
08/14/97  09/24/97  Talbert Medical Management         Own, op medical, dental clinics MedPartners Inc               
08/14/97  12/29/97  Tuesday Morning Corp               Own, operate giftware stores    Madison Dearborn Partners     
08/14/97  12/05/97  Uniforce Services Inc              Pvd temporary personnel svcs    Comforce Corp                 
08/18/97  11/04/97  Monterey Resources Inc             Oil and gas exploration, prodn  Texaco Inc                    
08/21/97  01/14/98  Boston Technology Inc              Mnfr voice processing systems   Comverse Technology Inc       
08/25/97  10/21/97  ACC Consumer Finance Corp          Pvd auto financing services     Household International Inc   
08/25/97  12/17/97  Mosince Paper Corp                 Manufacture paper               Wausau Paper Mills            
08/26/97  12/22/97  Savannah Foods & Industries        Produce sugar, sugar by-prod    Imperial Holly Corp           
08/28/97  12/23/97  Evans Withycombe Residential       Real estate investment trust    Equity Residential Pptys Trust
08/28/97  02/25/98  Value Property Trust               Real estate investment trust    Wellsford Real Properties Inc 
08/28/97  10/10/97  Versa Technologies Inc             Mnfr rubber components, molds   Applied Power Inc             
08/29/97  12/29/97  Rexel Inc                          Whl electrical components       Rexel SA (Pinault-Printemps)  
09/03/97  12/30/97  Zytec Corp                         Mnfr electric power supplies    Computer Products Inc         
09/04/97  01/09/98  Hudson Foods Inc                   Produce poultry products        Tyson Foods Inc               
09/05/97  11/26/97  Medic Computer Systems Inc         Pvd mgmt info sys design svcs   Misys PLC                     
09/05/97  01/16/98  Technology Modeling Assoc Inc      Dvlp simulation software        Avant! Corp                   
09/08/97  02/02/98  CompuServe Inc (H&R Block)         Internet service provider       WorldCom Inc                  
09/08/97  12/31/97  Fuqua Enterprises Inc              Manufacture tanned leather      Graham-Field Health Products  
09/10/97  11/28/97  Data Documents Inc                 Manufacture tabulating cards    Corporate Express Inc         
09/10/97  12/02/97  Tinsley Laboratories Inc           Mnfr optical instr, lenses      Silicon Valley Group Inc      
09/11/97  12/22/97  Fieldcrest Cannon Inc              Mnfr broadwoven fabrics         Pillowtex Corp                
09/12/97  12/09/97  Unison Software Inc                Develop network mgmt software   Tivoli Systems Inc (IBM Corp) 
09/12/97  01/16/98  WHG Resort & Casino Inc            Own, op resorts and casino      Patriot Amer Hosp/Wyndham Intl
09/12/97  02/25/98  Western National Corp              Insurance holding co            American General Corp         
09/15/97  12/19/97  Beacon Properties Corp             Real estate investment trust    Equity Office Properties Trust
09/16/97  11/04/97  All American Communications        Pvd motion picture & video svc  Pearson PLC                   
09/16/97  02/02/98  Quick & Reilly Group Inc           Securities brokerage firm       Fleet Financial Group Inc, MA 
09/18/97  12/16/97  Guaranty National Corp             Insurance company               Orion Capital Corp            
09/18/97  12/22/97  USLD Communications Corp           Pvd long distance commun svcs   LCI International Inc         
09/19/97  01/16/98  Sterling Electronics Corp          Whl electronic components       Marshall Industries           
09/21/97  12/16/97  Computer Data Systems Inc          Design computer program data    Affiliated Computer Services  
09/22/97  12/05/97  Washington National Corp           Insurance company               Conseco Inc                   
09/23/97  01/12/98  Tejas Gas Corp                     Own, op natural gas lines       Shell Oil (Royal Dutch Petro) 
09/24/97  11/24/97  Allergan Ligand Retinoid           Manufacture pharmaceuticals     Ligand Pharmaceuticals Inc    
09/24/97  12/12/97  Game Financial Corp                Pvd fund access svcs            Travelers Express Co (Viad)   
09/24/97  11/28/97  Salomon Inc                        Investment bank, finl advisory  Travelers Group Inc           
09/25/97  02/19/98  Talley Industries Inc              Mnfr guided missiles, space veh Carpenter Technology Corp     
09/29/97  12/22/97  Graphic Industries Inc             Pvd financial printing svcs     Wallace Computer Services Inc 
09/29/97  12/23/97  HPR Inc                            Pvd computer programming svcs   HBO & Co                      
09/29/97  12/01/97  Morningstar Group Inc              Produce dairy products          Suiza Foods Corp              
09/30/97  11/26/97  Arbor Health Care Co               Own and operate nursing homes   AHC Acquisition Corp          
10/01/97  01/29/98  Brooks Fiber Properties Inc        Pvd communication installation  WorldCom Inc                  
10/01/97  09/14/98  MCI Communications Corp            Pvd telecommunication services  WorldCom Inc                  
10/02/97  04/30/98  Kapson Senior Quarters Corp        Provide residential care svcs   Prometheus Senior Quarters    
10/03/97  12/29/97  Natl Health Enhancement Sys        Develop healthcare software     HBO & Co                      
10/06/97  01/28/98  Caliber Systems Inc                Trucking holding company        FDX Corp                      
10/06/97  12/19/97  EndoVascular Technologies Inc      Mnfr surgical instruments       Guidant Corp                  
10/06/97  03/20/98  Orion Network Systems Inc          Pvd Communications svcs         Loral Space & Communications  
10/08/97  04/07/98  Associates First Capital Corp      Pvd finance, leasing services   Shareholders                  
10/09/97  12/23/97  Melamine Chemicals Inc             Manufacture melamine crystal    Borden Chemical Inc (Borden)  
10/10/97  11/19/97  Greenfield Industries Inc          Mnfr steel cutting tools        Kennametal Inc                
10/13/97  01/22/98  Netcom On-Line Communication       Internet service provider       ICG Communications Inc        
10/13/97  12/01/97  Network General Corp               Pvd computer sys design svcs    McAfee Associates Inc         
10/15/97  12/04/97  Viewlogic Systems Inc              Dvlp automation software        Synopsys Inc                  
10/16/97  02/12/98  Omni Insurance Group Inc           Insurance company               Hartford Financial Services   
10/17/97  12/29/97  Computational Systems Inc          Manufacture measuring devices   Emerson Electric Co           
10/17/97  11/19/97  Exide Electronics Group Inc        Manufacture power supplies      BTR PLC                       
10/17/97  01/02/98  Infinity Financial Technology      Dvlp financial software         SunGard Data Systems Inc      
10/20/97  02/24/98  ITT Corp                           Own and operate hotels          Starwood Hotels & Resorts     
10/20/97  03/06/98  Santa Fe Pacific Pipeline          Operate petroleum pipelines     Kinder Morgan Energy Partners 
10/20/97  06/24/98  Ticketmaster Group Inc             Own, operate ticket agencies    HSN Inc                       
10/21/97  01/07/98  International Dairy Queen Inc      Whl dairy desserts, hamburgers  Berkshire Hathaway Inc        
10/23/97  12/19/97  Premenos Technology Corp           Develop EDT software            Harbinger Corp                

Value of    Enterprise
Date       Date                                        Acquiror                        Transaction    Value
Announced Effective Target Name                        Business Description              ($ mil)      ($ mil)
- ---------------------------------------------------------------------------------------------------------------------------------

08/14/97  12/13/97  Allied Capital Commercial Corp    Closed-end mgmt investment co     381.30       621.24  
08/14/97  12/31/97  Allied Capital Corp               CLosed-end mgmt investment co     130.00       210.64  
08/14/97  09/16/97  American Medserve Corp            Whl, retail pharmaceuticals       233.20       240.47  
08/14/97  09/24/97  Talbert Medical Management        Pvd medical services to HMO's     189.00            
08/14/97  12/29/97  Tuesday Morning Corp              Investors                         298.60       337.36  
08/14/97  12/05/97  Uniforce Services Inc             Pvd help supply services          140.70       133.72  
08/18/97  11/04/97  Monterey Resources Inc            Oil and gas exploration, prodn  1,435.30     1,320.89  
08/21/97  01/14/98  Boston Technology Inc             Mnfr telecommunication equip      873.90       906.34  
08/25/97  10/21/97  ACC Consumer Finance Corp         Provide financial services        186.90       219.83  
08/25/97  12/17/97  Mosince Paper Corp                Manufacture, wholesale paper      446.30       512.46  
08/26/97  12/22/97  Savannah Foods & Industries       Produce sugar                     582.90       609.91  
08/28/97  12/23/97  Evans Withycombe Residential      Real estate investment trust      932.40     1,068.03  
08/28/97  02/25/98  Value Property Trust              Real estate investment trust      186.60       163.55  
08/28/97  10/10/97  Versa Technologies Inc            Mnfr tools, equip, consumables    141.90       140.65  
08/29/97  12/29/97  Rexel Inc                         Whl radios, televisions           302.00       647.89  
09/03/97  12/30/97  Zytec Corp                        Design, mnfr electronic prod      412.30       428.02  
09/04/97  01/09/98  Hudson foods Inc                  Poultry, meat processing          648.40     1,021.87  
09/05/97  11/26/97  Medic Computer Systems Inc        Manufacture computers             915.80       882.60  
09/05/97  01/16/98  Technology Modeling Assoc Inc     Develop software                  144.30       140.54  
09/08/97  02/02/98  CompuServe Inc (H&R Block)        Pvd telecommunication svcs      1,185.90     1,052.17  
09/08/97  12/31/97  Fuqua Enterprises Inc             Mnfr medical supply, healthcare   231.00       229.95  
09/10/97  11/28/97  Data Documents Inc                Retail office supplies            159.40       212.19  
09/10/97  12/02/97  Tinsley Laboratories Inc          Mnfr semiconductor equipment       40.50        40.89  
09/11/97  12/22/97  Fieldcrest Cannon Inc             Mnfr, whl home textile products   768.20       787.17  
09/12/97  12/09/97  Unison software Inc               Dvlp systems mgmt software        183.00       180.26  
09/12/97  01/16/98  WHG Resort & Casino Inc           Real estate investment trust      266.00       169.94  
09/12/97  02/25/98  Western National Corp             Insurance holding company       1,215.00     2,340.92  
09/15/97  12/19/97  Beacon Properties Corp            Real estate investment trust    4,039.40     3,358.85  
09/16/97  11/04/97  All American Communications       Publish newspapers, periodicals   500.20       498.59  
09/16/97  02/02/98  Quick & Reilly Group Inc          Bank holding company            1,525.50     1,440.08  
09/18/97  12/16/97  Guaranty National Corp            Insurance company; holding co     117.20       647.41  
09/18/97  12/22/97  USLD Communications Corp          Pvd telecommunications svcs       402.80       407.07  
09/19/97  01/16/98  Sterling Electronics Corp         Whl electronic components         217.60       208.73  
09/21/97  12/16/97  Computer Data Systems Inc         Pvd date processing services      383.70       389.58  
09/22/97  12/05/97  Washington National Corp          Insurance holding company         424.00       433.68  
09/23/97  01/12/98  Tejas Gas Corp                    Oil and gas exploration, prodn  2,165.60     2,203.96  
09/24/97  11/24/97  Allergan Ligand Retinoid          Manufacture diagnostic tests       71.40        39.70  
09/24/97  12/12/97  Game Financial Corp               Pvd money order issuance svcs      50.60        42.63  
09/24/97  11/28/97  Salomon Inc                       Insurance firm                  8,852.10   141,077.45  
09/25/97  02/19/98  Talley Industries Inc             Mnfr zirconium, steel products    309.40       264.39  
09/29/97  12/22/97  Graphic Industries Inc            Mnfr manifold business forms      424.50       418.75  
09/29/97  12/23/97  HPR Inc                           Dvlp healthcare software          389.60       376.01  
09/29/97  12/01/97  Morningstar Group Inc             Produce milk, related prod        972.00       932.58  
09/30/97  11/26/97  Arbor Health Care Co              Investment holding company        424.20       419.33  
10/01/97  01/29/98  Brooks Fiber Properties Inc       Pvd telecommunication svcs      2,532.60     3,112.89  
10/01/97  09/14/98  MCI Communications Corp           Pvd telecommunication svcs     41,906.90    43,588.51  
10/02/97  04/30/98  Kapson Senior Quarters Corp       Pvd nursing care services         247.40       231.85  
10/03/97  12/29/97  Natl Health Enhancement Sys       Devlp healthcare software          97.80        96.52  
10/06/97  01/28/98  Caliber Systems Inc               Provide express delivery svcs   2,471.40     2,681.17  
10/06/97  12/19/97  EndoVascular Technologies Inc     Mnfr cardiovascular equipment     187.80       190.46  
10/06/97  03/20/98  Orion Network Systems Inc         Manufacture satellite equip       425.60     1,265.08  
10/08/97  04/07/98  Associates First Capital Corp     Investor Group                 26,624.60    75,189.21  
10/09/97  12/23/97  Melamine Chemicals Inc            Mnfr formaldehyde, resins         119.70        87.78  
10/10/97  11/19/97  Greenfield Industries Inc         Mnfr metalworking tools           957.00     1,062.17  
10/13/97  01/22/98  Netcom On-Line Communication      Pvt telecommunications svcs       269.40       214.02  
10/13/97  12/01/97  Network General Corp              Develop network software        1,142.50     1,113.34  
10/15/97  12/04/97  Viewlogic Systems Inc             Develop automation software       530.90       492.99  
10/16/97  02/12/98  Omni Insurance Group Inc          Provide insurance services        184.70       184.72  
10/17/97  12/29/97  Computational Systems Inc         Mnfr appliance componments        158.60       160.45  
10/17/97  11/19/97  Exide Electronics Group Inc       Mnfr plastic, rubber,indl prods   583.20       590.91
10/17/97  01/02/98  Infinity Financial Technology     Provide data processing svcs      358.00       347.76  
10/20/97  02/24/98  ITT Corp                          Real estate investment trust   13,748.20    13,534.84  
10/20/97  03/06/98  Santa Fe Pacific Pipeline         Operate natural gas pipelines   1,473.00     1,352.15  
10/20/97  06/24/98  Ticketmaster Group Inc            Operate television stations       413.20       845.30  
10/21/97  01/07/98  International Dairy Queen Inc     Property, casualty insurance co   596.90       558.69  
10/23/97  12/19/97  Premenos Technology Corp          Dvle elctn commerce software      234.70       211.13  

1 Day      1 Week     4 Weeks   3 Months   1 Year    
Date       Date                                         Prior to   Prior to   Prior to   Prior to   Prior to 
Announced  Effective Target Business Description       Annc. Date Annc. Date Annc. Date Annc. Date Annc. Date 
- ------------------------------------------------------------------------------------------------------------------------

08/14/97  12/13/97  Allied Capital Commercial Corp        7.49      7.77       10.64      18.18      8.90  
08/14/97  12/31/97  Allied Capital Corp                   7.83      7.83        9.10      19.93     23.12  
08/14/97  09/16/97  American Medserve Corp                2.49     16.13       25.76                       
08/14/97  09/24/97  Talbert Medical Management           10.53     18.87       36.96                72.60
08/14/97  12/29/97  Tuesday Morning Corp                 22.70     25.79       11.11     197.03     28.21  
08/14/97  12/05/97  Uniforce Services Inc                37.56     37.56       52.62      48.23    101.50  
08/18/97  11/04/97  Monterey Resources Inc               39.42     39.42       54.13                30.23  
08/21/97  01/14/98  Boston Technology Inc                (0.32)    16.22       10.37     103.42     15.71  
08/25/97  10/21/97  ACC Consumer Finance Corp            35.82     34.75       29.64     125.16     96.69  
08/25/97  12/17/97  Mosince Paper Corp                   15.62     15.91        5.64      52.89     11.73  
08/26/97  12/22/97  Savannah Foods & Industries           8.36     14.89       17.39      65.31     31.71  
08/28/97  12/23/97  Evans Withycombe Residential         14.16     21.39       18.88      21.40     22.88  
08/28/97  02/25/98  Value Property Trust                 24.99     20.90       18.68      32.00     25.59  
08/28/97  10/10/97  Versa Technologies Inc               36.81     33.11       31.33      72.84     72.84  
08/29/97  12/29/97  Rexel Inc                            19.21     26.32       21.62      62.16     23.29  
09/03/97  12/30/97  Zytec Corp                           45.35     48.22       71.17               283.18  
09/04/97  01/09/98  Hudson Foods Inc                     23.49     31.63       28.64      51.64     25.81  
09/05/97  11/26/97  Medic Computer Systems Inc            7.69     12.00       25.00      17.15     89.19  
09/05/97  01/16/98  Technology Modeling Assoc Inc        29.52     52.81       43.16                36.00  
09/08/97  02/02/98  CompuServe Inc (H&R Block)            1.39      2.92        8.36       1.39     16.36  
09/08/97  12/31/97  Fuqua enterprises Inc                42.32     52.82       78.75      57.24     81.87  
09/10/97  11/28/97  Data Documents Inc                   10.91     14.87       26.13      53.14     26.12  
09/10/97  12/02/97  Tinsley Laboratories Inc             96.36     96.36       96.36     301.64    132.53  
09/11/97  12/22/97  Fieldcrest Cannon Inc                 1.49      8.58       31.72      86.30     76.62  
09/12/97  12/09/97  Unison Software Inc                   9.09     25.00       22.45       4.65    100.00  
09/12/97  01/16/98  WHG Resort & Casino Inc              35.08     72.35       78.50               117.30  
09/12/97  02/25/98  Western National Corp                 9.58      7.43       14.41      68.88     13.62  
09/15/97  12/19/97  Beacon Properties Corp               28.39     30.62       30.85      69.44     45.80  
09/16/97  11/04/97  All American                         12.71     41.67       37.84     175.68    100.00  
09/16/97  02/02/98  Quick & Reilly Group Inc             18.23     33.10       69.63     103.58     60.91  
09/18/97  12/16/97  Guaranty National Corp               10.77     23.87       27.72     125.00     44.00  
09/18/97  12/22/97  USLD Communications Corp             18.86     34.13                 120.92     40.10  
09/19/97  01/16/98  Sterling Electronics Corp            16.26     30.23       57.01      91.74     69.70  
09/21/97  12/16/97  Computer Data Systems Inc            42.54     47.63       73.68     129.64     84.54  
09/22/97  12/05/97  Washington National Corp              2.70      4.11       12.24      10.37     17.70  
09/23/97  01/12/98  Tejas Gas Corp                       24.09     22.39       33.70      75.71     50.23  
09/24/97  11/24/97  Allergan Ligand Retinoid             13.03     11.59        7.83                       
09/24/97  12/12/97  Game Financial Corp                   4.88      4.88        4.88      10.26     11.69  
09/24/97  11/28/97  Salomon Inc                          21.43     24.09       34.60      77.50     44.76  
09/25/97  02/19/98  Talley Industries Inc                 6.67     10.98       34.27      54.84     34.27  
09/29/97  12/22/97  Graphic Industries Inc                8.75     19.18       34.88     155.88     65.71  
09/29/97  12/23/97  HPR Inc                              22.92     24.54       32.38      57.08     30.54  
09/29/97  12/01/97  Morningstar Group Inc                14.62     11.48       53.46                       
09/30/97  11/26/97  Arbor Health Care Co                 15.39     19.60       26.76      92.51     39.53  
10/01/97  01/29/98  Brooks Fiber Properties Inc          35.71     58.40       83.65     121.34     93.47  
10/01/97  09/14/98  MCI Communications Corp              65.17     63.55       58.10      96.15     20.35  
10/02/97  04/30/98  Kapson Senior Quarters Corp          (0.86)     9.43        1.75      45.00     34.88  
10/03/97  12/29/97  Natl Health Enhancement Sys          16.69     41.48      121.93      76.88     85.57  
10/06/97  01/28/98  Caliber Systems Inc                  13.90     19.72       42.57     284.73     68.28  
10/06/97  12/19/97  EndoVascular Technologies Inc        22.14     22.14       73.91      56.86     87.13  
10/06/97  03/20/98  Orion Network Systems Inc            20.16     27.94       32.62      91.91     68.16  
10/08/97  04/07/98  Associates First Capital Corp        32.67     36.32       31.24      96.48     39.00  
10/09/97  12/23/97  Melamine Chemicals Inc               70.83     72.63       70.83     177.97     46.43  
10/10/97  11/19/97  Greenfield Industries Inc            19.69     26.67       44.08      35.71     34.22  
10/13/97  01/22/98  Netcom On-Line Communication         49.75     70.94       78.52      51.00     64.73  
10/13/97  12/01/97  Network General Corp                 19.65     25.27       42.72                       
10/15/97  12/04/97  Viewlogic Systems Inc                24.44     25.14       29.48     215.49     82.11  
10/16/97  02/12/98  Omni Insurance Group Inc             78.87     75.78      130.91     252.78    154.00  
10/17/97  12/29/97  Computational Systems Inc            45.08     48.25       62.47      91.29    101.02  
10/17/97  11/19/97  Exide Electronics Group Inc         125.24    133.17      149.46     146.81     30.34  
10/17/97  01/02/98  Infinity Financial Technology        19.00     17.93       17.40                (0.09) 
10/20/97  02/24/98  ITT Corp                             94.29     98.25       95.40      98.83     34.12  
10/20/97  03/06/98  Santa Fe Pacific Pipeline            31.82     33.24       38.56      51.64     34.27  
10/20/97  06/24/98  Ticketmaster Group Inc               32.00     28.43       56.32                68.51  
10/21/97  01/07/98  International Dairy Queen Inc        11.92      9.09        9.37      35.00      8.54
10/23/97  12/19/97  Premenos Technology Corp             55.20     49.12       27.82       8.63    117.26  

Merger Premiums to Market Value Analysis
Mergers with Target Price Equal to or Greater than $10 per Share
Announced and Completed 1/1/96-10/9/98
(continued)

- ------------------------------------------------------------------------------------------------------------------------------------

Date      Date                                                                     
Announced Effective Target Name                    Target Business Description     Acquiror Name
- ------------------------------------------------------------------------------------------------------------------------------------

10/23/97  04/02/98  Universal Outdoor Holdings Inc Pvd outdoor advertising svcs     Clear Channel Communications     
10/29/97  01/30/98  Carson Pirie Scott & Co        Own, op department stores        Proffitt's Inc                   
10/31/97  03/12/98  ILC Technology Inc             Mnfr high intensity lamps        BEC Group Inc                    
10/31/97  02.27/98  Xpedite Systems Inc            Pvd enhanced fax services        Premiere Technologies Inc        
11/03/97  03/24/98  Oregon Metallurgical Corp      Mnfr, whl titanium               Allegheny Teledyne Inc           
11/03/97  01/09/98  Sequana Therapeutics           Mnfr diagnostic substances       Arris Pharmaceuticals Corp       
11/04/97  05/20/98  Safety-Kleen Corp (Laidlaw)    Pvd vehicular cleaning svcs      Laidlaw Environmental Services   
11/05/97  01/16/98  Mac Frugal's Bargains          Whl, ret general merchandise     Consolidated Stores Corp         
11/07/97  03/10/98  Quality Food Centers Inc       Own and operate supermarkets     Fred Meyer Inc                   
11/11/97  02/11/98  Healthdyne Technologies Inc    Mnfr specialized med devices     Respironics Inc                  
11/13/97  03/25/98  Chartwell Leisure Inc          Own, op hotels and motels        Investor Group                   
11/13/97  03/11/98  Hugoton Energy Corp            Oil and gas exploration prodn    Chesapeake Energy Corp           
11/17/97  02/26/98  Grantic Financial Inc          Pvd business credit services     Fidelity National Financial      
11/18/97  01/08/98  Jackson Hewitt                 Pvd tax preparation services     Cendant Corp                     
11/19/97  02/27/98  Amati Communications Corp      Mnfr data communications equip   Texas Instruments Inc            
11/19/97  04/01/98  Renal Treatment Centers Inc    Own, op kidney dialysis centers  Total Renal Care Holdings Inc    
11/19/97  08/12/98  Telemundo Group Inc            Own. op Spanish TV stations      Investor Group                   
11/21/97  01/28/98  BDM International Inc          Pvd comp info technology svcs    TRW Inc                          
11/24/97  03/30/98  MAPCO Inc                      Gas utility, petro refining      Williams Cos Inc                 
11/26/97  04/23/98  ACC Corp                       Pvd telecommunications svcs      Teleport Communications Group    
11/26/97  02/25/98  Universal Hospital Services    Pvd med equip rental services    Investor Group                   
11/28/97  12/30/97  Deflecta-Shield Corp           Mnfr truck accessories           Lund International Holdings      
12/01/97  02/19/98  Raptor Systems Inc             Develop security mgmt software   AXENT Technologies Inc           
12/02/97  06/02/98  Interstate Hotels Co           Own, op hotels and motels        Patriot Amer Hosp/Wyndam Ind     
12/11/97  01/20/98  TriMas Corp                    Mnfr specialty closures, caps    MascoTech Inc                    
12/12/97  05/29/98  Lukens Inc                     Mnfr steel plates                Bethlehem Steel Corp             
12/15/97  03/27/98  Gulf South Medical Supply Inc  Wholesale medical supplies       Physician Sales & Services Inc   
12/15/97  05/01/98  Piper Jaffray Cos              Investment bank; holding co      U.S. Bancorp, Minneapolis, MN    
12/15/97  03/02/98  Sano Corp                      Mnfr pharmaceuticals             Elan Corp PLC                    
12/16/97  05/08/98  Ambassador Apartments Inc      Real estate investment trust     Apartment Investment & Mgmt Co   
12/16/97  01/30/98  Spine-Tech Inc                 Mnfr spinal implants             Sulzer Medical (Gebrueder Sulzer)
12/17/97  04/08/98  Oasis Residential Inc          Real estate investment trust     Camden Property Trust            
12/17/97  01/23/98  Suburban Ostomy Supply Co Inc  Whl medical and hospital equip   InvaCare Corporation             
12/19/97  03/30/98  ASR Investments Corp           Real estate investment trust     United Dominion REalty Tr Inc    
12/19/97  06/17/98  Chemi-Trol Chemical Co         Mnfr steel pressure tanks        Harsco Corp                      
12/19/97  04/20/98  Continental Homes Holding      Construct, design homes          DR Horton Inc                    
12/19/97  05/01/98  IPC Information Systems Inc    Mnfr telecommunications equip    Cable Systems International      
12/19/97  06/04/98  Panavision Inc                 Mnfr camera systems              Mafco Holdings Inc               
12/19/97  01/20/98  Showboat Inc                   Own, operate hotel casinos       Harrah's Entertainment           
12/19/97  01/27/98  Software Artistry Inc          Develop help-desk software       Tivoli Systems Inc (IBM Corp)    
12/19/97  02/03/98  Synmetrics Industries Inc      Mnfr communications equip        Tel-Save Holdings                
12/22/97  05/21/98  Dynatech Corp                  Mnfr test, analysis products     Investor Group                   
12/22/97  09/30/98  Essex County Gas               Gas utility                      Eastern Enterprises              
12/23/97  04/01/98  Union Corp                     Pvd adjustment collection svcs   Outsourcing Solutions Inc        
01/01/98  07/31/98  GoodMark Foods Inc             Produce meat snacks              ConAgra Inc                      
01/05/98  07/17/98  La Quinta Inns Inc             Own, op motor inns               Medtrust Acquisition Co          
01/06/98  04/01/98  Schult Homes Corp              Manufacture mobile homes         Oakwood Homes Corp               
01/08/98  07/23/98  Teleport Communications Group  Pvd telecommunication services   AT&T Corp                        
01/12/98  02/19/98  Computer Language Research Inc Dvlp tax processing software     Research Institute of America    
01/14/98  06/01/98  Continental Can Co Inc         Mnfr metal, plastic cans         Suiza Foods Corp                 
01/14/98  06/19/98  Price REIT Inc                 Real estate investment trust     Kimco Realty Corp                
01/19/98  04/24/98  USF&G Corp                     Insurance holding company        St Paul Cos Inc                  
01/20/98  10/05/98  Buttrey Food and Drug Stores   Own, op supermarkets, drug store Albertson's Inc                  
01/20/98  04/16/98  NACT Telecommunications (GST)  Pvd telephone commun svcs        World Access Inc                 
01/20/98  05/27/98  Regal Cinemas Inc              Pvd movie exhibition services    Investor Group                   
01/21/98  05/22/98  Thermadyne Holdings Corp       Mnfr welding equip, indl mach    DLJ Merchant Bkg Partners II     
01/23/98  04/13/98  Handy & Harman                 Mnfr, whl metal wire, cable      WHX Corp                         
01/26/98  06/11/98  Digital Equipment Corp         Mnfr computers, equip            Compaq Computer Corp             
01/27/98  03/03/98  State of the Art Inc           Develop financial software       Sage Group PLC                   
02/02/98  03/27/98  BGS Systems Inc                Develop utilities software       BMC Software Inc                 
02/02/98  04/20/98  Source Services Corp           Provide help supply services     Romac International Inc          
02/04/98  03/20/98  Industrial Acoustics Inc       Mnfr noise reducing products     IAC Holdings Corp                
02/09/98  03/31/98  Arbor Drugs Inc                Own, operate drug stores         CVS Corp                         
02/09/98  06/15/98  Culligan Water Technologies    Mnfr, whl purification products  United States Filter Corp        
02/09/98  04/16/98  Summit Care Corp               Provide nursing services         Fountain View (Heritage)         
02/10/98  06/04/98  Illinois Central Corp          Railroad transportation svcs     Canadian National Railway Co     

- ------------------------------------------------------------------------------------------------------------------------------------
Value of         Enter-
Trans-           prise
Date      Date                                      Acquiror                          action           Value
Announced Effective Target Name                     Business Description              ($ mil)          ($ mil)
- ------------------------------------------------------------------------------------------------------------------------------------

10/23/97  04/02/98  Universal Outdoor Holdings Inc Own, op TV, radio bdscstg station   1,627.80        1,729.53
10/29/97  01/30/98  Carson Pirie Scott & Co        Own and operate dept stores           867.70          992.38
10/31/97  03/12/98  ILC Technology Inc             Mnfr, whl eyeglass lenses, frame      130.80          135.55
10/31/97  02.27/98  Xpedite Systems Inc            Pvd computer telephony svcs           496.40          468.79
11/03/97  03/24/98  Oregon Metallurgical Corp      Mnfr specialty materials, metal       557.20          566.80
11/03/97  01/09/98  Sequana Therapeutics           Manufacture synthetic drugs           169.40          169.97
11/04/97  05/20/98  Safety-Kleen Corp (Laidlaw)    Pvd waste removal svcs              1,804.00        2,054.95
11/05/97  01/16/98  Mac Frugal's Bargains          General merchandise ret stores        994.10        1,040.90
11/07/97  03/10/98  Quality Food Centers Inc       Own, operate department stores      1,703.40        1,671.77
11/11/97  02/11/98  Healthdyne Technologies Inc    Mnfr, whl respiratory prod            341.90          344.16
11/13/97  03/25/98  Chartwell Leisure Inc          Investor group                        240.80          272.75
11/13/97  03/11/98  Hugoton Energy Corp            Oil and gas exploration, prodn        377.00          377.46
11/17/97  02/26/98  Grantic Financial Inc          Title insurance company               132.40          151.93
11/18/97  01/08/98  Jackson Hewitt                 Provide discount club svcs            468.20          442.64
11/19/97  02/27/98  Amati Communications Corp      Mnfr semiconductors, computers        459.80          463.30
11/19/97  04/01/98  Renal Treatment Centers Inc    Pvd kidney dialysis services        1,362.60        1,457.03
11/19/97  08/12/98  Telemundo Group Inc            Investor group                        521.40          710.48
11/21/97  01/28/98  BDM International Inc          Elec equip, credit reporting          888.00          923.01
11/24/97  03/30/98  MAPCO Inc                      Gas utility                         2,634.10        3,405.65
11/26/97  04/23/98  ACC Corp                       Pvd telecommunication services        906.80          930.23
11/26/97  02/25/98  Universal Hospital Services    Investor group                        133.00          122.73
11/28/97  12/30/97  Deflecta-Shield Corp           Mnfr automobile parts                  89.80           87.26
12/01/97  02/19/98  Raptor Systems Inc             Develop software                      253.70          225.83
12/02/97  06/02/98  Interstate Hotels Co           Real estate investment trust        2,055.90        2,095.27
12/11/97  01/20/98  TriMas Corp                    Mnfr motor vehicle components         911.70        1,384.00
12/12/97  05/29/98  Lukens Inc                     Manufacture steel products            700.20          751.93
12/15/97  03/27/98  Gulf South Medical Supply Inc  Wholesale medical equipment           678.90          629.50
12/15/97  05/01/98  Piper Jaffray Cos              Bank holding company                  767.80          991.44
12/15/97  03/02/98  Sano Corp                      Mnfr drug delivery systems            396.80          395.98
12/16/97  05/08/98  Ambassador Apartments Inc      real estate investment trust          663.00          620.98
12/16/97  01/30/98  Spine-Tech Inc                 Mnfr medical implants                 621.10          618.51
12/17/97  04/08/98  Oasis Residential Inc          Real estate investment trust          395.20          825.51
12/17/97  01/23/98  Suburban Ostomy Supply Co Inc  Mnfr surgical, medical supplies       130.80          128.54
12/19/97  03/30/98  ASR Investments Corp           real estate investment trust          277.00          264.20
12/19/97  06/17/98  Chemi-Trol Chemical Co         Mnfr scaffolding, pipes                46.10           55.83
12/19/97  04/20/98  Continental Homes Holding      Construct residential bldgs           590.20          569.49
12/19/97  05/01/98  IPC Information Systems Inc    Mnfr telecommun equip                 201.70          252.03
12/19/97  06/04/98  Panavision Inc                 Mnfr toilet preparation               296.60           np   
12/19/97  01/20/98  Showboat Inc                   Own, op hotel casinos               1,147.60          987.48
12/19/97  01/27/98  Software Artistry Inc          Dvlp systems mgmt software            201.90          190.51
12/19/97  02/03/98  Synmetrics Industries Inc      ,Pvd telecommunications svcs           25.00           31.51
12/22/97  05/21/98  Dynatech Corp                  Investor group                        762.90          783.40
12/22/97  09/30/98  Essex County Gas               Gas utility holding company            79.20          117.58
12/23/97  04/01/98  Union Corp                     Pvd outsourcing svcs                  193.00          202.64
01/01/98  07/31/98  GoodMark Foods Inc             Produce meats, eggs, cooking oil      217.80          230.60
01/05/98  07/17/98  La Quinta Inns Inc             Real estate investment trust        2,907.50        3,040.50
01/06/98  04/01/98  Schult Homes Corp              Mnfr, ret factory-built homes         101.40          104.04
01/08/98  07/23/98  Teleport Communications Group  Own, op telecommunications sys     11,187.70        4,612.51
01/12/98  02/19/98  Computer Language Research Inc Publish tax law information           325.40          320.43
01/14/98  06/01/98  Continental Can Co Inc         Produce milk, related prod            330.50          334.44
01/14/98  06/19/98  Price REIT Inc                 Real estate investment trust          870.60          804.79
01/19/98  04/24/98  USF&G Corp                     Insurance holding company           3,782.20        3,382.59
01/20/98  10/05/98  Buttrey Food and Drug Stores   Supermarkets, department stores       139.20          175.71
01/20/98  04/16/98  NACT Telecommunications (GST)  Pvd telecommunication services         53.10          144.63
01/20/98  05/27/98  Regal Cinemas Inc              Investor group                      1,462.70        1,408.72
01/21/98  05/22/98  Thermadyne Holdings Corp       Merchant banking firm                 790.00          742.65
01/23/98  04/13/98  Handy & Harman                 Mnfr steel and steel prods            625.10          613.20
01/26/98  06/11/98  Digital Equipment Corp         Manufacture personal computers      9,123.70           8,620
01/27/98  03/03/98  State of the Art Inc           Dvlp, whl accounting software         245.20          244.44
02/02/98  03/27/98  BGS Systems Inc                Develop software                      306.90          288.51
02/02/98  04/20/98  Source Services Corp           Pvd specialty staffing svcs           454.40          431.09
02/04/98  03/20/98  Industrial Acoustics Inc       Investment company                     25.30           48.96
02/09/98  03/31/98  Arbor Drugs Inc                Own and operate drug stores         1,423.30          957.18
02/09/98  06/15/98  Culligan Water Technologies    Mnfr water treatment equip          1,474.30        1,927.57
02/09/98  04/16/98  Summit Care Corp               Own, op healthcare facilities         275.10          276.92
02/10/98  06/04/98  Illinois Central Corp          Pvd railroad services               2,931.00        2,996.58

- ------------------------------------------------------------------------------------------------------------------------------------
Premium
----------------------------------------------------------------------------------
Date      Date                                     1 Day Prior     1 Week Prior    4 Weeks Prior  3 Months Prior    1 Year Prior   
Announced Effective Target Name                   to Annc. Date   to Annc. Date    to Annc. Date  to Annc. Date     to Annc. Date 
- ------------------------------------------------------------------------------------------------------------------------------------

