AGREEMENT AND PLAN OF MERGER

Execution Version

AGREEMENT AND PLAN OF MERGER

among

HH GP HOLDING, LLC,

HLND MERGERCO, LLC,

HILAND PARTNERS GP, LLC

and

HILAND PARTNERS, LP

Executed June 1, 2009

TABLE OF CONTENTS

Exhibit A — Form of Confidentiality Agreement

AGREEMENT AND PLAN OF MERGER

          This AGREEMENT AND PLAN OF MERGER, executed this 1st day of June, 2009 (this “ Agreement ”), is entered into among HH GP Holding, LLC, an Oklahoma limited liability company (“ Parent ”), HLND MergerCo, LLC, a Delaware limited liability company and a subsidiary of Parent (“ Merger Sub ” and, together with Parent, the “ Parent Parties ”), Hiland Partners GP, LLC, a Delaware limited liability company and the general partner of the Partnership (“ Partnership GP ”), and Hiland Partners, LP, a Delaware limited partnership (the “ Partnership ” and, together with Partnership GP, the “ Hiland Parties ”).

WITNESSETH :

          WHEREAS, the parties intend that Merger Sub be merged with and into the Partnership, with the Partnership surviving that merger on the terms and subject to the conditions set forth in this Agreement (the “ Merger ”);

          WHEREAS, it is contemplated that, on the Closing Date (as defined herein), HPGP MergerCo, LLC, a Delaware limited liability company and a subsidiary of Parent (“ HPGP Merger Sub ”), be merged with and into Hiland Holdings GP, LP, a Delaware limited partnership (“ Holdings ”), with Holdings surviving that merger (the “ Holdings Merger ”) on the terms and subject to the conditions set forth in the Agreement and Plan of Merger, dated as of the date hereof (the “ Holdings Agreement ”), among Parent, HPGP Merger Sub, Hiland Partners GP Holdings, LLC, a Delaware limited liability company and the general partner of Holdings (“ Holdings GP ”), and Holdings;

          WHEREAS, the board of directors of Partnership GP (the “ Board of Directors ”), acting upon the unanimous recommendation of its Conflicts Committee, has (i) determined that this Agreement and the transactions contemplated hereby are advisable, fair to and in the best interests of the Partnership and the holders of Common Units (other than Partnership GP and its Affiliates (including Holdings)), (ii) approved the execution, delivery and performance of this Agreement by the Hiland Parties and the consummation of the transactions contemplated hereby, including the Merger, and (iii) resolved to recommend approval of this Agreement and the Merger by the holders of Common Units (excluding Common Units owned by Partnership GP and its Affiliates (including Holdings)) of the Partnership;

          WHEREAS, Holdings GP and Holdings are parties to a Support Agreement, dated the date hereof (the “ Support Agreement ”), with Parent and the Hiland Parties pursuant to which Holdings GP and Holdings have, among other things: (i) agreed that the Partnership Interests of which Holdings is the record and beneficial owner will not be converted into the right to receive the Merger Consideration and will remain outstanding as Partnership Interests of the Surviving Entity (as defined herein) in the Merger, and (ii) agreed to vote the Common Units and Subordinated Units of which Holdings is the record and beneficial owner in favor of the approval of this Agreement and the Merger;

          WHEREAS, the board of directors of each of Parent and Merger Sub and the sole member of Merger Sub have unanimously approved this Agreement and declared it advisable for Parent and Merger Sub, respectively, to enter into this Agreement; and

          WHEREAS, the parties desire to make certain representations, warranties, covenants and agreements in connection with the Merger and the transactions contemplated by this Agreement and also to prescribe certain conditions to the Merger as specified herein.

          NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, Parent, Merger Sub, Partnership GP and the Partnership hereby agree as follows:

ARTICLE I

THE MERGER

          Section 1.1 The Merger . At the Effective Time, upon the terms and subject to the conditions set forth in this Agreement and in accordance with the applicable provisions of the Delaware Revised Uniform Limited Partnership Act (“ DRULPA ”) and the Delaware Limited Liability Company Act (“ DLLCA ”), Merger Sub shall be merged with and into the Partnership, whereupon the separate existence of Merger Sub shall cease, and the Partnership shall continue as the surviving entity in the Merger (the “ Surviving Entity ”).