10/23/97  04/02/98  Universal Outdoor Holdings Inc     2.32           5.17            20.46           20.65             21.75  
10/29/97  01/30/98  Carson Pirie Scott & Co           38.83          39.30            31.80          109.29             56.87  
10/31/97  03/12/98  ILC Technology Inc               108.72         107.62           108.72          125.56            128.19  
10/31/97  02.27/98  Xpedite Systems Inc               69.02          73.02            68.05           78.29             73.02  
11/03/97  03/24/98  Oregon Metallurgical Corp         45.50          61.66            40.62            9.12             35.05  
11/03/97  01/09/98  Sequana Therapeutics              44.00          47.27            23.43            6.23             82.54  
11/04/97  05/20/98  Safety-Kleen Corp (Laidlaw)       26.16          38.06            47.32                                    
11/05/97  01/16/98  Mac Frugal's Bargains              2.92          18.49            23.46           62.78             33.31  
11/07/97  03/10/98  Quality Food Centers Inc          13.86          23.43            27.96           46.76             42.28  
11/11/97  02/11/98  Healthdyne Technologies Inc       44.36          40.15            44.36          166.67             44.36  
11/13/97  03/25/98  Chartwell Leisure Inc             11.29           4.55            11.29           25.45             12.20  
11/13/97  03/11/98  Hugoton Energy Corp                7.68          11.04            26.91           52.34             12.25  
11/17/97  02/26/98  Grantic Financial Inc             89.79          89.79            87.61          155.00             87.59  
11/18/97  01/08/98  Jackson Hewitt                    26.51          21.70            47.83        1,600.00            156.60  
11/19/97  02/27/98  Amati Communications Corp         31.69          44.14            13.48           13.58             26.48  
11/19/97  04/01/98  Renal Treatment Centers Inc      8.63           17.04            26.87         64.55             16.63     
11/19/97  08/12/98  Telemundo Group Inc               19.66          29.07            24.96           47.72             30.76  
11/21/97  01/28/98  BDM International Inc             31.11          43.47            38.01           19.19             13.46  
11/24/97  03/30/98  MAPCO Inc                         21.05          35.99            43.66           36.24             53.83  
11/26/97  04/23/98  ACC Corp                          14.94          19.05            84.33           65.29             71.67  
11/26/97  02/25/98  Universal Hospital Services       29.17          29.17            25.25           67.57             26.53  
11/28/97  12/30/97  Deflecta-Shield Corp              33.33          33.33            77.78           82.86             70.67  
12/01/97  02/19/98  Raptor Systems Inc                 5.40          20.73            16.49          (24.55)            22.40  
12/02/97  06/02/98  Interstate Hotels Co               2.56           8.70            27.39           45.63             30.15  
12/11/97  01/20/98  TriMas Corp                       12.65           9.96            18.97           42.27             13.58  
12/12/97  05/29/98  Lukens Inc                        92.00          94.33            69.61           64.38             48.61  
12/15/97  03/27/98  Gulf South Medical Supply Inc     38.50          21.97            16.04           36.44             49.07  
12/15/97  05/01/98  Piper Jaffray Cos                 25.21          24.17            54.01          132.81             44.66  
12/15/97  03/02/98  Sano Corp                         52.71          42.64            95.13          105.08             71.32  
12/16/97  05/08/98  Ambassador Apartments Inc          4.44           5.42             5.42            4.10            (13.30) 
12/16/97  01/30/98  Spine-Tech Inc                    14.29          52.94            55.81          121.28             16.20  
12/17/97  04/08/98  Oasis Residential Inc              9.47          10.72             7.95           12.32             (2.60) 
12/17/97  01/23/98  Suburban Ostomy Supply Co Inc      8.05          13.25            13.25            2.17             22.08  
12/19/97  03/30/98  ASR Investments Corp               4.38           1.09             2.56            3.76             (5.16) 
12/19/97  06/17/98  Chemi-Trol Chemical Co            61.40          61.40            64.29          113.95             75.24  
12/19/97  04/20/98  Continental Homes Holding         26.28          27.64            35.97          114.69             61.02  
12/19/97  05/01/98  IPC Information Systems Inc       14.29          31.25            14.29          182.35            100.00  
12/19/97  06/04/98  Panavision Inc                                    3.42            19.10           24.71             21.14  
12/19/97  01/20/98  Showboat Inc                                     66.78            62.91           67.35             50.46  
12/19/97  01/27/98  Software Artistry Inc                            61.98            57.43          237.93             67.52  
12/19/97  02/03/98  Synmetrics Industries Inc                        36.36           172.73          110.53            114.29  
12/22/97  05/21/98  Dynatech Corp                     29.93          37.16            29.93          (41.41)           (42.38) 
12/22/97  09/30/98  Essex County Gas                  26.56          55.46            61.17           97.44             74.73  
12/23/97  04/01/98  Union Corp                        14.55          13.51            23.53           41.57             29.90  
01/01/98  07/31/98  GoodMark Foods Inc                54.49          75.88            69.36           73.21             68.12  
01/05/98  07/17/98  La Quinta Inns Inc                28.40          35.95            35.95           41.50             47.00  
01/06/98  04/01/98  Schult Homes Corp                  1.12          10.43            19.21           15.51             25.00  
01/08/98  07/23/98  Teleport Communications Group     (2.45)          1.72            16.96           76.12             20.38  
01/12/98  02/19/98  Computer Language Research Inc    60.71          62.16            69.81          767.47          1,025.00  
01/14/98  06/01/98  Continental Can Co Inc            45.83          74.37            71.16          198.35             72.98  
01/14/98  06/19/98  Price REIT Inc                    13.48          14.33            18.21           26.42             17.50  
01/19/98  04/24/98  USF&G Corp                        18.19          22.47            14.51           18.55             17.52  
01/20/98  10/05/98  Buttrey Food and Drug Stores      44.19          44.19            47.62           89.31             39.33  
01/20/98  04/16/98  NACT Telecommunications (GST)     12.00          12.45            16.67                             20.69  
01/20/98  05/27/98  Regal Cinemas Inc                 14.29          10.71            34.78           29.17             19.23  
01/21/98  05/22/98  Thermadyne Holdings Corp          19.48          21.05            18.46           30.19             15.72  
01/23/98  04/13/98  Handy & Harman                     8.67          14.63             1.62          118.60             30.56  
01/26/98  06/11/98  Digital Equipment Corp            32.06          50.25            62.45           61.07             25.65  
01/27/98  03/03/98  State of the Art Inc              33.33          35.39            35.39           57.14             38.58  
02/02/98  03/27/98  BGS Systems Inc                   23.29          32.35            42.86           57.89             37.93  
02/02/98  04/20/98  Source Services Corp              51.12          56.69            50.24          140.98             59.65  
02/04/98  03/20/98  Industrial Acoustics Inc              0           4.76            10.00            2.33             10.00  
02/09/98  03/31/98  Arbor Drugs Inc                    1.86          14.12            18.13           82.45             30.81  
02/09/98  06/15/98  Culligan Water Technologies       57.49          62.89            27.35           56.96             43.47  
02/09/98  04/16/98  Summit Care Corp                  14.29          31.25            37.71           97.65             27.27  
02/10/98  06/04/98  Illinois Central Corp             10.64          20.00            18.86           17.74              8.71  

F-12

Merger Premiums to Market Value Analysis
Mergers with Target Price Equal to or Greater than $10 per Share
Announced and Completed 1/1/96-10/9/98
(continued)

- ------------------------------------------------------------------------------------------------------------------------------------

Date      Date                                                                     
Announced Effective Target Name                    Target Business Description     Acquiror Name
- ------------------------------------------------------------------------------------------------------------------------------------

02/11/98  06/10/98  MTL Inc                        Pvd tank truck carrier svcs     Sombrero Acquisition Corp      
02/11/98  05/20/98  Waverly Inc                    Publish books, periodicals      Wotlers Kluwer NV              
02/16/98  08/04/98  Coherent Communications Sys    Mnfr voice enhancement prods    Tellabs Inc                    
02/17/98  05/27/98  Devon Group Inc                Pvd graphic arts services       Applied Graphics Technologies  
02/17/98  06/11/98  Zurn Industries Inc            Mnfr environmental equipment    US Industries Inc              
02/18/98  06/27/98  Republic Automotive Parts Inc  Mnfr, who automotive parts      Keystone Automotive Inds Inc   
02/19/98  04/21/98  Mastering Inc                  Provide computer training svcs  PLATINUM Technology Inc        
02/23/98  06/30/98  Money Store Inc.               Provide mtg svcs, loans         First Union Corp, Charlotte, NC
02/23/98  04/28/98  Trusted Information Systems    Develop security software       Network Associates Inc         
02/24/98  04/06/98  Wonderware Corp                Dvlp process control software   Siehe PLC                      
02/26/98  09/30/98  Dresser Industries Inc         Mnfr oil & gas field machinery  Halliburton Co                  
03/02/98  08/03/98  Benchmarq Microelectronics Inc Mnfr microprocessors            Unitrode Corp                  
03/02/98  08/17/98  DeepTech International         Oil and gas exploration, prodn  El Paso Natural Gas Co         
03/02/98  05/19/98  Scopus Technology Inc          Dvlp Client/server software     Siebel Systems Inc             
03/03/98  05/27/98  EVI Weatherford Inc            Provide oil field services      EVI Inc                        
03/05/98  05/20/98  XL Connect Solutions Inc       Pvd integrated sys design svcs  Xerox Corp                     
03/06/98  07/31/98  Alumax Inc                     Mnfr aluminum products          Aluminum Co of America (Alcoa) 
03/09/98  06/05/98  LCI International Inc          Pvd telecommunications svcs     Qwest Communications Corp                        

03/09/98  06/25/98  PriCellular Corp               Pvd cellular telephone svcs     American Cellular Corp         
03/10/98  06/05/98  Portec Inc                     Mnfr railroad track components  J Richard Industries Inc       
03/11/98  07/16/98  Waste Management Inc           Pvd chemical waste mgmt svcs    USA Waste Services Inc         
03/12/98  04/20/98  Metromail Corp                 Pvd direct-mail advg svcs       Great Universal Stores PLC     
03/13/98  07/31/98  MedCath Inc                    Pvd cardiology related svcs     Investor Group                 
03/16/98  08/03/98  American General Hospitality   Real estate investment trust    CapStar Hotel Co               
03/16/98  05/28/98  Logic Works Inc                Develop client/server software  PLATINUM Technology Inc        
03/16/98  07/01/98  360 Communications Co          Pvd telecommunication svcs      ALLTEL Corp                    
03/17/98  07/31/98  BET Holdings Inc               Own and operate TV stations     Investor Group                 
03/17/98  05/27/98  ForeFront Group Inc            Develop software                CBT Group PLC                  
03/18/98 06/30/98   Medusa Corp                    Manufacture cement              Southdown Inc                  
03/24/98  08/17/98  Insilco Corp                   Mnfr auto, elec, & electn parts DLJ Merchant Bkg Partners II   
03/24/98  06/24/98  Walsh International Inc        Provide programming svcs        Cognizant Corp                 
03/27/98  07/01/98  Grand Prix Assoc Of Long Beach Own, op motorsport facilities   Dover Downs Entertainment Inc  
03/27/98  07/15/98  Intl Specialty Prods           Mnfr speciality chemicals       ISP Holdings Inc               
03/30/98  05/11/98  Children's Discovery Centers   Operate child care centers      Knowledge Beginnings Inc       
04/02/98  06/30/98  Security Capital Atlantic Inc  Real estate investment trust    Security Capital Pacific Trust 
04/06/98  07/10/98  MoneyGram Payment Systems Inc  Pvd money wire transfer svcs    Viad Corp                      
04/06/98  07/31/98  Zero Corp                      Manufacture metal encasements   Applied Power Inc              
04/07/98  06/30/98  Beneficial Corp                Pvd consumer financing svcs     Household International Inc.        
04/07/98  06/30/98  Green Tree Financial Corp      Pvd consumer, coml finance svcs Conseco Inc                    
04/08/98  05/19/98  Blessings Corp                 Mnfr plastic film products      Huntsman Packaging Corp        
04/09/98  07/27/98  Claremont Technology Group Inc Pvd comp integrated sys svc     Complete Business Solutions    
04/09/98  05/15/98  Dart Group Corp                Own, operate auto part stores   Richfood Holdings Inc          
04/13/98  07/31/98  Mariner Health Group Inc       Provide sub-acute care svcs     Paragon Health Network Inc     
04/15/98  08/11/98  Harborside Healthcare Corp     Pvd long-term med services      Investcorp                     
04/16/98  09/28/98  Award Software International   Develop software                Phoenix Technologies Ltd       
04/17/98  07/21/98  XcelleNet Inc                  Dvlp remote computing software  Sterling Commerce Inc          
04/20/98  09/15/98  Atria Communities Inc          Provide residential care svcs   Kapson Senior Quarters Corp     
04/21/98  08/25/98  PCA International Inc          Pvd photo processing services   Investor Group                 
04/21/98  06/24/98  Tracor Inc                     Mnfr defense electronics        General Electric Co PLC        
04/27/98  07/09/98  Fluke Corp                     Mnfr electronic test equipment  Danaher Corp                   
04/27/98  08/30/98  Vitalink Pharmacy Services Inc Pvd health and allied svcs      Genesis Health Ventures Inc    
04/27/98  06/01/98  Yuric Systems Inc              Mnfr communications equip       Lucent Technologies Inc        
04/29/98  08/14/98  Neurex Corp                    Mnfr, whl biopharmaceuticals    Elan Corp PLC                  
05/04/98  07/09/98  Echlin Inc                     Mnfr, whl automotive parts      Dana Corp                      
05/04/98  06/29/98  Union Texas Petroleum Holdings Oil and gas exploration, prodn  ARCO                           
05/06/98  08/06/98  Mountbatten Inc                Surety insurance company        Fidelity & Deposit Co of MD    
05/08/98  06/15/98  Authentic Specialty Foods Inc  Whl, mnfr Mexican foods         Agrobios (Desc SA de CV)       
05/13/98  06/26/98  Sage Laboratories Inc          Mnfr electronic components      Filtronic Comick PLC           
05/14/98  09/25/98  New Plan Realty Trust          Real estate investment trust    Excel Realty Trust Inc         
05/18/98  08/19/98  Mercantile Stores Co Inc       Own, op department stores       Dillard's Inc                  
05/18/98  08/07/98  RP Scherer Corp                Mnfr soft gelatin capsules      Cardinal Health Inc            
05/18/98  08/26/98  Viking Office Products Inc     Whl. retail office products     Office Depot Inc.
05/25/98  10/01/98  US Surgical Corp               Manufacture surgical staples    Tyco International Ltd         
05/26/98  08/24/98  Hyperion Software Corp         Develop software                Arbor Software Corp            
05/27/98  09/17/98  May & Speh Inc                 Pvd computer-based direct mktg  Acxioin Corp                   
05/28/98  07/07/98  Donnelley Enterprise Solutions Pvd info management services    Bowne & Co Inc                 

- ------------------------------------------------------------------------------------------------------------------------------------
Value of         Enter-
Trans-           prise
Date      Date                                      Acquiror                          action           Value
Announced Effective Target Name                     Business Description              ($ mil)          ($ mil)
- ------------------------------------------------------------------------------------------------------------------------------------

02/11/98  06/10/98  MTL Inc                          Investment company                  250.10         250.36
02/11/98  05/20/98  Waverly Inc                      Publish newspapers,books            375.60         390.05
02/16/98  08/04/98  Coherent Communications Sys      Mnfr voice data transport sys       664.30         514.18
02/17/98  05/27/98  Devon Group Inc                  Pvd digital prepress services       474.40          25.32
02/17/98  06/11/98  Zurn Industries Inc              Mfnr consumer building prods        790.80         699.54
02/18/98  06/27/98  Republic Automotive Parts Inc    Whl auto parts and supplies          62.80          85.90
02/19/98  04/21/98  Mastering Inc                    Develop integrated software         198.70         180.54
02/23/98  06/30/98  Money Store Inc.                 Commercial bank holding co        2,215.20       3,631.37
02/23/98  04/28/98  Trusted Information Systems      Develop network software            322.10         255.45
02/24/98  04/06/98  Wonderware Corp                  Mnfr appliance controls            362.70         343.26
02/26/98  09/30/98  Dresser Industries Inc           Mnfr oil field machinery          7,783.20       8,429.13
03/02/98  08/03/98  Benchmarq Microelectronics Inc   Mnfr semiconductors, capacitors     150.60         145.10
03/02/98  08/17/98  DeepTech International           Oil and gas exploration, prodn      375.40         526.65
03/02/98  05/19/98  Scopus Technology Inc            Dvlp sales automation software      490.70         455.88
03/03/98  05/27/98  EVI Weatherford Inc              Mnfr oil field products           2,670.70       2,826.43
03/05/98  05/20/98  XL Connect Solutions Inc         Mnfr business machine; fin co        88.00         348.57
03/06/98  07/31/98  Alumax Inc                       manufacture aluminum products     3,944.20       3,698.41
03/09/98  06/05/98  LCI International Inc            Pvd telephone commun svcs         4,401.40       4,808.21
03/09/98  06/25/98  PriCellular Corp                 Pvd cellular common services      1,385.20       1,070.55
03/10/98  06/05/98  Portec Inc                       Investment firm                      76.50          79.77
03/11/98  07/16/98  Waste Management Inc             Pvd waste disposal services      13,313.60      19,980.86
03/12/98  04/20/98  Metromail Corp                   Own, op mail order house            837.90         830.34
03/13/98  07/31/98  MedCath Inc                      Investor group                      227.80         354.05
03/16/98  08/03/98  American General Hospitality     Own, operate hotels               1,211.80         979.19
03/16/98  05/28/98  Logic Works Inc                  Develop integrated software         212.90         190.35
03/16/98  07/01/98  360 Communications Co            Pvd telecommunication svcs        5,948.60       6,021.37
03/17/98  07/31/98  BET Holdings Inc                 Investor group                      462.30         768.07
03/17/98  05/27/98  ForeFront Group Inc              Dev educational software            147.50         127.13
03/18/98 06/30/98   Medusa Corp                      Mnfr cement; limestone mining     1,052.50       1,084.12
03/24/98  08/17/98  Insilco Corp                     Merchant banking firm               425.30         446.51
03/24/98  06/24/98  Walsh International Inc          pvd information services            176.80         179.22
03/27/98  07/01/98  Grand Prix Assoc Of Long Beach   Own, op race track, casinos          91.00         114.96
03/27/98  07/15/98  Intl Specialty Prods             Mnfr industrial chemicals           324.50       2,125.81
03/30/98  05/11/98  Children's Discovery Centers     Own, operate child care centers      89.10          98.06
04/02/98  06/30/98  Security Capital Atlantic Inc    Real estate investment trust      1,681.40       1,688.36
04/06/98  07/10/98  MoneyGram Payment Systems Inc    Provide food catering services      293.60         268.95
04/06/98  07/31/98  Zero Corp                        Mnfr tools, equip, consumables      431.60         456.24
04/07/98  06/30/98  Beneficial Corp                  Provide financial services        8,703.80      21,875.73
04/07/98  06/30/98  Green Tree Financial Corp        Insurance holding company         7,358.80       8,515.19
04/08/98  05/19/98  Blessings Corp                   Prod printed, laminated films       269.70         244.61
04/09/98  07/27/98  Claremont Technology Group Inc   Pvd computer programming svcs       282.50         278.53
04/09/98  05/15/98  Dart Group Corp                  Wholesale groceries                 193.30         565.17
04/13/98  07/31/98  Mariner Health Group Inc         Own, op nursing care facilities     622.30       1,089.72
04/15/98  08/11/98  Harborside Healthcare Corp       Investment firm                     263.20         280.42
04/16/98  09/28/98  Award Software International     Develop systems software            129.50         101.81
04/17/98  07/21/98  XcelleNet Inc                    Dvlp electn commerce software       214.30         196.34
04/20/98  09/15/98  Atria Communities Inc            Provide residential care svcs       238.90         501.89
04/21/98  08/25/98  PCA International Inc            Investor group                      210.40         268.01
04/21/98  06/24/98  Tracor Inc                       Mnfr radios and televisions       1,323.50       1,377.62
04/27/98  07/09/98  Fluke Corp                       Mnfr tools, control equipment       718.90         657.51
04/27/98  08/30/98  Vitalink Pharmacy Services Inc   Own, op geriatric facilities        678.40         680.28
04/27/98  06/01/98  Yuric Systems Inc                Mnfr telecom equip, software      1,044.10       1,002.06
04/29/98  08/14/98  Neurex Corp                      Mnfr drug delivery systems          824.50         800.83
05/04/98  07/09/98  Echlin Inc                       Mnfr motor vehicle products       4,124.80       4,345.06
05/04/98  06/29/98  Union Texas Petroleum Holdings   Oil and gas exploration, prodn    2,741.40       3,124.56
05/06/98  08/06/98  Mountbatten Inc                  Surety insurance co                  43.40          41.43
05/08/98  06/15/98  Authentic Specialty Foods Inc    Mnfr, whl foods products            141.90         148.06
05/13/98  06/26/98  Sage Laboratories Inc            Mnfr mobile telephone devices        20.20          16.61
05/14/98  09/25/98  New Plan Realty Trust            Real estate investment trust      1,715.30       2,270.33
05/18/98  08/19/98  Mercantile Stores Co Inc         Own, op department stores         2,943.10       3,022.02
05/18/98  08/07/98  RP Scherer Corp                  Whl pharmaceutical products       2,541.60       2,518.70
05/18/98  08/26/98  Viking Office Products Inc.      Own. op stationerly stores        3,082.20       3,049.42
05/25/98  10/01/98  US Surgical Corp                 Mnfr fire protection systems      3,394.20       3.969.78
05/26/98  08/24/98  Hyperion Software Corp           Dvlp software                       837.30         751.40
05/27/98  09/17/98  May & Speh Inc                   Provide on-line database svcs       502.50         526.15
05/28/98  07/07/98  Donnelley Enterprise Solutions   Pvd printing svcs                   105.20         114.54

- ------------------------------------------------------------------------------------------------------------------------------------
Premium
----------------------------------------------------------------------------------
Date      Date                                     1 Day Prior     1 Week Prior    4 Weeks Prior  3 Months Prior    1 Year Prior   
Announced Effective Target Name                   to Annc. Date   to Annc. Date    to Annc. Date  to Annc. Date     to Annc. Date 
- ------------------------------------------------------------------------------------------------------------------------------------

02/11/98  06/10/98  MTL Inc                          37.93         38.53            56.10           79.78           46.79 
02/11/98  05/20/98  Waverly Inc                      42.47         50.73            50.73           77.27           -3.11 
02/16/98  08/04/98  Coherent Communications Sys      30.36         43.23            81.37          104.76           40.24 
02/17/98  05/27/98  Devon Group Inc                  29.19         32.03            37.91          108.07           52.10 
02/17/98  06/11/98  Zurn Industries Inc              19.53         22.00            36.05           80.82           28.17 
02/18/98  06/27/98  Republic Automotive Parts Inc    33.03         33.33            28.57            9.09           20.00 
02/19/98  04/21/98  Mastering Inc                    31.58         25.00            33.33           -1.96           36.99 
02/23/98  06/30/98  Money Store Inc.                 37.26         28.50            87.43           25.81           34.20 
02/23/98  04/28/98  Trusted Information Systems      59.92         84.59            92.29           25.21          119.76 
02/24/98  04/06/98  Wonderware Corp                  50.00         59.34            79.44          125.88           32.41 
02/26/98  09/30/98  Dresser Industries Inc           13.73         15.03            18.32           43.09           17.73 
03/02/98  08/03/98  Benchmarq Microelectronics Inc   15.77         14.02            67.22            5.97            4.86 
03/02/98  08/17/98  DeepTech International            8.74          9.80            15.46          138.30           30.23 
03/02/98  05/19/98  Scopus Technology Inc            58.51         93.64           100.13            2.35           84.66 
03/03/98  05/27/98  EVI Weatherford Inc              39.85         59.59            41.33           74.50            6.18 
03/05/98  05/20/98  XL Connect Solutions Inc        -11.11         15.11            22.14          180.70           19.40 
03/06/98  07/31/98  Alumax Inc                       35.08         33.26            36.25           30.83           52.85 
03/09/98  06/05/98  LCI International Inc            22.18         24.21            54.84          133.33           55.20 
03/09/98  06/25/98  PriCellular Corp                  7.69         16.67            16.06           58.87           23.76 
03/10/98  06/05/98  Portec Inc                        8.48         13.78            10.35           43.82           13.27 
03/11/98  07/16/98  Waste Management Inc             12.62         15.78            15.78          -12.03            5.07 
03/12/98  04/20/98  Metromail Corp                   32.69         28.37            30.19          117.32           77.49 
03/13/98  07/31/98  MedCath Inc                      15.15         10.95            34.51           26.67           26.67 
03/16/98  08/03/98  American General Hospitality     56.60         58.43            52.01           27.67           37.49 
03/16/98  05/28/98  Logic Works Inc                  12.96         36.18            57.13          131.25           70.22 
03/16/98  07/01/98  360 Communications Co            15.41         30.39            49.84           84.49           68.97 
03/17/98  07/31/98  BET Holdings Inc                 53.66         58.49            58.24          109.13           17.76 
03/17/98  05/27/98  ForeFront Group Inc              17.27         29.36            48.50          258.63           81.91 
03/18/98  06/30/98  Medusa Corp                      17.16         24.29            35.28           60.58           53.29 
03/24/98  08/17/98  Insilco Corp                      4.65         11.11            12.85                                 
03/24/98  06/24/98  Walsh International Inc                        36.84            53.33          105.29           59.10 
03/27/98  07/01/98  Grand Prix Assoc Of Long Beach   11.81         22.06            21.55           42.21           31.37 
03/27/98  07/15/98  Intl Specialty Prods              4.29          1.74            14.51           43.14           22.18 
03/30/98  05/11/98  Children's Discovery Centers     20.99         16.67            25.64          139.02           28.95 
04/02/98  06/30/98  Security Capital Atlantic Inc    14.88         14.88            14.20           10.31           12.56 
04/06/98  07/10/98  MoneyGram Payment Systems Inc    11.49         15.67            42.36           87.57           61.40 
04/06/98  07/31/98  Zero Corp                        16.46         17.99            33.18           84.27           24.56 
04/07/98  06/30/98  Beneficial Corp                  82.38         82.10            86.06          131.23           84.34 
04/07/98  06/30/98  Green Tree Financial Corp        82.51         86.12            94.23           60.39          110.14 
04/08/98  05/19/98  Blessings Corp                   18.73         18.31            34.94          118.18           41.77 
04/09/98  07/27/98  Claremont Technology Group Inc   21.35         77.05           118.18           21.35           60.00 
04/09/98  05/15/98  Dart Group Corp                  14.29         11.89            19.40           71.81           46.79 
04/13/98  07/31/98  Mariner Health Group Inc          6.04         10.88            28.98          139.39           27.42 
04/15/98  08/11/98  Harborside Healthcare Corp       18.34         22.70             5.82          117.39           35.59 
04/16/98  09/28/98  Award Software International     12.83         21.34            53.12           44.54           96.40 
04/17/98  07/21/98  XcelleNet Inc                     6.11         12.55             7.73                                 
04/20/98  09/15/98  Atria Communities Inc             2.53          7.29            -0.31           82.02           16.13 
04/21/98  08/25/98  PCA International Inc            23.26         17.78            20.46           80.43           19.10 
04/21/98  06/24/98  Tracor Inc                        9.97         16.79            25.00          100.00           33.89 
04/27/98  07/09/98  Fluke Corp                       61.73         61.29            57.90           64.38           64.84 
04/27/98  08/30/98  Vitalink Pharmacy Services Inc   13.57         12.15             6.51           23.29            6.51 
04/27/98  06/01/98  Yuric Systems Inc                11.11         17.40            49.73          268.42           62.55 
04/29/98  08/14/98  Neurex Corp                      65.56         46.75            41.40          197.27           88.20 
05/04/98  07/09/98  Echlin Inc                       41.48         42.86            52.78           67.94           49.41 
05/04/98  06/29/98  Union Texas Petroleum Holdings   41.46         46.84            36.47           53.64           49.68 
05/06/98  08/06/98  Mountbatten Inc                   2.46          6.18             4.29           66.86           24.26 
05/08/98  06/15/98  Authentic Specialty Foods Inc     6.25         13.33            37.37                           20.35 
05/13/98  06/26/98  Sage Laboratories Inc            37.26         34.62            35.92           29.63           38.61 
05/14/98  09/25/98  New Plan Realty Trust            13.43         15.44            14.29           29.55           11.49 
05/18/98  08/19/98  Mercantile Stores Co Inc          9.12          9.59            15.42           56.48           19.40 
05/18/98  08/07/98  RP Scherer Corp                  17.47         23.34            30.06           83.76           51.76 
05/18/98  08/26/98  Viking Office Products Inc       43.86         42.38            44.24          107.16           49.74 
05/25/98  10/01/98  US Surgical Corp                  7.91         25.73            39.73           35.01           51.62 
05/26/98  08/24/98  Hyperion Software Corp            4.97          3.78            -3.57          114.87           -1.79 
05/27/98  09/17/98  May & Speh Inc                    2.65         12.58            20.35           58.64           34.23 
05/28/98  07/07/98  Donnelley Enterprise Solutions   60.77         61.54            83.61          102.41          118.18 

Page F-13

Merger Premiums to Market Value Analysis
Mergers with Target Price Equal to or Greater than $10 per Share
Announced and Completed 1/1/96-10/9/98
(continued)

- ------------------------------------------------------------------------------------------------------------------------------------

Date      Date                                                                     
Announced Effective Target Name                    Target Business Description     Acquiror Name
- ------------------------------------------------------------------------------------------------------------------------------------

06/04/98  09/08/98  DSC Communications Corp        Dvlp, mnfr digital telecom sys  Alcatel Alsthom CGE           
06/04/98  07/20/98  Pollo Tropical Inc             Own and operate restaurants     Carrols Corp                  
06/10/98  08/18/98  Ceanic Corp                    Pvd subsea services, products   Stolt Comex Seaway SA         
06/10/98  09/25/98  Manor Care Inc                 Own, op nursing homes, hotels   Health Care and Retirement    
06/12/98  07/21/98  Triangle Pacific Corp          Mnfr, whl wood cabinets         Armstrong World Industries Inc
06/15/98  08/31/98  Bay Networks Inc               Mnfr, whl data networking prods Northern Telecom Ltd (BCE Inc)
06/16/98  08/31/98  Personnel Management Inc       Employment agency               Linsalata Capital Partners    
06/17/98  09/24/98  Intersolv Inc.                 Develop software products       Micro Focus Group PLC         
06/17/98  09/08/98  Nimbus CD International Inc    Mnfr compact discs              Carlton Communications PLC    
06/18/98  07/28/98  ARCO Chemical Co (ARCO)        Mnfr, whl intermediate chems    Lyondell Petrochemical Co     
06/18/98  09/24/98  PMT Services Inc               Pvd credit card services        NOVA Corp                     
06/19/98  08/31/98  Camco International Inc        Mnfr oil, gas field equipment   Schlumberger Technology Corp  
06/22/98  08/31/98  Broderbund Software Inc        Dvlp, whl educational software  Learning Co Inc               
06/24/98  10/05/98  Penederm Inc                   Mnfr pharmaceutical products    Mylan Laboratories Inc        
06/29/98  09/22/98  Dawson Production Services Inc Oil and gas exploration, prodn  Key Energy Group Inc          
06/29/98  09/30/98  Physio-Control International   Mnfr, whl cardiac defibrilator  Medtronic Inc                 
07/01/98  08/20/98  Leeg Inc                       Provide management services     Metzler Group Inc             
07/03/98  09/18/98  Saks Holdings (Investcorp Bk)  Own and operate dept stores     Proffitt's Inc                
07/17/98  09/02/98  DeCrane Aircraft Holdings Inc  Mnfr avionics components        DLJ Merchant Banking Inc      
07/20/98  10/06/98  General Signal Corp            Mnfr electric control equip     SPX Corp                      
09/29/98  10/07/98  Newmont Gold Co                Gold mining                     Newmont Mining Corp           

- ------------------------------------------------------------------------------------------------------------------------------------
Value of         Enter-
Trans-           prise
Date      Date                                      Acquiror                        action           Value
Announced Effective Target Name                     Business Description            ($ mil)         ($ mil)
- ------------------------------------------------------------------------------------------------------------------------------------

06/04/98  09/08/98  DSC Communications Corp         Mnfr telephone, common equip        4685.30     5084.93 
06/04/98  07/20/98  Pollo Tropical Inc              Own and operate restaurants           94.60       93.28 
06/10/98  08/18/98  Ceanic Corp                     Pvd oil/gas contracting svcs         222.80      247.21 
06/10/98  09/25/98  Manor Care Inc                  Own, operate nursing homes          2474.40     2986.16 
06/12/98  07/21/98  Triangle Pacific Corp           Mnfr interior furnishings           1124.30     1124.59 
06/15/98  08/31/98  Bay Networks Inc                Mnfr telecommunications equip       9268.60     9008.96 
06/16/98  08/31/98  Personnel Management Inc        Investment firm                       34.90       37.50 
06/17/98  09/24/98  Intersolv Inc.                  Manufacture lenses, computers        532.00      511.38 
06/17/98  09/08/98  Nimbus CD International Inc     Pvd motion picture prodn svcs        264.90      288.46 
06/18/98  07/28/98  ARCO Chemical Co (ARCO)         Mnfr petrochems, polyolefins        5645.70     6512.54 
06/18/98  09/24/98  PMT Services Inc                Pvd information retrieval svcs      1266.60     1238.70 
06/19/98  08/31/98  Camco International Inc         Develop software                    3376.30     3307.25 
06/22/98  08/31/98  Broderbund Software Inc         Pvd serv dev consumer software       424.30      287.22 
06/24/98  10/05/98  Penederm Inc                    Mnfr, whl pharmaceuticals            193.10      190.48 
06/29/98  09/22/98  Dawson Production Services Inc  Pvd oil well services                348.80      309.40 
06/29/98  09/30/98  Physio-Control International    Mnfr medical technology prods        529.10      543.04 
07/01/98  08/20/98  Leeg Inc                        Pvd business consulting svcs         294.40      272.58 
07/03/98  09/18/98  Saks Holdings (Investcorp Bk)   Own and operate dept stores         3282.30     3381.20 
07/17/98  09/02/98  DeCrane Aircraft Holdings Inc   Merchant banking firm                181.50      174.11 
07/20/98  10/06/98  General Signal Corp             Mnfr engine components, tools       2318.70     2309.41 
09/29/98  10/07/98  Newmont Gold Co                 Gold, coal mining, oil, gas expl     264.80     4235.41 

- ------------------------------------------------------------------------------------------------------------------------------------
Premium
----------------------------------------------------------------------------------
Date      Date                                     1 Day Prior     1 Week Prior    4 Weeks Prior  3 Months Prior    1 Year Prior   
Announced Effective Target Name                   to Annc. Date   to Annc. Date    to Annc. Date  to Annc. Date     to Annc. Date 
- ------------------------------------------------------------------------------------------------------------------------------------

06/04/98  09/08/98  DSC Communications Corp         81.64            111.91            98.67            46.71            105.08  
06/04/98  07/20/98  Pollo Tropical Inc              10.00              7.32            18.12            66.04             37.50  
06/10/98  08/18/98  Ceanic Corp                     29.56             34.45                             79.78             52.38  
06/10/98  09/25/98  Manor Care Inc                  21.77             25.31            17.97            21.29             (1.47) 
06/12/98  07/21/98  Triangle Pacific Corp           26.14             26.50            24.02                                     
06/15/98  08/31/98  Bay Networks Inc                34.97             18.49            44.88            61.74             59.21  
06/16/98  08/31/98  Personnel Management Inc        25.49             23.08            23.08            66.23             21.90  
06/17/98  09/24/98  Intersolv Inc.                  56.16             41.05            52.09           161.01             24.91  
06/17/98  09/08/98  Nimbus CD International Inc      6.98              5.75            10.84             8.24             12.20  
06/18/98  07/28/98  ARCO Chemical Co (ARCO)         14.22             12.27             3.36            23.20             18.92  
06/18/98  09/24/98  PMT Services Inc                21.98             35.54            31.98            57.25             53.65  
06/19/98  08/31/98  Camco International Inc         32.57             39.88            19.50            51.78             36.41  
06/22/98  08/31/98  Broderbund Software Inc         21.21             16.36            18.96           (19.60)           (16.23) 
06/24/98  10/05/98  Penederm Inc                    38.97             39.52            88.28            76.89             75.12  
06/29/98  09/22/98  Dawson Production Services In   40.70             50.54            66.67            29.63             38.61  
06/29/98  09/30/98  Physio-Control International    19.57             31.74            31.34            86.44             57.14  
07/01/98  08/20/98  Leeg Inc                        46.50             48.98            41.77                              69.08  
07/03/98  09/18/98  Saks Holdings (Investcorp Bk)   34.46             39.02            40.85            39.55            (12.07) 
07/17/98  09/02/98  DeCrane Aircraft Holdings Inc   30.50             28.67            33.82            33.33             31.90  
07/20/98  10/06/98  General Signal Corp             19.60             22.66            19.40           (13.46)             0.28  
09/29/98  10/07/98  Newmont Gold Co                 (5.16)            20.81            62.37           (44.55)             4.35  
Mean:    28.1%             32.7%            39.6%            77.9%             53.2%

Source: Securities Data Company, Inc.; Three month and one-year premiums 
calculated using security prices from FactSet Research Systems, Inc. Commercial 
banks and other similar financial institutions were excluded for the purpose of 
this analysis. 
Page F-14

RELATIVE CONTRIBUTION ANALYSIS (a)
($ IN THOUSANDS)

STAR GAS' AVERAGE
GROSS PROFIT
CONTRIBUTION

96-97          26.7%

98-99          28.8%

96-99          27.8%

STAR GAS' AVERAGE
EBITDA CONTRIBUTION

96-97          35.4%

98-99          32.8%

96-99          34.0%

[_]  A.G. Edwards analyzed the relative pro forma contribution of both Star Gas 
and Petro to the ownership of capital in the pro forma entity based on Star
Gas' and Petro's historical results from operations and their respective
projections.

[GROSS PROFIT CHART APPEARS HERE]

[EBITDA (c) CHART APPEARS HERE]

______________________________________
(a)  For purposes of its analysis, A.G. Edwards converted Petro's historical 
December 31st fiscal year-end to a September 30th fiscal year-end for
comparison purposes. Petro's projections are based on a December 31st
calendar year end. Other measures of relative contribution analysis are 
non-meaningful.
(b)  Assumes normalized weather.
(c)  Includes only heating oil EBITDA for Petro.

Page G-1

RELATIVE CONTRIBUTION ANALYSIS
($ IN THOUSANDS)
(continued)

FOR STAR GAS' CONTRIBUTION                   IMPLIED FIRM VALUE
OF APPROXIMATELY 27.8% OF THE                    
COMBINED ENTITY'S GROSS                          [PIE CHART APPEARS HERE]
PROFIT AND 34.0% OF THE COMBINED
ENTITY'S EBITDA, IT WILL RECEIVE
APPROXIMATELY 37.1% OF THE
IMPLIED FIRM VALUE.

Page G-2

DISCOUNTED CASH FLOW ANALYSIS

[_]   A.G. Edwards performed discounted cash flow
analyses for Petro, Star Gas and Star Gas Pro
Forma using projected tax-adjusted operating cash
flows for 1999 through 2002, terminal values
calculated on 2002 EBITDA, and discount rates
based on the related weighted average cost of
capital.

Assumptions:

[_]   Weighted average cost of capital ("WACC")
-    Petro Stand Alone of 13.4% to 13.9%
(calculated WACC of 13.6%)
-    Star Gas Stand Alone of 6.8% to 7.2%
(calculated WACC of 7.0%)
-    Star Gas Pro Forma of 7.3% to 7.7%
(calculated WACC of 7.5%)

[_]   Terminal value EBITDA multiple
-    Petro Stand Alone of 6.0x to 8.0x (calculated
normalized 1998 EBITDA multiple of 6.5x)
-    Star Gas Stand Alone and Star Gas Pro Forma
of 9.0x to 11.0x (calculated normalized 1998 
EBITDA multiple of 10.6x)

Page H-1

Discounted Cash Flow Analysis

(continued)

Petro Stand Alone                             
------------------------------------------------------------ 
Terminal Value EBITDA Multiple                 
30 Year                                                    
------------------------------------------------- 
6.0x     6.5x     7.0x      7.5x      8.0x       
------------------------------------------------------------ 
13.4%   $ 64,921 $ 81,662 $ 98,403 $ 115,143 $ 131,884   

WACC          13.6%     62,511   79,110   95,709   112,308   128,908   

13.9%     60,124   76,583   93,042   109,502   125,961   
------------------------------------------------------------  

Star Gas Stand Alone
------------------------------------------------------------
Terminal  Value EBITDA Multiple
30 Year
-------------------------------------------------
9.0x     9.5x    10.0x     10.5x     11.0x
------------------------------------------------------------
6.8%   $103,675 $110,428 $117,181 $ 123,935 $ 130,688

WACC           7.0%    102,537  109,240  115,942   122,645   129,347

7.2%    101,410  108,062  114,714   121,367   128,019       
------------------------------------------------------------

Star Gas Pro Forma
------------------------------------------------------------
Terminal Value EBITDA Multiple
30 Year         
-------------------------------------------------
9.0x     9.5x    10.0x     10.5x     11.0x
------------------------------------------------------------ 
7.3%   $139,743 $148,282 $156,820 $ 165,358 $ 173,896   

WACC           7.5%    138,338  146,815  155,291   163,767   172,243

7.7%    136,946  145,360  153,775   162,190   170,605
------------------------------------------------------------   

Page H-2    

DISCOUNTED CASH FLOW ANALYSIS
PETRO -- STAND ALONE
EXCLUDING DISTRIBUTIONS FROM STAR GAS
($ IN THOUSANDS)

====================================================================================================================================
NORMALIZED  
CASH FLOW SUMMARY (a):                                               1998          1999        2000      2001      2002    TERMINAL
- ----------------------                                            ------------    ------      ------    ------    ------  ----------

EBITDA                                                                 $46,900   $48,706      $51,196   $53,390   $55,385   

Taxes                                                                     (500)     (500)        (500)     (500)     (500) 

Maintenance capital expenditures                                                  (3,000)      (3,060)   (3,121)   (3,184)

Working capital increases (b)                                                       (500)        (500)     (500)     (500)
-------      -------   -------   ------- 
Net operating cash flow (free cash flow)                                          44,706       47,136    49,269    51,201 
-------------- 
WEIGHTED AVERAGE COST OF CAPITAL (C)                 13.6%
-------------- 
-------------- 
Terminal EBITDA multiple (d)                          6.5x
--------------  

Discount factor                                                                   0.8799       0.7742    0.6812    0.5994    0.5994

Terminal value (e)                                                                                                         $360,003
--------------  
PRESENT VALUE                                    $355,875                        $39,337      $36,494   $33,564   $30,691  $215,791
--------------                      -------      -------   -------   -------  --------
Current net debt and preferred stock (f)        ($276,765)
-------------- 
-------------- 
NET PRESENT VALUE OF EQUITY                      $ 79,110
-------------- 

___________________________________________________________
(a)  Based on management projections.
(b)  A.G. Edwards' estimate.
(c)  Based on comparable companies' WACC.
(d)  Petro's  current firm value of $304.4 million/$46.9 million normalized 
1998 EBITDA = 6.5x, which represents a multiple of current year 
normalized EBITDA.
(e)  Terminal value calculated using EBITDA multiple.
(f)  Net of $33.2 million of cash. Market value of debt used.

Page H-3

DISCOUNTED CASH FLOW ANALYSIS
PETRO - STAND ALONE USING STAR GAS' PRO FORMA WACC
EXCLUDING DISTRIBUTIONS FROM STAR GAS
($ in thousands)

====================================================================================================================================
NORMALIZED
CASH FLOW SUMMARY (a):                                          1998         1999       2000        2001        2002      TERMINAL
- -----------------                                            ----------  ----------  ----------  ----------  ----------  ----------

EBITDA                                                        $46,900     $48,706     $51,196     $53,390     $55,385

Taxes                                                            (500)       (500)       (500)       (500)       (500)

Maintenance capital expenditures                                           (3,000)     (3,060)     (3,121)     (3,184)

Working capital increases (b)                                                (500)       (500)       (500)       (500)
----------  ----------  ----------  ----------
Net operating cash flow                                                      
(free cash flow)                                                           44,706      47,136      49,269      51,201

-----------------
WEIGHTED AVERAGE COST OF CAPITAL (c)                 7.5%
-----------------

-----------------
TERMINAL EBITDA MULTIPLE (d)                         6.5x
-----------------

Discount factor                                                            0.9299      0.8647      0.8041      0.7477       0.7477

Terminal value (e)                                                                                                        $360,003

-----------------
PRESENT VALUE                                   $429,392                  $41,571     $40,758     $39,615     $38,282     $269,166
-----------------                ----------  ----------  ----------  ----------  ----------

Current net debt and preferred 
stock (f)                                      ($276,765)
-----------------

=================
NET PRESENT VALUE OF EQUITY                     $152,627
=================

- ------------------------------------------------------------------------------------------------------------------------------------

(a) Based on management projections.
(b) A.G. Edwards' estimate.
(c) Based on comparable companies' WACC.
(d) Petro's current term value of $304.4 million/$46.9 million normalized 1998
EBITDA = 6.5x, which represents a multiple of current year normalized
EBITDA.
(e) Terminal value calculated using EBITDA multiple.
(f) Net of $33.2 million of cash. Market value of debt used.

Page H - 4

DISCOUNTED CASH FLOW ANALYSIS  
STAR GAS - STAND ALONE
($ IN THOUSANDS)

==========================================================================================================================
NORMALIZED                                                     
INCOME STATEMENT SUMMARY (a):                                  1998       1999      2000      2001      2002      TERMINAL 
- ----------------------------                                   ----       ----      ----      ----      ----      -------- 

EBITDA                                                        22,135     24,491    26,029    27,566    29,104              
% increase                                                                10.6%      6.3%      5.9%      5.6%             
Net income                                                     2,799      3,297     3,281     3,439     3,761              

CASH FLOW SUMMARY:                                                                                                         
- -----------------                                                                                                          

After-tax EBI                                                            12,108    12,658    13,317    14,141              
Depreciation and amortization                                            12,358    13,346    14,224    14,938              
Maintenance capital expenditures                                         (2,632)   (2,679)   (2,728)   (2,777)             
Working capital increases (b)                                              (500)     (500)     (500)     (500)             
-------   -------   -------   -------              
Net operating cash flow (free cash flow)                                 21,334    22,825    24,313    25,802               

-------------
WEIGHTED AVERAGE COST OF CAPITAL (c)             7.0%
-------------
-------------
TERMINAL EBITDA MULTIPLE (d)                    10.6x
-------------
Discount factor                                                           0.9342    0.8728    0.8154    0.7618       0.7618 
Terminal value (e)                                                                                                 $308,502
-------------
PRESENT VALUE                               $314,355                     $19,931   $19,922   $19,825   $19,656     $235,020 
-------------                    -------   -------   -------   -------     --------
Current net debt (f)                       ($109,285)
-------------
NET PRESENT VALUE OF EQUITY                 $205,070
=============

Common units/Total units (g)                    60.5%

=============
EQUITY VALUE TO COMMON UNITS (h)            $123,985 
=============
- --------------------------------------------------------------------------------

(a)  Based on management projections.
(b)  A.G. Edwards' estimate.
(c)  Based on comparable companies' WACC.
(d)  Star's current firm value of $234.1 million $22.1 million normalized 1998
EBITDA = 10.6x, which represents a multiple of current year normalized
EBITDA.
(e)  Terminal value calculated using EBITDA multiple.
(f)  Represents total projected 9/30/98 debt less cash.
(g)  Total units include common, subordinated and GP units.
(h)  Current market value of common units is 3,858 units* $19.563 unit price =
$75,472

Page H-5

Discounted Cash Flow Analysis
Star Gas - Pro Forma
($ in thousands)

- ------------------------------------------------------------------------------------------------------------------------------------
Normalized
Income Statement Summary (a):                    1998           1999          2000           2001           2002         Terminal
- ------------------------                       ----------     --------      --------      ---------      ----------    ------------

EBITDA                                          69,535         73,697        77,725         81,456         84,989 
% increase                                                     6.0%          5.5%           4.8%           4.3%

Net income                                        (102)          (456)       (4,315)        (7,751)       (10,944)   

Cash Flow Summary:
- ------------------

After-tax EBI                                                  29,012        27,234         25,266         23,258

Depreciation and amortization                                  43,661        49,466         55,166         60,705

Maintenance capital expenditures                               (5,632)       (5,739)        (5,849)        (5,961) 

Working capital increases (b)                                  (1,000)       (1,000)        (1,000)        (1,000)  
--------      --------      ---------      ----------
Net operating cash flow (free cash flow)                       66,041        69,961         73,583         77,002

----------------  
Weighted average cost of capital (c)                 7.5% 
----------------

---------------- 
Terminal EBITDA multiple (d)                        10.6
----------------

Discount factor                                                0.9299        0.8647         0.8041         0.7477        0.7477

Terminal value (e)                                                                                                     $900,883

----------------
Present value                                   $912,213      $61,410       $60,494        $59,165        $57,573      $673,571
----------------   -------       -------        -------        -------      --------

Less net debt (f)                              ($291,997) 
----------------  

Net present value of equity                     $620,216
================
Original common units/Total units (g)               26.7%

---------------- 
Equity value to common units (h)                $165,462
----------------
- ------------------------------------------------------------------------------------------------------------------------------------

(a) Based on management projections. See Appendix K for model.
(b) A.G. Edwards' estimate.
(c) Based on comparable companies' WACC.
(d) Star's current firm value of $234.1 million/$22.1 million normalized 1998 
EBITDA = 10.6x, which represents a multiple of current year normalized 
EBITDA.
(e) Terminal value calculated using EBITDA multiple.
(f) Represents total proforma projected 9/30/98 debt less cash and cash
collateral.
(g) Total units include common, newly issued common, senior subordinated, 
subordinated and GP units.
(h) Current market value of common units is 3,858 units *$19.563 unit price =
$75,472.

Page H-6

DISCOUNTED CASH FLOW ANALYSIS
PETRO - STAND ALONE
WEIGHTED AVERAGE COST OF CAPITAL DERIVATION
($ in millions)
================================================================================

TOTAL                                 IMPLIED      TOTAL      TOTAL     
MARKET       UNIT        TOTAL        MARKET       DEBT/     DEBT AS %     UN-
LEVERED    VAL. DEBT    PRICE AT     UNITS        VALUE OF     TOTAL     OF TOTAL    LEVERED
COMPARABLE COMPANY                      BETA (a)   (BK = MKT)  (10/14/98)   OUT. (MIL)    EQUITY       EQUITY     CAPITAL      BETA
- ------------------------------------------------------------------------------------------------------------------------------------

AmeriGas Partners, L.P.                  0.42       $711.1      $24.125       41.9        $1,031.2     69.0%       40.8%      0.249
Cornerstone Propane Partners, L.P.       0.45        240.9       18.000       19.9           365.2     66.0%       39.8%      0.271
Ferrellgas Partners, L.P.                0.46        504.1       20.000       31.3           638.6     78.9%       44.1%      0.257
Heritage Propane Partners, L.P.          0.42        177.8       20.813        8.5           180.0     98.8%       49.7%      0.211
National Propane Partners, L.P.          0.61        145.5        9.438       11.2           108.2    134.5%       57.4%      0.260 
Star Gas Partners, L.P.                  0.39        109.8       19.563        6.3           124.9     87.9%       46.8%      0.208
Suburban Propane Partners, L.P.          0.40        427.9       19.625       28.7           575.3     74.4%       42.7%      0.229

----------------------------------------------------------
Petro's capitalization - at market 
Comparable group's average unlevered beta:                         0.24        Total debt (b)                      $310.0      91.8%
Petro's debt - to - equity ratio:                                1123.5%       Common equity                         27.6       8.2%
------     -----
Petro's debt as a percent of total capital:                        91.8%                                           $337.6     100.0%
----------------------------------------------------------
Comparable group's beta relevered for Petro's capital structure:  2.945%
=====

DERIVATION OF WEIGHTED AVERAGE COST OF CAPITAL:
- ----------------------------------------------

MARKET RISK PREMIUM RANGE (e)
---------------------------------
11.3%       12.3%        13.3%
---------------------------------     
Petro's theoretical levered beta (d):                                        2.945
Assumed % of equity in Petro's capital structure:                              8.2%
Risk - free rate of return (c):                                                4.6%
Petro's cost of equity range (at various market risk premiums):                               37.9%       40.8%        43.8%
====        ====         ====
Petro's assumed tax rate:                                                      0.0%
Assumed % of debt in capital structure (b):                                   91.8%
Petro's estimated cost of debt (f):                                           11.2%
Petro's estimated after - tax cost of debt:                                   11.2%           11.2%       11.2%        11.2%

---------------------------------
Petro's weighted average cost of capital range (g):                                           13.4%       13.6%        13.9%
---------------------------------

_______________________________________________
(a) Source: Bloomberg. 143 week (maximum weekly time period allowed, or the
number of weeks available, which may be less than 143) adjusted beta
relative to the S&P 500 index.
(b) Includes preferred stock; not net of cash.
(c) Ten - year Treasury rate on October 14, 1998.
(d) Bloomberg's reported beta for Petro is .60.
(e) Ibbotson Associates 1997. Total returns for small company stocks of 17.7% 
minus the risk-free rate.
(f) Based on Petro's current debt structure.
(g) Calculation based upon use of the capital Asset Pricing Model (CAPM).

Page H-7

Discounted Cash Flow Analysis
Star Gas -- Stand Alone
Weighted Average Cost of Capital Derivation
($ in millions)
- ------------------------------------------------------------------------------------------------------------------------------------
Total                                Implied     Total         Total
Market        Unit       Total       Market      Debt/       Debt as %      Un-
Levered     Val. Debt     Price at     Units      Value of     Total        of Total    levered
Comparable Company                   Beta (a)     (Bk=Mkt)    (10/14/98)  Out. (Mil)    Equity     Equity        Capital      Beta
- ------------------------------------------------------------------------------------------------------------------------------------

AmeriGas Partners, L.P.                0.42        $711.1        $24.125      41.9     $1,031.2     69.0%         40.8%       0.249
Cornerstone Propane Partners, L.P.     0.45         240.9         18.000      19.9        365.2     66.0%         39.8%       0.271
Ferrellgas Partners, L.P.              0.46         504.1         20.000      31.3        638.6     78.9%         44.1%       0.257
Heritage Propane Partners, L.P.        0.42         177.8         20.813       8.5        180.0     98.8%         49.7%       0.211 
National Propane Partners, L.P.        0.61         145.5          9.438      11.2        108.2    134.5%         57.4%       0.260
Star Gas Partners, L.P.                0.39         109.8         19.563       6.3        124.9     87.9%         46.8%       0.208
Suburban Propane Partners, L.P.        0.40         427.9         19.625      28.7        575.3     74.4%         42.7%       0.229

Star's capitalization - 
at market (b)
Comparable group's average unlevered beta:                          0.24                Total debt       $109.8    46.8%
Star's debt-to-equity ratio (b):                                   87.9%                Common equity     124.9    53.2%
Star's debt as a percent of total capital (b):                     46.8%                              ---------    -----
Comparable group's beta relevered for Star's capital structure    0.378%                                 $234.6   100.0%
=====

Derivation of Weighted Average Cost of Capital:                                                   Market Risk Premium Range (d)
- ----------------------------------------------                                                --------------------------------------
11.3%          12.3%        13.3%
--------------------------------------

Star's theoretical levered beta:                                             0.378
Assumed % of equity in Star's capital structure (b):                         53.2%
Risk-free rate of return (c):                                                 4.6%
Star's cost of equity range (at various market risk premiums):                                      8.9%           9.3%         9.6%
Star's assumed tax rate:                                                     35.0%                  ====           ====         ====
Assumed % of debt in capital structure (b):                                  46.8%
Star's estimated cost of debt (e):                                            6.9%
Star's estimated after-tax cost of debt:                                      4.5%                  4.5%           4.5%         4.5%
--------------------------------------
Star's weighted average cost of capital range (f):                                                  6.8%           7.0%         7.2%

- ----------------------------------------
(a)  Source: Bloomberg. 143 week (maximum weekly time period allowed, or the 
number of weeks available, which may be less than 143) adjusted beta 
relative to the S&P 500 Index.
(b)  Market value of debt is assumed to equal book value; debt is not net of 
cash.
(c)  Ten-year Treasury rate on October 14, 1998.
(d)  Ibbotson Associates 1997. Total returns for small company stocks of 17.7% 
minus the risk-free rate.
(e)  Based on Star current debt structure.
(f)  Calculation based upon use of the Capital Asset Pricing Model (CAPM).

Page H-8

Discounted Cash Flow Analysis
Star Gas - Pro Forma
Pro Forma Weighted Average Cost of Capital Derivation
($ in millions)

- ----------------------------------------------------------------------------------------------------------------------------------

Total                                Implied     Total     Total
Market         Unit       Total       Market     Debt/    Debt as %    Un-
Levered    Val. Debt     Price at     Units      Value of    Total    of Total   levered
Comparable Company                       Beta (a)   (Bk = Mkt)   (10/14/98)   Out. (Mil)   Equity     Equity   Capital    Beta
- ----------------------------------------------------------------------------------------------------------------------------------

AmeriGas Partners, L.P.                  0.42       $711.1       $24.125      41.9        $1,031.2     69.0%   40.8%      0.249
Cornerstone Propane Partners, L.P.       0.45        240.9        18.000      19.9           365.2     66.0%   39.8%      0.271
Ferrellgas Partners, L.P.                0.46        504.1        20.000      31.3           638.6     78.9%   44.1%      0.257
Heritage Propane Partners, L.P.          0.42        177.8        20.813       8.5           180.0     98.8%   49.7%      0.211
National Propane Partners, L.P.          0.61        145.5         9.438      11.2           108.2    134.5%   57.4%      0.260
Star Gas Partners, L.P.                  0.39        109.8        19.563       6.3           124.9     87.9%   46.8%      0.208
Suburban Propane Partners, L.P.          0.40        427.9        19.625      28.7           575.3     74.4%   42.7%      0.229

Comparable group's average unlevered beta:              0.24            -------------------------------------------  
Pro forma debt - to - equity ratio (b):                113.5%           Pro forma capitalization - at market (b)     
Pro forma debt as a percent of total                                    Total debt          $313.9       53.2%       
capital (b):                                         53.2%            Total equity         276.5       46.8%       
Comparable group's beta relevered for                                                       ------      -----        
Pro Forma capital structure                          0.418                                $590.5      100.0%       
======            --------------------------------------------  

Derivation of Weighted Average Cost of Capital:                              Market Risk Premium Range (d)   
- -----------------------------------------------                              -----------------------------   

Pro forma theoretical levered beta:                  0.418                       11.3%     12.3%     13.3%   
Assumed % of equity in Pro forma capital                                     -----------------------------   
structure (b):                                      46.8%                                                  
Risk - free rate of return (c):                        4.6%                                                  
Pro forma cost of equity range (at various                                                                   
market risk premiums):                                                          9.3%      9.8%     10.2%   
Pro forma assumed tax rate:                           35.0%                      =====     =====     =====   
Assumed % of debt in capital structure (b):           53.2%                                                  
Pro forma estimated cost of debt (e):                  8.6%                                                  
Pro forma estimated after - tax cost of debt:          5.6%                       5.6%      5.6%      5.6%   
-----------------------------   
Pro forma weighted average cost of capital range (f):                             7.3%      7.5%      7.7%   
- ---------------------------------------------------------------              -----------------------------    

(a) Source: Bloomberg. 143 week (maximum weekly time period allowed, or the
number of weeks available, which may be less than 143) adjusted beta
relative to the S&P 500 index.
(b) Market value of debt is assumed to equal book value.  See page C-6 for 
equity calculation.
(c) Ten-Year Treasury rate on October 14, 1998.
(d) Ibbotson Associates 1997.  Total returns for small company stocks of 17.7% 
minus the risk-free rate.
(e) Based on Pro forma debt structure.
(f) Calculation based upon use of the Capital Asset Pricing Model (CAPM).

Page H-9

COMPARABLE TRANSACTIONS ANALYSIS
FIRM VALUATION

[_]   A.G. Edwards noted that public disclosure regarding transactions in the 
retail home heating oil distribution industry was extremely limited.

[_]   A.G. Edwards analyzed the financial terms related to divestitures by
Petro of certain of its retail home heating oil branches and compared
them to the implied multiples of the aggregate purchase price of Petro's
heating oil assets.

[_]   Petro has sold three branches for an average EBITDA multiple of 9.0x.

[_]   A.G. Edwards calculated the purchase price of Petro's heating oil assets
and calculated multiples based on Petro's EBITDAs.

========================================================================
PURCHASE PRICE OF HEATING OIL ASSETS
------------------------------------

Equity purchase price of heating oil assets
including CUs (see page C-5)                                 $25,549

Cost of Debt to be Redeemed ($206,250 + $2,844 premium)        209,094

Cost of Debt to be Assumed                                      69,646

Cost of Preferred stock at Redemption Value                     31,767

Consent Fees                                                     2,110  

Transaction Fees                                                19,343
---------
Aggregate purchase price of heating oil assets               $ 357,509 
=========

Multiples   
----------------------------------            
Multiples             Notes
--------------           ---------------------------------------- 

1997 Normalized EBITDA (a)            43,040             8.3 x             As a multiple of aggregate transaction value
Normalized 1998 EBITDA budget (a)     46,900             7.6 x             As a multiple of aggregate transaction value
1999 Projected EBITDA (a)             48,706             7.3 x             As a multiple of aggregate transaction value
--------------

_______________________________________
(a) Calculated as gross profit minus SG&A expense and direct delivery 
expense.

Page I-1

PUBLIC COMPANY ANALYSIS

[__]  A.G. Edwards compared certain financial and market information of Star
Gas on a historical and pro forma basis to that of certain public
propane master limited partnerships which A.G. Edwards deemed relevant
for the purposes of this analysis. In addition to Star Gas, A.G. Edwards
reviewed the trading multiples from a total of six master limited
partnerships.

[__]  The selected propane master limited partnerships are as follows:
- AmeriGas Partners, L.P.             - Heritage Propane Partners, L.P.
- Cornerstone Propane Partners, L.P.  - National Propane Partners, L.P.
- Ferrellgas Partners, L.P.           - Suburban Propane Partners, L.P.

[__]  No company used in the analysis is identical to Star Gas.

----------------------------------------------------------------------------------------------------
PUBLIC COMPARABLE COMPANIES (a)
----------------------------------------------------------------------------------------------------
PUBLIC            PUBLIC    
PRO FORMA           COMPANY           COMPANY    
STAR            STAR               MEDIANS           RANGES  
----------------------------------------------------------------------------------------------------   

Yield                               11.2%          11.8%                10.1%       9.1% to 22.3%   
Firm value/LTM EBITDA               12.5x (b)      10.0x (b)            11.6x       9.0x to 12.7x   
Firm value/1999E EBITDA              9.6x           7.7x                 9.2x       8.4x to 11.1x     
Equity Market Cap/LTM DCF           15.4x (c)      12.5x (c)            13.4x       8.1x to 15.3x
Equity Market Cap/1999E DCF          9.6x           7.4x                 9.8x       4.9x to 12.2x
LTM common unit coverage             1.0x (d)       0.9x (d)             1.5x       0.6x to 1.6x
1999E common unit coverage           1.5x           1.5x                 2.1x       1.1x to 2.3x
LTM total unit coverage              0.6x (d)       0.7x (d)             0.7x       0.4x to 1.2x
1999E total unit coverage            0.9x           1.1x                 1.0x       0.7x to 1.2x
---------------------------------------------------------------------------------------------------

(a) Public comparable companies include: APU, CNO, FGP,HPG, NPL AND 
SPH.
(b) Firm value/adjusted for actual 1998 budget EBITDA.
(c) Equity market cap/adjusted for actual 1998 budget EBITDA.
(d) Adjusted for actual 1998 budget.
Page J-1

Public Company Analysis
($ in millions, except per unit data)

- ------------------------------------------------------------------------------------------------------------------------

Closing       Implied                           
Price        Market    Implied                           Common
on          Value      Firm     Distribution            Units/        
Company                                    Ticker   (10/14/98)    of Equity    Value      per Unit     Yield  Total Units    
- ------------------------------------------------------------------------------------------------------------------------

Star Gas Partners, L.P.               (a)   SGU       $19.563     $  124.9    $  234.1       $2.20       11.2%     60.5%

AmeriGas Partners, L.P.                     APU        24.125      1,031.2     1,739.4        2.20        9.1%     52.8%
Cornerstone Propane Partners, L.P.    (c)   CNO        18.000        365.2       596.7        2.16       12.0%     66.8%
Ferrellgas Partners, L.P.             (d)   FGP        20.000        638.6     1,131.2        2.00       10.0%     47.0%
Heritage Propane Partners, L.P.             HPG        20.813        180.0       354.6        2.00        9.6%     56.3%
National Propane Partners, L.P.             NPL         9.438        108.2       250.9        2.10       22.3%     59.6%
Suburban Propane Partners, L.P.       (c)   SPH        19.625        575.3       922.5        2.00       10.2%     75.1%

- ------------------------------------------------------------------------------------------------------------------------
Mean                                                                                                     12.2%     59.6%
Median                                                                                                   10.1%     58.0%
- ------------------------------------------------------------------------------------------------------------------------

Pro Forma                                             $19.563       $276.5 (f)  $568.5 (g)   $2.30       11.8%     74.9%

LTM Common      LTM Total        FY99E      FY99E Common       FY99E Total
Company                                     Unit Coverage  Unit Coverage    DCF/Unit     Unit Coverage     Unit Coverage
- --------------------------------------------------------------------------------------------------------------------------------

Star Gas Partners, L.P.                        1.0x (b)        0.6x (h)       $2.02          1.5x               0.9x

AmeriGas Partners, L.P.                        1.4x            0.8x            2.39          2.1x               1.1x
Cornerstone Propane Partners, L.P.             0.8x            0.6x            1.51          1.1x               0.7x
Ferrellgas Partners, L.P.                      1.5x            0.7x            2.15          2.3x               1.1x
Heritage Propane Partners, L.P.                1.5x            0.8x            2.38          2.2x               1.2x
National Propane Partners, L.P.                0.6x            0.4x            1.87           NA                0.9x
Suburban Propane Partners, L.P.                1.6x            1.2x            1.98          1.3x               1.0x

- --------------------------------------------------------------------------------------------------------------------------------
Mean                                           1.3x            0.7x                          1.8x               1.0x
Median                                         1.5x            0.7x                          2.1x               1.0x
- --------------------------------------------------------------------------------------------------------------------------------

Pro Forma                                      0.9x (b)        0.7x (b)        2.60          1.5x               1.1x

- -------------------------------------------------------
1999 estimates per A.G. Edwards' research, except for Star and Pro Forma. 1999
estimates for National Propane from Merrill Lynch research report dated
July 29, 1998.
Implied Firm Value equals common, subordinated and GP units multiplied by the 
market price of common units plus debt, less cash.
(a) Pro Forma for the Pearl Gas acquisition and the common unit offering.
(b) For Star and Pro Forma only, LTM DCF figures are adjusted for actual 1998 
budget DCF estimates.
(c) Financial information pro forma for common unit offering.  Maintenance 
capital expenditures assumed to be 8% of EBITDA due to lack of disclosure.
(d) Maintenance capital expenditures assumed to be 8% of EBITDA due to lack of 
disclosure.
(e) Financial figures exclude $5.1 million gain from sale of minority interest.
(f) Calculated as: (10,841 common units X $19,563)+(2,767 senior subordinated
units X $18.52)+ (857 junior subordinated and GP units X $15.41).
(g) $276.5 in equity plus $313.9 pro forma debt, less $21.9 cash and cash 
collateral.

Page J-2

PUBLIC COMPANY ANALYSIS
($ IN MILLIONS, EXCEPT PER UNIT DATA)
(continued)

- --------------------------------------------------------------------------------

LONG TERM        LTM           FIRM VALUE/     FIRM VALUE/       EQUITY        EQUITY
DEBT/         EBITDA/            LTM            1999E        MARKET CAP/    MARKET CAP/ 
FIRM VALUE      INT. EXP.         EBITDA          EBITDA         LTM DCF       1999E DCF
------------------------------------------------------------------------------------------- 

STAR GAS PARTNERS, L.P.             44.8%        2.4x (a)         12.5x (a)         9.6x        15.4x (a)         9.6x

AmeriGas Partners, L.P.             39.9%        2.2x             11.8x             9.9x        14.8x            10.4x
Cornerstone Propane Partners, L.P.  39.7%        2.4x             12.7x            11.1x        15.3x            12.2x              
Ferrellgas Partners, L.P.           44.1%        2.1x             11.4x             9.0x        14.2x             9.5x
Heritage Propane Partners, L.P.     49.8%        2.6x              9.7x             9.0x        12.6x             8.8x 
National Propane Partners, L.P.     55.2%        2.6x             12.7x             9.3x        12.0x             4.9x
Suburban Propane Partners, L.P.     46.4%        3.3x              9.0x             8.4x         8.1x            10.1x

- ---------------------------------------------------------------------------------------------------------------------------
MEAN                                45.8%        2.6x             11.2x             9.5x        12.9x             9.3x
MEDIAN                              45.2%        2.5x             11.6x             9.2x        13.4x             9.8x
- ---------------------------------------------------------------------------------------------------------------------------

PRO FORMA                           55.2%        2.0x (a)         10.0x (a)         7.7x        12.5x (a)         7.4x

______________________________________________________________________________
EBITDA is defined as net income (loss) before extraordinary items plus interest,
income taxes, depreciation and amortization, impairment expense, and other
non-recurring and non-operating items.
(a) For Star and Pro forma only, LTM figures use adjusted for actual 1998 budget
estimates.

Page J-3

PUBLIC COMPANY DESCRIPTIONS

AMERIGAS PARTNERS, L.P.          AmeriGas Partners operates the largest retail
propane distribution business in the U.S.,
serving approximately 968,000 residential,
commercial, industrial, agricultural, and
motor-fuel customers in 45 states. AmeriGas 
Partners also sells propane-related supplies
and equipment, including home appliances. The
company owns or leases a fleet of about 385
transport trucks, 680 railroad tank cars, and
2,300 bobtail and rack trucks. It also owns or
leases propane-storage facilities in Arizona
and Rhode Island. AmeriGas Propane, a wholly
owned subsidiary of UGI Corp., owns 58% of
AmeriGas Partners.

[GRAPH APPEARS HERE]

CORNERSTONE PROPANE              Cornerstone Propane Partners, L.P. distributes 
PARTNERS, L.P.                   propane for residential, commercial,           
industrial, agricultural and other retail uses;
markets and distributes propane and natural gas
liquids; services propane heating systems and  
appliances; and sells propane-related supplies,
appliances and other equipment. It is the fifth
largest retail marketer of propane in the U.S. 
in terms of volume. The partnership's          
operations are concentrated in the east coast, 
south-central and west coast regions of the    
U.S.

[GRAPH APPEARS HERE]

Page J-4

PUBLIC COMPANY DESCRIPTIONS
(continued)

FERRELLGAS PARTNERS, L.P.          Ferrellgas is the second largest U.S.
distributor of propane serving more than
800,000 residential and commercial customers.
The company also engages in propane/natural
gas trading, wholesale propane marketing, and
chemical feedstock marketing. It markets its
products primarily in the Midwest, the Great
Lakes area, and the Southeast. With a
delivery fleet of approximately 4,000
vehicles, Ferrellgas sells almost 700 million
gallons of fuel annually to its retail
customers, which represents about 8% of all
retail propane bought in the U.S. The company
has acquired more than 100 companies in 11
years.

[GRAPH APPEARS HERE]

HERITAGE PROPANE                   Heritage Propane Partners distributes propane
PARTNERS, L.P.                     to more than 220,000 residential, commercial,
industrial, and agricultural customers. The  
propane is used primarily for heating,       
drying, cooking, as fuel for engines, as a   
cutting gas for mining operations, and for   
curing tobacco. The company's retail         
operations distribute propane to customers in
23 states in the western, southeastern, and  
northeastern U.S. The company also           
distributes wholesale propane and sells,     
installs, and repairs propane-related        
equipment. Heritage has acquired 40 retail   
propane operations since 1989, bringing      
annual propane sales to over 125 million     
gallons. 

[GRAPH APPEARS HERE]

Page J-5

PUBLIC COMPANY DESCRIPTIONS
(continued)

NATIONAL PROPANE PARTNERS, L.P.          National Propane L.P. markets propane
on a retail basis to residential,
commercial, industrial and agricultural
customers and dealers in 25 states; and
also sells propane-related supplies and
equipment, including home and
commercial appliances. It is the sixth
largest retail marketer of propane in
the U.S. in terms of volume, supplying
approximately 250,000 active retail and
wholesale customers in 25 states
through 166 service centers located in
24 states. Operations are concentrated
in the Midwest, Northeast, Southeast
and Southwest regions of the
U.S.
[GRAPH APPEARS HERE]

SUBURBAN PROPANE PARTNERS, L.P.          Suburban Propane Partners markets and
distributes propane to residential,
commercial, industrial and agricultural
customers through a retail distribution
network consisting of 352 district
locations in 41 states. The company,
the third largest retail marketer of
propane in the U.S., serves over
730,000 active customers primarily
located in the east and west coast
regions of the country. Suburban
Propane also sells, installs and
services equipment related to its
propane distribution business,
including heating and cooking
appliances and, at some locations,
propane fuel systems.

[GRAPH APPEARS HERE]

Page J-6

TRANSACTIONS SUMMARY AND ASSUMPTIONS

(In thousands except per share and per unit data)

- ------------------------------------------------------------------------------------------------------------------------------------
SUMMARY CASH FLOW AND COVERAGE ANALYSIS
- ------------------------------------------------------------------------------------------------------------------------------------
($ on per Unit basis)
Estimated      Normalized                              Projected
------------------------------------------------------------
1998           1998          1999            2000              2001           2002
-----------    ------------   -----------    ------------      -----------    ------------  

STAR STAND ALONE       
EBITDA                                $ 18,781        $ 22,135      $ 24,491       $ 26,029           $ 27,566       $ 29,104
Interest Expense                      (7,922)         (7,662)       (8,811)        (9,377)            (9,878)       (10,380) 
Maintenance CapEx                     (2,710)         (2,710)       (2,632)        (2,679)            (2,728)        (2,777) 
Other                                    (25)            (25)          (25)           (25)               (25)           (25)
-----------    ------------   -----------    ------------      -----------    ------------  
Distributable Cash Flow               $  8,124        $ 11,738      $ 13,023       $ 13,948           $ 14,935       $ 15,922 
===========    ============   ===========    ============      ===========    ============  
DCF per Common Unit                   $   2.11        $   3.04      $   3.32       $   3.42           $   3.51       $   3.62
DCF / Common Unit MQD                     0.96 x          1.38 x        1.51 x         1.55 x             1.60 x         1.65 x

DCF per Total Unit                    $   1.27        $   1.84      $   2.02       $   2.11           $   2.20       $   2.30
DCF / Total MQD                           0.58 x          0.84 x        0.92 x         0.96 x             1.00 x         1.04 x 

Indicated Distribution per Common 
Unit                                 $   2.20         $  2.20      $   2.20       $   2.20           $   2.20       $  2.20 

STAR PRO FORMA
EBITDA
------
Star                                 $ 18,781        $ 22,135      $ 24,491       $ 26,029           $ 27,566       $ 29,104
Petro                                  37,650          46,900        48,706         51,196             53,390         55,385
Synergies                                 500             500           500            500                500            500
-----------    ------------   -----------    ------------      -----------    ------------  
Total                                   56,911          69,535        73,697         77,725             81,456         84,989
-----------    ------------   -----------    ------------      -----------    ------------  

Interest Expense                       (28,307)        (28,253)      (29,468)       (31,549)           (33,017)       (34,202)
Maintenance CapEx                       (5,486)         (5,486)       (5,632)        (5,739)            (5,849)        (5,961)
Other                                   (1,025)         (1,025)       (1,025)        (1,025)            (1,025)        (1,025)
-----------    ------------   -----------    ------------      -----------    ------------  
Distributable Cash Flow                22,093          34,771        37,572         39,412             41,565         43,801
===========    ============   ===========    ============      ===========    ============  

DCF per Common Unit                   $   2.04        $   3.21      $   3.47       $   3.54           $   3.51       $   3.45 
DCF per Sr. Sub & Common Unit         $   1.62        $   2.56      $   2.76       $   2.78           $   2.73       $   2.73
DCF per Total Unit                    $   1.53        $   2.40      $   2.60       $   2.62           $   2.59       $   2.59

Indicated Distribution per Common     $   2.30        $   2.30      $   2.30       $   2.30           $   2.30       $   2.30
Unit
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
ACCRETION/DILUTION
- ------------------------------------------------------------------------------------------------------------------------------------
DCF per Unit - Star Stand Alone       $   1.27        $   1.84      $   2.02       $   2.11           $   2.20       $   2.30
DCF per Unit - Pro Forma              $   1.53        $   2.40      $   2.60       $   2.62           $   2.59       $   2.59
- ------------------------------------------------------------------------------------------------------------------------------------
Accretive ($/Unit)                   $   0.25        $   0.56      $   0.58       $   0.51           $   0.39       $   0.29
Accretive (%)                           20.0%           30.7%         28.6%          24.1%              17.5%          12.6%
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma Heating Oil DCF per Unit                                  $   3.06       $   3.02           $   2.87       $   2.79
DPUs Issued as Sr Sub Units at Beg of       
Year                                        -               -             -            303                303              -
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma Credit Analysis
- ------------------------------------------------------------------------------------------------------------------------------------
EBITDA/Interest                           2.01 x          2.46 x        2.50 x         2.46 x             2.47 x         2.48 x 
LT Debt/EBITDA                            5.43            4.45          4.68           4.73               4.72           4.71
LT Debt/EBITDA (Pro Forma for 
Full-Year Acquisitions)                  5.27            4.32          4.44           4.50               4.50           4.50
# of Units Issued to Meet Debt               
Covenant                                    -               -             -            574                846            874 
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma Coverage Ratios
- ------------------------------------------------------------------------------------------------------------------------------------
MQD Coverage 
------------
Common Unit                              0.89 x          1.39 x        1.51 x         1.54 x             1.53 x         1.50 x  
Senior Subordinated Units                0.71            1.11          1.20           1.21               1.19           1.18
Total Unit                               0.66            1.05          1.13           1.14               1.12           1.12 

Indicated Distribution Coverage
-------------------------------
Common Unit                              0.89 x          1.39 x        1.51 x         1.54 x             1.53 x         1.50 x   
Senior Subordinated Unit                 0.71            1.11          1.20           1.21               1.19           1.18
Total Unit                               0.66            1.05          1.13           1.14               1.12           1.12 
- ------------------------------------------------------------------------------------------------------------------------------------

- -------------------------------------------------------------------------------------------------------------
CURRENT MODEL ASSUMPTIONS                                                                                    
- -------------------------------------------------------------------------------------------------------------

Scenario Version                    30-yrs, $30mm @ 4.75x mid-year, $.01 '99, $.005 '00-'01, flat att.      
Petro Acqs/yr                           $30,000                                                              
Star Acqs/yr                            $10,000                  G.P. Interest Subordinate                   
Price per Petro Share                   $  2.42                                                              
- -------------------------------------------------------------------------------------------------------------

- -------------------------------------------------------------------------------------------------------------
EQUITY RESTRUCTURING                                                                                         
- ------------------------------------------------------------------------------------------------------------- 
PETRO
--------------------------------------        
PUBLIC                      INSIDERS
--------                    ----------   

Securities Offered                                 Sr Sub                      Sub & GP
Insentive Rights                                       76%                           24%
Value Offered                                      $ 2.42                        $ 2.45
Current Market                                     $ 1.31                        $ 1.31
Premium to Market                                    84.1%                         86.7%

Implied Value of Security Offered                  $18.52                        $15.41
Security Offered per Share                        0.13064                       0.15920
Total Shares                                       14,609                        11,953
Insiders to Receive Sr. Sub                         6,572                        (6,572)
Shares to Be Converted                             21,181                         5,382
Units Offered                                       2,767                           857
DPUs Offered                                                                        909

Implied Value of GP/Unit                                                         $15.41
- -------------------------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------- 
SOURCES AND USES OF FUNDS
- -------------------------------------------------------------------------------------------------------------  

Sources:                                          Uses:                     
Excess Cash on Hand                  $841         Repay Debt Principal         $206,250
New Sar Debt                      120,000         Redeem Preferred               31,767
New MLP Equity                    139,363         Premium on Redemption/          
New MLP E Equity                        -          Exchange/Defeasance            2,844
Equity for Contest Fees             2,110         Consent Fees                    2,110
Cash Balance                            0         Transaction Fees               19,343

---------                                     ---------   
$262,314                                       $262,314                                       
=========                                     =========  
- -------------------------------------------------------------------------------------------------------------  

- -------------------------------------------------------------------------------------------------------------  
FINANCING SUMMARY
- -------------------------------------------------------------------------------------------------------------   

AMOUNT        RATE       UNIT PRICE
---------    ----------    ----------    
New Common Raised                 $139,363                    $20.26
New Debt Raised                    120,000       9.00%
- -------------------------------------------------------------------------------------------------------------   

- -------------------------------------------------------------------------------------------------------------   
UNITS OUTSTANDING
- -------------------------------------------------------------------------------------------------------------    
CURRENT                  PRO FORMA
-----------------------------   -----------------------------
UNITS             %             UNITS             % 
-------------   -------------   -------------   -------------  

Existing Common                                     3,858           60.5%           3,858           26.7%
New Common                                              0            0.0%           6,983           48.5%
New Common for Acquisitions                             0            0.0%               0            0.0%
Common to Petro Shareholders                            0            0.0%               0            0.0%
Sr Sub (Petro S/Hs)                                     0            0.0%           2,767           19.1%
Existing Sub                                        2,395           37.5%             567            3.9%
Implied GP                                            128            2.0%             289            2.0%
-------------   -------------   -------------   -------------  
Total Units                               6,382          100.0%          14,465          100.0%
=============   =============   =============   =============  
- -------------------------------------------------------------------------------------------------------------    

Main Model Oct-7 Rev I with new Star & AGE 30 yr Petro
Projections and tax effect. For discussion purposes only.