          Section 1.2 Closing . The closing of the Merger (the “ Closing ”) shall take place at the offices of Baker Botts L.L.P. at 910 Louisiana Street, Houston, Texas at 10:00 a.m., local time, on a date to be specified by the parties (the “ Closing Date ”) which shall be no later than the third Business Day after the satisfaction or waiver (to the extent permitted by applicable Law) of the conditions set forth in Article VI (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions), or at such other place, date and time as the Partnership and Parent may agree in writing.

          Section 1.3 Effective Time . At the Closing, the Partnership shall cause the Merger to be consummated by executing and filing a certificate of merger (the “ Certificate of Merger ”) with the Secretary of State of the State of Delaware in accordance with Section 17-211 of the DRULPA and Section 18-209 of the DLLCA. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware, or at such later date or time as may be agreed by Parent and the Partnership in writing and specified in the Certificate of Merger in accordance with the DRULPA and the DLLCA (such time as the Merger becomes effective is referred to herein as the “ Effective Time ”).

          Section 1.4 Effects of the Merger . The Merger shall have the effects set forth in this Agreement, the Partnership Agreement and the applicable provisions of the DRULPA and DLLCA.

          Section 1.5 Partnership Agreement of the Surviving Entity . The Partnership Agreement, as in effect immediately prior to the Effective Time, shall remain the partnership agreement of the Surviving Entity and shall continue in effect until thereafter changed or amended in accordance with the provisions thereof and applicable Law.

          Section 1.6 Admission of Additional Limited Partners . Upon the conversion of the limited liability company interests in Merger Sub (“ Merger Sub LLC Interests ”), which are denominated in units (“ Merger Sub LLC Units ”), into Common Units pursuant to Section 2.1(c) and the recording of the name of the holder thereof as a limited partner of the Partnership on the books and records of the Partnership, such Person shall automatically and effective as of the Effective Time be admitted to the Partnership as an additional Limited Partner and be bound by the Partnership Agreement as such.

ARTICLE II

CONVERSION OF PARTNERSHIP INTERESTS; EXCHANGE OF CERTIFICATES

          Section 2.1 Effect on Partnership Interests . At the Effective Time, by virtue of the Merger and without any action on the part of the Partnership, Merger Sub or the holders of any securities of the Partnership or Merger Sub:

          (a) Conversion of Common Units . Subject to Sections 2.1(b) and 2.1(d), each Common Unit issued and outstanding immediately prior to the Effective Time, other than any Common Units included among the Rollover Interests, shall thereupon be converted automatically into and shall thereafter represent the right to receive $7.75 in cash without any interest thereon (the “ Merger Consideration ”). Immediately prior to the Effective Time, each award of Restricted Units (as defined in the Hiland Partners, LP Long-Term Incentive Plan (the “ Hiland LTIP ”)) issued and outstanding to any nonemployee member of the Board of Directors shall become fully vested as Common Units and shall thereupon be converted automatically into and shall thereafter represent the right to receive the Merger Consideration. All Common Units that have been converted into the right to receive the Merger Consideration as provided in this Section 2.1 shall be automatically cancelled and shall cease to exist, and the holders of such Common Units immediately prior to the Effective Time (whether certificated or non-certificated and represented in book-entry form) shall cease to have any rights with respect to such Common Units other than the right to receive the Merger Consideration.

          (b) Rollover of Certain Partnership Interests . The following Partnership Interests shall be treated in the Merger as follows:

               (i) each of the 2,321,471 Common Units owned by Holdings shall be unchanged and remain outstanding as Common Units of the Surviving Entity, and no consideration shall be delivered in respect thereof;

               (ii) each of the 3,060,000 Subordinated Units owned by Holdings shall be unchanged and remain outstanding as Subordinated Units of the Surviving Entity, and no consideration shall be delivered in respect thereof;

               (iii) the General Partner Interest, which is represented by 190,814 General Partner Units and is owned by Partnership GP, shall be unchanged and remain outstanding as the General Partner Interest of the Surviving Entity, and no consideration shall be delivered in respect thereof; and

               (iv) the Incentive Distribution Rights, which are owned by Partnership GP, shall be unchanged and remain outstanding as Incentive Distribution Rights of the Surviving Entity, and no consideration shall be delivered in respect thereof.