1 of 19

TRANSACTION SUMMARY AND ASSUMPTIONS
(in thousands except per share and per unit data)

30-yr.; $30mm @ 4.75x mid-year; $.01 '99, $.005 '00-'01 flat att.

$10,000   Star Acqs/yr
$30,000   Petro Acqs/yr         G.P. Interest Subordinate
$2.42     /Petro Share

OPERATING ASSUMPTIONS
- ---------------------
PETRO       STAR      STAR NORMAL
-----       ----      -----------
Normalized Maintenance CapEx                   $2,776     $2,710        $2,710
Maintenance CapEx Life                         15 yrs     15 yrs
Growth CapEx Life                             6.5 yrs     15 yrs

Marginal Tax Rate                                33.0%      33.0%
Deferred Tax Percent                                         0.0%

Required Cash at Beginning for Initial  
Distribution                                              7,956
Minimum Star Stand Alone Cash Balance                       $500
Minimum Star Pro Forma Cash Balance                      $10,142
Consolidation Savings                                       $500
Annual Bank Fees                                 $692       $222
Last 20 Days Average Stock Price @ 10/14        $1.31     $20.26
Annual Transaction/Deal Expenses                            $450
Debt/EBITDA Bank Covenant Ratio                             4.5x
Issue Equity to Meet Bank Debt Covenants (Y/N)?              yes

DEBT RESTRUCTURING
- ------------------
PROJECTED   
12/31/97    
PRIVATES:                         % TENDERED   PRINCIPAL    STRATEGY    PRICE
----------   ---------    --------    -----
11.96% Sr Notes                   100.0%       60,000     Exchange   105.2%
14.10% Sr Notes                   100.0%        3,100     Exchange   105.2%
14.10% Sub Notes                  100.0%        3,100     Exchange   105.2%
14.33% Pfd Stock                  100.0%        4,167   Neg. Tender  100.0%
PUBLICS:
10.13% Sub Notes & Sr Notes       100.0%       50,000   Neg. Tender  100.0%
9.38% Sub Notes & Sr Notes        100.0%       75,000      Tender    100.0%
12.25% Sub Notes & Sr Notes       100.0%       81,250      Tender    103.5%
12.88% Pfd Stock                  100.0%       30,000      Tender     92.0%

NEW SECURITY ASSUMPTIONS
- ------------------------

New MLP Equity
- --------------
Gross Proceeds                    $139,363
Common Units for Consent Fee         2,110
Common Units to Enron                   --
--------
Total New Equity Value          $141,473
Common Units to Public               6,983 units

New Star Debt
-------------
Gross Proceeds  120,000
Gross Spread %                                   5.0%   Gross Spread %     3.0%
Gross Spread $                                 $6,968   Gross Spread $   $3,600
Offering Price/Share (current market price)    $20.26   Coupon            9.00%

Main Model Oct-7 Rev 1 with new Star & AGE 30 yr Petro Projections and tax
effect

ACQUISITION ASSUMPTIONS
- -----------------------

Petro                      Multiple       1998        1999       2000       2001       2002
- -----                      --------      ------      ------     ------     ------     ------

Amount                     4.75x           $0     $30,000    $30,000    $30,000    $30,000
Timing                                    End         Mid        Mid        Mid        Mid
% EBITDA                                 0.0%       50.0%      50.0%      50.0%      50.0%
Amount                     4.75x                       $0                         
Timing                                                Beg                         
% EBITDA in Initial Yr.                            100.0%
Units Issued at: Common                  $22.00
Sr Sub                  $18.52

Star Stand-Alone
- ----------------
Weather                   30 year
Amount                      6.50x     $10,000     $10,000    $10,000    $10,000    $10,000
Timing                                    End         Mid        Mid        Mid        Mid
% EBITDA in Initial Year                 0.0%       50.0%      50.0%      50.0%      50.0%
Amount Financed with Equity              $600      $2,948     $4,127     $3,521     $2,853
New Units @:                               27         134        188        160        130
Units Issued at Price of:              $22.00      $22.00     $22.00     $22.00     $22.00

Amount                      6.50x                      $0
Timing                                                Beg
% EBITDA in Initial Year                           100.0%

EXCHANGE ASSUMPTIONS
- --------------------
GETS NEW UNITS OF: 
EXISTING       --------------------------------------------------
SHAREHOLDERS OF:                 SHARES        COMMON     SR SUB     JNR SUB     G.P.     DPUs(1)
- ----------------               ----------      ------     ------     -------    ------    -------
Public Class A Shareholders     14,609              0      1,909           0         0       479
Insider Class B Shares              11              0          0           0                   0
Insider Class C Shareholders                                                         0
Class A & C Shares to Receive
Jr Sub & GP                   5,382              0          0         567       289       215
Class A Shares to Receive
Sr Sub                        6,572              0        859           0         0       215
-------            ---      -----         ---       ---       ---
26,574              0      2,767         567       289       909
E Sr. Sub                                                     --                              --
-----                             ---
Total                                                  2,767                             909
=====                             ===

(1) Includes 2.0% G.P. Interest.

TRANSACTION COSTS SUMMARY
- -------------------------

New MLP Equity                                    $6,968
New Star Debt                                      3,600
Fairness Opinion                                   1,000
Financial Advisory                                 1,500
Exchange Fees on Public Petro Debt/Preferred       1,375
Legal Fees                                         2,500
Printing                                           1,000
Accounting Fees                                      250
Other:
- ------
Environmental                                        350
Rating Agencies                                      100
Roadshow                                             200
Asset Appraisal                                      250
Solicitation expenses                                100
Other Bank Fees                                      150
-------
$19,343
=======        

HEATING OIL DPU TRIGGER
- -----------------------
DCF/Unit:       % Convert
$2.90           33.3%

CONSENT FEE CALCULATION
- -----------------------

% of Petro Stock                3.0%
New Petro Shares                 797
Exchange Ratio                 7.65x
------
New Common Units                 104
Common Unit Price             $20.26
------
Implied Value                 $2,110
======

Main Model Oct-7 Rev I with new Star & AGE 30 yr Petro
Projections and tax effect. For discussion purposes only.

2 of 19

-------------------------------------------------------------------------
Summary                                               30-yr; $30mm @ 4.75x mid year; $.01 `99, $.005 `00-`01, flat std.
Distributions                                         $10,000     Star Acqs/yr
$30,000     Petro Acqs/yr        G.P. Interest Subordinate
$2.42       / Petro Share
------------------------------------------------------------------------- 

Projected
---------------------------------------------------------------
Unitholder Class (1)                                 1998            1999            2000            2001            2002
-------------   ---------------  --------------  --------------  --------------

Common Unitholders                                                  
MQD                                                              $24,936         $25,596         $27,229         $29,207
Incentive Distributions                                             -                -               -               -
---------------  --------------  --------------  --------------
Total                                               $24,936         $25,596         $27,229         $29,207         
E Capital
Existing Sr. Sub Units                                          -               -               -               -
Number of DPUs Issued as Sr Sub Units                           -               -               -               -
New Sr. Sub Units                                               -               -               -               -
---------------  --------------  --------------  --------------
Total Sr. Sub Units                                     -               -               -               -

Existing Common                                                 -               -               -               -
New Common                                                      -               -               -               -
---------------  --------------  --------------  --------------
Total Common                                            -               -               -               -
Common MQD                                                      -               -               -               -
Common Incentive Distributions                                  -               -               -               -
Sr. Sub MQD                                                     -               -               -               -
Sr. Sub Incentive Distributions                                 -               -               -               -
---------------  --------------  --------------  --------------
Total Distributions

Senior Subordinated Unitholders (1)                                     -               237             237             -
Number of DPUs Issued on Sr. Sub Units                  
Base MQD                                                    $ 6,364         $ 6,378         $ 6,392         $ 6,392
Incremental MQD from DPUs Issued as 
Sr. Sub Units                                                 -               545           1,089           1,089
Incentive Distributions                                         -               -               -               -
Incremental Incentive Distributions 
from DPUs Issued as Sr. Sub Units                             -               -               -               -
---------------  --------------  --------------  --------------
Total                                               $ 6,364         $ 6,923         $ 7,481         $ 7,481    

Subordinated Unitholders (1)                                            
Number of DPUs Issued as Sr. Sub Units                          -                60              60              -
Base MQD                                                     $1,305         $ 1,305         $ 1,305         $ 1,305   
Incremental MQD from DPUs Issued as 
Sr. Sub Units                                                 -               138             277             277
Incentive Distributions                                         -               -               -                 -
Incremental Incentive Distributions 
from DPUs Issued as Sr. Sub Units                             -               -               -                 -
---------------  --------------  --------------  --------------
Total                                                $1,305         $ 1,443         $ 1,582         $ 1,582

General Partner                                
Number of DPUs Issued on Sr. Sub Units                          -               -               -               -
Base MQD                                                       $665            $651            $638            $638
Incremental MQD from DPUs Issued as 
Sr. Sub Units                                                 -                14              28              28
Incentive Distributions                                         -               -               -               -
Incremental Incentive Distributions 
from DPUs Issued as Sr. Sub Units                             -               -               -               -
---------------  --------------  --------------  --------------
Total                                                  $665            $665            $665            $665

Unitholder Class Total                                               
Common Unitholders                                          $24,936         $25,596         $27,279         $29,207
Senior Subordinated Unitholders                             $ 6,364         $ 6,923         $ 7,481         $ 7,481
Subordinated Unitholders                                      1,305           1,443           1,582           1,582
General Partner                                                 665             665             665             665
---------------  --------------  --------------  --------------
Total                                               $33,270         $34,628         $36,957         $38,935    

Distributions to DPUs converted to 
Senior Subordinated Units         
MQD                                                         $     0         $   697         $ 1,394         $ 1,394
Incentive Distributions                                         -               -               -               -
---------------  --------------  --------------  --------------
Total                                                   -               697           1,394           1,394    

check           -               -               -               -

- ------------
(1) Reflects distributions for respective Unitholder class. All DPUs are issued
as Senior Subordinated Units but are distributed pro rata to all Petro
shareholders. Consequently, the Subordinated Unitholder class includes DPUs
which have been issued as Senior Subordinated Units.

Main Model Oct-7 Rev I with new Star & AGE 30 yr Petro
Projections and tax effect. For discussion purposes only.

3 of 19

TRANSACTION SUMMARY AND ASSUMPTIONS
(in thousands except per share and per unit data)                    30-yr; $30mm @ 4.75x mid-year;$.01 '99,$.005 '00-'O1, flat att.

RECAPITALIZATION ASSUMPTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
(D)EFEASE
(T)ENDER 
(R)EDEEM       PRINCIPAL                    
LOCKUP    (E)XCHANGE      AS OF       MATURITY PERIOD   COUPON/   SINKING FUND PAYMENT   % RED/
---------------             --------------------           
PETRO INSTRUMENTS:                PREMIUM   (N)OTHING      9/30/98       M/D         YR   DIVIDEND  PAYMENT   YEAR START   EXCHANGED
- ------------------                -------   ----------     ----------   ---------------   --------  --------------------   ---------

11.96% Sr Notes                                 e          $ 60,000 v    1-Oct        0   11.960%    $   0             0    100.0%
14.10% Sr Notes                                 e             3,100 v   15-Jan     2001   14.100%        -          1997    100.0%
14.10% Sub Notes                                e             3,100 v   15-Jan     2001   14.100%        -          1997    100.0% 
10.13% Sub Notes & Sr Notes        0.0%         t            50,000 v    1-Apr     2003   10.130%        -                  100.0% 
9.38% Sub Notes & Sr Notes        0.0%         t            75,000 v    1-Feb     2006    9.375%        -                  100.0% 
12.25% Sub Notes & Sr Notes        0.0%         t            81,250 v    1-Feb     2005   12.250%        -                  100.0% 
8.00% Acq. & Other Notes Pay                   n            14,508 v                 0    8.000%        -             0      0.0%
8.25% Existing Credit Facility                 n                 0 v              1998    8.250%        -                    0.0%
0.00% Other Notes                              n                 0 v       NA       NA    0.000%        0            NA      0.0% 
--------                                                          
$286,958                                                         

PFRD STOCK:     
- -----------     
14.33% Pfd Stock                                t             4,167 v     1-Aug    1999   14.330%    4,167          1997    100.0% 
12.88% Pfd Stock                  0.0%          t            30,000 v    15-Feb    2009   12.875%        0                  100.0%
0.00%                                           n                 0                        0.000%
-------- 
$ 34,167
--------                                                          
Total Petro                                        $321,125
--------                                                          

STAR INSTRUMENTS:                                                                    
- ------------------
8.04% 1st Mortgage Notes         0.07           n            85,000 v        NA      NA    8.040%        -             0      0.0%  
7.25% WC Revolver                0.00           n             4,785          NA      NA    7.250%        -            NA      0.0%
7.25% Acquisition Facility       0.01           n             9,000 v        NA      NA    7.250%        -            NA      0.0%
9.00% New Debt                                  n           120,000 v        NA      NA    9.000%        0            NA      0.0%
7.17% Pearl Notes                0.01           n            11,000          NA      NA    7.170%        0            NA      0.0%
-------- 
8.21%                     $218,785
--------  
Total Combined                                     $539,910
========  

RED/EXCHG      DEFEASANCE         RED/EXCHG/DEFEASE            EXCHANGED
-------------------------        
PETRO INSTRUMENTS:                 PRICE           PRICE          VALUE          PREMIUM          INT RATE     SECURITY TYPE 
- ------------------                 ---------      ----------     -----------    ---------         ---------    -------------

11.96% Sr Notes                      105.2%                        $63,126      $       0               9.0%   Sr Notes  
14.10% Sr Notes                      105.2%                          3,260            -                11.5%   Sr Notes   
14.10% Sub Notes                     105.2%                          3,260            -                11.5%   Sub Notes
10.13% Sub Notes & Sr Notes          100.0%         106.2%          50,000            -                        Sub Notes & Sr Notes 
9.38% Sub Notes & Sr Notes          100.0%         108.2%          75,000            -                        Sub Notes & Sr Notes 
12.25% Sub Notes & Sr Notes          103.5%         116.2%          84,094          2,844                      Sub Notes & Sr Notes 
8.00% Acq. & Other Notes Pay         100.0%                            -              -                        Acq. & Other Notes 
Pay         
8.25% Existing Credit Facility       100.0%                            -              -                        Existing Credit
Facility          
0.00% Other Notes                      0.0%                            -              -                11.0%   Other Notes
----------          
$   2,844                        
PFRD STOCK:          
- -----------                    
14.33% Pfd Stock                     100.0%                          4,167            -                        Pfd Stock   
12.88% Pfd Stock                      92.0%                         27,600            -                        Pfd Stock   
0.00%                                                                  -              -
----------          
$       0
Total Petro                                                             ----------          
$   2,844
----------           
STAR INSTRUMENTS:                                                                         
- ------------------             
8.04% 1st Mortgage Notes               0.0%                            -              -                        1st Mortgage Notes 
7.25% WC Revolver                      0.0%                            -              -                        WC Revolver
7.25% Acquisition Facility             0.0%                            -              -                        Acquisition 
Facility
9.00% New Debt                         0.0%                            -              -                        New Notes
7.17% Pearl Notes                      0.0%                            -              -                        Pearl Notes 
----------          
$       0
----------          
Total Combined                                                                  $   2,844
----------           
2,843.75

STAR STAND ALONE DISTRIBUTION ASSUMPTIONS       
- -----------------------------------------------------------------------------

Distribution         
------------         

Minimum Quarterly Distribution                                  $   2.20              
First Target Distribution                                       $   2.42              
Second Target Distribution                                      $   2.84              
Third Target Distribution                                       $   3.70               
Thereafter                                                            NM              

Target Distribution Level                                       $   2.20             
Annual Distribution Increase                                    $   0.00             

------------
Standard Distributions Structure ("S") or Target ("T")                  t 
------------  

STAR PRO FORMA DISTRIBUTION ASSUMPTIONS       
- -------------------------------------------------------------
Distribution       
------------       

Minimum Quarterly Distribution                   $   2.30           
First Target Distribution                        $   2.42               
Second Target Distribution                       $   2.84               
Third Target Distribution                        $   3.70                
Thereafter                                             NM      

----------------------------------------------------       
1998      1999      2000       2001      2002     Thereafter    
---------  --------  --------   --------  --------   

Annual Indicated Distribution Increase     $   0.00   $   0.00  $   0.00   $   0.00  $   0.00   $   0.00                   
Target Indicated Distribution Level        $   2.30   $   2.30  $   2.30   $   2.30  $   2.30                               
----------- 
Standard Distribution Structure ("S") or Target ("T")        t
----------- 
- ----------------------------------------------------------------------------------------------------------             

Main Model Oct-7 Rev I with new Star & AGE 30 yr Petro
Projections and tax effect. For discussion purposes only.

4 of 19

- --------------------------------------------------------------------------------
Pro Forma Opening Balance Sheet
(In thousands except per share and per unit data)

Opening Balance Sheet                                       Star Gas       Petro                                         Pro Forma
--------       -----               
----------     ----------                         Merger       Star Gas
9/30/98        9/30/98                       Adjustments     9/30/98
----------     ----------                      -----------    --------

Assets                                                                                         
Cash                                                    $    500         $   9,642                       $     0    $ 10,142
Other Current Assets                                      15,376            71,498                             -      86,874   
--------         ---------                      --------    --------  
Total Current Assets                                     15,876            81,140                             -      97,016

PP&E and Intangibles, Net                                161,292           106,695                             -     267,987
Investments in Unconsolidated Affiliates                       -             1,582                        (1,582)          -
Other Assets                                                   -            12,802                             -      12,802
--------         ---------                      --------    --------  
Total Assets                                            177,168           202,219                        (1,582)    377,805
========         =========                                  ======== 
Liabilities                                                                                    

Current Liabilities                                       10,101            80,870                             -      90,971    
8.25% Existing Credit Facility                             4,785                 -                             -       4,785   
Long Term Debt                                           105,000           286,958                       (82,804)    309,154     
Total Preferred Stock                                          -            34,167                       (34,167)          -   
Other Liabilities                                             76            10,710                             -      10,786   
--------         ---------                      --------    --------  
Total Liabilities                                       119,962           412,705                      (116,971)    415,696    

Common Shareholder's/Partner's Equity                        57,206          (210,486)                      115,389     (37,891)   
--------         ---------                      --------    --------  
Total Liabilities and Equity Check                     $177,168          $202,219                     ($  1,582)   $377,805
========         =========                                  ======== 
0                 - 

PRO FORMA CAPITAL STRUCTURE                                 Star Gas         Petro    
--------         -----    
----------       ----------        % Not         Merger       Star Gas
9/30/98          9/30/98         Tendered     Adjustments    9/30/98
----------       ----------       --------     -----------   -------- 

DEBT:
8.04% 1st Mortgage Notes                                   $ 85,000                $0                     $       0     $85,000
7.25% WC Revolver                                             4,785                 -                             -       4,785
7.25% Acquisition Facility                                    9,000                 -                             -       9,000
7.17% Pearl Notes                                            11,000                 -                             -      11,000

11.96% Sr Notes                                                 -              60,000         100.0%        (60,000)          -
14.10% Sr Notes                                                 -               3,100         100.0%         (3,100)          -
14.10% Sub Notes                                                -               3,100         100.0%         (3,100)          -
10.13% Sub Notes & Sr Notes                                     -              50,000         100.0%        (50,000)          -
9.38% Sub Notes & Sr Notes                                      -              75,000         100.0%        (75,000)          -
12.25% Sub Notes & Sr Notes                                     -              81,250         100.0%        (81,250)          -
0.00% Other Notes                                               -                   0                             -           -
8.00% Acq. & Other Notes Pay                                    -              14,508                             -      14,508
8.25% Existing Credit Facility                                  -                   0                             -           -

9.00% Exchange Debt                                             -                   -                        63,126      65,126
11.50% Exchanged Debt                                                                                         6,520       6,520
9.00% New Debt                                                  -                   -                       120,000     120,000
--------         ---------                      --------    --------  
Total L.T. Debt                                         109,785           286,958                       (82,804)    313,939
--------         ---------                                  -------- 
Preferred Stock
14.33% Pfd. Stock                                               -               4,167             -          (4,167)          -
12.88% Pfd. Stock                                               -              30,000                       (30,000)          -
--------         ---------                      --------    --------  
Total Preferred                                             -              34,167                       (34,167)          -
--------         ---------                                  -------- 
Common Equity                                                57,206          (210,486)                      115,389     (37,891)
--------         ---------                                  -------- 

Total Capital                                          $166,991         $ 110,639                                  $276,048 
========         =========                                  ======== 

Main Model Oct-7 Rev I with new Star & AGE 30 yr Petro
Projections and tax effect. For discussion purposes only.

5 of 19

STAR GAS STAND ALONE INCOME STATEMENT
(In thousands except per share and per unit data)

Estimated   Normalized                  Projected
---------------------------------------
1998        1998       1999       2000        2001      2002
-------      -------    -------    -------    -------   -------

EBITDA                                                  $18,781      $22,133    $24,491    $26,029    $27,566   $29,104
Depreciation and Amortization                       11,927       11,649     12,358     13,346     14,224    14,938
-------      -------    -------    -------    -------   -------

EBIT                                                      6,854       10,486     12,133     12,683     13,342    14,166
Interest Expense                                    (7,922)      (7,662)    (8,811)    (9,377)    (9,878)  (10,380)  
Interest Income                                          -            -          -          -          -         -
Other Income                                             -            -          -          -          -         -
-------      -------    -------    -------    -------   -------

Income Before Taxes                                      (1,068)       2,824      3,322      3,306      3,464     3,786
Current Income Taxes                                   (25)         (25)       (25)       (25)       (25)      (25)
Deferred Income Taxes                                    -            -          -          -          -         - 
-------      -------    -------    -------    -------   -------
Net income Available to Common                          ($1,093)     $ 2,799    $ 3,297    $ 3,281    $ 3,439   $ 3,761 
=======      =======    =======    =======    =======   =======

STAR GAS STAND ALONE UNITS OUTSTANDING                  

Common Units                                            
Beginning Balance                                      3,832        3,832      3,858      3,990      4,174     4,330
Issuance                                                27           27        131        184        157       127
Buyback                                                  0            0          0          0          0         0
-------      -------    -------    -------    -------   -------
Ending Balance                                         3,858        3,858      3,990      4,174      4,330     4,458
-------      -------    -------    -------    -------   -------
Average Common Units Outstanding                       3,858        3,858      3,924      4,082      4,252     4,394

Subordinated Units                                      
Beginning Balance                                      2,396        2,396      2,396      2,396      2,396     2,396
Issuance                                                 0            0          0          0          0         0
Buyback                                                  0            0          0          0          0         0
-------      -------    -------    -------    -------   -------
Ending Balance                                         2,396        2,396      2,396      2,396      2,396     2,396
-------      -------    -------    -------    -------   -------
Average Subordinated Units Outstanding                 2,396        2,396      2,396      2,396      2,396     2,396

GP Implied Units                                        
Beginning Balance                                        127          127        128        130        134       137
Issuance                                                 1            1          3          4          3         3 
Buyback                                                  0            0          0          0          0         0  
-------      -------    -------    -------    -------   -------
Ending Balance                                           128          128        130        134        137       140
-------      -------    -------    -------    -------   ------- 
Average Implied GP Units Outstanding                     128          128        129        132        136       139
Total Units                                          6,382        6,382      6,516      6,704      6,864     6,993  
=======      =======    =======    =======    =======   ======= 

Average Units Outstanding                            6,382        6,382      6,449      6,610      6,784     6,929
=======      =======    =======    =======    =======   ======= 

Main Model Oct-7 Rev I with new Star & AGE 30 yr Petro
Projections and tax effect. For discussion purposes only.

6 of 19

(In thousands except per share and per unit data)
Estimated                 Projected
-------------------------------------------
Star Gas Stand Alone Balance Sheet                                 1998      1999       2000        2001        2002
---------  --------   --------    --------    -------- 

Assets:                                                                               
Cash                                                          $    500    $    500   $    500    $    500    $    500
Other Current Assets                                            15,376      18,447     19,274      20,101      20,928
--------    --------   --------    --------    -------- 
Total Current Assets                                        15,876      18,947     19,774      20,601      21,428

PP&E and Intangibles, Net                                      161,292     162,016    161,799     160,753     159,042
Other Assets                                                         -           -          -           -           - 
--------    --------   --------    --------    -------- 
Total Assets                                               177,168     180,963    181,573     181,354     180,470
========    ========   ========    ========    ========

Liabilities:                                                                          
Current Liabilities - Excluding Working Capital Borrowing       10,101      13,172     13,999      14,826      15,653
Total Debt                                                     109,785     118,453    125,370     132,288     139,207 
Other Liabilities                                                   76          76         76          76          76
--------    --------   --------    --------    -------- 
Total Liabilities                                          119,962     131,701    139,445     147,190     154,936

Partner's Equity                                                 57,206      49,262     42,128      34,164      25,534
========    --------   --------    --------    -------- 
Total Liabilities and Equity                              $177,168    $180,963   $181,573    $181,354    $180,470 
========    ========   ========    ========    ========
Check                                                       0           0          0           0           0

Star Gas Stand Alone Cash Flow Statement                                              

Net Income                                                                 $ 3,297   $  3,281    $  3,439    $  3,761
Depreciation and Amortization                                               12,358     13,346      14,224      14,938 
Deferred Taxes                                                                   -          -           -           -
Other Income                                                                     -          -           -           -
Other Assets/Liabilities                                                         -          -           -           -
Change in Working Capital                                                        0          -          (0)          0
--------   --------    --------    -------- 
Cash from Operations                                                         15,655     16,627      17,663      18,699   
--------   --------    --------    --------

Maintenance CapEx                                                           (2,632)    (2,679)     (2,728)     (2,777)
Internal Growth CapEx                                                            -          -           -           -
External Growth CapEx                                                      (10,000)   (10,000)    (10,000)    (10,000)
--------   --------    --------    -------- 
Cash from Investments                                                       (12,632)   (12,679)    (12,728)    (12,777) 
--------   --------    --------    -------- 

Acquisition Borrowing                                                        7,052      5,873       6,479       7,147
Remaining Distributions to Repay Debt                                           (0)        (0)        (11)       (678)
Amortization of Mortgage Notes                                                   -          -           -           -
Borrowing to Repay Exisitng Debt                                                 -          -           -           -
Borrowing for Changes in WC                                                     (0)         -           0          (0)
Borrowing to Pay Full MQD                                                    1,166        594           -           -
Change in Equity                                                             2,949      4,127       3,521       2,853
Transaction/Deal Expenses                                                     (450)      (450)       (450)       (450)
Distributions                                                              (14,188)   (14,542)    (14,924)    (15,243)
--------   --------    --------    -------- 
Cash from Financing                                                          (3,473)    (4,398)     (5,385)     (6,372)
--------   --------    --------    -------- 

Net Cash Flow                                                                  (450)      (450)       (450)       (450)
Initial Cash Balance                                                            500        500         500         500
--------   --------    --------    --------   
Cash Available for Paydown on WC Revolver and Acq. Facility                      50         50          50          50

Minimum Cash Balance                                                            500        500         500         500

Borrowing/(Paydown) on WC Revolver and Acq. Facility                            450        450         450         450
--------   --------    --------    --------          
Net Change in Cash                                                                -          -           -           - 
--------   --------    --------    -------- 

Ending Cash Balance                                                        $    500   $    500    $    500    $    500
========   ========    ========    ========

Main Model Oct-7 Rev I with new Star & AGE 30 yr Petro
Projections and tax effect. For discussion purposes only.

7 of 19

(In thousands except per share and per unit data)
Estimated   Normalized             Projected
---------------------------------- 
1998        1998     1999      2000      2001      2002
---------   ----------  ----      ----      ----      ----     

STAR GAS STAND ALONE EBITDA CALCULATION
(See Tab 3: Cases)
- -------------------------------------------------------------------------------------------------------------------------------
Year 1      Year 2    Year 3    Year 4    Year 5
EBITDA Growth Rate                                                              17.9%       10.6%      6.3%      5.9%      5.6%
- -------------------------------------------------------------------------------------------------------------------------------

Base EBITDA:     Timing
------
End              1998
Mid              1999
Mid              2000
Mid              2001
Mid              2002
Mid              2003
Mid              2004
Mid              2005
-------     -------     -------   -------   -------   -------
Total EBITDA                                                     $18,781     $22,135     $24,491   $26,029   $27,566   $29,104
=======     =======     =======   =======   =======   ======= 

Pro Forma Full-Year EBITDA for Debt Covenant Analysis             18,781      22,135      25,260    26,798    28,335    29,873

STAR GAS STAND ALONE DEPRECIATION CALCULATION

Existing Depreciation                                            $11,927     $11,649     $11,649   $11,649   $11,649   $11,649

1998 Normal          2,710
Maintenance CapEx:                      1998            2,710    $     0     $     0     $   181   $   181   $   181   $   181
Annual Growth 1.8%       1999            2,632                                 88       175       175       175
2000            2,679                                           89       179       179
2001            2,728                                                     91       182
2002            2,777                                                               93

Internal Growth CapEx                   1998                0          -           -           -         -         -         -
Annual Growth: 0.0%      1999                0                                  -         -         -         -
2000                0                                            -         0         0
2001                0                                                      -         0
2002                0                                                                -
2003                0
2004                0
2005                0

External Growth CapEx:                  1998           10,000          -           -         667       667       667       667 
Annual Growth: 0.00/6    1999           10,000                                333       667       667       667
2000           10,000                                          333       667       667
2001           10,000                                                    333       667
2002           10,000                                                              333
2003           10,000
2004           10,000
2005           10,000
-------     -------     -------   -------   -------   ------- 
Total Depreciation:                                           $11,927     $11,649     $12,358   $13,346   $14,224   $14,938
=======     =======     =======   =======   =======   =======

Main Model Oct-7 Rev I with new Star & AGE 30 yr Petro
Projections and tax effect. For discussion purposes only.

8 of 19

Star Gas Stand Alone Schedule           
(In thousands except per share and per unit share)       

Estimated       Normalized                           Projected
----------------------------------------------------
1998             1998            1999          2000            2001       2002
----------      ------------    ------------   ---------        --------   ---------

8.04% 1st Mortgage Notes
Beginning Balance                              $ 85,000          $85,000          $ 85,000    $ 85,000         $85,000   $ 85,000
Borrowing                                            0                0                 0           0               0          0
Amortization                                         0                0                 0           0               0          0
----------      ------------    ------------   ---------        --------   ---------
Ending Balance                                   85,000           85,000            85,000      85,000          85,000     85,000

Interest Payment                  8.04%           6,834            6,834             6,834       6,834           6,834      6,834
Make-Whole Payment                                    0                0                 0           0               0          0

7.17% Pearl Notes
Beginning Balance                              $      0          $     0          $ 11,000     S11,000         $11,000    S11,000
Borrowing                                       11,000           11,000                 0           0               0          0
Amortization                                         0                0                 0           0               0          0
----------      ------------    ------------   ---------        --------   ---------
Ending Balance                                   11,000           11,000            11,000      11,000          11,000     11,000

Interest Payment                  7.17%             613              613               789         789             789        789
% of year Pearl Notes
Outstanding                                       77.7%            77.7%                0           0               0          0

7.25% WC Revolver
Beginning Balance                                     -                -          $  4,785    $  4,785         $ 4,785   $  4,785
Borrowing for Change in WC                           -                -                (0)                          0         (0)
Borrowing/(Payment)                              4,785            4,785                 0           0               0          0
----------      ------------    ------------   ---------        --------   ---------
Ending Balance                                    4,785            4,785             4,785       4,785           4,785      4,795
Effective Avg WC Balance                          3,490              (97)                0          14               0         14

Interest Payment                  7.25%             253               (7)                0           1               0          1

7.25% Acquisition Facility
Beginning Balance                                     -                           $  9,000    $ 17,668         $24,585   $ 31,503
External Acquisitions                            9,400            9,400             7,052       5,873           6,479      7,147
External Acquisitions at
Beginning of 1999                                   -                -                 -           -               -          -
Internal Acquisitions                             (400)            (400)                -           -               -          -
Borrowing to Pay Full MQD                            -                -             1,166         594               -          -
Borrowings to Repay                                  -                -                 -           -               -          -
Existing Debt                                       -                -                 -           -               -          -
Borrowings/(Payment)                                -                -               450         450             450        450
Remaining Distributions
to Repay Debt                                       -                -                (0)         (0)            (11)      (678)
----------      ------------    ------------   ---------        --------   ---------
Ending Balance                                    9,000            9,000            17,668      24,585          31,503     38,422

Interest Payment                  7.25%               0                0               967       1,532           2,033      2,535

Total Debt
Beginning Balance                              $ 85,000          $85,000          $109,785    $118,453        $125,370   $132,288
Amortization of Mortgage    Notes                    -                -                 -           -               -          -
Borrowing for Pearl Notes                       11,000           11,000                 -           -               -          -
Borrowing for Changes in    WC                       -                -                (0)          -               0         (0)

Borrowing to Pay Full MQD                            -                -             1,166         594               -          -
Acquisition Borrowing                            9,000            9,000             7,052       5,873           6,479      7,147
Borrowing to Repay
Existing Debt                                       -                -                 -           -               -          -
Remaining Distributions
to Repay Debt                                       -                -                (0)         (0)            (11)      (678)
Borrowing/(Payment) on WC Revolver
and Acq. Facility                               4,785            4,785               450         450             450        450
----------      ------------    ------------   ---------        --------   ---------
Ending Balance                                  $109,785         $109,785          $118,453    $125,370        $132,288   $139,207
==========      ============    ============   =========        ========   =========

Interest Expense
Interest Expense                              $  7,700          $ 7,440          $  8,589    $  9,155         $ 9,656   $ 10,158
Bank Fee                                           222              222               222         222             222        222
----------      ------------    ------------   ---------        --------   ---------
Total Interest Payment                     $  7,922          $ 7,662          $  8,811    $  9,377         $ 9,878   $ 10,380
==========      ============    ============   =========        ========   ========= 

Main Model Oct-7 Rev I with new Star & AGE 30 yr Petro
Projections and tax effect. For discussion purposes only.

9 of 19

Star Gas Stand Alone Schedule of Actual Distributions
(In thousands except per share and per unit data)

Estimated   Normalized                                 Projected
------------------------------------------------
ASSUMES REVISED TARGET
DISTRIBUTION STRUCTURE                        1998        1998                         1999         2000      2001           2002
---------   --------                      ----------   ---------  --------       --------

Distributable Cash
- ------------------
Cash from Operations                        $10,834     $14,448                        $15,655     $16,627    $17,663       $18,699
Maintenance CapEx                           (2,710)     (2,710)                        (2,632)     (2,679)    (2,728)       (2,777)

Other                                            0           0                              0           0          0             0
---------   --------                      ----------   ---------  --------       --------

Total MLP Distributable Cash
Flow                                         8,124      11,738                         13,023      13,948     14,935        15,922
Distributable Cash Flow / Unit              $  1.27     $  1.84                        $  2.02     $  2.11    $  2.20       $  2.30

Average Units for Calculating Annual
- ------------------------------------
Distributions                                                                               2           2          2             2
-------------
Common Units                                  3,858       3,858                          3,924       4,082      4,252         4,394
Subordinated Units                            2,396       2,396                          2,396       2,396      2,396         2,396
General Partner Interest Unit
Equivalent                                     128         128                            129         132        136           139
---------   --------                      ----------   ---------  --------       --------

Total Units Outstanding                       6,382       6,382                          6,449       6,610      6,784         6,929

Distribution Levels
- -------------------
MQD                                         $  2.20     $  2.20                        $  2.20     $  2.20    $  2.20       $  2.20
First Target                                $  2.42     $  2.42                        $  2.42     $  2.42    $  2.42       $  2.42
Second Target                               $  2.84     $  2.84                        $  2.84     $  2.84    $  2.84       $  2.84
Third Target                                $  3.70     $  3.70                        $  3.70     $  3.70    $  3.70       $  3.70
Indicated Cash Distribution                 $  2.20     $  2.20                        $  2.20     $  2.20    $  2.20       $  2.20

Distribution of MQD
- -------------------
Cash Available                                8,124      11,738                         13,023      13,948     14,935        15,922
Cash Borrowed to Pay Full MQD,                5,917       2,303                          1,166         594          0             0
Allocation to:
Common Units                                 8,489       8,489                          8,633       8,980      9,354         9,667
Subordinated Units                           5,271       5,271                          5,271       5,271      5,271         5,271
General Partner Interest                       281         281                            284         291        298           305

First Target Distribution
- -------------------------
Cash Available                                    0           0                              0           0         11           678
Cash Required for Target
Distribution                                    0           0                              0           0      1,492         1,524
Cash Required for Indicated
Distribution                                    0           0                              0           0          0             0
Actual Cash Distributed                          0           0                              0           0          0             0
Allocation to:
Common units                                     0           0                              0           0          0             0
Subordinated Units                               0           0                              0           0          0             0
General Partner Interest                         0           0                              0           0          0             0

Second Target Distribution
- --------------------------
Cash Available                                    0           0                              0           0          0             0
Cash Required for Target
Distribution                                    0           0                              0           0          0             0
Cash Required for Indicated
Distribution                                    0           0                              0           0          0             0
Actual Cash Distributed                          0           0                              0           0          0             0
Allocation to:
Common Units                                     0           0                              0           0          0             0
Subordinated Units                               0           0                              0           0          0             0
General Partner Interest                         0           0                              0           0          0             0
Incentive Distribution                           0           0                              0           0          0             0

Third Target Distribution
- -------------------------
Cash Available                                    0           0                              0           0          0             0
Cash Required for Target
Distribution                                    0           0                              0           0          0             0
Cash Required for Indicated
Distribution                                    0           0                              0           0          0             0
Actual Cash Distributed                          0           0                              0           0          0             0
Allocation to:
Common Units                                     0           0                              0           0          0             0
Subordinated Units                               0           0                              0           0          0             0
General Partner Interest                         0           0                              0           0          0             0
Incentive Distribution                           0           0                              0           0          0             0

Main Model Oct-7 Rev I with new Star & AGE 30 yr Petro
Projections and tax effect. For discussion purposes only.

10 of 19

Star Gas Stand Alone Schedule of Actual Distributions (cont'd) 

(In thousands except per share and per unit data)

Estimated      Normalized                          Projected
---------------------------------------------------- 
1998            1998           1999          2000          2001          2002
-----------      -----------   ------------    ---------    ----------     -------- 
Remaining Distributions                                                                                    
- -----------------------                                           

Cash Available                           0                0                 0            0             0             0
Allocation to:                                                                                             
Common Units                            0                                  0            0             0             0
Subordinated Units                      0                0                 0            0             0             0
General Partner Interest                0                0                 0            0             0             0
Incentive Distribution                  0                0                 0            0             0             0
Repay Indebtedness                     (0)              (0)                0            0            11           678

Total Distributions                                                                                        
- -------------------                                                                                        
Common Units                         8,489            8,489             8,633        8,980         9,354         9,667
Subordinated Units                   5,271            5,271             5,271        5,271         5,271         5,271
General Partner Interest               281              281               284          291           298           305
Incentive Distribution                   0                0                 0            0             0             0
-------          -------           -------      -------       -------       ------- 
Total Distributions               $14,041          $14,041           $14,188      $14,542       $14,924       $15,243
=======          =======           =======      =======       =======       =======

Total Distributions Per Unit                                                                               
- ----------------------------                                      
Common Unit                        $  2.20          $  2.20           $  2.20      $  2.20       $  2.20       $  2.20
Subordinated Unit                     2.20             2.20              2.20         2.20          2.20          2.20
GP Unit                               2.20             2.20              2.20         2.20          2.20          2.20

Main Model Oct-7 Rev I with new Star & AGE 30 yr Petro
Projections and tax effect. For discussion purposes only.

11 of 19

(In thousands except per share and per unit data)

Petro EBITDA Calculation                         Estimated        Normalized                          Projected
---------------------------------------------------- 
1998            1998           1999          2000          2001          2002
-----------      -----------   ------------    ---------    ----------     -------- 

- ------------------------------------------------------------------------------------------------------------------------------------
Year 1        Year 2         Year 3       Year 4         Year 5
EBITDA Growth Rate
- ------------------------------------------------------------------------------------------------------------------------------------

Base EBITDA:    Timing  
------
Acquisitions:    End      1998  $     0
Mid      1999   30,000
Mid      2000   30,000
Mid      2001   30,000
Mid      2002   30,000
Mid      2003   30,000
Mid      2004   30,000
Mid      2005   30,000
-------        -------        -------         -------       -------       ------- 
Total EBITDA.                                  $37,630        $46,900        $48,706         $51,196       $53,390       $55,385
=======        =======        =======         =======       =======       =======

Pro Forma Full-Year EBITDA for Debt Covenent 
Analysis                                        37,630         46,900         51,864          54,354        56,548        58,543

Petro Depreciation Calculation

Existing Depreciation                             $28,710        $28,710        $28,710         $28,710       $28,710       $28,710

Maintenance CapEx:           1998  $ 2,776              -              -            185             185           185           185
Annual Growth: 2.0%       1999    3,000                                          100             200           200           200
2000    3,060                                                          102           204           204
2001    3,121                                                                        104           208
2002    3,184                                                                                      106
2003    3,247
2004    3,312
2005    3,378

Internal Growth CapEx:       1998  $     0              -              -              -               -             -             - 
Annual Growth: 0.0%       1999        0                                            -               -             -             -
2000        0                                                            -             -             -
2001        0                                                                          -             -
2002        0                                                                                        - 

2003        0
2004        0
2005        0

External Growth CapEx:       1998  $     0              -              -              0               0             0             0
Annual Growth: 0.0%       1999   30,000                                        2,308           4,615         4,615         4,615
2000   30,000                                                        2,308         4,615         4,615
2001   30,000                                                                      2,308         4,615
2002   30,000                                                                                    2,308
2003   30,000
2004   30,000
2005   30,000

-------        -------        -------         -------       -------       ------- 
Total Depreciation:                               28,710         28,710         31,303          36,120        40,942        45,767
=======        =======        =======         =======       =======       =======

Main Model Oct-7 Rev I with new Star & AGE 30 yr Petro
Projections and tax effect. For discussion purposes only.

12 of 19    

- ------------------------------------------------------------------------------------------------------------------------------------
(in thousands except per share and per unit data)

STAR PRO FORMA INCOME STATEMENT                                                                         PROJECTED
ESTIMATED  NORMALIZED   -----------------------------------------
1998        1998        1999       2000       2001       2002
--------   ----------   --------   --------   --------   --------

Combined EBITDA                                                 $ 56,411   $   69,035   $ 73,197   $ 77,225   $ 80,956   $ 84,489
Consolidated Savings                                              500          500        500        500        500        500 
--------   ----------   --------   --------   --------   --------
Pro Forma EBITDA                                                  56,911       69,535     73,697     77,725     81,456     84,989
Depreciation and Amortization                                  40,637       40,359     43,661     49,466     55,166     60,705
--------   ----------   --------   --------   --------   --------
EBIT                                                              16,274       29,176     30,036     28,259     26,290     24,284
Interest Expense                                              (28,307)     (28,253)   (29,468)   (31,549)   (33,017)   (34,202)
Interest Income                                                     -            -          -          -          -          - 
Other Income                                                        -            -          -          -          -          -  

EBT                                                              (12,033)         923        569     (3,290)    (6,726)    (9,919)
--------   ----------   --------   --------   --------   --------
Current Income Taxes                                           (1,025)      (1,025)    (1,025)    (1,025)    (1,025)    (1,025)  
Deferred Income Taxes                                               -            -          -          -          -          -  
--------   ----------   --------   --------   --------   --------
Net Income Available to Common                                  $(13,058)  $     (102)  $   (456)  $ (4,315)  $ (7,751)  $(10,944)
========   ==========   ========   ========   ========   ========
Pro Forma Full-Year EBITDA for Debt Covenant Analysis             56,911       69,535     77,624     81,652     85,383     88,916

STAR PRO FORMA UNITS OUTSTANDING

Common Units
Beginning Balance                                                           10,842     10,842     10,842     11,416     12,261
Issuance                                                                       -          -          -          -          - 
Issued to Meet Debt Covenant Ratio                                             -          -        574        846        874
Issued to E                                                                    -          -          -          -          - 
Buyback                                                                        -          -          -          -          - 
--------   ----------   --------   --------   --------   --------
Ending Balance                                                 10,842       10,842     10,842     11,416     12,261     13,136
--------   ----------   --------   --------   --------   --------
Average Common Units Outstanding                               10,842       10,842     10,842     11,129     11,839     12,699 

Deferred Participation Units                                                        -    
Beginning Balance                                                    -            -        909        909        606        303
DPUs Issued at Beginning of Year                                  -            -          -       (303)      (303)         - 
--------   ----------   --------   --------   --------   --------
Ending Balance                                                      -            -        909        606        303        303

SR Subordinated Units
Beginning Balance - Sr Sub Units                                              2,767      2,767      2,767      3,070      3,373
DPUs Issued                                                                    -          -        303        303          -  
Sr. Sub Issuance                                                               -          -          -          -          - 
Sr. Sub to E                                                                   -          -          -          -          - 
Sr. Sub Converted to G.P. Interest                                             -          -          -          -          - 
--------   ----------   --------   --------   --------   --------
Ending Balance                                                  2,767        2,767      2,767      3,070      3,373      3,373 
--------   ----------   --------   --------   --------   --------
Average Sr Subordinated Units Outstanding                       2,767        2,767      2,767      3,070      3,373      3,373 

Subordinated Units
Beginning Balance                                                              567        567        567        567        567
Issuance                                                                       -          -          -          -          - 
Buyback                                                                        -          -          -          -          - 
--------   ----------   --------   --------   --------   --------
Ending Balance                                                    567          567        567        567        567        567 
--------   ----------   --------   --------   --------   --------
Average Subordinated Units Outstanding                            567          567        567        567        567        567 

GP Implied Units
Beginning Balance                                                              289        289        289        289        289 
Issued in conjunction with DPUs                                                -          -          -          -          - 
Issued to Meet Debt Covenant Ratio                                             -          -          -          -          - 
Issued in conjunction with E Equity                                            -          -          -          -          - 
Buyback                                                                        -          -          -          -          -
--------   ----------   --------   --------   --------   --------
289          289        289        289        289        289 
--------   ----------   --------   --------   --------   --------
Average Implied GP Units Outstanding                              289          289        289        289        289        289 

Total Units Outstanding                                           14,465       14,465     14,465     15,343     16,491     17,366 
--------   ----------   --------   --------   --------   --------
Average Total Units Outstanding                                   14,465       14,465     14,465     15,055     16,068     16,928 
========   ==========   ========   ========   ========   ========

Pro Forma Heating Oil Units Used for DPU Issue Calculation                                 8,016      8,446      9,285     10,000

(In thousands except per share and per unit data}

STAR PRO FORMA BALANCE SHEET                              Estimated                           Projected
--------------------------------------------------
1998           1999          2000        2001          2002
---------     ---------     ---------    ---------     ---------

ASSETS
Cash                                                    $  10,142     $  10,142     $  10,142    $  10,142     $  10,142
Other Current Assets                                       86,874        92,319        97,589      102,470       107,092 
---------     ---------     ---------    ---------     ---------
Total Current Assets                                     97,016       102,461       107,731      112,612       117,354

PP&E and Intangibles, Net                                 267,987       269,958       266,231      256,915       242,170
Other Assets                                               12,802        12,802        12,802       12,802        12,802
---------     ---------     ---------    ---------     ---------
Total Assets                                            377,805       385,221       386,764      382,329       372,206
=========     =========     =========    =========     =========

LIABILITIES
Current Liabilities                                        90,978        96,416       101,686      106,567       111,189
8.25% Existing Credit Facility                              4,785         4,785         4,785        4,785         4,785
Total LT Debt                                             309,154       344,852       367,434      384,224       400,122
Other Liabilities                                          10,786        10,786        10,786       10,786        10,786
---------     ---------     ---------    ---------     ---------
Total Liabilities                                       415,696       456,839       484,691      506,361     $ 526,882

PREFERRED STOCK                                                   -             -             -            -             -
Common Shareholder's Equity                                 (37,891)      (71,618)      (97,927)    (124,033)     (154,676)
---------     ---------     ---------    ---------     --------- 
Total Liabilities and Equity                          $ 377,805     $ 385,221     $ 386,764    $ 382,329     $ 372,206
=========     =========     =========    =========     =========
Check                      -             -             0           (0)           (0)

STAR PRO FORMA CASH FLOW STATEMENT                      
Net Income                                                                  ($456)      ($4,315)     ($7,751)      (10,944)
Depreciation and Amortization                                            43,661        49,466       55,366        60,705
Deferred Taxes                                                                -             -            -             - 
Other Assets/Liab                                                             -             -            -             -  
---------     ---------    ---------     --------- 
Change in Non-Cash Working Capital                                            -             -            -             - 
Cash from Operations                                                       43,204        45,151       47,414        49,762

Maintenance CapEx                                                        (5,632)       (5,739)      (5,849)       (5,961)
Internal Growth CapEx                                                         -             -            -             - 
External Growth CapEx                                                   (40,000)      (40,000)     (40,000)      (40,000)
---------     ---------    ---------     --------- 
Cash from Investments                                                     (45,632)      (45,739)     (45,849)      (45,961)

Acquisition Borrowing                                                    40,000        40,000       40,000        40,000
Remaining Distributions to Repay Debt                                    (4,302)       (4,785)      (4,608)       (4,866)
Amortization of Existing Debt                                            (6,127)       (8,141)         (60)          (60)
Borrowing to Repay Existing Debt                                          6,127         8,141           60            60
Borrowing for Changes in WC                                                   -             -            -             - 
Change in Common Equity & GP Interest                                         -        12,634       18,603        19,236
Repayment of Preferred Stock                                                  -             -            -             - 
Distributions                                                           (33,270)      (34,628)     (36,957)      (38,935)
---------     ---------    ---------     --------- 
Cash from Financing                                                         2,428        13,221       17,038        15,435

Net Cash Flow                                                                   0        12,634       18,603        19,236  
Initial Cash Balance                                                       10,142        10,142       10,142        10,142 
---------     ---------    ---------     --------- 
Cash Available for Paydown on WC Revolver and Acq. Facility                10,142        22,776       28,745        29,378 

Minimum Cash Balance                                                       10,142        10,142       10,142        10,142 

Borrowing (Paydown) on WC Revolver and Acq. Facility                            0       (12,634)     (18,603)      (19,236)
---------     ---------    ---------     --------- 
Ending Cash Balance                                                        10,142        10,142       10,142        10,142 

Net Change in Cash                                                      $       0     $       0    $       0     $       0
=========     =========    =========     =========

Main Model Oct-7 Rev I with new Star & AGE 30 yr Petro
Projections and tax effect. For discussion purposes only.

14 of 19

(In thousands except per share and per unit data)

Estimated     Normalized                       Projected
Star Pro Forma Debt Schedule                                                   ------------------------------------------------

1998           1998           1999         2000         2001        2002
----------    ------------    ----------   ----------   ----------  ----------

8.04% 1 st Mortgage Notes                                                                                            
Beginning Balance                               $85,000         $85,000        85,000      $85,000      $85,000     $85,000
Borrowing                                           -               -             -            -            -           -
Amortization                                        -               -             -            -            -           -
----------    ------------    ----------   ----------   ----------  ----------
Ending Balance                                   85,000          85,000        85,000       85,000       85,000      85,000
Interest Payment                    8.04%         6,834           6,834         6,834        6,834        6,834       6,834

7.17% Pearl Notes                                                                                                    
Beginning Balance                                11,000          11,000        11,000       11,000       11,000      11,000
Borrowing                                           -               -             -            -            -           -
Amortization                                        -               -             -            -            -           -
----------    ------------    ----------   ----------   ----------  ----------
Ending Balance                                   11,000          11,000        11,000       11,000       11,000      11,000
Interest Payment                    7.17%           613             613           789          789          789         789
% of year Pearl Notes Outstanding                 77.7%           77.7%                                          

10.13% Sub Notes & Sr Notes                                                                                          
Beginning Balance                                50,000          50,000              -           -            -           -
Borrowing                                           -               -              -           -            -           -
Amortization                                  (50,000)        (50,000)             -           -            -           -
----------    ------------    -----------  ----------   ----------  ----------
Ending Balance                                        -               -              -           -            -           -
Interest Payment                   10.13%             -               -              -           -            -           -

9.38% Sub Notes & Sr Notes                                                                                           
Beginning Balance                               75,000           75,000              -           -            -           -
Borrowing                                          -                -              -           -            -           -
Amortization                                 (75,000)         (75,000)             -           -            -           -
-----------    ------------    -----------  ----------   ---------- -----------
Ending Balance                                        -               -              -           -            -           -
Interest Payment                    9.38%             -               -              -           -            -           -

12.25% Sub Notes & Sr Notes                                                                                          
Beginning Balance                                81,250          81,250              -           -            -           -
Borrowing                                           -               -              -           -            -           -
Amortization                                  (81,250)        (81,250)             -           -            -           -
-----------    ------------    -----------  ----------   ----------  ----------
Ending Balance                                        -               -              -           -            -           -
Interest Payment                   12.25%             -               -              -           -            -           -

9.00% New Debt                                                                                                       
Beginning Balance                                     -               -        120,000     126,127      134,268     134,328
Borrowing                                     120,000         120,000          6,127       8,141           60          60
Amortization                                        -               -              -           -            -           -
-----------    ------------    -----------  ----------   ----------  ----------
Ending Balance                                  120,000         120,000        126,127     134,268      134,328     134,388
Interest Payment                    9.00%        10,800          10,800         11,076      11,718       12,087      12,092

Exchange of 11.96% Senior Notes                                                                                      
Beginning Balance                                     -               -         63,126      63,126       63,126      63,126
Borrowing                                      63,126          63,126              -           -            -           -
Amortization                                        -               -              -           -            -           -
-----------    ------------    -----------  ----------   ----------  ----------
Ending Balance                                   63,126          63,126         63,126      63,126       63,126      63,126
Interest Payment                    9.00%         5,681           5,681          5,681       5,681        5,681       5,681

8.00% Acq. & Other Notes Pay                                                                                          
Beginning Balance                                16,507          16,507         14,508       8,381          240         180
Borrowing                                           -               -              -           -            -           -
Amortization                                   (1,999)         (1,999)        (6,127)     (8,141)         (60)        (60)
-----------    ------------    -----------  ----------   ----------  ----------
Ending Balance                                   14,508          14,508          8,381         240          180         120
Interest Payment                    8.00%         1,241           1,241            916         345           17          12

Main Model Oct-7 Rev I with new Star & AGE 30 yr Petro
Projections and tax effect. For discussion purposes only.

15 of 19     

- -------------------------------------------------------------------------------
(In thousands except per share and per unit data)

Estimated      Normalized                             Projected  
---------------------------------------------------
Star Pro Forma Debt Schedule (cont'd)                1998           1998         1999           2000           2001          2002  
--------      ---------       ----           ----           ----          ---- 

Exchange of 14.10% Senior Notes                                                                                          
Beginning Balance                                     -               -          6,520         6,520         6,520         6,520
Borrowing                                        6,520           6,520          -             -             -             -   
Amortization                                       -               -            -             -             -             - 
---------       ---------     --------      --------      --------      --------  
Ending Balance                                      6,520           6,520        6,520         6,520         6,520         6,520
Interest Payment            11.50%                    750             750          750           750           750           750

7.25% WC Revolver                                                                                                        
Beginning Balance                                     -               -          4,785         4,785         4,785         4,785
Borrowing for Change in WC                         -               -            -             -             -             - 
Borrowing to Pay Full MQD                          -               -            -             -             -             -  
Borrowing (Payment)                              4,785           4,785          -             -             -             - 
---------       ---------     --------      --------      --------      --------  
Ending Balance                                      4,785           4,785        4,785         4,785         4,785         4,785

Effective Avg WC Balance                           23,600          23,600       10,814         9,393         9,393         9,393
Interest Payment             7.25%                  1,711           1,711          784           681           681           681

7.25% Acquisition Facility                                                                                               
Beginning Balance                                     -               -          9,000        44,698        67,280        84,069 
External Acquisitions                             9,400           9,400       40,000        40,000        40,000        40,000 
External Acquisitions at Beginning of 1999          -               -            -             -             -             -   
Internal Growth CapEx                              (400)           (400)         -             -             -             -  
Payment                                             -               -             (0)      (12,634)      (18,603)      (19,236) 
Remaining Distributions to Repay Debt               -            (1,501)      (4,302)       (4,785)       (4,608)       (4,866)
---------       ---------     --------      --------      --------      --------  
Ending Balance                                    9,000           7,499       44,698        67,280        84,069        99,968
Interest Payment             7.25%                   ($15)           ($69)    $  1,947      $  4,059      $  5,486      $  6,671

Total Pro Forma Debt                                                                                                     
Beginning Balance                               $ 318,757       $ 318,757     $313,939      $349,637      $372,219      $389,009
Amortization of Existing Debt                 (208,249)       (208,249)      (6,127)       (8,141)          (60)          (60)
Exchange of Notes                               69,646          69,646          -             -             -             -   
Borrowing for Changes in WC                        -               -            -             -             -             - 
Acquisition Borrowing                            9,000           9,000       40,000        40,000        40,000        40,000 
Borrowing to Pay Full MQD                          -               -            -             -             -             -  
Borrowing to Repay Existing Debt               120,000         120,000        6,127         8,141            60            60
Remaining Distributions to Repay Debt              -            (1,501)      (4,302)       (4,785)       (4,608)       (4,866)
Borrowing (Payments) on WC Revolver and                                                                             
Acq. Facility                                  4,785           4,785           (0)      (12,634)      (18,603)      (19,236)
---------       ---------     --------      --------      --------      --------  
Ending Balance                                    313,939         312,439      349,637       372,219       389,009       404,907

Preferred Stock                                                                                                          
Beginning Balance                                  34,167          34,167          -             -             -             -
Repayments                                     (34,167)        (34,167)         -             -             -             -
---------       ---------     --------      --------      --------      --------  
Ending Balance                                        -               -            -             -             -             -
Dividend Payment            14.33%                    -               -            -             -             -             - 

Interest Expense/Dividends                         27,615          27,561       28,776        30,857        32,325        33,510
Chase Fees                                            692             692          692           692           692           692
---------       ---------     --------      --------      --------      --------  
Total Interest Payment/Dividends           $  28,307       $  28,253     $ 29,468      $ 31,549      $ 33,017      $ 34,202
=========       =========     ========      ========      ========      ======== 

Main Model Oct-7 Rev I with new Star & AGE 30 yr Petro
Projections and tax effect. For discussion purposes only.

16 of 19

STAR PRO FORMA DISTRIBUTION SCHEDULE OF ACTUAL DISTRIBUTIONS         

(In thousands except per share and per unit data)

Estimated      Normalized                        Projected 
----------------------------------------------------
1998           1998           1999           2000          2001        2002  
---------      ----------    ----------      ----------    ---------   ----------   

Distributable Cash                                                                                                                
- ------------------

Cash from Operations (excl chg in WC)             27,579          40,257      $ 43,204        $ 45,151     $ 47,414      $49,762    
Maintenance CapEx                                (5,486)         (5,486)       (5,632)         (5,739)      (5,849)      (5,961)   
Other                                               -               -             -               -            -                   
---------      ----------    ----------      ----------    ---------   ----------   
Total MLP Distributable                                                                                                             
Cash Flow                                        22,093          34,771        37,572          39,412       41,565       43,801    
Distributable Cash Flow Unit                     $  1.53        $   2.40      $   2.60        $   2.62     $   2.59      $  2.59    
Distributable Cash Flow /
Unit Pro Forma for DPU Conversion

Average Units for Calculating Annual
- ------------------------------------
Distribution
- -------------
Common Units                                      10,842          10,842        10,842          11,129       11,839       12,699
SR Subordinated Units                              2,767           2,767         2,767           3,070        3,373        3,373  
Subordinated Units                                   567             567           567             567          567          567  
General Partner Interest Unit                                                                                                     
Equivalent                                          289             289           289             289          289          289  
---------      ----------    ----------      ----------    ---------   ----------  
Total Units Outstanding                           14,465          14,465        14,465          15,055       16,068       16,928

Distribution Levels                              $  2.30        $   2.30        $ 2.30        $   2.30     $   2.30      $  2.30  
- -------------------                                                                                                               
MQD                                              $  2.30        $   2.30        $ 2.30        $   2.30     $   2.30      $  2.30  
First Target                                     $  2.42        $   2.42         $2.42        $   2.42     $   2.42         2.42  
Second Target                                    $  2.84        $   2.84         $2.84        $   2,84     $   2.84         2.84  
Third Target                                     $  3.70        $   3.70      $    170        $   3.70     $   3.70      $  3.70  

Indicated Cash Distribution                      $  2.30        $   2.30         $2.30        $   2.30     $   2.30      $  2.30  

Distribution of MQD
- -------------------
Cash Available                                    22,093          34,771        37,572          39,412       41,565       43,801  
Allocation to:                                                                                                                    
Common Units                                     22,093          24,936        24,936          25,596       27,229       29,207  
SR Subordinated Units                                 0           6,364         6,364           7,061        7,758        7,758  
Subordinated Units                                    0           1,305         1,305           1,305        1,305        1,305  
General Partner Interest                              0             665           665             665          665          665  

First Target Distribution                                                                                                         
- -------------------------
Cash Available                                         0           1,501         4,302           4,785        4,608        4,866  
Cash Required for Target Distribution                 0           1,736         1,736           1,808        1,932        2,037  
Cash Required for Indicated                                                                                                      
Distribution                                         0               0             0               0            0            0  
Actual Cash Distributed                               0               0             0               0            0            0  
Allocation to:                                                                                                                    
Common Units                                          0               0             0               0            0            0  
SR Subordinated Units                                 0               0             0               0            0            0  
Subordinated Units                                    0               0             0               0            0            0  
General Partner Interest                              0               0             0               0            0            0  

Total Distributions to:                                                                                                          
Common Units                                         0               0             0               0            0            0  
Sr. Subordinated Units                               0               0             0               0            0            0  
Subordinated Units                                   0               0             0               0            0            0  
General Partner Interest                             0               0             0               0            0            0   

Main Model Oct-7 Rev I with new Star & AGE 30 yr Petro
Projections and tax effect. For discussion purposes only.

17 of 19

STAR GAS PRO FORMA SCHEDULE OF ACTUAL DISTRIBUTIONS (CONT'D)

(In thousands except per share and per unit data)

Estimated    Normalized                  Projected
-----------------------------------------------------
1998         1998           1999        2000          2001           2002
---------    ----------    -----------   ---------    ----------     ----------- 
Second Target Distribution
- --------------------------

Cash Available                                      0             0              0           0             0               0
Cash Required for Target Distribution            0             0              0           0             0               0
Cash Required for Indicated Distribution         0             0              0           0             0               0
Actual Cash Distributed                          0             0              0           0             0               0

Allocation to:                                                                                             
Common Units                                     0             0              0           0             0               0
SR Subordinated Units                            0             0              0           0             0               0
Subordinated Units                               0             0              0           0             0               0
General Partner Interest                         0             0              0           0             0               0
Incentive Right                                  0             0              0           0             0               0
Incentive Right to GP Interest                0             0              0           0             0               0
Incentive Right to Sub Units                  0             0              0           0             0               0
Incentive Right to Sr. Sub Units              0             0              0           0             0               0

Total Distributions to:                                                                                    
Common Units                                  0             0              0           0             0               0
Sr. Subordinated Units                        0             0              0           0             0               0
Subordinated Units                            0             0              0           0             0
General Partner Interest                      0             0              0           0             0               0

Third Target Distribution                                                                                  
- -------------------------
Cash Available                                      0             0              0           0             0               0

Cash Required for Target Distribution            0             0              0           0             0               0
Cash Required for Indicated Distribution         0             0              0           0             0               0
Actual Cash Distributed                          0             0              0           0             0               0

Allocation to:                                                                                             
Common Units                                     0             0              0           0             0               0
Sr. Subordinated Units                           0             0              0           0             0               0
Subordinated Units                               0             0              0           0             0               0
General Partner Interest                         0             0              0           0             0               0
Incentive Right                                  0             0              0           0             0               0
Incentive Right to GP Interest                0             0              0           0             0               0
Incentive Right to Sub Units                  0             0              0           0             0               0
Incentive Right to Sr. Sub Units              0             0              0           0             0               0

Total Distributions to:                                                                                    
Common Units                                  0             0              0           0             0               0
Sr. Subordinated Units                        0             0              0           0             0               0
Subordinated Units                            0             0              0           0             0               0
General Partner Interest                      0             0              0           0             0               0

Remaining Distribution                                                                                     
- ----------------------
Cash Available                                      0             0              0           0             0               0
Cash Required for Indicated                                                                             
Distribution                                    0             0              0           0             0               0
Actual Cash Distributed                          0             0              0           0             0               0
Allocation to:                                                                                             
Common Units                                     0             0              0           0             0               0
Sr. Subordinated Units                           0             0              0           0             0               0
Subordinated Units                               0             0              0           0             0               0
General Partner Interest                         0             0              0           0             0               0
Incentive Right                                  0             0              0           0             0               0
Incentive Right to GP Interest                0             0              0           0             0               0
Incentive Right to Sub Units                  0             0              0           0             0               0
Incentive Right to Sr. Sub Units              0             0              0           0             0               0
Repay Indebtedness                               0         1,501          4,302       4,785         4,608           4,866

Total Distributions to:                          
Common Units                                  0             0               0          0             0               0
Sr. Subordinated Units                        0             0               0          0             0               0
Subordinated Units                            0             0               0          0             0               0
General Partner Interest                      0             0               0          0             0               0

Main Model Oct-7 Rev I with new Star & AGE 30 yr Petro
Projections and tax effect. For discussion purposes only.

Page 18 of 19 

STAR GAS PRO FORMA SCHEDULE OF ACTUAL DISTRIBUTIONS (CONT,D)      

(In thousands except per share and per unit data)

Estimated        Normalized                               Projected
----------------------------------------------------------------
1998            1998            1999                 2000             20O1           2002
----------       ----------     -----------          ------------     -----------    -----------
Total Distributions
- -------------------                             

Common units                         $22,093          $24,936        $24,936                $25,596          $27,229       $29,207  
SR Subordinated Units                      0            6,364          6,364                  7,061            7,758         7,758  
Subordinated Units                         0            1,305          1,305                  1,305            1,305         1,305  
General Partner Interest                   0              665            665                    665              665           665  
----------        ---------     -----------          ------------      ----------    -----------
Total Distributions                 $22,093          $33,270        $33,270                $34,628          $36,957       $38,935  
==========        =========     ===========          ============      ==========    ===========

14,041           14,041         14,188                 14,542           14,924        15,243  
Total Distributions Per Units
- -----------------------------
Common Units                         $  2.04          $  2.30        $  2.30                $  2.30          $  2.30       $  2.30
SR Subordinated Units                   0.00             2.30           2.30                   2.30             2.30          2.30
Subordinated & GP Units                 0.00             2.30           2.30                   2.30             2.30          2.30

Main Model Oct-7 Rev I with new Star & AGE 30 yr Petro
Projections and tax effect. For discussion purposes only.

19 of 19

PETRO PRO FORMA, WORKING CAPITAL REQUIREMENTS
(IN 000S, EXCEPT PER SHARE AMOUNTS)

- -------------------------------------------------------------------------------------------------------
ASSUMPTIONS
- -------------------------------------------------------------------------------------------------------

DEBT ATTRIBUTED TO PETRO:                                                                                         
9/30/98                                                
Pro Forma       Interest      Annual                      
Balance          Rate       Interest                      
----------      ---------    --------

8.00 % Acquisition & Other Notes Pay                      $ 14,508          8.00%       $ 1,161                      
9.00 % Exchanged Debt                                       63,126          9.00%         5,681                      
11.50% Exchanged Debt                                        6,520         11.50%           750                      
9.25% New Debt (a)                                         120,000          9.25%        11,100                      
-------- 
$18,692

NEW COMMON UNITS TO REFINANCE OLD DEBT & CONSENT FEE:                                                             
Price Per        Number                     Annual       
Amount to be Raised                         Share          of Units       MQD       Distribution       
- ----------------------------------------------------------     ----------   --------    ---------------

$141,473                              $20.259           6,983       $2.30         $16,061       

INCREASE IN MQD ON OLD COMMON UNITS                              Number     Increase in     Annual                      
of Units       MQD       Distribution
----------   -----------  --------------
Old Common Units                                                  3,832       $0.10         $   383                      

OPERATING WORKING CAPITAL REQUIRE               $   500                                                                            

Tax Liability:                                  $ 5,000                                                

(a) AGE assumed rate of 9.25%                                                                                      
- -------------------------------------------------------------------------------------------------------

- -------------------------------------------------------------------------------------------------
REQUIREMENT CALCULATION
- -------------------------------------------------------------------------------------------------
Closing Date
----------------------------------------
Jan 31         Feb 28       Mar 31
1999           1999         1999
------------    ----------   -----------

Interest on Debt Attributed to Petro:                   $  17,134       $ 15,576     $14,019

MQD on New Common Units                                    16,061         16,061      16,061

Increase in MQD on old Common Units                           383            383         383

Operating Working Capital Requirement                         500            500         500

Tax Liability                                               5,000          5,000       5,000
---------       --------     -------
Sub Total                                               $  39,078       $ 37,521     $35,963

Petro EBITDA
Historical Quarter Ended:
6/30/98                                                   ($6,355)       ($6,355)   ($ 6,355)
9/30/97                                                   (20,908)       (20,908)    (20,908)
12/31/97                                                   16,716         16,716      16,716
-------
Projected Month Ended:
2/28/99                                                    20,434
3/31/99                                                    13,281         13,281
---------       --------     

Sub Total                                               $  23,168       $  2,734    ($10,547)

TOTAL                                                   $  15,910       $ 34,787     $46,510

- -------------------------------------------------------------------------------------------------
WORKING CAPITAL REQUIREMENT                                18,000         35,000      46,500
- -------------------------------------------------------------------------------------------------

Projected Month Ended Working Capital:
Standard Calculation                                    $  20,670       $ 36,836     $47,341
Excess Cash Assuming a March 31 Close                                                $   841

Appendix II to

FAIRNESS OPINION PRESENTATION TO THE
SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS OF
STAR GAS CORPORATION

Analyses performed under 15-year weather scenario
Changed Pages Only

CONFIDENTIAL

A,G. EDWARDS & SONS, INC.
INVESTMENT BANKING

October 16, 1998

TABLE OF CONTENTS

Please note:  Appendix II follows the same page numbering format as Appendix I
and contains only those pages that changed as a result of performing the
analyses under the 15-year weather scenario.  Appendix II should be read in
conjunction with Appendix I.

Section
-------
Overview of Petroleum Heat and Power Co., Inc...............      A

Overview of Star Gas Partners, L.P..........................      B

Pro Forma Merger Analysis...................................      E

Relative Contribution Analysis..............................      G

Discounted Cash Flow Analysis...............................      H

Comparable Transactions Analysis............................      I

Public Company Analysis.....................................      J

Pro Forma Model.............................................      K

Overview of Petro
EBITDA Projections
($ in thousands)

- ------------------------------------------------------------------------------------------------------------------
Adjusted for 
Actual        Normalized                                 Projected
------------------------------------------------------------------------
1998           1998             1999             2000               2001          2002 
-----------------------------------------------------------------------------------------------------  

EBITDA          $37,630         $44,749          $46,463         $48,897            $51,040       $52,989
- -------------------------------------------------------------------------------------------------------------------

Major Assumptions for 1999 - 2002
- ---------------------------------
[_]   15 Year Weather

[_]   Flat Attrition.

[_]   $30 million of acquisitions at 4.75x EBITDA multiple using half-year
convention.

[_]   Increase in gross profit margin of $0.01 in 1999 and $0.005 in 2000 to
2002.

Page A - 8

Overview of Star Gas
EBITDA Projections
($ in thousands)

- --------------------------------------------------------------------------------------------------------------------------
Adjusted for 
Actual             Normalized                                  Projected
--------------------------------------------------------------------------- 
1998                1998                1999              2000               2001            2002
------------------------------------------------------------------------------------------------------------   

EBITDA          $18,781             $20,731             $23,032           $24,465            $25,898          $27,331
- --------------------------------------------------------------------------------------------------------------------------

Major Assumptions for 1999 - 2002
- ---------------------------------
[_]   15 Year Weather

[_]   No growth in base business.

[_]   $10 million of acquisitions at 6.5x EBITDA multiple using half-year 
convention.

[_]   No increase in gross profit margin.

Page B - 4

PRO FORMA MERGER ANALYSIS

[_]  A.G. Edwards analyzed the impact of the Transaction on the Partnership's
distributable cash flow per unit, the related accretion, common unit
coverage and total unit coverage on a pro forma basis.