The Partnership Interests described in this Section 2.1(b) are referred to in this Agreement as “ Rollover Interests ,” and the record and beneficial owners of such Rollover Interests are referred to in this Agreement as the “ Rollover Parties .”

          (c) Conversion of Merger Sub Limited Liability Company Interests . At the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof, each Merger Sub LLC Unit issued and outstanding immediately prior to the Effective Time shall be converted into and become one Common Unit of the Surviving Entity, which Common Units shall be duly authorized and validly issued in accordance with applicable Laws and the Partnership Agreement and shall be fully paid (to the extent required by the Partnership Agreement) and nonassessable (except to the extent such nonassessability may be affected by Sections 17-607 and 17-804 of DRULPA). Immediately after the Effective Time, such Common Units and the Rollover Interests will constitute the only outstanding Partnership Interests of the Surviving Entity. From and after the Effective Time, any certificates or other evidence representing the Merger Sub LLC Units shall be deemed for all purposes to represent the number of Common Units of the Surviving Entity into which such Merger Sub LLC Units were converted in accordance with this Section 2.1(c). Partnership GP hereby agrees and acknowledges that conversion of the Merger Sub LLC Units to Common Units of the Surviving Entity as provided herein shall constitute a duly authorized, accepted, executed and countersigned delivery of such Common Units, without any further action by Partnership GP or any other person.

          (d) Adjustments . If between the date of this Agreement and the Effective Time, the outstanding Common Units, including securities convertible or exchangeable into or exercisable for Common Units, shall be changed into a different number of units or other securities by reason of any split, combination, merger, consolidation, reorganization, reclassification, recapitalization or other similar transaction, or any distribution payable in Partnership Interests shall be declared thereon with a record date within such period, the Merger Consideration shall be appropriately adjusted to provide the holders of Common Units the same economic effect as contemplated by this Agreement prior to such event; provided that nothing herein shall be construed to permit the Partnership to take any action with respect to its securities that is expressly prohibited by the terms of this Agreement.

          Section 2.2 Exchange of Certificates .

          (a) Paying Agent . Prior to the mailing of the Proxy Statement (as defined herein), Parent shall appoint a U.S. bank or trust company agreeable to the Conflicts Committee to act as paying agent (the “ Paying Agent ”) for the holders of Common Units (other than the Rollover Parties) in connection with the Merger and to receive and pay out the Merger

Consideration to which such holders shall become entitled pursuant to Section 2.1. At or prior to the Effective Time, the Parent Parties shall deposit, or shall cause to be deposited, in trust with the Paying Agent, for the benefit of holders of Common Units (other than the Rollover Parties), cash in an amount sufficient to pay the aggregate Merger Consideration in exchange for all Common Units outstanding immediately prior to the Effective Time (other than Common Units included among the Rollover Interests), payable upon due surrender of the certificates that immediately prior to the Effective Time represented Common Units (“ Certificates ”) (or effective affidavits of loss in lieu thereof) or non-certificated Common Units represented in book-entry form (“ Book-Entry Common Units ”) pursuant to the provisions of this Article II (such cash hereinafter referred to as the “ Exchange Fund ”).

          (b) Payment Procedures .

               (i) As soon as reasonably practicable after the Effective Time and in any event not later than the fifth Business Day following the Effective Time, Parent shall cause the Paying Agent to mail to each holder of record of Common Units whose Common Units were converted into the Merger Consideration pursuant to Section 2.1(a), (A) a letter of transmittal (the “ Letter of Transmittal ”) (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates (or effective affidavits of loss in lieu thereof) to the Paying Agent or, in the case of Book-Entry Common Units, upon adherence to the procedures set forth in the Letter of Transmittal, and shall be in such customary form and have such other provisions as Parent and the Hiland Parties shall reasonably determine) and (B) instructions for use of the Letter of Transmittal in effecting the surrender of the Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry Common Units in exchange for the Merger Consideration.