---------------------------------------------------------
STAR GAS       STAR GAS  
STAND-ALONE    PRO FORMA   
-------------  -----------
DCF PER UNIT
1998 Adjusted for Actual (a)         $1.27          $1.53
1998 Normalized (b)                   1.62           2.15  
1999 Projected                        1.77           2.31

ACCRETION / DILUTION
1998 Adjusted for Actual (a)                        $0.26
1998 Normalized (b)                                  0.53
1999 Projected                                       0.54

COMMON UNIT COVERAGE
1998 Adjusted for Actual (a)           0.96x          0.89x    
1998 Normalized (b)                    1.22           1.25     
1999 Projected                         1.30           1.33     

TOTAL UNIT COVERAGE
1998 Adjusted for Actual (a)          0.58x          0.66x
1998 Normalized (b)                   0.74           0.94
1999 Projected                        0.81           1.00 

--------------------------------------------------------------
(a)   Projected results are adjusted for year to date actual
performance.
(b)   Adjusted to represent normal weather.

Page E-1

RELATIVE CONTRIBUTION ANALYSIS (a) 
($ in thousands)

[_]  A.G. Edwards analyzed the relative pro forma
contribution of both Star Gas and Petro to the
ownership of capital in the pro forma entity based on
Star Gas' and Petro's historical results from
operations and their respective projections.

Star Gas' Average                                     
Gross Profit                               GROSS PROFIT    
Contribution                           [GRAPH APPEARS HERE]

96-97          26.7%

98-99          29.0%

96-99          27.8%

Star Gas'Average                              EBITDA (c)
EBITDA Contribution                    [GRAPH APPEARS HERE]

96-97          35.4%

98-99          32.4%

96-99          33.8%

--------------------------
(a)  For purposes of its analysis, A.G. Edwards converted
Petro's historical December 31 st fiscal year-end to
a September 30th fiscal year-end for comparison
purposes. Petro's projections are based on a December
31st calendar year end. Other measures of relative
contribution analysis are non-meaningful.
(b)  Assumes normalized weather.
(c)  Includes only heating oil EBITDA for Petro.

Page G - 1

RELATIVE CONTRIBUTION ANALYSIS 
($ IN THOUSANDS) 
(continued)

FOR STAR GAS'                             IMPLIED FIRM VALUE
CONTRIBUTION OF 
APPROXIMATELY 27.8% OF
THE COMBINED ENTITY'S 
GROSS PROFIT AND 33.8%  
OF THE COMBINED ENTITY'S  
EBITDA, IT WILL RECEIVE                [PIE CHART APPEARS HERE] 
APPROXIMATELY 37.1% OF  
THE IMPLIED FIRM VALUE.

Page G-2

DISCOUNTED CASH FLOW ANALYSIS

[_]  A.G. Edwards performed discounted cash flow analyses for Petro, Star Gas
and Star Gas Pro Forma using projected tax-adjusted operating cash flows
for 1999 through 2002, terminal values calculated on 2002 EBITDA, and
discount rates based on the related weighted average cost of capital.

Assumptions:

[_]  Weighted average cost of capital ("WACC")
- Petro Stand Alone of 13.4% to 13.9% (calculated WACC of 13.6%)
- Star Gas Stand Alone of 6.8% to 7.2% (calculated WACC of 7.0%)
- Star Gas Pro Forma of 7.3% to 7.7% (calculated WACC of 7.5%)

[_]  Terminal value EB1TDA multiple
- Petro Stand Alone of 6.0x to 8.0x (calculated normalized 1998 EBITDA
multiple of 6.5x)
- Star Gas Stand Alone and Star Gas Pro Forma of 9.0x to 11.0x (calculated
normalized 1998 EBITDA multiple of 10.6x)

Page H - 1

DISCOUNTED CASH FLOW ANALYSIS
(continued)

PETRO STAND ALONE
- ------------------------------------------------------------------------------
15 Year                Terminal Value EBITDA Multiple
--------------------------------------------------------------
6.0x       6.5x        7.0x        7.5x        8.0x
- ------------------------------------------------------------------------------

13.4%       $49,406    $65,422     $81,439     $97,455     $113,472

WACC  13.6%        47,103     62,984      78,865      94,746      110,628

13.9%        44,822     60,570      76,317      92,064      107,812 
- ------------------------------------------------------------------------------

STAR GAS STAND ALONE
- ------------------------------------------------------------------------------
15 Year              Terminal Value EBITDA Multiple
--------------------------------------------------------------
9.0x       9.5x       10.0x       10.5x       11.0x
- ------------------------------------------------------------------------------

6.8%        $92,914    $99,255    $105,597     $111,939    $118,281

WACC   7.0%         91,847     98,141     104,436      110,730     117,024

7.2%         90,790     97,037     103,284      109,532     115,779
- ------------------------------------------------------------------------------

STAR GAS PRO FORMA
- ------------------------------------------------------------------------------
15 Year             Terminal Value EBITDA Multiple
--------------------------------------------------------------
9.0x        9.5x       10.0x      10.5x        11.0x
- ------------------------------------------------------------------------------

7.3%        $128,663    $136,782   $144,902   $153,021     $161,141

WACC   7.5%         127,328     135,389    143,449    151,510      159,570

7.7%         126,006     134,008    142,010    150,012      158,014
- ------------------------------------------------------------------------------

Page H - 2

DISCOUNTED CASH FLOW ANALYSIS
PETRO - STAND ALONE
EXCLUDING DISTRIBUTIONS FROM STAR GAS
($ IN THOUSANDS)

- ----------------------------------------------------------------------------------------------------------------------------------
Normalized
Cash Flow Summary (a):                                         1998       1999       2000          2001        2002      Terminal
- -----------------                                           ----------  --------   --------      --------     --------  ---------- 

EBITDA                                                       $44,749    $46,463    $ 48,897      $51,040      $52,989

Taxes                                                                      (500)      (500)         (500)        (500)

Maintenance capital expenditures                                         (3,000)    (3,060)       (3,121)      (3,184)

Working capital increases (b)                                              (500)      (500)         (500)        (500)
--------   --------      --------     --------
Net operating cash flow (free cash flow)                                 42,463     44,837        46,919       48,805

----------------
Weighted average cost of capital (c)           13.6%   
----------------            

----------------
Terminal EBITDA multiple (d)                     6.5x
----------------
Discount factor                                                          0.8799     0.7742        0.6812       0.5994      0.5994

Terminal value (e)                                                                                                       $344,429
----------------- 
Present value                                 $339,749                  $37,363    $34,714       $31,963      $29,254    $206,455
-----------------              --------   --------      --------     --------  ---------- 

Current net debt and preferred stock (f)     ($276,765)
----------------- 
----------------- 
Net present value of equity                    $62,984
----------------- 

- --------------------------------------------------------------------------------
(a) Based on management projections. 
(b) A.G. Edwards' estimate. 
(c) Based on comparable companies' WACC. 
(d) Petro's current firm value of $304.4 million/$46.9 million normalized 30-
year weather 1998 EBITDA = 6.5x, which represents a multiple of current year
normalized EBITDA.
(e) Terminal value calculated using EBITDA multiple. 
(f) Net of $33.2 million of cash. Market value of debt used.

Page H-3

DISCOUNTED CASH FLOW ANALYSIS
PETRO - STAND ALONE USING STAR GAS' PRO FORMA WACC
EXCLUDING DISTRIBUTIONS FROM STAR GAS
($ IN THOUSANDS)

- ------------------------------------------------------------------------------------------------------------------------------------
Normalized
Cash Flow Summary (a):                            1998           1999             2000            2001          2002       Terminal
- ---------------------                          ----------     ----------       ----------      ----------    ----------   ----------

EBITDA                                         $  44,749      $  46,463        $  48,897       $  51,040     $  52,989 

Taxes                                                              (500)            (500)           (500)         (500)

Maintenance capital expenditures                                 (3,000)          (3,060)         (3,121)       (3,184)

Working capital increases (b)                                      (500)            (500)           (500)         (500) 
----------       ----------      ----------    ----------    
Net operating cash flow (free 
cash flow)                                                    42,463           44,837          46,919        48,805

Weighted average cost of capital (c)     7.5%
---------
Terminal EBITDA multiple (d)             6.5x
---------
Discount factor                                                  0.9299           0.8647          0.8041        0.7477        0.7477

Terminal value (e)                                                                                                        $  344,429

Present value                       $ 409,993                 $  39,486        $  38,770       $  37,725     $  36,490    $  257,522
----------                ----------      ----------      ----------      ----------  ----------

Current net debt and preferred      
stock (f)                        $(276,765) 
---------- 

Net present value of equity         $ 133,228
---------- 

- ------------------------------------------------------------------------------------------------------------------------------------

(a) Based on management projections.
(b) A.G. Edwards' estimate.
(c) Based on comparable companies' WACC.
(d) Petro's current firm value of $304.4 million/$46.9 million normalized 
30-year weather 1998 EBITDA = 6.5x, which represents a multiple of current
year normalized EBITDA.
(e) Terminal value calculated using EBITDA multiple.
(f) Net of $33.2 million of cash. Market value of debt used.

Page H-4

Discounted Cash Flow Analysis
Star Gas - Stand Alone
($ in thousands)

- ------------------------------------------------------------------------------------------------------------------------------
Normalized
Income Statement Summary (a):                        1998         1999           2000         2001         2002       Terminal  
- ----------------------------                      ----------   ----------     ----------   ---------    ----------   -----------

EBITDA                                               20,731      23,032         24,465       25,898       27,331                
% increase                                                    11.1%           6.2%         5.9%         5.5%                
Net income                                            1,395       2,075          2,213        2,305        2,560                

Cash Flow Summary:                                                                                                              
- -----------------                                                                                                               
After-tax EBI                                                    10,649         11,097       11,656       12,379                
Depreciation and amortization                                    12,358         13,343       14,217       14,927                
Maintenance capital expenditures                                 (2,657)        (2,705)      (2,753)      (2,803)               
Working capital increases (b)                                      (500)          (500)        (500)        (500)               
---------      ---------    ---------    ---------               
Net operating cash flow (free cash flow)                         19,850         21,235       22,620       24,003                

Weighted average cost of capital (c)   [    7.0%]                                                                               
Terminal EBITDA multiple (d)           [   10.6x]                                                                               

Discount factor                                                  0.9342         0.8728       0.8154       0.7618           0.7618 
Terminal value (e)                                                                                                       $289,709 
Present value                          [$294,513]               $18,545        $18,534      $18,445      $18,286         $220,703 
---------      ---------    ---------    ---------       --------- 
Current net debt (f)                   ($109,285)                                                 
Net present value of equity             $185,228
==========
Common units/Total units (g)                60.5%
Equity value to common units (h)       [$111,989]

- ------------------------------------------
(a) Based on management projections.
(b) A.G. Edwards' estimate.
(c) Based on comparable companies' WACC.
(d) Star's current firm value of $234.1 million/$22.1 million normalized 30-year
weather 1998 EBITDA=10.6x, which represents a multiple of current year
normalized EBITDA.
(e) Terminal value calculated using EBTIDA multiple.
(f) Represents total projected 9/30/98 debt less cash.
(g) Total units include common, subordinated and GP units.
(h) Current nearest value of common units is 3,858 units * $19.563 unit
price=$75,472.
Page H-5

DISCOUNTED CASH FLOW ANALYSIS
STAR GAS - PRO FORMA
($ IN THOUSANDS)

- --------------------------------------------------------------------------------------------------------------------------
NORMALIZED                                                              
INCOME STATEMENTS SUMMARY (a):                             1998       1999      2000      2001      2002      TERMINAL          
- ------------------------                                ----------  --------  --------  --------  --------  ------------        

EBITDA                                                      65,980    69,995    73,862    77,438    80,820   
% increase                                                             6.1%      5.5%      4.8%      4.4%                     

Net income                                                  (3,711)   (3,694)   (7,056)  (10,430)  (13,719)                      

Cash Flow Summary:
- ------------------

After-tax EBI                                                         25,310    23,373    21,255    19,101 

Depreciation and amortization                                         43,661    49,463    55,159    60,694  

Maintenance capital expenditures                                      (5,657)   (5,765)   (5,874)   (5,987)  

Working capital increases (b)                                         (1,000)   (1,000)   (1,000)   (1,000)   
--------  --------  --------  --------    
Net operating cash flow (free cash flow)                              62,314    66,071    69,540    72,808     

Weighted average cost of capital (c)           7.5%
----------                                                
Terminal EBITDA multiple (d)                  10.6x
----------
Discount factor                                                       0.9299    0.8647    0.8041    0.7477        0.7477 

Terminal value (e)                                                                                              $856,692         

Present value                              $865,956                  $57,945   $57,131   $55,914   $54,437      $640,530         
----------                 --------  --------  --------  --------  ------------          
Less net debt (f)                         ($291,997)
----------
Net present value of equity                $573,959
==========
Original common units/Total units (g)         26.7%

Equity value to common units (h)           $153,122
----------                                           
- --------------------------------------------------------------------------------------------------------------------------

(a) Based on management projections. See Appendix K for model.
(b) A.G. Edwards' estimate
(c) Based on comparable companies' WACC.
(d) Star's current firm value of $234.1 million/$22.1 million normalized 30-year
weather 1998 EBITDA = 10.6x, which represents a multiple of current year
normalized EBITDA.
(e) Terminal value calculated using EBITDA multiple.
(f) Represents total proforma projected 9/30/98 debt less cash and cash
collateral.
(g) Total units include common, newly issued common, senior subordinated,
subordinated and GP units.
(h) Current market value of common units is 3,858 units* $19.563 unit price =
$75,472.

Page H - 6

COMPARABLE TRANSACTIONS ANALYSIS 
FIRM VALUATION

[_]    A.G. Edwards noted that public disclosure regarding transactions in
the retail home heating oil distribution industry was extremely
limited.

[_]    A.G. Edwards analyzed the financial terms related to divestitures by
Petro of certain of its retail home heating oil branches and compared
them to the implied multiples of the aggregate purchase price of
Petro's heating oil assets.

[_]    Petro has sold three branches for an average EBITDA multiple of 9.0x.

[_]    A.G. Edwards calculated the purchase price of Petro's heating oil
assets and calculated multiples based on Petro's EBITDAs.

---------------------------------------------------------------------------------------------------
Purchase Price of Heating Oil Assets
-------------------------------------------       

Equity purchase price of heating oil assets
including CUs                                                            $  25,549 

Cost of Debt to be Redeemed ($206,250 + $2,844 premium)                      209,094 

Cost of Debt to be Assumed                                                    69,646 

Cost of Preferred stock at Redemption Value                                   31,767 

Consent Fees                                                                   2,110 

Transaction Fees                                                              19,343 
--------- 

Aggregate purchase price of heating oil assets                             $ 357,509 
========= 

Multiples                                                                
-----------------------------------------                                -----------       
Multiples        Notes
-----------       ---------------------------
Normalized 1998 EBITDA budget (a)                         44,749            8.0 X          As a multiple of aggregate 
1999 Projected EBITDA (a)                                 46,463            7.7 x           transaction value.  
----------- 
As a multiple of aggregate 
transaction value. 

___________________________________________________________________
(a) Calculated as gross profit minus SG&A expense and direct 
delivery expense.

Page I - 1

PUBLIC COMPANY ANALYSIS

[_] A.G. Edwards compared certain financial and market information of Star
Gas on a historical and pro forma basis to that of certain public
propane master limited partnerships which A.G. Edwards deemed relevant
for the purposes of this analysis. A.G. Edwards reviewed the trading
multiples from a total of six master limited partnerships.

[_] The selected propane master limited partnerships are as follows:

- AmeriGas Partners, L.P.              - Heritage Propane Partners, 
L.P.
- Cornerstone Propane Partners, L.P.   - National Propane Partners, 
L.P.
- Ferrellgas Partners, L.P.            - Suburban Propane Partners,
L.P.

[_] No company used in the analysis is identical to Star Gas. 

===========================================================================================================   
PUBLIC COMPARABLES COMPANIES (a)
=========================================================================================================== 
Public             Public     
Pro forma          Company            Company   
Star           Star             Medians            Ranges    
-----------------------------------------------------------------------------------------------------------

Yield                                   11.2%          11.8%              10.1%           9.1% to 22.3%
Firm value/LTM EBITDA                   12.5x (b)      10.0x (b)          11.6x           9.0x to 12.7x  
Firm value/1999E EBITDA                 10.2x           8.1x               9.2x           8.4x to 11.7x      
Equity Market Cap/LTM DCF               15.4x (c)      12.5x (c)          13.4x           8.1x to 15.3x
Equity Market Cap/1999E DCF             10.6x           8.1x               9.8x           4.9X to 12.2x  
LTM common unit coverage                 1.0x (d)       0.9x (d)           1.5x           0.6x to  1.6x 
1999E common unit coverage               1.3x           1.3x               2.1x           1.1x to  2.3x 
LTM total unit coverage                  0.6x (d)       0.7x (d)           0.7x           0.4x to  1.2x    
1999E total unit coverage                0.8x           1.0x               1.0x           0.7x to  1.2x 
-----------------------------------------------------------------------------------------------------------

(a) Public comparable companies include APU, CNO, FGP, HPG, NPL and 
SPH.
(b) Firm value/adjusted for actual 1998 budget EBITDA.
(c) Equity market cap/adjusted for actual 1998 budget EBITDA.
(d) Adjusted for actual 1998 budget.

Page J-1

PUBLIC COMPANY ANALYSIS
($ IN MILLIONS, EXCEPT PER UNIT DATA)

====================================================================================================================================

Closing        Implied      Implied                               Common
Price on      Market Value     Firm    Distribution                Units/
Company                                 Ticker    (10/14/98)       of Equity     Value      per unit     Yield     Total Units
- ------------------------------------------------------------------------------------------------------------------------------------

Star Gas Partners, L.P.            (a)  SGU       $19.563        $  124.9       $  234.1      $2.20      11.2%       60.5%
AmeriGas Partners, L.P.                 APU        24.125         1,031.2        1,739.4       2.20       9.1%       52.8%
Cornerstone Propane Partners, L.P. (c)  CNO        18.000           365.2          596.7       2.16      12.0%       66.8%
Ferrellgas Partners, L.P.          (d)  FGP        20.000           638.6        1,131.2       2.00      10.0%       47.0%
Heritage Propane Partners, L.P.         HPG        20.813           180.0          354.6       2.00       9.6%       56.3%
National Propane Partners, L.P.         NPL         9.438           108.2          250.9       2.10      22.3%       59.6%
Suburban Propane Partners, L.P.    (e)  SPH        19.625           575.3          922.5       2.00      10.2%       75.1%

- ------------------------------------------------------------------------------------------------------------------------------------
Mean                                                                                                     12.2%       59.6%
Median                                                                                                   10.1%       58.0%
====================================================================================================================================

Pro Forma                                         $19.563        $  276.5(f)    $  568.5(g)   $2.30      11.8%       74.9%

====================================================================================================================================

LTM Common        LTM Total       FY99E         FY99E Common         FY99E Total
Unit Coverage     Unit Coverage    DCF/Unit       Unit Coverage       Unit Coverage
- ------------------------------------------------------------------------------------------------------------------------------------

Star Gas Partners, L.P.            (a)            1.0x (b)        0.6x (b)        $1.77           1.3x                0.8x
AmeriGas Partners, L.P.                           l.4x            0.8x             2.39           2.1x                1.1x       
Cornerstone Propane Partners, L.P. (c)            0.8x            0.6x             1.51           1.1x                0.7x
Ferrellgas Partners, L.P.          (d)            1.5x            0.7x             2.15           2.3x                1.1x
Heritage Propane Partners, L.P.                   1.5x            0.8x             2.38           2.2x                1.2x  
National Propane Partners, L.P.                   0.6x            0.4x             1.87             NA                0.9x  
Suburban Propane Partners, L.P.    (e)            1.6x            1.2x             1.98           1.3x                1.0x 

- ------------------------------------------------------------------------------------------------------------------------------------
Mean                                              1.3x            0.7x                            1.8x                1.0x    
Median                                            1.5x            0.7x                            2.lx                1.0x    
===================================================================================================================================

Pro Forma                                         0.9X(b)        0.7x(b)           2.31           1.3x                1.0x   

______________________________________
1999 estimates per A. G. Edwards' research, except for Star and Pro Forma. 1999
estimates for National Propane from Merril Lynch research report dated July
29,1998.

Implied Firm Value equals common, subordinated and GP units, multiplied by the
market price of common units plus debt, less cash.

(a) Pro forma for the Pearl Gas acquisition and the common unit offering.  
(b) For Star and Pro Forma only, LTM DCF figures are adjusted for actual 1998
budget DCF estimates. 
(c) Financial information pro forma for common unit offering. Maintenance
capital expenditures assumed to be 8% of EBITDA due to lack of disclosure.
(d) Maintenance capital expenditures assumed to be 8% of EBITDA due to lack of
disclosure.
(e) Financial figures exclude $5.1 million gain from sale of minority interest. 
(f) Calculated as: (10,841 common units x $19.563) + (2,767 senior subordinated
units x $18.52) + (857 junior subordinated and GP units x $15.41).
(g) $276.5 in equity plus $313.9 pro forma debt, less $21.9 in cash and cash
collateral.

Page J - 2

PUBLIC COMPANY ANALYSIS
($ IN MILLIONS, EXCEPT PER UNIT DATA)
(continued)

- ------------------------------------------------------------------------------------------------------------------------------------

Long Term         LTM        Firm Value/   Firm Value/       Equity         Equity
Debt/         EBITDA/          LTM          1999E        Market Cap/    Market Cap/
Firm Value      Int. Exp.       EBITDA        EBITDA         LTM DCF        1999E DCF
-------------------------------------------------------------------------------------------

Star Gas Partners, L.P.                    44.8%            2.4x (a)      12.5x (a)     10.2x           15.4x (a)       10.6x
AmeriGas Partners, L.P.                    39.9%            2.2x          11.8X          9.9X           14.8x           10.4x
Cornerstone Propane Partners, L.P.         39.7%            2.4x          12.7x         11.1X           15.3x           12.2x
Ferrellgas Partners, L.P.                  44.1%            2.1x          11.4x          9.0X           14.2x            9.5x
Heritage Propane Partners, L.P.            49.8%            2.6x           9.7x          9.0x           12.6x            8.8x
National Propane Partners, L.P.            55.2%            2.6x          12.7x          9.3x           12.0x            4.9x
Suburban Propane Partners, L.P.            46.4%            3.3x           9.0x          8.4x            8.1x           10.1x

- ------------------------------------------------------------------------------------------------------------------------------------

Mean                                       45.8%            2.6x          11.2x          9.5x           12.9x            9.3x
Median                                     45.2%            2.5x          11.6x          9.2x           13.4x            9.8X
- ------------------------------------------------------------------------------------------------------------------------------------

Pro Forma                                  55.2%            2.0x (a)      10.0x (a)      8.1x           12.5x (a)        8.1x

______________________________________________
EBITDA is defined as net income (loss) before extraordinary items plus interest,
income taxes, depreciation and amortization, impairment expense, and other
non-recurring and non-operating items.
(a)  For Star and Pro forma only, LTM figures use adjusted for actual 1998
budget estimates.

Page J-3

====================================================================================================================================
TRANSACTION SUMMARY AND ASSUMPTIONS

(in thousands except per share and per unit data)

- ------------------------------------------------------------------------------------------------------------------------------------
SUMMARY CASH FLOW AND COVERAGE ANALYSIS
- ------------------------------------------------------------------------------------------------------------------------------------
($ on per Unit basis)

ESTIMATED     NORMALIZED                              PROJECTED
-----------------------------------------------------
1998           1998             1999           2000           2001        2002
---------     ----------       ---------      ----------     ----------  ---------

STAR STAND ALONE                                                                                                                  
EBITDA                                     $ 18,781      $ 20,731         $ 23,032       $ 24,465       $ 25,898    $27,331  
Interest Expense                            (7,922)       (7,662)          (8,574)        (8,884)        (9,351)     (9,819) 
Maintenance CapEx                           (2,710)       (2,710)          (2,657)        (2,705)        (2,753)     (2,803) 
Other                                          (25)          (25)             (25)           (25)           (25)        (25) 
---------     ----------       ---------      ----------     ----------  ---------
Distributable Cash Flow                    $  8,124      $ 10,334         $ 11,776       $ 12,851       $ 13,769    $ 14,684  
=========     ==========       =========      ==========     ==========  =========

DCF per Common Unit                        $   2.11      $   2.68         $   2.87       $   2.85       $   2.87    $   2.90  
DCF / Common Unit MQD                          0.96 x        1.22 x           1.30 x         1.30 x         1.31 x      1.32 x

DCF per Total Unit                         $   1.27      $   1.62         $   1.77       $   1.83       $   1.88    $   1.93  
DCF / Total MQD                                0.58 x        0.74 x           0.81 x         0.83 x         0.85 x      0.88 x

Indicated Distribution per Common Unit     $   2.20      $   2.20         $   2.20       $   2.20       $   2.20    $   2.20  

STAR PRO FORMA                                                                                                                    
EBITDA                                                                                                                       
------                                                                                                                       
Star                                     $ 18,781      $ 20,731         $ 23,032       $ 24,465       $ 25,898    $ 27,331 
Petro                                      37,630        44,749           46,463         48,897         51,040      52,989 
Synergies                                     500           500              500            500            500         500 
---------     ----------       ---------      ----------     ----------  ---------
Total                                        56,911        65,980           69,995         73,862         77,438      80,820 
---------     ----------       ---------      ----------     ----------  --------- 

Interest Expense                            (28,307)      (28,307)         (29,004)       (30,429)       (31,685)    (32,820)
Maintenance CapEx                            (5,486)       (5,486)          (5,657)        (5,765)        (5,874)     (5,987)
Other                                        (1,025)       (1,025)          (1,025)        (1,025)        (1,025)     (1,025)
---------     ----------       ---------      ----------     ----------  ---------
Distributable Cash Flow                     22,093        31,162           34,309         36,643         38,854      40,988
=========     ==========       =========      ==========     ==========  =========

DCF per Common Unit                        $   2.04      $   2.87         $   3.06       $   3.02       $   2.95    $   2.87 
DCF per Sr. Sub & Common Unit              $   1.62      $   2.29         $   2.45       $   2.46       $   2.44    $   2.41
DCF per Total Unit                         $   1.53      $   2.15         $   2.31       $   2.33       $   2.32    $   2.29

Indicated Distribution per Common Unit     $   2.30      $   2.30         $   2.30       $   2.30       $   2.30    $   2.30
- ------------------------------------------------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------------------
ACCRETION/DILUTION
- ------------------------------------------------------------------------------------------------------------------------------------
DCF per Unit - Star Stand Alone            $   1.27      $   1.62         $   1.77       $   1.83       $   1.88    $   1.93 
DCF per Unit - Pro Forma                   $   1.53      $   2.15         $   2.31       $   2.33       $   2.32    $   2.29
- ------------------------------------------------------------------------------------------------------------------------------------
ACCRETIVE ($/UNIT)                        $   0.25      $   0.54         $   0.54       $   0.50       $   0.44    $   0.36 
Accretive (%)                                 20.0%         33.0%            30.2%          27.5%          23.4%       18.9%
- ------------------------------------------------------------------------------------------------------------------------------------
PRO FORMA HEATING OIL DCF PER UNIT                                        $   2.74       $   2.73       $   2.66    $   2.56
DPUs ISSUED AS Sr SUB UNITS AT BEG OF YEAR       -             -                -             -              -            -
- ------------------------------------------------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------------------
PRO FORMA CREDIT ANALYSIS                  
- ------------------------------------------------------------------------------------------------------------------------------------
EBITDA/Interest                                2.01 x        2.33 x           2.41 x         2.43 x         2.44 x      2.46 x
LT Debt/EBITDA                                 5.43          4.69             4.74           4.73           4.72        4.71
LT Debt/EBITDA (Pro Forma for Full-Year 
Acquisitions)                                5.27          4.55             4.50           4.50           4.50        4.50
# of Units Issued to Meet Debt Covenant         -             -                772          1,007          1,075       1,126

- ------------------------------------------------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------------------
PRO FORMA COVERAGE RATIOS
- ------------------------------------------------------------------------------------------------------------------------------------
MQD Coverage 
------------
Common Unit                                   0.89 x        1.25 x           1.33 x         1.31 x         1.28 x      1.25 x
Senior Subordinated Unit                      0.71          1.00             1.07           1.07           1.06        1.05
Total Unit                                    0.66          0.94             1.00           1.01           1.01        1.00  

Indicated Distribution Coverage
------------------------------- 
Common Unit                                   0.89 x        1.25 x           1.33 x         1.31 x         1.28 x      1.25 x
Senior Subordinated Unit                      0.71          1.00             1.07           1.07           1.06        1.05
Total Unit                                    0.66          0.94             1.00           1.01           1.01        1.00  
- ------------------------------------------------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT MODEL ASSUMPTIONS
- ------------------------------------------------------------------------------------------------------------------------------------

Scenario Version:                        15-yr; $30mm @ 4.75x mid-year; $.01 '99, $.005 '00-'01, flat att.
Petro Acqs/yr                                 $30,000
Star Acqs/yr                                  $10,000             G.P. Interest Subordinate
Price per Petro Share                         $  2.42

- ------------------------------------------------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------------------
EQUITY RESTRUCTURING 
- ------------------------------------------------------------------------------------------------------------------------------------
PETRO                
------------------------------------------------
PUBLIC                         INSIDERS
----------------                ---------------- 

Securities Offered                                                                  Sr Sub                        Sub & GP
Incentive Rights                                                                        76%                             24%
Value Offered                                                                  $      2.42                     $      2.45 
Current Market                                                                 $      1.31                     $      1.31
Premium to Market                                                                     84.1%                           86.7%  

Implied Value of Security Offered                                              $     18.52                     $     15.41
Security Offered per Share                                                         0.13064                         0.15920
Total Shares                                                                        14,609                          11,953
Insiders to Receive Sr. Sub                                                          6,572                          (6,572)   
Shares to Be Converted                                                              21,181                           5,382    
Units Offered                                                                        2,767                             857   
DPUs Offered                                                                                                           909

Implied Value of GP/Unit                                                                                       $     15.41

- ------------------------------------------------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------------------
SOURCES AND USES OF FUNDS
- ------------------------------------------------------------------------------------------------------------------------------------
SOURCES:                                                     USES:

Excess Cash on Hand                  $    841                Repay Debt Principal            $206,250
New Star Debt                         120,O00                Redeem Preferred                  31,767
New MLP Equity                        139,363                Premium on Redemption/
New MLP E Equity                         -                    Exchange/Defeasance               2,844     
Equity for Consent Fees                 2,110                Consent Fees                       2,110
Cash Balance                                0                Transaction Fees                  19,343

---------                                              ----------
$262,314                                                $262,314 
=========                                              ==========
- ------------------------------------------------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------------------
FINANCING SUMMARY
- ------------------------------------------------------------------------------------------------------------------------------------
AMOUNT           RATE         UNIT PRICE
-----------     -----------   ----------------

New Common Raised                                         $ 139,363                     $     20.26               
New Debt Raised                                             120,000          9.00%  

- ------------------------------------------------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------------------
UNITS OUTSTANDING 
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT                           PRO FORMA
-----------------------      ------------------------------      
UNITS            %            UNITS                 %        
-----------   ---------      -----------        -----------    

Existing Common                                         3,858        60.5%            3,858              26.7%   
New Common                                                  0         0.0%            6,983              48.3%
New Common for Acquisitions                                 0         0.0%                0               0.0%
Common to Petro Shareholders                                0         0.0%                0               0.0%
Sr Sub (Petro S/H's)                                        0         0.0%            2,767              19.1% 
Existing Sub                                            2,396        37.5%              567               3.9%
Implied GP                                                128         2.0%              289               2.0%
-----------   ---------      -----------        -----------    
Total Units                                        6,382       100.0%           14,465             100.0%
===========   =========      ===========        ===========

- ------------------------------------------------------------------------------------------------------------------------------------

Main Model Oct-7 Rev I with new Star & AGE 30 yr Petro
Projections and tax effect. For discussion purposes only.

1 of 19

================================================================================
TRANSACTION SUMMARY AND ASSUMPTIONS
-------------------------------------------------------------------------
(in thousands except per share and per unit data)       15-yr;$30mm @ 4.75x mid-year; $.01 '99,$.005 '00-'01, flat att.    

$10,000   Star Acqs/yr                                                      
$30,000   Petro Acqs/yr            G.P. Interest Subordinate                
$2.42     /  Petro Share                                                    
-------------------------------------------------------------------------
OPERATING ASSUMPTIONS
- ----------------------------------------------------------------------------
PETRO     STAR      STAR NORMAL
---------  --------  --------------

Normalized Maintenance CapEx                              $2,776     $ 2,710      $2,710
Maintenance CapEx Life                                     15 yrs      15 yrs 
Growth CapEx Life                                         6.5 yrs      15 yrs

Marginal Tax Rate                                           33.0%       33.0%
Deferred Tax Percent                                                     0.0%

Required Cash at Beginning for Initial Distribution                    7,956
Minimum Star Stand Alone Cash Balance                                $   500 
Minimum Star Pro Forma Cash Balance                                  $10,142
Consolidation Savings                                                $   500 
Annual Bank Fees                                          $   692    $   222
Last 20 Days Average Stock Price @ 10/14                  $  1.31    $ 20.26
Annual Transaction/Deal Expenses                                     $   450
Debt/EBITDA Bank Covenant Ratio                                          4.5x 
Issue Equity to Meet Bank Debt Covenants (Y/N)?                           yes

DEBT RESTRUCTURING
- ---------------------------------------------------------------------------------------------------------------
PROJECTED   
12/31/97   
PRIVATES:                               % TENDERED         PRINCIPAL            STRATEGY             PRICE
-------------     ---------------    -----------------   ----------------

11.96% Sr Notes                         100.0%            60,000             Exchange             105.2%
14.10% Sr Notes                         100.0%             3,100             Exchange             105.2%
14.10% Sub Notes                        100.0%             3,100             Exchange             105.2%
14.33% Pfd Stock                        100.0%             4,167            Neg. Tender           100.0%
PUBLICS:
10.13% Sub Notes & Sr Notes             100.0%            50,000            Neg. Tender           100.0%
9.38% Sub Notes & Sr Notes             100.0%            75,000              Tender              100.0%
12.25% Sub Notes & Sr Notes             100.0%            81,250              Tender              103.5%
12.88% Pfd Stock                        100.0%            30,000              Tender               92.0%

NEW SECURITY ASSUMPTIONS
- ------------------------------------------------------

NEW MLP EQUITY
- --------------

Gross Proceeds                          $139,363
Common Units for Consent Fee               2,110
Common Units to Enron                          -
Total New Equity Value               --------
Common Units to Public                  $141,473
6,983 units

NEW STAR DEBT
-------------

Gross Proceeds           120,000
Gross Spread %                                       5.0%             Gross Spread %               3.0%
Gross Spread $                                    $6,968              Gross Spread $          $  3,600 
Offering Price/Share (current market price)       $20.26              Coupon                      9.00%

ACQUISITION ASSUMPTIONS
- ------------------------------------------------------------------------------------
PETRO                                   MULTIPLE            1998           1999           2000           2001           2002
- -----                                ------------     -------------   ------------   ------------  -------------  --------------

Amount                                  4.75x          $      0        $ 30,000      $ 30,000      $ 30,000        $ 30,000
Timing                                                    End             Mid           Mid           Mid             Mid
% EBITDA                                                    0.0%           50.0%         50.0%         50.0%           50.0%
Amount                                  4.75x                          $      0
Timing                                                                    Beg
% EBITDA in Initial Year                                                  100.0%
Units Issued at:     Common                              $  22.00
Sr. Sub.                            $  18.52

STAR STAND-ALONE
- ----------------    
Weather                                   15 Year
Amount                                  6.50x          $ 10,000        $ 10,000      $ 10,000      $ 10,000        $ 10,000
Timing                                                    End             Mid           Mid           Mid             Mid
% EBITDA in Initial Year                                    0.0%           50.0%         50.0%         50.0%           50.0%

Amount Financed with Equity                            $    600        $ 11,169      $  6,641      $  6,375        $  6,082
New Units @:                                                 27             508           302           290             276
Units Issued at Price of:                              $  22.00        $  22.00      $  22.00      $  22.00        $  22.00

Amount                                  6.50x                          $      0
Timing                                                                    Beg
% EBITDA in Initial Year                                                  100.0%

EXCHANGE ASSUMPTIONS
- ------------------------------------------------------------------------------------
EXISTING                          GETS NEW UNITS OF:
---------------------------------------------------------------
SHAREHOLDERS OF:                                  SHARES         COMMON        SR SUB       JNR SUB      G.P.      DPUs (1)
- -----------------------------------------------------------   ------------  ------------  ----------  ---------- ------------

Public Class A Shareholders                       14,609              0          1,909          0          0         479
Insider Class B Shares                                11              0              0          0                      0
Insider Class C Shareholders                                                                               0            
Class A & C Shares to Receive Jr Sub & GP       5,382              0              0        567        289         215
Class A Shares to Receive Sr Sub                6,572              0            859          0          0         215
--------     -----------    -----------  ---------  ---------  ----------
26,574              0          2,767        567        289         909
E Sr. Sub                                                                            -                                 -
-----------                        ----------
Total                                                                         2,767                               909
===========                        ==========

(1) Includes 2.0% G.P. Interest.

TRANSACTION COSTS SUMMARY
--------------------------------------------------------------

New MLP Equity                                 $ 6,968                     
New Star Debt                                    3,600
Fairness Opinion                                 1,000
Financial Advisory                               1,500
Exchange Fees on Public Petro Debt/Preferred     1,375
Legal Fees                                       2,500
Printing                                         1,000
Account Fees                                       250
Other:
-----
Environmental                                      350
Rating Agencies                                    100
Roadshow                                           200
Asset Appraisal                                    250
Solicitation expenses                              100
Other Bank Fees                                    150
--------
$19,343
========

HEATING OIL DPU TRIGGER
----------------------
DCF/Unit     % Convert

$2.90          33.3%

CONSENT FEE CALCULATION
- ---------------------------------------------

% of Petro Stock         3.0%
New Petro Shares         797
Exchange Ratio          7.65x
--------
New Common Units         104
Common Unit Price     $20.26
--------
Implied Value         $2,110
========

Main Model Oct-8 Rev 2 with new Star & AGE 15 yr Petro Projections 
and tax effect. For discussion purposes only.