               (ii) Upon surrender of a Certificate (or an effective affidavit of loss in lieu thereof) or Book-Entry Common Units to the Paying Agent together with such Letter of Transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may customarily be required by the Paying Agent, the holder of such Certificate or Book-Entry Common Units shall be entitled to receive in exchange therefor a check in an amount equal to the product of (x) the number of Common Units represented by such holder’s properly surrendered Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry Common Units multiplied by (y) the Merger Consideration. No interest shall be paid or accrued for the benefit of holders of the Certificates or Book-Entry Common Units on the Merger Consideration payable in respect of the Certificates or Book-Entry Common Units. In the event of a transfer of ownership of Common Units that is not registered in the unit transfer register of the Partnership, a check for any cash to be paid upon due surrender of the Certificate may be paid to such a transferee if the Certificate formerly representing such Common Units is presented to the Paying Agent, accompanied by all documents required to evidence and effect such transfer and to evidence that any applicable unit transfer or other Taxes have been paid or are not applicable.

               (iii) Parent, the Surviving Entity and the Paying Agent shall be entitled to deduct and withhold from the consideration otherwise payable under this Agreement to any holder of Common Units such amounts as are required to be withheld or deducted under the Internal Revenue Code of 1986, as amended (the “ Code ”), or any provision of federal, state,

local or foreign Tax Law with respect to the making of such payment. To the extent that amounts are so withheld or deducted and paid over to the applicable Governmental Entity, such withheld or deducted amounts shall be treated for all purposes of this Agreement as having been paid to the holder of Common Units in respect of which such deduction and withholding were made.

          (c) Closing of Transfer Register . At the Effective Time, the unit transfer register of the Partnership shall be closed, and there shall be no further registration of transfers on the unit transfer register of the Surviving Entity of Common Units (other than the Rollover Interests) that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates or Book-Entry Common Units provided for in Section 2.1(a) are presented to the Surviving Entity or Parent for transfer, they shall be cancelled and exchanged for a check in the proper amount pursuant to and subject to the requirements of this Article II.

          (d) Termination of Exchange Fund . Any portion of the Exchange Fund (including the proceeds of any investments thereof) that remains undistributed to the former holders of Common Units for twelve months after the Effective Time shall be delivered to the Surviving Entity upon demand, and any former holders of Common Units who have not surrendered their Certificates or Book-Entry Common Units provided for in Section 2.1(a) in accordance with this Section 2.2 shall thereafter look only to the Surviving Entity for payment of their claim for the Merger Consideration, without any interest thereon, upon due surrender of their Certificates or Book-Entry Common Units.

          (e) No Liability . Notwithstanding anything herein to the contrary, none of Parent, Merger Sub, the Partnership, Partnership GP, the Surviving Entity, the Paying Agent or any other person shall be liable to any former holder of Common Units for any amount properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

          (f) Investment of Exchange Fund . The Paying Agent shall invest the Exchange Fund as reasonably directed by Parent; provided , however , that any investment of such Exchange Fund shall be limited to direct short-term obligations of, or short-term obligations fully guaranteed as to principal and interest by, the U.S. government and that no such investment or loss thereon shall affect the amounts payable to holders of Common Units that converted into the right to receive the Merger Consideration pursuant to Section 2.1. Any interest and other income resulting from such investments shall be paid to the Surviving Entity pursuant to Section 2.2(d).

          (g) Lost Certificates . In the event that any Certificate representing Common Units provided for in Section 2.1(a) shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent or the Paying Agent, the posting by such person of a bond in customary amount as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent will issue in exchange for such lost, stolen or destroyed Certificate a check in the amount of the number of Common Units represented by such lost, stolen or destroyed Certificate multiplied by the Merger Consideration.

          Section 2.3 Timing for Rollover Interests . For the avoidance of doubt, the parties acknowledge and agree that the Rollover Commitments shall be deemed to become effective and irrevocable immediately prior to the Effective Time and prior to any other event described above in this Article II.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE HILAND PARTIES

          Except as disclosed (a) in (i) the Hiland SEC Documents (as defined herein) or (ii) the Holdings SEC Documents (as defined in the Holdings Agreement), in each case filed on or after December 31, 2008 and prior to the date of this Agreement (excluding any disclosures included in any risk factor section of such documents and any other disclosures in such documents to the extent that they are cautionary, predictive or forward-looking in nature) or (b) in a section of the disclosure schedule delivered concurrently herewith by the Hiland Parties to Parent (the “ Hiland Disclosure Schedule ”) corresponding to the applicable sections of this Article III to which such disclosure applies ( provided , however , that any information set forth in one section of such Hiland Disclosure Schedule also shall be deemed to apply to each other section of this Agreement to which its relevance is reasonably apparent), the Hiland Parties hereby represent and warrant, jointly and severally, to the Parent Parties as follows:

          Section 3.1 Qualification, Organization, Subsidiaries, Etc.

          (a) Section 3.1(a) of the Hiland Disclosure Schedule sets forth, as of the date hereof, a true and complete list of the Hiland Parties and each direct or indirect Subsidiary and Partially Owned Entity of the Partnership (collectively, the “ Hiland Group Entities ”), together with (i) the nature of the legal organization of such person, (ii) the jurisdiction of organization or formation of such person, (iii) the name of each Hiland Group Entity that owns beneficially or of record any equity or similar interest in such person, and (iv) the percentage interest owned by each such Hiland Group Entity in such other persons.

          (b) Each Hiland Group Entity is a legal entity validly existing and in good standing under the Laws of its respective jurisdiction of formation. Each Hiland Group Entity has all requisite limited partnership, limited liability company or corporate, as the case may be, power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted in all material respects.

          (c) Each Hiland Group Entity is duly registered or qualified to do business and is in good standing as a foreign limited partnership, limited liability company or corporation, as the case may be, in each jurisdiction where the ownership, leasing or operation of its assets or properties or the conduct of its business requires such registration or qualification, except where the failure to be so registered, qualified or in good standing would not, individually or in the aggregate, have a Hiland Material Adverse Effect. The organizational or governing documents of the Hiland Group Entities, as previously made available to Parent, are in full force and effect. None of the Hiland Group Entities is in violation of its organizational or governing documents.

          Section 3.2 Capitalization .

          (a) Partnership GP is the sole general partner of the Partnership. Partnership GP is the record and beneficial owner of the 2% General Partner Interest and all of the Incentive Distribution Rights in the Partnership, and such General Partner Interest and Incentive Distribution Rights have been duly authorized and validly issued in accordance with applicable Laws and the Partnership Agreement and such Incentive Distribution Rights are fully paid (to the extent required by the Partnership Agreement) and nonassessable (to the extent such nonassessability may be affected by Sections 17-607 and 17-804 of DRULPA). Partnership GP owns all of the General Partner Interest and all of the Incentive Distribution Rights free and clear of any Encumbrances except pursuant to the organizational or governing documents of any of the Hiland Group Entities. Holdings is the record owner of 99.999% of the limited liability company interests in Partnership GP. Hiland Partners GP, Inc. is the record owner of 0.001% of the limited liability company interests of Partnership GP. Such limited liability company interests in Partnership GP have been duly authorized and validly issued in accordance with applicable Laws and the limited liability company agreement of Partnership GP and are fully paid (to the extent required by the limited liability company agreement of Partnership GP) and nonassessable (except to the extent such nonassessability may be affected by Sections 18-607 and 18-804 of DLLCA).

          (b) As of the date of this Agreement (the “ Execution Date ”), the Partnership has no Partnership Interests issued and outstanding other than the following:

               (i) 6,289,880 Common Units, of which 2,321,471 are owned of record by Holdings;

               (ii) 3,060,000 Subordinated Units, all of which are owned of record by Holdings;

               (iii) 190,814 General Partner Units, comprising all of the General Partner Interest, all of which are owned beneficially and of record by Partnership GP; and

               (iv) the Incentive Distribution Rights, all of which are owned beneficially and of record by Partnership GP.

Each of such limited partner interests described in clauses (i), (ii) and (iv) above has been duly authorized and validly issued in accordance with applicable Laws and the Partnership Agreement, and is fully paid (to the extent required under the Partnership Agreement) and non-assessable (except to the extent such nonassessability may be affected by Sections 17-607 and 17-804 of DRULPA). Such limited partner interests were not issued in violation of any preemptive or similar rights or any other agreement or understanding binding on the Partnership. As of the date of this Agreement, except for outstanding awards for the issuance of 15,750 Restricted Units pursuant to the Hiland LTIP, 47,169 phantom units that may be settled in Common Units, and 33,336 options for the purchase of Common Units and except pursuant to the organizational or governing documents of any of the Hiland Group Entities, (A) there are no outstanding options, warrants, subscriptions, puts, calls or other rights, agreements, arrangements or commitments (preemptive, contingent or otherwise) obligating any of the Hiland Group Entities to offer, issue, sell, redeem, repurchase, otherwise acquire or transfer, pledge or encumber any equity interest in any of the Hiland Group Entities; (B) there are no outstanding