2 of 19

- ------------------------------------------------------------------------------------------------------------------------------------
SUMMARY DISTRIBUTIONS
-------------------------------------------------------------------------
(in thousands except per share and per unit data)          15-yr; $30mm @ 4.75x mid-year; $.01 '99, $.005'00-'01, flat att.

$10,000    Star Acqs/yr                                               
$30,000    Petro Acqs/yr            G.P. Interest Subordinate         
$2.42      / Petro Share                                              
-------------------------------------------------------------------------

PROJECTED
-----------------------------------------
UNITHOLDER CLASS (1)                                                            1998       1999       2000       2001      2002
--------   --------   --------   --------   --------

COMMON UNITHOLDERS
MQD                                                                                  $25,823    $27,869    $30,264    $32,796
Incentive Distributions                                                                    -          -          -          -
--------   --------   --------   --------
Total                                                                           $25,823    $27,869    $30,264    $32,796

CAPITAL
Existing Sr. Sub Units                                                                     -          -          -          -
Number of DPUs Issued as Sr Sub Units                                                      -          -          -          -
New Sr. Sub Units                                                                          -          -          -          -
--------   --------   --------   --------
Total Sr. Sub Units                                                                   -          -          -          -

Existing Common                                                                            -          -          -          -
New Common                                                                                 -          -          -          -
--------   --------   --------   --------
Total Common                                                                          -          -          -          -

Common MQD                                                                                 -          -          -          -
Common Incentive Distributions                                                             -          -          -          -
Sr. Sub MQD                                                                                -          -          -          -
Sr. Sub. Incentive Distributions                                                           -          -          -          -
--------   --------   --------   --------
Total Distributions                                                                   -          -          -          -

SENIOR SUBORDINATED UNITHOLDERS (1)
Number of DPUs Issued as Sr Sub Units                                                      -          -          -          -

Base MQD                                                                             $ 6,364    $ 6,364    $ 6,364    $ 6,364 
Incremental MQD from DPUs Issued as Sr. Sub Units                                          -          -          -          -
Incentive Distributions                                                                    -          -          -          -
Incremental Incentive Distributions from DPUs Issued as Sr. Sub Units                      -          -          -          - 
--------   --------   --------   --------
Total                                                                           $ 6,364    $ 6,364    $ 6,364    $ 6,364

SUBORDINATED UNITHOLDERS (1)
Numbers of DPUs Issued as Sr Sub Units                                                     -          -          -          -

Base MQD                                                                             $ 1,305    $ 1,305    $ 1,305    $ 1,211
Incremental MQD from DPUs Issued as Sr. Sub Units                                          -          -          -          -
Incentive Distributions                                                                    -          -          -          -
Incremental Incentive Distributions from DPUs Issued as Sr. Sub Units                      -          -          -          - 
--------   --------   --------   --------
Total                                                                           $ 1,305    $ 1,305    $ 1,305    $ 1,211

GENERAL PARTNER
Numbers of DPUs Issued as Sr Sub Units                                                     -          -          -          -

Base MQD                                                                             $   665    $   665    $   665    $   617
Incremental MQD from DPUs Issued as Sr. Sub Units                                          -          -          -          -
Incentive Distributions                                                                    -          -          -          -
Incremental Incentive Distributions from DPUs Issued as Sr. Sub Units                      -          -          -          - 
--------   --------   --------   --------
Total                                                                           $   665    $   665    $   665    $   617

UNITHOLDER CLASS TOTAL
Common Unitholders                                                                   $25,823    $27,869    $30,264    $32,796
Senior Subordinated Unitholders                                                        6,364      6,364      6,364      6,364
Subordinated Unitholders                                                               1,305      1,305      1,305      1,211
General Partner                                                                          665        665        665        617
--------   --------   --------   --------
Total                                                                           $34,158    $36,204    $38,599    $40,988

DISTRIBUTIONS TO DPUS CONVERTED TO SENIOR SUBORDINATED UNITS
MQD                                                                                  $     0    $     0    $     0    $     0
Incentive Distributions                                                                    -          -          -          -
--------   --------   --------   --------
Total                                                                                 -          -          -          -

check                  -          -          -          -

________________________
(1)  Reflects distributions for respective Unitholder class. All DPUs are
issued as Senior Subordinated Units but are distributed pro rata to all
Petro shareholders. Consequently, the Subordinated Unitholder class
includes DPUs which have been issued as Senior Subordinated Units.

Main Model Oct-8 Rev 2 with new Star & AGE 15 yr Petro
Projections and tax effect. For discussion purposes only.

3 of 19

=======================================================================================================================
TRANSACTION SUMMARY AND ASSUMPTIONS
(in thousands per share and per unit data) 
15-yr; $30mm @ 4.75x mid-year; $.01'99, $.005 00-'01, flat att.

RECAPITALIZATION ASSUMPTIONS
- ------------------------------------------------------------------------------------------------------------------------

(D)EFEASE
(T)ENDER
(R)EDEEM    PRINCIPAL
LOCKUP    (E)XCHANGE    AS OF       MATURITY PERIOD      COUPON/     SINKING FUND PAYMENT
-----------------                ----------------------
PETRO INSTRUMENTS:                  PREMIUM   (N)OTHING    9/30/98     M/D        YR        DIVIDEND    PAYMENT    YEAR START
- --------------------------------    --------------------  ---------    ---        --        --------    -------    ----------

11.96% Sr Notes                                    e      $ 60,000 v    1-Oct         0     11.960%      $    0           0
14.10% Sr Notes                                    e         3,100 v   15-Jan      2001     14.100%           -        1997
14.10% Sub Notes                                   e         3,100 v   15-Jan      2001     14.100%           -        1997
10.13% Sub Notes & Sr Notes          0.0%          t        50,000 v    1-Apr      2003     10.130%           -  
9.38% Sub Notes & Sr Notes          0.0%          t        75,000 v    1-Feb      2006      9.375%           -  
12.25% Sub Notes & Sr Notes          0.0%          t        81,250 v    1-Feb      2005     12.250%           -  
8.00% Acq. & Other Notes Pay                      n        14,508 v                  0      8.000%           -           0
8.25% Existing Credit Facility                    n             0 v               1998      8.250%           -  
0.00% Other Notes                                 n             0 v      NA         NA      0.000%           0           NA
--------  
$286,958                                             

PFRD STOCK:                                                                                                      
- ----------                                                                                                       
14.33% Pfd Stock                                   t         4,167 v    1-Aug      1999     14.330%       4,167        1997
12.88% Pfd Stock                     0.0%          t        30,000 v   15-Feb      2009     12.875%           0  
0.00%                                             n             0                           0.000%              
--------  
$ 34,167                                               
--------  
Total Petro                                          $321,125                                               
--------  

STAR INSTRUMENTS:                                                                                                
- --------------------------------                                                                                 
8.04% 1st Mortgage Notes             0.07          n        85,000 v      NA         NA      8.040%           -           0
7.25% WC Revolver                    0.00          n         4,785        NA         NA      7.250%           -          NA  
7.25% Acquisition Facility           0.01          n         9,000 v      NA         NA      7.250%           -          NA
9.00% New Debt                                     n       120,000 v      NA         NA      9.000%           0          NA
7.17% Pearl Notes                    0.01          n        11,000        NA         NA      7.170%           0          NA
--------  
8.21%                $218,785    
--------  
Total Combined                                       $539,910
========  

% RED./     RED/EXCHG   DEFEASANCE    RED/EXCHG/DEFEASE     EXCHNAGED
PETRO INSTRUMENTS:                   EXCHANGED     PRICE      PRICE        -----------------     ---------      
- -----------------                    ---------   ---------   ----------     VALUE      PREMIUM    INT RATE    SECURITY TYPE
------     -------    --------    -------------

11.96% Sr Notes                         100.0%     105.2%                 $63,126    $     0         9.0%   Sr Notes
14.10% Sr Notes                         100.0%     105.2%                   3,260          -        11.5%   Sr Notes
14.10% Sub Notes                        100.0%     105.2%                   3,260          -        11.5%   Sub Notes
10.13% Sub Notes & Sr Notes             100.0%     100.0%     106.2%       50,000          -                Sub Notes & Sr Notes
9.38% Sub Notes & Sr Notes              100.0%     100.0%     108.2%       75,000          -                Sub Notes & Sr Notes 
12.25% Sub Notes & Sr Notes             100.0%     103.5%     116.2%       84,094      2,844                Sub Notes & Sr Notes 
8.00% Acq. & Other Notes Pay              0.0%     100.0%                       -          -                Acq. & Other Notes Pay
8.25% Existing Credit Facility            0.0%     100.0%                       -          -                Existing Credit Facility
0.00% Other Notes                         0.0%       0.0%                       -          -        11.0%   Other Notes
--------  
$ 2,844 

PFRD STOCK:                                                
- ----------                                                 
14.33% Pfd Stock                        100.0%     100.0%                   4,167          -                Pfd Stock  
12.88% Pfd Stock                        100.0%      92.0%                  27,600          -                Pfd Stock  
0.00%                                                                           -          -
--------  
$     0
--------  
Total Petro                                                                     $ 2,844  
--------  

STAR INSTRUMENTS:                                          
- --------------------------------                           
8.04% 1st Mortgage Notes                  0.0%       0.0%                       -          -                1st Mortgage Notes
7.25% WC Revolver                         0.0%       0.0%                       -          -                WC Revolver
7.25% Acquisition Facility                0.0%       0.0%                       -          -                Acquisition Facility
9.00% New Debt                            0.0%       0.0%                       -          -                New Debt
7.17% Pearl Notes                         0.0%       0.0%                       -          -                Pearl Notes  
--------  
$     0 
-------- 
Total Combined                                                                  $ 2,844 
--------  

2,843.75

STAR STAND ALONE DISTRIBUTION ASSUMPTIONS
- -----------------------------------------------------------------------------

Distribution
------------

Minimum Quarterly Distributions                                       $2.20
First Target Distribution                                             $2.42
Second Target Distribution                                            $2.84
Third Target Distribution                                             $3.70
Thereafter                                                               NM   

Target Distribution Level                                             $2.20
Annual Distribution Increase                                          $0.00

------
Standard Distribution Structure ("S") or Target ("T")                   t   
------
- -----------------------------------------------------------------------------------

STAR PRO FORMA DISTRIBUTION ASSUMPTIONS
- --------------------------------------------------------------------------------

Distribution
------------

Minimum Quarterly Distribution                                        $2.30
First Target Distribution                                             $2.42
Second Target Distribution                                            $2.84
Third Target Distribution                                             $3.70
Thereafter                                                               NM   

1998      1999      2000      2001      2002      Thereafter
----      ----      ----      ----      ----     

Annual Indicated Distribution Increase                                $0.00     $0.00     $0.00     $0.00     $0.00     $0.00
Target Indicated Distribution Level                                   $2.30     $2.30     $2.30     $2.30     $2.30 
-------------
Standard Distribution Structure ("S") or Target ("T")                            t   
--------------
- --------------------------------------------------------------------------------

Main Model Oct.8 Rev 2 with new Star & AGE 15 yr Petro Projections and 
tax effect. For discussion purposes only.

4 of 19

================================================================================================================================
PRO FORMA OPENING BALANCE SHEET

(in thousands except per share and per unit data)           15-yr; $30mm @ 4.75x mid-year; $0.1 '99, $.005 '00-'01, flat att.

OPENING BALANCE SHEET                             STAR GAS                    PETRO                                   PRO FORMA 
------------               ----------                                           
------------               ----------                  MERGER          STAR GAS 
9/30/98                   9/30/98                 ADJUSTMENTS        9/30/98 
------------               ----------                -----------      ----------

ASSETS:                                                                                                                         
-----------                
Cash                                              $500                   $9,642                        $0          $10,142 
-----------                
Other Current Assets                            15,376                   71,498                         -           86,874 
------------               ----------                -----------      ---------- 
Total Current Assets                          15,876                   81,140                         -           97,016 

PP&E and Intangibles, Net                      161,292                  106,695                         -          267,987 
Investments in Unconsolidated Affiliates             -                    1,582                    (1,582)               -   
Other Assets                                         -                   12,802                         -           12,802 
------------               ----------                -----------      ---------- 
Total Assets                                 177,168                  202,219                    (1,582)         377,805 
============               ==========                                 ========== 

LIABILITIES:                                                                                                                    
Current Liabilities                             10,101                   80,870                         -           90,971 
8.25% Existing Credit Facility                   4,785                        -                         -            4,785 
Long Term Debt                                 105,000                  286,958                   (82,804)         309,154 
Total Preferred Stock                                -                   34,167                   (34,167)               -   
Other Liabilities                                   76                   10,710                         -           10,786 
------------               ----------                -----------      ---------- 
Total Liabilities                            119,962                  412,705                  (116,971)         415,696 

Common Shareholder's/Partner's Equity                57,206                 (210,486)                  115,389          (37,891)
------------               ----------                -----------      ---------- 
Total Liabilities and Equity                  $177,168                 $202,219                   ($1,582)        $377,805 
============               ==========                ===========      ========== 

check                                 0                        -                         -                -    

PRO FORMA CAPITAL STRUCTURE                       STAR GAS                    PETRO 
------------               ---------- 
------------               ----------       % NOT       MERGER         STAR GAS
9/30/98                   9/30/98      TENDERED   ADJUSTMENTS        9/30/98
------------               ----------    ----------  -----------       -------- 

DEBT:
8.04% 1st Mortgage Notes                            $85,000                       $0                        $0          $85,000
7.25% WC Revolver                                     4,785                        -                         -            4,785
7.25% Acquisition Facility                            9,000                        -                         -            9,000
7.17% Pearl Notes                                    11,000                        -                         -           11,000

11.96% Sr Notes                                           -                   60,000        100.0%     (60,000)               - 
14.10% Sr Notes                                           -                    3,100        100.0%      (3,100)               -
14.10% Sub Notes                                          -                    3,100        100.0%      (3,100)               -
10.13% Sub Notes & Sr Notes                               -                   50,000        100.0%     (50,000)               -
9.38% Sub Notes & Sr Notes                                -                   75,000        100.0%     (75,000)               -
12.25% Sub Notes & Sr Notes                               -                   81,250        100.0%     (81,250)               -
0.00% Other Notes                                         -                        0                         -                -
8.00% Acq. & Other Notes Pay                              -                   14,508                         -           14,508
8.25% Existing Credit Facility                            -                        0                         -                -

9.00% Exchanged Debt                                     -                        -                    63,126           63,126
11.50% Exchanged Debt                                                                                    6,520            6,520
9.00% New Debt                                           -                        -                   120,000          120,000
Total L.T. Debt                          ------------               ----------                -----------       --------  
109,785                  286,958                   (82,804)         313,939
------------               ----------                                  --------   
PREFERRED STOCK:                                        
14.33% Pfd Stock                                          -                    4,167                    (4,167)               -
12.88% Pfd Stock                                          -                   30,000                   (30,000)               -
------------               ----------                -----------       --------   
Total Preferred                                    -                   34,167                   (34,167)               -
------------               ----------                                  --------    
Common Equity                                        57,206                 (210,486)                  115,389          (37,891)
------------               ----------                                  --------     
$166,991                $ 110,639                                   $276,048
============               ==========                                  ========     
Total Capital            

Main Model Oct-8 Rev 2 with new Star & AGE 15 yr Petro Projections and tax
effect. For discussion purposes only.

5 of 19

================================================================================
(in thousands except per share and per unit data)

15-yr; $30mm @ 4.75x mid-year; $.01 '99, $.005 '00-01, flat att.
STAR GAS STAND ALONE INCOME STATEMENT
ESTIMATED        NORMALIZED                          PROJECTED
---------------------------------------------- 
1998             1998           1999          2000        2001        2002
--------------------------------------------------------------------------------

EBITDA                                          $18,781          $20,731         $23,032       $24,465     $25,898     $27,331
Depreciation and Amortization               11,927           11,649          12,358        13,343      14,217      14,927 
-------          -------         -------       -------     -------     -------

EBIT                                              6,854            9,082          10,674        11,122      11,681      12,404   
Interest Expense                            (7,922)          (7,662)         (8,574)       (8,884)     (9,351)     (9,819)
Interest Income                                  -                -               -             -           -           -
Other Income                                     -                -               -             -           -           -
-------          -------         -------       -------     -------     -------

Income Before Taxes                              (1,068)           1,420           2,100         2,238       2,330       2,585   
Current Income Taxes                           (25)             (25)            (25)          (25)        (25)        (25)
Deferred Income Taxes                            -                -               -             -           -           -
-------          -------         -------       -------     -------     -------

Net Income Available to Common                  ($1,093)         $ 1,395         $ 2,075       $ 2,213     $ 2,305     $ 2,560 
=======          =======         =======       =======     =======     ======= 

STAR GAS STAND ALONE UNITS OUTSTANDING

Common Units
Beginning Balance                            3,832            3,832           3,858         4,356       4,652       4,936
Issuance                                       27               27             498           296         284         271
Buyback                                         0                0               0             0           0           0
-------          -------         -------       -------     -------     -------
Ending Balance                               3,858            3,858           4,356         4,652       4,936       5,207
-------          -------         -------       -------     -------     -------  
Average Common Units Outstanding             3,858            3,858           4,107         4,504       4,794       5,071

Subordinated Units                                
Beginning Balance                            2,396            2,396           2,396         2,396       2,396       2,396
Issuance                                        0                0               0             0           0           0
Buyback                                         0                0               0             0           0           0
-------          -------         -------       -------     -------     -------  
Ending Balance                               2,396            2,396           2,396         2,396       2,396       2,396
-------          -------         -------       -------     -------     -------  
Average Subordinated Units Outstanding       2,396            2,396           2,396         2,396       2,396       2,396 

GP Implied Units
Beginning Balance                              127              127             128           138         144         150
Issuance                                        1                1              10             6           6           6 
Buyback                                         0                0               0             0           0           0
-------          -------         -------       -------     -------     -------  
Ending Balance                                 128              128             138           144         150         155
-------          -------         -------       -------     -------     -------  
Average Implied GP Units Outstanding           128              128             133           141         147         152

Total Units                             6,382            6,382           6,890         7,192       7,481       7,758
=======          =======         =======       =======     =======     ======= 

Average Units Outstanding               6,382            6,382           6,636         7,041       7,337       7,620
=======          =======         =======       =======     =======     ======= 

Main Model Oct-8 Rev 2 with new Star & AGE 15 yr Petro Projections and tax 
effect. For discussion purposes only.

6 of 19

====================================================================================================================================
(in thousands except per share and per unit data)          15-yr; $30mm @ 4.75x mid-year; $.01 '99, $.005'00-'01, flat att.

ESTIMATED                  PROJECTED                  
----------------------------------------- 
STAR GAS STAND ALONE BALANCE SHEET                                              1998       1999       2000       2001      2002    
---------  --------   --------   --------   --------  

ASSETS:                                                                                                                             
Cash                                                                                                                          
Other Current Assets                                                     $     500  $    500   $    500   $    500   $    500
Total Current Assets                                                       15,376    17,662     18,433     19,204     19,974 
---------  --------   --------   --------   --------  
15,876    18,162     18,933     19,704     20,474 

PP&E and Intangibles, Net                                                  161,292   162,041    161,853    160,839    159,165 
Other Assets                                                                     -         -          -          -          -
---------  --------   --------   --------   --------
Total Assets                                                              177,168   180,203    180,786    180,543    179,639 
=========  ========   ========   ========   ========

LIABILITIES:                                                                                 
Current Liabilities - Excluding Working Capital Borrowings                  10,101    12,387     13,158     13,929     14,699  
Total Debt                                                                 109,785   111,890    118,337    124,783    131,231 
Other Liabilities                                                               76        76         76         76         76  
---------  --------   --------   --------   -------- 
Total Liabilities                                                         119,962   124,353    131,571    138,788    146,007 

Partner's Equity                                                                 57,206    55,850     49,215     41,755     33,633 
---------  --------   --------   --------   --------
Total Liabilities and Equity                                             $ 177,168  $180,203   $180,786   $180,543   $179,639  
=========  ========   ========   ========   ========
Check                                              0         0          0          0          0 

STAR GAS STAND ALONE CASH FLOW STATEMENT                                                     

Net Income                                                                               $  2,075   $  2,213   $  2,305   $  2,560 
Depreciation and Amortization                                                         12,358     13,343     14,217     14,927  
Deferred Taxes                                                                             -          -          -          -
Other Income                                                                               -          -          -          -
Other Assets/Liabilities                                                                   -          -          -          - 
Change in Working Capital                                                                 (0)         0          -          - 
--------   --------   --------   -------- 
Cash from Operations                                                                       14,433     15,556     16,522     17,487
--------   --------   --------   -------- 

Maintenance CapEx                                                                     (2,657)    (2,705)    (2,753)    (2,803)
Internal Growth CapEx                                                                      -          -          -          - 
External Growth CapEx                                                                (10,000)   (10,000)   (10,000)   (10,000)
--------   --------   --------   -------- 
Cash from Investments                                                                     (12,657)   (12,705)   (12,753)   (12,803)
--------   --------   --------   --------  

Acquisition Borrowing                                                                 (1,169)     3,359      3,625      3,918 
Remaining Distributions to Repay Debt                                                      0         (0)         0         (0)
Amortization of Mortgage Notes                                                             -          -          -          -
Borrowing to Repay Existing Debt                                                           -          -          -          -  
Borrowing for Changes in WC                                                                0         (0)         -          - 
Borrowing to Pay Full MQD                                                              2,824      2,638      2,371      2,080 
Change in Equity                                                                      11,169      6,641      6,375      6,082 
Transaction/Deal Expenses                                                               (450)      (450)      (450)      (450)
Distributions                                                                        (14,599)   (15,490)   (16,141)   (16,763)
--------   --------   --------   --------
Cash from Financing                                                                        (2,226)    (3,301)    (4,219)    (5,134)
--------   --------   --------   -------- 

Net Cash Flow                                                                                (450)      (450)      (450)      (450)
Initial Cash Balance                                                                          500        500        500        500
--------   --------   --------   -------- 
Cash Available for Paydown on WC Revolver and Acq. Facility                                    50         50         50         50

Minimum Cash Balance                                                                          500        500        500        500

Borrowing/(Paydown) on WC Revolver and Acq. Facility                                          450        450        450        450
--------   --------   --------   -------- 

Net Change in Cash                                                                              -          -          -          -  
--------   --------   --------   --------  

Ending Cash Balance                                                                      $    500   $    500   $    500   $    500
========   ========   ========   ========  

Main Model Oct-8 Rev 2 with new Star & AGE 15 yr Petro Projections and tax
effect. For discussion purposes only.

7 of 19

===============================================================================================================================
(in thousands except per share and per unit data)

15-yr; $30mm @ 4.75x mid-year; $.01 '99, $.005 '00-'01, flat att.

ESTIMATED   NORMALIZED                    PROJECTED                 
------------------------------------------
1998         1998        1999       2000        2001       2002  
---------   ----------   --------   --------   ---------   -------- 

STAR GAS STAND ALONE EBITDA CALCULATION                                                                                        
(See Tab 3: Cases)                                                                                                             
- -------------------------------------------------------------------------------------------------------------------------------
Year 1       Year 2     Year 3      Year 4     Year 5
EBITDA Growth Rate                                                          10.4%        11.1%       6.2%        5.9%      5.5%
- ------------------------------------------------------------------------------------------------------------------------------- 
Base EBITDA:        Timing                                                                                                     
------                                                                                                     
End         1998                                                                                          
Mid         1999                                                                                          
Mid         2000                                                                                          
Mid         2001                                                                                          
Mid         2002                                                                                          
Mid         2003                                                                                          
Mid         2004                                                                                          
Mid         2005                                                                                          
---------   ---------    --------   --------   ---------   --------   
Total EBITDA                                                  $18,781     $20,731     $23,032    $24,465     $25,898    $27,331
=========   =========    ========   ========   =========   ========   

Pro Forma Full-Year EBITDA for Debt Covenant Analysis          18,781      20,731      23,748     25,181      26,614     28,047

STAR GAS STAND ALONE DEPRECIATION CALCULATION                                                                                  

Existing Depreciation                                         $11,927     $11,649     $11,649    $11,649     $11,649    $11,649 
1998 Normal      2,710
Maintenance CapEx:               1998          2,710          $     0     $     0     $   181    $   181     $   181    $   181
Annual Growth: 1.8%       1999          2,657                                       89        177         177        177
2000          2,705                                                  90         180        180
2001          2,753                                                              92        184
2002          2,803                                                                         93

Internal Growth CapEx:           1998              0                -           -           -          -           -          - 
Annual Growth: 0.0%       1999              0                                        -          -           -          - 
2000              0                                                   -           0          0
2001              0                                                               -          0
2002              0                                                                          -
2003              0
2004              0
2005              0

External Growth CapEx:           1998         10,000                -           -         667        667         667        667
Annual Growth: 0.0%       1999         10,000                                      333        667         667        667
2000         10,000                                                 333         667        667
2001         10,000                                                             333        667
2002         10,000                                                                        333
2003         10,000
2004         10,000
2005         10,000
---------   ---------    --------   --------   ---------   --------
Total Depreciation:                                           $11,927     $11,649     $12,358    $13,343     $14,217    $14,927
=========   =========    ========   ========   =========   ========   

Main Model Oct-8 Rev 2 with new Star & AGE 15 yr Petro Projections and tax 
effect. For discussion purposes only.

8 of 19

=================================================================================================================================
STAR GAS STAND ALONE DEBT SCHEDULE

(in thousands except per share and per unit data)

15-yr; $30mm @ 4.75x mid-year; $.01 '99, $.005 '00-'01, flat att.

ESTIMATED        NORMALIZED                           PROJECTED
--------------------------------------------------
1998              1998           1999           2000          2001         2002
---------        ----------      --------       --------      --------     --------

8.04% 1st Mortgage Notes
Beginning Balance                         $ 85,000         $ 85,000         $ 85,000       $ 85,000      $ 85,000     $ 85,000
Borrowing                                       0                0                0              0             0            0 
Amortization                                    0                0                0              0             0            0
--------         --------         --------       --------      --------     --------
Ending Balance                              85,000           85,000           85,000         85,000        85,000       85,000

Interest Payment                   8.04%     6,834            6,834            6,834          6,834         6,834        6,834   
Make-Whole Payment                               0                0                0              0             0            0

7.17% Pearl Notes
Beginning Balance                         $      0         $      0         $ 11,000       $ 11,000      $ 11,000     $ 11,000
Borrowing                                  11,000           11,000                0              0             0            0
Amortization                                    0                0                0              0             0            0
--------         --------         --------       --------      --------     --------
Ending Balance                              11,000           11,000           11,000         11,000        11,000       11,000

Interest Payment                   7.17%       613              613              789            789           789          789
% of year Pearl Notes Outstanding             77.7%            77.7%               0              0             0            0

7.25% WC Revolver
Beginning Balance                                -                -         $  4,785       $  4,785      $  4,785     $  4,785
Borrowing for Change in WC                      -                -                0             (0)            -            -
Borrowing/(Payment)                         4,785            4,785                0              0             0            0
--------         --------         --------       --------      --------     --------
Ending Balance                               4,785            4,785            4,785          4,785         4,785        4,785 

Effective Avg WC Balance                     3,490              (97)              14              0             0           14
Interest Payment                   7.25%       253               (7)               1              0             0            1

7.25% Acquisition Facility
Beginning Balance                                -                -         $  9,000       $ 11,105      $ 17,552     $ 23,998
External Acquisitions                       9,400            9,400           (1,169)         3,359         3,625        3,918
External Acquisitions at 
Beginning of 1999                               -                -                -              -             -            -
Internal Acquisitions                        (400)            (400)               -              -             -            -
Borrowing to Pay Full MQD                       -                -            2,824          2,638         2,371        2,080
Borrowings to Repay Existing Debt               -                -                -              -             -            -
Borrowings/(Payment)                            -                -              450            450           450          450
Remaining Distributions to Repay Debt           -                -                0             (0)            0           (0)
--------         --------         --------       --------      --------     --------
Ending Balance                               9,000            9,000           11,105         17,552        23,998       30,446

Interest Payment                   7.25%         0                0              729          1,039         1,506        1,974

TOTAL DEBT                                    
Beginning Balance                          $ 85,000         $ 85,000         $109,785       $111,890      $118,337     $124,783
Amortization of Mortgage Notes                   -                -                -              -             -            -
Borrowing for Pearl Notes                   11,000           11,000                -              -             -            -
Borrowing for Changes in WC                      -                -                0             (0)            -            -
Borrowing to Pay Full MQD                        -                -            2,824          2,638         2,371        2,080
Acquisition Borrowing                        9,000            9,000           (1,169)         3,359         3,625        3,918
Borrowing to Repay Existing Debt                 -                -                -              -             -            -
Remaining Distributions to Repay Debt            -                -                0             (0)            0           (0)
Borrowing/Payment on WC Revolver and 
Acq. Facility                                4,785            4,785              450            450           450          450
--------         --------         --------       --------      --------     --------
Ending Balance                             $109,785         $109,785         $111,890       $118,337      $124,783     $131,231
========         ========         ========       ========      ========     ========
INTEREST EXPENSE
Interest Expense                          $  7,700         $  7,440         $  8,352       $  8,662      $  9,129     $  9,597
Bank Fee                                       222              222              222            222           222          222
--------         --------         --------       --------      --------     --------
Total Interest Payment                 $  7,922         $  7,662         $  8,574       $  8,884      $  9,351     $  9,819
========         ========         ========       ========      ========     ========

Main Model Oct-8 Rev 2 with new Star & AGE 15 yr Petro Projections and tax 
effect. For discussion purposes only.

9 of 19

- ------------------------------------------------------------------------------------------------------------------------------------
STAR GAS STAND ALONE SCHEDULE OF ACTUAL DISTRIBUTIONS           15-yr; $30mm @ 4.75x mid-year; $.01 '99, $.005 '00-'01, flat att.

(in thousands except per share and per unit data)          

ESTIMATED NORMALIZED                 PROJECTED                  
----------------------------------------- 
ASSUMES REVISED TARGET DISTRIBUTIONS STRUCTURE                        1998      1998       1999       2000       2001      2002    
--------  ---------  --------   --------   --------   --------  

Distributable Cash
- ------------------                                                                                                
Cash from Operations                                                $ 10,834  $  13,044  $ 14,433   $ 15,556   $ 16,522   $ 17,487 
Maintenance CapEx                                                (2,710)    (2,710)   (2,657)    (2,705)    (2,753)    (2,803)
Other                                                                 0          0         0          0          0          0 
--------  ---------  --------   --------   --------   --------
Total MLP Distributable Cash Flow                                      8,124     10,334    11,776     12,851     13,769     14,684 
Distributable Cash Flow/Unit                                        $   1.27  $    1.62  $   1.77   $   1.83   $   1.88   $   1.93 

Average Units for Calculating Annual Distributions                                              2          2          2          2
- --------------------------------------------------
Common Units                                                           3,858      3,858     4,107      4,504      4,794      5,071 
Subordinated Units                                                     2,396      2,396     2,396      2,396      2,396      2,396
General Partner Interest Unit Equivalent                                 128        128       133        141        147        152
--------  ---------  --------   --------   --------   --------
Total Units Outstanding                                                6,382      6,382     6,636      7,041      7,337      7,620 

Distribution Levels
- -------------------
MQD                                                                 $   2.20  $   2.20   $   2.20   $   2.20   $   2.20   $   2.20 
First Target                                                        $   2.42  $   2.42   $   2.42   $   2.42   $   2.42   $   2.42
Second Target                                                       $   2.84  $   2.84   $   2.84   $   2.84   $   2.84   $   2.84
Third Target                                                        $   3.70  $   3.70   $   3.70   $   3.70   $   3.70   $   3.70

Indicated Cash Distribution                                         $   2.20  $   2.20   $   2.20   $   2.20   $   2.20   $   2.20

Distribution of MQD
- -------------------
Cash Available                                                         8,124    10,334     11,776     12,851     13,769     14,684
Cash Borrowed to Pay Full MQD                                          5,917     3,707      2,824      2,638      2,371      2,080
Allocation to:
Common Units                                                      8,489     8,489      9,036      9,909     10,546     11,157
Subordinated Units                                                5,271     5,271      5,271      5,271      5,271      5,271
General Partner Interest                                            281       281        292        310        323        335

First Target Distribution
- -------------------------
Cash Available                                                             0         0          0          0          0          0 

Cash Required for Target Distribution                                 0         0          0          0          0          0
Cash Required for Indicated Distribution                              0         0          0          0          0          0
Actual Cash Distributed                                               0         0          0          0          0          0
Allocation to:                                                                                                                   
Common Units                                                          0         0          0          0          0          0
Subordinated Units                                                    0         0          0          0          0          0
General Partner Interest                                              0         0          0          0          0          0

Second Target Distribution                                                                                                       
- --------------------------                                                                                                       
Cash Available                                                             0         0          0          0          0          0

Cash Required for Target Distribution                                 0         0          0          0          0          0
Cash Required for Indicated Distribution                              0         0          0          0          0          0
Actual Cash Distributed                                               0         0          0          0          0          0
Allocation to:                                                                                                                   
Common Units                                                          0         0          0          0          0          0
Subordinated Units                                                    0         0          0          0          0          0
General Partner Interest                                              0         0          0          0          0          0
Incentive Distribution                                                0         0          0          0          0          0

Main Model Oct-8 rev 2 with new Star & AGE 15yr Petro Projections and
tax effect. For discussion purposes only.

10 of 19

- ----------------------------------------------------------------------------------------------------------------------------------
STAR GAS STAND ALONE SCHEDULE OF ACTUAL DISTRIBUTIONS (CONT'D)   15-yr; 30 mm @ 4.75x mid-year ; $ 0.1 '99, $.005 '00.01, flat att

(in thousands except per share and per unit data)

ESTIMATED      NORMALIZED                     PROJECTED
-------------------------------------------
1998           1998               1999      2000      2001      2002
------------     ----------      ------------ --------  ---------  ---------

REMAINING DISTRIBUTION                                                 
- ----------------------                                                 
Cash Available                                    0              0                 0         0         0          0
Allocation to:                                                         
Common Units                                 0              0                 0         0         0          0
Subordinated Units                           0              0                 0         0         0          0
General Partner Interest                     0              0                 0         0         0          0
Incentive Distribution                       0              0                 0         0         0          0
Repay Indebtedness                          (0)            (0)               (0)        0        (0)         0

TOTAL DISTRIBUTIONS
- -------------------
Common Units                                  8,489          8,489             9,036     9,909    10,546     11,157
Subordinated Units                            5,271          5,271             5,271     5,271     5,271      5,271
General Partner Interest                        281            281               292       310       323        335
Incentive Distribution                            0              0                 0         0         0          0
------------     ----------      ------------ --------  ---------  ----------
Total Distributions                    $14,041        $14,041           $14,599   $15,490   $16,141    $16,763
============     ==========      ============ ========  =========  ==========

TOTAL DISTRIBITION PER UNIT
- ---------------------------
Common Unit                                   $2.20          $2.20             $2.20     $2.20     $2.20      $2.20
Subordinated Unit                              2.20           2.20              2.20      2.20      2.20       2.20
GP Unit                                        2.20           2.20              2.20      2.20      2.20       2.20   

Main Model Oct-8 Rev 2 with new Star & AGE 15yr Petro Projections and tax
effect. For discussion purposes only.

11 of 19

====================================================================================================================================
(in thousands except per share and per unit data)

15-yr; $30mm @ 4.75x mid-year; $.01 '99, $.005 '00-'01, flat att. 

Estimated   Normalized                        Projected
-------------------------------------------------
1998        1998          1999        2000           2001         2002
---------   ----------      -------    ---------     ----------   -----------
PETRO EBITDA CALCULATION                                                         

- ------------------------------------------------------------------------------------------------------------------------------------
Year 1         Year 2       Year 3        Year 4       Year 5 
EBITDA Growth Rate
- ------------------------------------------------------------------------------------------------------------------------------------

Base EBITDA:    Timing
------
Acquisitions:    End     1998     $      0 
Mid     1999       30,000  
Mid     2000       30,000
Mid     2001       30,000 
Mid     2002       30,000
Mid     2003       30,000
Mid     2004       30,000
Mid     2005       30,000   
--------      --------      --------     --------      --------     --------
Total EBITDA                                          $ 37,630      $ 44,749      $ 46,463     $ 48,897      $ 51,040     $ 52,989
========      ========      ========     ========      ========     ========

Pro Forma Full-Year EBITDA for Debt Covenent Analysis   37,630        44,749        49,534       51,968        54,111       56,060

PETRO DEPRECIATION CALCULATION                          

Existing Depreciation                                   $ 28,710      $ 28,710      $ 28,710     $ 28,710      $ 28,710     $ 28,710

Maintenance CapEx:         1998     $ 2,776                    -             -           185          185           185          185
Annual Growth: 2.0%   1999       3,000                                              100          200           200          200
2000       3,060                                                           102           204          204
2001       3,121                                                                         104          208
2002       3,184                                                                                      108
2003       3,247 
2004       3,312
2005       3,378 

Internal Growth CapEx:     1998     $     0                    -             -             -            -             -            -
Annual Growth: 0.0%   1999           0                                                -            -             -            -
2000           0                                                             -             -            -
2001           0                                                                           -            -
2002           0                                                                                        -
2003           0
2004           0
2005           0

External Growth CapEx:     1998     $     0                    -             -             0            0             0            0
Annual Growth: 0.0%   1999      30,000                                            2,308        4,615         4,615        4,615
2000      30,000                                                         2,308         4,615        4,615
2001      30,000                                                                       2,308        4,615
2002      30,000                                                                                    2,308
2003      30,000                                                                                        
2004      30,000                                                                                        
2005      30,000                                                                                         

--------      --------      --------     --------      --------     --------
Total Depreciation                                      28,710        28,710        31,303       36,120        40,942       45,767
========      ========      ========     ========      ========     ========

Main Model Oct-8 Rev 2 with new Star & AGE 15 yr Petro Projections and tax 
effect. For discussion purposes only.