securities or obligations of any kind of any of the Hiland Group Entities that are convertible into or exercisable or exchangeable for any equity interest in any of the Hiland Group Entities or any other person, and none of the Hiland Group Entities has any obligation of any kind to issue any additional securities or to pay for or repurchase any securities; (C) there are not outstanding any equity appreciation rights, phantom equity or similar rights, agreements, arrangements or commitments based on the value of the equity, book value, income or any other attribute of any of the Hiland Group Entities; (D) there are no outstanding bonds, debentures or other evidences of indebtedness of any of the Hiland Group Entities having the right to vote (or that are exchangeable for or convertible or exercisable into securities having the right to vote) with the holders of Common Units on any matter; and (E) except as described in the organizational or governing documents of the Hiland Parties or the Support Agreement, there are no Unitholder agreements, proxies, voting trusts, rights to require registration under securities Laws or other arrangements or commitments to which any of the Hiland Group Entities is a party or to the knowledge of the Hiland Group Entities by which any of their securities are bound with respect to the voting, disposition or registration of any outstanding securities of any of the Hiland Group Entities.

          (c) All of the outstanding limited liability company, partnership or other equity interests of each Subsidiary of the Partnership (i) have been duly authorized and validly issued in accordance with applicable Laws and its governing documents and are fully paid (to the extent required by its governing documents) and nonassessable (except to the extent such nonassessability may be affected by applicable Laws, including Sections 17-607 and 17-804 of DRULPA) and (ii) are owned 100% directly or indirectly by the Partnership, free and clear of any Encumbrance except pursuant to the organizational or governing documents of any of the Hiland Group Entities and other than Encumbrances securing the obligations of Hiland Operating, LLC under the Hiland Operating Credit Agreement.

          (d) All of the outstanding equity interests of each Partially Owned Entity of the Partnership (i) have been duly authorized and validly issued in accordance with applicable Laws and its governing documents and are fully paid (to the extent required by its organizational or governing documents) and nonassessable (except to the extent such nonassessability may be affected by applicable Laws), and (ii) are owned directly or indirectly by the Partnership in the respective amounts shown on Section 3.1(a) of the Hiland Disclosure Schedule, free and clear of any Encumbrance except pursuant to the organizational or governing documents of any of the Hiland Group Entities.

          (e) Except with respect to the ownership of any equity or long-term debt securities between or among the Hiland Group Entities, none of the Hiland Group Entities owns or will own at the Closing Date, directly or indirectly, any equity or long-term debt securities of any corporation, partnership, limited liability company, joint venture, association or other entity.

          (f) Except as provided in the Partnership Agreement, no holder of Partnership Interests in any of the Hiland Parties has any right to have such Partnership Interests registered under the Securities Act of 1933, as amended (the “ Securities Act ”), by the Partnership.

          Section 3.3 Authority; No Violation; Consents and Approvals .

          (a) Each of the Hiland Parties has all requisite limited liability company or limited partnership power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance by each Hiland Party of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all requisite limited liability company or limited partnership action on the part of such Hiland Party, except for (i) Unitholder Approval of this Agreement and the Merger and (ii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware; and no other vote or approval by any holders of Partnership Interests or limited liability company interests in Partnership GP or other corporate, limited liability company, partnership or other organizational votes, approvals or proceedings in respect of the Hiland Parties are necessary to consummate the transactions contemplated by this Agreement.

          (b) This Agreement has been duly executed and delivered by each Hiland Party and, assuming the due authorization, execution and delivery hereof by the Parent Parties, constitutes a legal, valid and binding agreement of such Hiland Party, enforceable against such Hiland Party in accordance with its terms (except insofar as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law)).

          (c) Except for matters expressly contemplated by this Agreement and matters described in clauses (ii), (iii) or (iv) below that would not, individually or in the aggregate, have a Hiland Material Adverse Effect, neither the execution and delivery by the Hiland Parties of this Agreement, nor the consummation by the Hiland Parties of the transactions contemplated hereby and the performance by the Hiland Parties of this Agreement will (i) violate or conflict with any provision of the organizational or governing documents of the Hiland Group Entities; (ii) require any consent, approval, authorization or permit of, registration, declaration or filing with, or notification to, any Governmental Entity or any other person; (iii) result in any breach of or constitute a default (or an event that, with notice or lapse of time or both, would become a default) under, or give to others any right of termination, cancellation, amendment or acceleration of any obligation or the loss of any benefit under any agreement or instrument to which any of the Hiland Group Entities is a party or by or to which any of their properties are bound; (iv) result in the creation of an Encumbrance upon any of the assets of any of the Hiland Group Entities; or (v) violate or conflict in any material respect with any material Law applicable to the Hiland Group Entities.

          (d) Section 3.3(d) of the Hiland Disclosure Schedule identifies all consents, approvals and authorizations of any Governmental Entity or third party that are required to be obtained by any Hiland Group Entity in connection with (1) the execution and delivery by the Hiland Parties of this Agreement or (2) the consummation by the Hiland Parties of the transactions contemplated by this Agreement, in each case except for such consents, approvals and authorizations that, if not obtained, would not, individually or in the aggregate, have a Hiland Material Adverse Effect.

          Section 3.4 SEC Reports and Compliance .

          (a) The Partnership and its Subsidiaries have filed or furnished all forms, documents, statements and reports required to be filed or furnished prior to the date hereof by them with the Securities and Exchange Commission (the “ SEC ”) since January 1, 2006 (the forms, documents, statements and reports filed with or furnished to the SEC since January 1, 2006 and those filed or furnished with the SEC subsequent to the date of this Agreement, if any, including any amendments thereto, the “ Hiland SEC Documents ”). As of their respective dates, or, if amended, as of the date of the last such amendment prior to the date hereof, the Hiland SEC Documents complied, and each of the Hiland SEC Documents filed or furnished subsequent to the date of this Agreement will comply, in all material respects with the requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), as the case may be, and the applicable rules and regulations promulgated thereunder, and complied or will comply, as applicable, in all material respects with the then-applicable accounting standards and the rules and regulations of the SEC with respect thereto. None of the Hiland SEC Documents so filed or furnished or that will be filed or furnished subsequent to the date of this Agreement contained or will contain, as the case may be, any untrue statement of a material fact or omitted or will omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

          (b) As of the date hereof, there are no outstanding comments from, or unresolved issues raised by, the SEC with respect to the Hiland SEC Documents.

          (c) The financial statements (including all related notes and schedules) of the Partnership and its Subsidiaries included in or incorporated by reference into the Hiland SEC Documents (the “ Hiland Financial Statements ”) fairly present, in all material respects, the financial position of the Partnership and its Subsidiaries, taken as a whole, as at the respective dates thereof, and the results of their operations and their cash flows for the respective periods then ended (subject, in the case of the unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein, including the notes thereto) in conformity with United States generally accepted accounting principles (“ GAAP ”) (except, in the case of the unaudited statements, as permitted by the SEC) applied on a consistent basis during the periods involved (except as may be specified therein or in the notes thereto).

          Section 3.5 No Undisclosed Liabilities . Neither the Partnership nor any of the Partnership’s Subsidiaries has any indebtedness or liability (whether absolute, accrued, contingent or otherwise) of any nature that is not accrued or reserved against in the Hiland Financial Statements filed prior to the execution of this Agreement or reflected in the notes thereto, other than (a) liabilities incurred or accrued in the ordinary course of business consistent with past practice since December 31, 2008 or (b) liabilities of the Partnership or any of the Partnership’s Subsidiaries that would not, individually or in the aggregate, have a Hiland Material Adverse Effect.

          Section 3.6 Compliance with Law . Each of the Hiland Group Entities is in compliance with all applicable Laws, other than any noncompliance which would not, individually or in the aggregate, have a Hiland Material Adverse Effect.