12 of 19

==========================================================================================================================
(in thousands except per share and per unit data)

15-YR; $30MM @ 4.75X MID-YEAR; $.01 '99, $.005 '00-'01, FLAT ATT.
STAR PRO FORMA INCOME STATEMENT
ESTIMATED   NORMALIZED                    PROJECTED                 
------------------------------------------
1998         1998        1999       2000        2001       2002  
---------   ----------   --------   --------   ---------   --------  

Combined EBITDA                                               $56,411      $65,480    $69,495    $73,362     $76,938    $80,320
Consolidated Savings                                           500          500        500        500         500        500  
---------   ----------   --------   --------   ---------   --------   
Pro Forma EBITDA                                               56,911       65,980     69,995     73,862      77,438     80,820
Depreciation and Amortization                               40,637       40,359     43,661     49,463      55,159     60,694
---------   ----------   --------   --------   ---------   --------    
EBIT                                                           16,274       25,621     26,334     24,399      22,279     20,126
Interest Expense                                           (28,307)     (28,307)   (29,004)   (30,429)    (31,685)   (32,820)
Interest Income                                                  -            -          -          -           -          - 
Other Income                                                     -            -          -          -           -          -  

EBT                                                           (12,033)      (2,686)    (2,669)    (6,031)     (9,045)   (12,694)
---------   ----------   --------   --------   ---------   --------     
Current Income Taxes                                        (1,025)      (1,025)    (1,025)    (1,025)     (1,025)    (1,025)
Deferred Income Taxes                                            -            -          -          -           -          -   
---------   ----------   --------   --------   ---------   --------
Net Income Available to Common                               ($13,058)     ($3,711)   ($3,694)   ($7,056)   ($10,430)  ($13,719)
=========   ==========   ========   ========   =========   ======== 

Pro Forma Full-Year EBITDA for Debt Covenant Analysis          56,911       65,980     73,782     77,649      81,225     84,607

STAR PRO FORMA UNITS OUTSTANDING

Common Units                                                                                                       -          -
Beginning Balance                                                        10,842     10,842     11,614      12,621     13,696
Issuance                                                                   -          -          -           -          - 
Issued to Meet Debt Covenant Ratio                                         -        772      1,007       1,075      1,126
Issued to E                                                                -          -          -           -          -  
Buyback                                                                    -          -          -           -          -  
---------   ----------   --------   --------   ---------   --------  
Ending Balance                                              10,842       10,842     11,614     12,621      13,696     14,822
---------   ----------   --------   --------   ---------   -------- 
Average Common Units Outstanding                            10,842       10,842     11,228     12,117      13,158     14,259

Deferred Participation Units                                                     -
Beginning Balance                                                -            -        909        909         909        909 
DPUs Issued at Beginning of Year                              -            -          -          -           -          -   
---------   ----------   --------   --------   ---------   --------  
Ending Balance                                                  -            -        909        909         909        909 

SR Subordinated Units
Beginning Balances - Sr Sub Units                                         2,767      2,767      2,767       2,767      2,767 
DPUs Issued                                                                -          -          -           -          - 
Sr Sub Issuance                                                            -          -          -           -          - 
Sr Sub to E                                                                -          -          -           -          - 
Sr Sub Converted to G.P. Interest                                          -          -          -           -          - 
---------   ----------   --------   --------   ---------   -------- 
Ending Balance                                               2,767        2,767      2,767      2,767       2,767      2,767 
---------   ----------   --------   --------   ---------   -------- 
Average Sr Subordinated Units Outstanding                    2,767        2,767      2,767      2,767       2,767      2,767 

Subordinated Units
Beginning Balance                                                           567        567        567         567        567 
Issuance                                                                   -          -          -          -           -
Buyback                                                                    -          -          -          -           - 
---------   ----------   --------   --------   ---------   -------- 
Ending Balance                                                 567          567        567        567         567        567 
---------   ----------   --------   --------   ---------   -------- 
Average Subordinated Units Outstanding                         567          567        567        567         567        567 

GP Implied Units
Beginning Balance                                                           289        289        289         289        289 
Issued in conjuction with DPUs                                             -          -          -           -          - 
Issued to Meet Debt Covenant Ratio                                         -          -          -           -          - 
Issued in conjuction with E Equity                                         -          -          -           -          - 
Buyback                                                                    -          -          -           -          - 
---------   ----------   --------   --------   ---------   -------- 
289          289        289        289         289        289 
---------   ----------   --------   --------   ---------   --------    
Average Implied GP Units Outstanding                           289          289        289        289         289        289 

Total Units Outstanding                                        14,465       14,465     15,237     16,245      17,320     18,446

---------   ----------   --------   --------   ---------   --------   
Average Total Units Outstanding                                14,465       14,465     14,851     15,741      16,782     17,883    
=========   ==========   ========   ========   =========   ======== 

Pro Forma Heating Oil Units Used for DPU 
Issue Calculation                                                                    8,215      8,700       9,446     10,263

Main Model Oct-8 Rev 2 with new Star & AGE 15 yr Petro Projections and 
tax effect. For discussion purposes only. 

13 of 19

================================================================================
(in thousands except per share and per unit data)

15-yr; $30mm @ 4.75x mid-year; $.01 '99, $.005 '00-'01, flat att.

ESTIMATED                             PROJECTED
------------------------------------------------------
STAR PRO FORMA BALANCE SHEET                                   1998            1999          2000          2001          2002
-----------     ------------  ------------  ------------  ------------ 

ASSETS:
Cash                                                       $ 10,142        $ 10,142      $ 10,142      $  10,142     $  10,142
Other Current Assets                                         86,874          92,410        97,741        102,672       107,335
-----------     ------------  ------------  ------------  ------------
Total Current Assets                                        97,016         102,552       107,883        112,814       117,477

PP&E and Intangibles, Net                                   267,987         269,983       266,285        257,001       242,293
Other Assets                                                 12,802          12,802        12,802         12,802        12,802
-----------     ------------  ------------  ------------  ------------ 
Total Assets                                               377,805         385,337       386,971        382,617       372,572 
===========     ============  ============  ============  ============  

LIABILITIES:
Current Liabilities                                          90,971          96,507       101,838        106,769       111,432
8.25% Existing Credit Facility                                4,785           4,785         4,785          4,785         4,785
Total LT Debt                                               309,154         332,019       349,421        365,513       380,732
Other Liabilities                                            10,786          10,786        10,786         10,786        10,786
-----------     ------------  ------------  ------------  ------------ 
Total Liabilities                                          415,696         444,097       466,830        487,852       507,734

Preferred Stock                                                  -               -             -              -             - 
Common Shareholder's Equity                                   (37,891)        (58,760)      (79,859)      (105,236)     (135,162)
-----------     ------------  ------------  ------------  ------------  
Total Liabilities and Equity                              $377,805        $385,337      $386,971      $ 382,617     $ 372,572  
===========     ============  ============  ============  ============   
Check                         -               -             -                 0             0

STAR PRO FORMA CASH FLOW STATEMENT
Net Income                                                                    ($3,694)      ($7,056)      ($10,430)     ($13,719)
Depreciation and Amortization                                                43,661        49,463         55,159        60,694
Deferred Taxes                                                                 -             -              -             -
Other Assets/Liab                                                              -             -              -             -
Change in Non-Cash Working Capital                                             -             -              -             -
------------  ------------  ------------  ------------   
Cash from Operations                                                           39,966        42,408         44,728        46,975

Maintenance CapEx                                                            (5,657)       (5,765)        (5,874)       (5,987)
Internal Growth CapEx                                                          -             -              -             - 
External Growth CapEx                                                       (40,000)      (40,000)       (40,000)      (40,000) 
------------  ------------  ------------  ------------
Cash from Investments                                                         (45,657)      (45,765)       (45,874)      (45,987)

Acquisition Borrowing                                                        40,000        40,000         40,000        40,000
Remaining Distributions to Repay Debt                                          (151)         (438)          (255)           (0)
Amortization of Existing Debt                                                (6,127)       (8,141)           (60)          (60)
Borrowing to Repay Existing Debt                                              6,127         8,141             60            60
Borrowing for Changes in WC                                                    -             -              -             -   
Change in Common Equity & GP Interest                                        16,984        22,160         23,653        24,781
Repayment of Preferred Stock                                                   -             -              -             -   
Distributions                                                               (34,158)      (36,204)       (38,599)      (40,988)
------------  ------------  ------------  ------------ 
Cash from Financing                                                            22,675        25,518         24,799        23,793

Net Cash Flow                                                                  16,984        22,160         23,653        24,781
Initial Cash Balance                                                           10,142        10,142         10,142        10,142 
------------  ------------  ------------  ------------  
Cash Available for Paydown on WC Revolver and Acq. Facility                    27,126        32,302         33,795        34,923

Minimum Cash Balance                                                           10,142        10,142         10,142        10,142  

Borrowing/(Paydown) on WC Revolver and Acq. Facility                          (16,984)      (22,160)       (23,653)      (24,781)
------------  ------------  ------------  ------------  
Ending Cash Balance                                                            10,142        10,142         10,142        10,142  

Net Change in Cash                                                           $      0           ($0)           ($0)    $       0
============  ============  ============  ============   

Main Model Oct-8 Rev 2 with new Star & AGE 15 yr Petro Projections and tax
effect. For discussion purposes only.

14 of 19

====================================================================================================================================
(in thousands except per share and per unit data)
15-YR; $30MM @ 4.75X MID-YEAR; $.01 '99, $.005 '00-'01, FLAT ATT.

ESTIMATED     NORMALIZED                         PROJECTED
----------------------------------------------
STAR PRO FORMA DEBT SCHEDULE                               1998          1998          1999          2000          2001      2002
---------     ---------     ---------     ---------    ---------  --------

8.04% 1st Mortgage Notes
Beginning Balance                                   $  85,000     $  85,000     $  85,000     $  85,000    $  85,000  $ 85,000
Borrowing                                                  -             -             -             -            -         -
Amortization                                               -             -             -             -            -         -
---------     ---------     ---------     ---------    ---------  --------
Ending Balance                                         85,000        85,000        85,000        85,000       85,000    85,000
Interest Payment                   8.04%                6,834         6,834         6,834         6,834        6,834     6,834

7.17% Pearl Notes                                                                                  
Beginning Balance                                      11,000        11,000        11,000        11,000       11,000    11,000
Borrowing                                                  -             -             -             -            -         -
Amortization                                               -             -             -             -            -         -
---------     ---------     ---------     ---------    ---------  --------
Ending Balance                                         11,000        11,000        11,000        11,000       11,000    11,000
Interest Payment                   7.17%                  613           613           789           789          789       789
% of year Pearl Notes Outstanding                        77.7%         77.7%                  

10.13% Sub Notes & Sr Notes                                                                        
Beginning Balance                                      50,000        50,000             -             -            -         -
Borrowing                                                  -             -             -             -            -         -
Amortization                                         (50,000)      (50,000)            -             -            -         -
---------     ---------     ---------     ---------    ---------  --------
Ending Balance                                              -             -             -             -            -         -
Interest Payment                  10.13%                    -             -             -             -            -         -

9.38% Sub Notes $ Sr Notes                                                           
Beginning Balance                                      75,000        75,000             -             -            -         -
Borrowing                                                  -             -             -             -            -         -
Amortization                                         (75,000)      (75,000)            -             -            -         -
---------     ---------     ---------     ---------    ---------  --------
Ending Balance                                              -             -             -             -            -         -
Interest Payment                   9.38%                    -             -             -             -            -         -

12.25% Sub Notes & Sr Notes                                                          
Beginning Balance                                      81,250        81,250             -             -            -         -
Borrowing                                                  -             -             -             -            -         -
Amortization                                         (81,250)      (81,250)            -             -            -         -
---------     ---------     ---------     ---------    ---------  --------
Ending Balance                                              -             -             -             -            -         -
Interest Payment                  12.25%                    -             -             -             -            -         -

9.00% New Debt                                                                       
Beginning Balance                                           -             -       120,000       126,127      134,268   134,328
Borrowing                                            120,000       120,000         6,127         8,141           60        60
Amortization                                               -             -             -             -            -         -
---------     ---------     ---------     ---------    ---------  --------
Ending Balance                                        120,000       120,000       126,127       134,268      134,328   134,388
Interest Payment                   9.00%               10,800        10,800        11,076        11,718       12,087    12,092

Exchange of 11.96% Senior Notes                                                      
Beginning Balance                                           -             -        63,126        63,126       63,126    63,126
Borrowing                                             63,126        63,126             -             -            -         -
Amortization                                               -             -             -             -            -         -
---------     ---------     ---------     ---------    ---------  --------
Ending Balance                                         63,126        63,126        63,126        63,126       63,126    63,126
Interest Payment                   9.00%                5,681         5,681         5,681         5,681        5,681     5,681

8.00% Acq. & Other Notes Pay                                                         
Beginning Balance                                      16,507        16,507        14,508         8,381          240       180
Borrowing                                                  -             -             -             -            -         -
Amortization                                          (1,999)       (1,999)       (6,127)       (8,141)         (60)      (60)
---------     ---------     ---------     ---------    ---------  --------
Ending Balance                                         14,508        14,508         8,381           240          180       120
Interest Payment                   8.00%                1,241         1,241           916           345           17        12

Main Model Oct-8 Rev 2 with new Star & AGE 15 yr Petro Projections and
tax effect. For discussion purposes only.

15 of 19

=================================================================================================================================
(in thousands except per share and per unit data)

15-yr; $30mm @ 4.75x mid-year; $.01 '99, $.005 '00-'01, flat att.

ESTIMATED   NORMALIZED                    PROJECTED
-------------------------------------------
STAR PRO FORMA DEBT SCHEDULE (CONT'D)                        1998         1998          1999        2000      2001       2002
---------   ----------    ---------   ---------  ---------  --------- 

Exchange of 14.10% Senior Notes                                    
Beginning Balance                                               -            -        6,520       6,520      6,520      6,520 
Borrowing                                                  6,520        6,520            -           -          -          - 
Amortization                                                   -            -            -           -          -          - 
---------   ----------    ---------   ---------  ---------  --------- 
Ending Balance                                              6,520        6,520        6,520       6,520      6,520      6,520

Interest Payment                               11.50%         750          750          750         750        750        750

7.25% WC Revolver                                                                                              
Beginning Balance                                               -            -        4,785       4,785      4,785      4,785
Borrowing for Change in WC                                     -            -            -           -          -          - 
Borrowing to Pay full MQD                                      -            -            -           -          -          - 
Borrowing/(Payment)                                        4,785        4,785            -           -          -          - 
---------   ----------    ---------   ---------  ---------  --------- 
Ending Balance                                              4,785        4,785        4,785       4,785      4,785      4,785 

Effective Avg WC Balance                                   23,600       23,600       10,828       9,379      9,379      9,379
Interest Payment                                7.25%       1,711        1,711          785         680        680        680

7.25% Acquisition Facility                                                                                     
Beginning Balance                                               -            -        9,000      31,865     49,266     65,358
External Acquisitions                                      9,400        9,400       40,000      40,000     40,000     40,000
External Acquisitions at Beginning of 1999                     -            -            -           -          -          - 
Internal Growth CapEx                                       (400)        (400)           -           -          -          -
Payment                                                        -            -      (16,984)    (22,160)   (23,653)   (24,781)
Remaining Distributions to Repay Debt                          -            -         (151)       (438)      (255)        (0)
---------   ----------    ---------   ---------  ---------  --------- 
Ending Balance                                              9,000        9,000       31,865      49,266     65,358     80,577

Interest Payment                                7.25%        ($15)        ($15)   $   1,481   $   2,941  $   4,155  $   5,290

Total Pro Forma Debt                                                                                        
Beginning Balance                                       $ 318,757   $  318,757    $ 313,939   $ 336,804  $ 354,206  $ 370,298
Amortization of Existing Debt                           (208,249)    (208,249)      (6,127)     (8,141)       (60)       (60)
Exchange of Notes                                         69,646       69,646            -           -          -          -
Borrowing for Changes in WC                                    -            -            -           -          -          -
Acquisition Borrowing                                      9,000        9,000       40,000      40,000     40,000     40,000
Borrowing to Pay Full MQD                                      -            -            -           -          -          -
Borrowing to Repay Existing Debt                         120,000      120,000        6,127       8,141         60         60
Remaining Distribution to Repay Debt                           -            -         (151)       (438)      (255)        (0)
Borrowing/(Payment) on WC Revolver and Acq. Facility       4,785        4,785      (16,984)    (22,160)   (23,653)   (24,781)
---------   ----------    ---------   ---------  ---------  --------- 
Ending Balance                                            313,939      313,939      336,804     354,206    370,298    385,517

Preferred Stock                                                                                             
Beginning Balance                                          34,167       34,167            -           -          -          - 
Repayment                                              (34,167)     (34,167)           -           -          -          - 
---------   ----------    ---------   ---------  ---------  --------- 
Ending Balance                                                  -            -            -           -          -          -

Dividend Payment                               14.33%           -            -            -           -          -          -

Interest Expense/Dividends                                 27,615       27,615       28,312      29,737     30,993     32,128
Chase Fees                                                    692          692          692         692        692        692
---------   ----------    ---------   ---------  ---------  --------- 
Total Interest Payment/Dividends                     $  28,307   $   28,307    $  29,004   $  30,429  $  31,685  $  32,820
=========   ==========    =========   =========  =========  ========= 

Main Model Oct-8 Rev 2 with new Star & AGE 15 yr Petro Projections
and tax effect. For discussion purposes only.

16 of 19

- --------------------------------------------------------------------------------
(in thousands except per share and per unit data)

15-yr $30mm @ 4.75x mid-year; $.01 '99, $.005 '00-'01, flat att.

STAR PRO FORMA DISTRIBUTION SCHEDULE OF ACTUAL DISTRIBUTIONS

Estimated     Normalized                     Projected
-------------------------------------------
1998         1998          1999      2000       2001       2002
---------     ----------   ---------  --------  ----------  ----------

Distributable Cash
- ------------------
Cash from Operations (excl chg in WC)                           27,579        36,648      $39,966    $42,408   $44,728     $46,975
Maintenance CapEx                                             (5,486)       (5,486)      (5,657)    (5,765)   (5,874)     (5,987)
Other                                                             -             -            -          -         -           - 
--------       -------      -------    -------   -------     -------  
Total MLP Distributable Cash Flow                                22,093        31,162       34,309     36,643    38,854      40,988 

Distributable Cash Flow / Unit                                 $  1.53       $  2.15      $  2.31    $  2.33   $  2.32     $  2.29 
Distributable Cash Flow / Unit Pro Forma for DPU Conversion

Average Units for Calculating Annual Distributions
- --------------------------------------------------
Common Units                                                    10,842        10,842       11,228     12,117    13,158      14,259
SR Subordinated Units                                            2,767         2,767        2,767      2,767     2,767       2,767
Subordinated Units                                                 567           567          567        567       567         567
General Partner Interest Unit Equivalent                           289           289          289        289       289         289
--------       -------      -------    -------   -------     -------
Total Units Outstanding                                         14,465        14,465       14,851     15,741    16,782      17,883

Distribution Levels                                            $  2.30       $  2.30      $  2.30    $  2.30   $  2.30     $  2.30
- -------------------                                                                                                               
MQD                                                            $  2.30       $  2.30      $  2.30    $  2.30   $  2.30     $  2.30
First Target                                                   $  2.42       $  2.42      $  2.42    $  2.42   $  2.42     $  2.42
Second Target                                                  $  2.84       $  2.84      $  2.84    $  2.84   $  2.84     $  2.84
Third Target                                                   $  3.70       $  3.70      $  3.70    $  3.70   $  3.70     $  3.70

Indicated Cash Distribution                                    $  2.30       $  2.30      $  2.30    $  2.30   $  2.30     $  2.30

Distribution of MQD
- -------------------
Cash Available                                                  22,093        31,162       34,309     36,643    38,854      40,988 
Allocation to:
Common Units                                               22,093        24,936       25,823     27,869    30,264      32,796 
SR Subordinated Units                                           0         6,226        6,364      6,364     6,364       6,364
Subordinated Units                                              0             0        1,305      1,305     1,305       1,211
General Partner Interest                                        0             0          665        665       665         617

First Target Distribution                                                          
- -------------------------                                                          
Cash Available                                                       0             0          151        438       255           0

Cash Required for Target Distribution                           0             0        1,783      1,892     2,020           0
Cash Required for Indicated Distribution                        0             0            0          0         0           0
Actual Cash Distributed                                         0             0            0          0         0           0
Allocation to:                                                                                                                    
Common Units                                                    0             0            0          0         0           0
SR Subordinated Units                                           0             0            0          0         0           0
Subordinated Units                                              0             0            0          0         0           0
General Partner Interest                                        0             0            0          0         0           0

Total Distributions to:                                                       
Common Units                                                 0             0            0          0         0           0
Sr. Subordinated Units                                       0             0            0          0         0           0
Subordinated Units                                           0             0            0          0         0           0
General Partner Interest                                     0             0            0          0         0           0

Main Model Oct-8 Rev 2 with new Star & AGE 15 yr Petro Projections and 
tax effect . For discussion purposes only.

17 of 19       

================================================================================
(in thousands except per share and per unit data)

STAR GAS PRO FORMA SCHEDULE OF ACTUAL DISTRIBUTIONS (CONT'D)        15-yr; $30mm @ 4.75x mid-year; $.01 '99, $.005 '00-'01, flat att

ESTIMATED    NORMALIZED                              PROJECTED                     
-------------------------------------------------------
1998         1998              1999         2000           2001           2002    
---------    ----------      -----------    --------      ---------      -----------

Second Target Distribution
- --------------------------
Cash Available                                   0             0               0              0              0              0       
Cash Required for Target Distribution         0             0               0              0              0              0       
Cash Required for Indicated Distribution      0             0               0              0              0              0       
Actual Cash Distributed                       0             0               0              0              0              0       
Allocation to:
Common Units                                  0             0               0              0              0              0       
SR Subordinated Units                         0             0               0              0              0              0
Subordinated Units                            0             0               0              0              0              0       
General Partner Interest                      0             0               0              0              0              0       
Incentive Right                               0             0               0              0              0              0       
Incentive Right to GP Interest              0             0               0              0              0              0
Incentive Right to Sub Units                0             0               0              0              0              0       
Incentive Right to Sr. Sub Units            0             0               0              0              0              0       

Total Distributions to:
Common Units                                0             0               0              0              0              0       
Sr. Subordinated Units                      0             0               0              0              0              0       
Subordinated Units                          0             0               0              0              0              0       
General Partner Interest                    0             0               0              0              0              0       

Third Target Distribution
- -------------------------
Cash Available                                   0             0               0              0              0              0       

Cash Required for Target Distribution         0             0               0              0              0              0       
Cash Required for Indicated Distribution      0             0               0              0              0              0       
Actual Cash Distributed                       0             0               0              0              0              0       
Allocation to:
Common Units                                  0             0               0              0              0              0       
Sr. Subordinated Units                        0             0               0              0              0              0
Subordinated Units                            0             0               0              0              0              0       
General Partner Interest                      0             0               0              0              0              0       
Incentive Right                               0             0               0              0              0              0       
Incentive Right to GP Interest              0             0               0              0              0              0
Incentive Right to Sub Units                0             0               0              0              0              0       
Incentive Right to Sr. Sub Units            0             0               0              0              0              0

Total Distributions to:
Common Units                                0             0               0              0              0              0       
Sr. Subordinated Units                      0             0               0              0              0              0
Subordinated Units                          0             0               0              0              0              0       
General Partner Interest                    0             0               0              0              0              0       

Remaining Distribution
- ----------------------
Cash Available                                   0             0               0              0              0              0       

Cash Required for Indicated Distribution      0             0               0              0              0              0       
Actual Cash Distributed                       0             0               0              0              0              0
Allocation to:
Common Units                                  0             0               0              0              0              0
Sr. Subordinated Units                        0             0               0              0              0              0       
Subordinated Units                            0             0               0              0              0              0       
General Partner Interest                      0             0               0              0              0              0       
Incentive Right                               0             0               0              0              0              0       
Incentive Right to GP Interest              0             0               0              0              0              0
Incentive Right to Sub Units                0             0               0              0              0              0       
Incentive Right to Sr. Sub Units            0             0               0              0              0              0       
Repay Indebtedness                            0             0             151            438            255              0       

Total Distributions to:
Common Units                                0             0               0              0              0              0       
Sr. Subordinated Units                      0             0               0              0              0              0       
Subordinated Units                          0             0               0              0              0              0       
General Partner Interest                    0             0               0              0              0              0       

Main Model Oct-8 Rev 2 with new Star & AGE 15 yr Petro Projections and
tax effect. For discussion purposes only.

18 of 19

====================================================================================================================================
(in thousands except per share and per unit data)

STAR GAS PRO FORMA SCHEDULE OF ACTUAL DISTRIBUTIONS (CONT'D)      15-yr; $30mm @ 4.75x mid-year; $.01 '99, $.005 '00-'01, flat att.

Estimated      Normalized                      Projected
-------------------------------------------------
1998           1998          1999          2000        2001        2002
-----------     -----------  -----------    ----------  ----------  ----------

Total Distributions
- -------------------
Common Units                                          $ 22,093        $ 24,936      $ 25,823       $ 27,869   $ 30,264    $ 32,796
SR Subordinated Units                                        0           6,226         6,364          6,364      6,364       6,364
Subordinated Units                                           0               0         1,305          1,305      1,305       1,211
General Partner Interest                                     0               0           665            665        665         617
---------       ---------     ---------      ---------  ---------   --------- 
Total Distributions                              $ 22,093        $ 31,162      $ 34,158       $ 36,204   $ 38,599    $ 40,988
=========       =========     =========      =========  =========   =========

14,041          14,041        14,599         15,490     16,141      16,763

Total Distributions Per Unit
- ----------------------------
Common Units                                          $   2.04        $   2.30      $   2.30       $   2.30   $   2.30    $   2.30
SR Subordinated Units                                     0.00            2.25          2.30           2.30       2.30        2.30
Subordinated & GP Units                                   0.00            0.00          2.30           2.30       2.30        2.13

Main Model Oct-8 Rev 2 with new Star & AGB 15 yr Petra Projections 
and tax effect. For discussion purposes only.

19 of 19

PETRO PRO FORMA WORKING CAPITAL REQUIREMENTS
(IN 000S, EXCEPT PER SHARE AMOUNTS)

- -----------------------------------------------------------------------------------------------------------------
ASSUMPTIONS
- -----------------------------------------------------------------------------------------------------------------

DEBT ATTRIBUTED TO PETRO:

9/30/98                      
Pro Forma         Interest           Annual  
Balance           Rate             Interest
---------        ----------       -----------
8.00 % Acquisition & Other Notes Pay  $ 14,508            8.00%           $ 1,161
9.00 % Exchanged Debt                   63,126            9.00%             5,681
11.50 % Exchanged Debt                    6,520           11.50%               750 
9.25 % New Debt (a)                    120,000            9.25%            11,100 
-----------
$18,692

NEW COMMON UNITS TO REFINANCE OLD DEBT & CONSENT FEE:
Price Per          Number                                    Annual
Amount to be Raised              Share            of Units            MQD                 Distribution
- ---------------------------------------------------     ----------       -----------          -------------------
$141,473                    $20.259            6,983             $2.30                  $16,061

INCREASE IN MDQ ON OLD COMMON UNITS                       Number         Increase in                Annual
of Units           MDQ                  Distribution  
----------       -----------          ------------------- 

Old Common Units                                          3,832             $0.10                   $383

OPERATING WORKING CAPITAL REQUIRE      $   500    

TAX LIABILITY:                         $ 5,000

(a) AGE assumed rate of 9.25%

- --------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------------
REQUIREMENT CALCULATION
- -----------------------------------------------------------------------------------------------------------------
Closing Date
--------------------------------------------------                
Jan 31            Feb 28            Mar 31       
1999              1999              1999  
--------------     -------------    --------------  

Interest on Debt Attributed to Petro:                              $17,134            $15,576          $14,019

MDQ on New Common Units                                             16,061             16,061           16,061          

Increase in MDQ on old Common Units                                    383                383              383 

Operating Working Capital Requirement                                  500                500              500         

Tax Liability                                                        5,000              5,000            5,000  
-----              -----            -----

Sub Total                                                          $39,078            $37,521          $35,963

Petro EBITDA
Historical Quarter Ended:
6/30/98                                                            ($6,355)           ($6,355)         ($6,355)
9/30/97                                                            (20,908)           (20,908)         (20,908)
12/31/97                                                            16,716             16,716           16,716
------
Projected Month Ended: 
2/28/99                                                             20,434
3/31/99                                                             13,281             13,281
------             ------

Sub Total                                                          $23,168            $ 2,734         ($10,547)

TOTAL                                                              $15,910            $34,787          $46,510

- -----------------------------------------------------------------------------------------------------------------
WORKING CAPITAL REQUIREMENT                                         18,000             35,000           46,500
- -----------------------------------------------------------------------------------------------------------------

Projected Month Ended Working Capital:
Standard Calculation                                               $20,670            $36,836          $47,341
Excess Cash Assuming a March 31 Close                                                                  $   841

- --------------------------------------------------------------------------------

CONTACT:
Star Gas:          Richard F. Ambury
Vice President-Finance
203-328-7313

Robert L. Rinderman
David C. Collins
Jaffoni & Collins Incorporated
212/835-8500 or rinderman@jcir.com
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Petro:             George Leibowitz
Treasurer
203/325-5470

Jim Bottiglieri
Vice President and Controller
203/325-5460

FOR IMMEDIATE RELEASE

STAR GAS PARTNERS, L.P. AND PETROLEUM HEAT AND POWER CO., INC.
ANNOUNCE AGREEMENT IN PRINCIPLE TO COMBINE

STAMFORD, CT (August 14, 1998) - Star Gas Partners, L.P., ("Star" or
the "Partnership") (NYSE:SGU) and Petroleum Heat and Power Co., Inc. ("Petro" or
the "Company") (NASDAQ:HEAT), jointly announced today that they have reached an
agreement in principle to enter into a strategic business combination in which
Petro would become a wholly-owned subsidiary of Star.  This transaction would be
effected through Petro shareholders exchanging their approximately 26.6 million
shares of Petro Common Stock for approximately 3.6 million Star master limited
partnership units which will be subordinated to the existing Star Common Units.

Star Gas currently distributes to its partners, on a quarterly basis, all of its
Available Cash, which is generally all of the cash receipts of the Partnership
less all cash disbursements, with a targeted Minimum Quarterly Distribution
("MQD") of $0.55 per Unit, or $2.20 per Unit on an annualized basis.  In
connection with the Petro transaction, the Partnership will increase the MQD to
$.575 per unit or $2.30 per Unit on an annualized basis.  This increase in the
MQD reflects the expectation that the transaction will be accretive to the
Partnership.  The increase in the MQD will also serve to raise the threshold
needed to end the subordination period.

Of the 3.6 million subordinated Partnership units anticipated to be distributed
to Petro shareholders, 2.8 million will be Senior Subordinated Units and
approximately 857,000 will be Junior Subordinated Units and General Partnership
Interests.  The Senior

Subordinated Units will be publicly registered and tradable (they are expected
to be listed on the NYSE) and will be subordinated in distributions to Star's
Common Units. The Junior Subordinated Units and General Partnership Interests
will not be registered nor publicly tradable and will be subordinated to both
the Common Units and the Senior Subordinated Units. The Senior Subordinated
Units will be exchanged with holders of Petro's publicly traded Class A common
stock and the Junior Subordinated Units and General Partnership Interests will
be exchanged with individuals that currently own Petro's Class C common stock.
Certain holders of the Company's Class C Common Stock will also exchange their
shares of Senior Subordinated Units.

It is currently contemplated that 21,177,000 shares of Petro Common Stock will
be exchanged for 2,767,000 Star Senior Subordinated Units.  5,386,000 shares of
Petro common stock, held by certain individuals who currently own Petro Class C
common stock, including Irik P. Sevin, Chairman of Petro and Star and other
members of a group that currently controls Petro, will be exchanged for 579,000
Junior Subordinated Units and General Partnership Interests which are
economically equivalent to 279,000 Junior Subordinated Units.

Under the partnership subordination provision, distributions on Star Senior
Subordinated Units may be made only after distributions of Available Cash on
Common Units meet the MQD requirement.  Distributions on Star Junior
Subordinated Units and to the General Partner may be made only after
distributions of Available Cash on Common Units and Senior Subordinated Units
meet the MQD requirement.  The Subordination Period will extend until the
Partnership earns and pays its MQD for three years.  In any event, as a
condition of this transaction, the Partnership agreement will be amended so that
no distribution will be paid on the Senior Subordinated Units, Junior
Subordinated Units, or to the General Partner except to the extent Available
Cash is earned from operations.

Like many other publicly traded master limited partnerships, the Partnerships
contains a provision which provides the General Partner with incentive
distributions in excess of certain targeted amounts.  This provision will be
modified so that should there be any such incentive distributions, they will be
made pro rata to the Senior Subordinated Units and Junior Subordinated Units as
well as to the General Partner.

In connection with the Transaction, the Senior Subordinated Units, Junior
Subordinated Units and General Partnership Interests can earn, pro rata, 303,000
additional Senior Subordinated Units each year that Petro provides $.50 per unit
accretion to Star to a maximum of 909,000 additional Senior Subordinated Units.

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In connection with the transaction, Star intends to raise approximately $140
million through a public offering of Common Units and $120 million through a
public or private offering of debt securities.  The net proceeds from these
offerings will be used primarily to redeem approximately $240 million in Petro
public and private debt and preferred stock.  Any such offering will be made
only by means of a prospectus or in transactions not requiring registration
under securities laws.  This announcement does not constitute an offer to sell
any securities.  As part of this recapitalization, Petro also intends to
restructure $66.2 million of privately held notes.

Petro has reached an agreement with institutional holders of an aggregate of
$149 million or 63.1% of such public debt and preferred stock to permit there
redemption of such securities at the closing of the Star Gas/Petro Transaction.
This agreement allows Petro to redeem its 9 3/8% Subordinated Debentures, 10
1/8% Subordinated Notes and 12 1/4% Subordinated Debentures at 100%, 100% and
103.5% of principal amount, respectively, and to redeem its 12 7/8% Preferred
Stock at $23 per share.  In consideration for this early redemption right, Petro
has agreed to issue to such holders 3.37 shares of newly issued Petro Junior
Convertible Preferred Stock for each $1,000 in principal amount or liquidation
preference of such securities.  Each share of Petro Junior Convertible Preferred
Stock will be exchangeable into .13 of a Star common Unit at the conclusion of
this transaction representing a maximum 104,000 MLP units.  Should the
transaction not be consummated, the Junior Preferred Stock will be converted
into a like number of shares of Class A Common Stock.

Petro will offer to the remaining holders of it's publicly traded debt and
preferred stock the same right of early redemption under the same terms and
conditions as agreed to by the consenting holders.  This proposal will be made
through an exchange offer that is expected to commence shortly.  This
transaction and the associated Petro recapitalization are subject to receiving
an agreement to the early redemption from at least 90% of the outstanding
publicly traded debt and preferred stock.

Petro currently has a 40.7% equity interest in the Partnership and a subsidiary
of Petro is its general partner.  After completion of the transaction, the Petro
shareholders will own approximately 26% of Star's equity through Subordinated
Units and General Partnership Interests.  The holders of the Partnership's
Common Units (including an estimated 6.4 million Common Units that will be sold
in the Partnerships $140 million public offering) will own an aggregate
approximately 74% equity interest in the Partnership following the completion of
the transaction.  The General Partner of the Partnership will be a newly
organized Delaware limited liability company that will be owned by members of
Petro's current group.

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In commenting on the proposed transaction, Joseph Cavanaugh, President of Star,
"We believe that this strategic combination will have a number of benefits for
the Partnership.  Firstly, we are pleased with having achieved our goal of
structuring a transaction which we believe will be immediately accretive,
enabling us to increase the Partnership's MQD to $2.30 annually.  Secondly, we
believe this strategic combination will provide an additional source of
attractive acquisition opportunities.  Petro is the largest retail heating oil
company in the country and the primary  consolidator of that highly fragmented
industry.  Over the past nineteen years Petro has acquired 189 distributorships.
As such, we believe this combination should provide the Partnership with a
platform to increase its acquisition activities.  Thirdly, over the past two and
one-half years, in an effort to take advantage of its size, Petro has
regionalized its operations, accessed developments in computer an and
communication technology, and  entered into cross-marketing partnerships.  These
programs have provided attractive productivity, operational and marketing
results which should continue to benefit the Partnership.  Finally, this
combination significantly increases the size and market capitalization of the
Partnership."

Irik P. Sevin, CEO of Petro stated, "We believe the proposed transaction will
enable Petro to achieve its stated objective of accessing equity to recapitalize
and delever.  This should permit us to continue our historically active
acquisition program and facilitate the funding of our operational and marketing
initiatives.  In addition, the MLP structure should provide a better valuation
format for Petro which is cash flow oriented and which has been the only
publicly traded company in its industry.  The transaction should provide our
shareholders with the resumption of annual cash distributions which Petro had
historically made."

The Board of Directors of Star has appointed an independent committee of
directors to represent Star Gas in this matter.  This committee has retained
A.G. Edwards & Sons, Inc. to act as it financial advisor and to determine the
fairness of this transaction to the Star Common Unit holders.  The Board of
Directors of Petro has retained PaineWebber Incorporated as its financial
advisor and Dain Rauscher Wessels to render an opinion as to the fairness to
Petro of this transaction.

The completion of the Transaction is subject to the negotiation and execution of
definitive agreements, the receipt of regulatory approvals, the approval of
Star's nonaffiliated common unit holders and Petro's nonaffiliated common
shareholders, other necessary partnership and corporate approvals, fairness
opinions from A.G. Edwards & Sons, Inc. and Dain Rauscher Wessels, and the
agreement to early redemption by the holders of 90% of Petro's

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publicly traded debt and preferred stock.

Petro and Star will continue to operate as separate business units and this
transaction will not have an impact on the day-to-day operations of either
entity.  There will be no reduction in the number of employees as a result of
this transaction.

Petroleum Heat and Power Co., Inc. is the largest retail distributor of home
heating oil in the nation, serving approximately 350,000 customers in the
Northeast and Mid-Atlantic states, including the metropolitan areas of New York,
Boston, Washington, D.C., Baltimore, and Providence.  Star Gas Partners L.P.,
the eighth largest retail propane distributor serves more than 166,000 customers
throughout 74 locations in the Northeast, from Maine to Southern New Jersey.
Star operates under several trademarks and trade names, including:  Star Gas
Service, Silgas, Blue Flame L.P. Gas, Maingas, Arrow Gas, Mid-Hudson Valley
Propane, Coleman Gas Service, H&S Gas, Wilhoyte L.P. Gas, Rural Natural Gas,
Pearl Gas, Bay State-Arrow Gas, Knowles L.P. Gas and Lowe Bros. & Dad.

This Press Release includes "forward-looking statements," within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act, which
represent Petro and Star's expectations or beliefs concerning future events that
involve risks and uncertainties.  Although Petro and Star Gas believe that the
expectations reflected in such forward-looking statements are reasonable, Petro
and Star Gas can give no assurance that such expectations will prove to have
been correct.  Investors and prospective investors should read this Press
Release in conjunction with Petro and Star Gas' Forms 10-K and 10-Q which
include additional information that could affect Petro and Star Gas' financial
results.

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