          Section 3.7 Environmental Laws and Regulations . Except as reflected in the Hiland Financial Statements, and except for any such matter that individually would not have a Hiland Material Adverse Effect:

          (a) None of the Hiland Group Entities is the subject of any outstanding written agreements (including consent orders and settlement agreements) with any Governmental Entity or other Person imposing liability with respect to any environmental matter;

          (b) None of the Hiland Group Entities has received any written communication from any Governmental Entity or other Person alleging, with respect to any such party, the violation of or liability under any Environmental Law or requesting, with respect to any such party, information with respect to an investigation pursuant to any Environmental Law; and

          (c) There has been no Release of any Hazardous Material from or in connection with the properties or operations of the Hiland Group Entities that has not been adequately reserved for in the Hiland Financial Statements and that has resulted or could reasonably be expected to result in liability under Environmental Laws or a claim for damages or compensation by any Person or Remedial Work.

          Section 3.8 Employee Benefits .

          (a) Except as would not have, individually or in the aggregate, a Hiland Material Adverse Effect, no Hiland Group Entity and no company or other entity that is required to be treated as a single employer together with a Hiland Group Entity under Section 414 of the Code (each, an “ ERISA Affiliate ”) maintains or has ever maintained or been obligated to contribute to or has any liability (secondary or otherwise) to an Employee Benefit Plan that is (1) subject to Title IV of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), or the minimum funding requirements of Section 412 of the Code or Section 302 of ERISA, (2) a plan of the type described in Section 4063 of ERISA or Section 413(c) of the Code, (3) a “multiemployer plan” (as defined in Section 3(37) of ERISA) or (4) a multiple employer welfare arrangement (as defined in Section 3(40) of ERISA).

          (b) Except as would not have, individually or in the aggregate, a Hiland Material Adverse Effect, the Employee Benefit Plans of the Hiland Group Entities and their affiliates (A) have been maintained (in form and in operation) in all respects in accordance with their terms and with ERISA, the Code and all other applicable Laws, (B) if intended to be qualified under Section 401(a) of the Code, have been maintained, and are currently, in compliance with the Code’s qualification requirements in form and operation, and (C) do not provide, and have not provided, any post-retirement welfare benefits or coverage, except as required under Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code (or similar state or local law).

          Section 3.9 Absence of Certain Changes or Events . Since December 31, 2008, (a) except as otherwise required or expressly provided for in this Agreement, (i) the businesses of the Hiland Group Entities have been conducted, in all material respects, in the ordinary course of business consistent with past practice and (ii) none of the Hiland Group Entities has taken or

permitted to occur any action that, were it to be taken from and after the date hereof, would require approval of Parent pursuant to Section 5.1(b) and (b) there has not been a Hiland Material Adverse Effect.

          Section 3.10 Investigations; Litigation . Except as disclosed in Section 3.10 of the Hiland Disclosure Schedule, there are no (a) investigations or proceedings pending (or, to the Knowledge of the Hiland Parties, threatened) by any Governmental Entity with respect to the Partnership or any of its Subsidiaries or (b) actions, suits, inquiries, investigations or proceedings pending (or, to the Knowledge of the Hiland Parties, threatened) against or affecting any Hiland Group Entity, or any of their respective properties at law or in equity before, and there are no orders, judgments or decrees of, or before, any Governmental Entity, in each case of clause (a) or (b), which would have (if adversely determined), individually or in the aggregate, a Hiland Material Adverse Effect.

          Section 3.11 Proxy Statement; Other Information . None of the information contained in the Proxy Statement will at the time of the mailing of the Proxy Statement to the Unitholders of the Partnership, at the time of the Partnership Meeting (as defined herein) (as such Proxy Statement shall have been amended or supplemented prior to the date of the Partnership Meeting), and at the time of any amendments thereof or supplements thereto, and none of the information supplied or to be supplied by the Partnership for inclusion or incorporation by reference in the Schedule 13E-3 (as defined herein) to be filed with the SEC concurrently with the filing of the Proxy Statement, will, at the time of its filing with the SEC, and at the time of any amendments thereof or supplements thereto, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided that no representation is made by the Partnership with respect to information supplied by a Parent Party or its controlling Affiliates or a Holdings Party for inclusion therein. The Proxy Statement will comply as to form in all material respects with the Exchange Act, except that no representation is made by the Partnership with respect to information supplied by a Parent Party or its controlling Affiliates or a Holdings Party for inclusion therein. The letter to Unitholders, notice of meeting, proxy statement and forms of proxy to be distributed to Unitholders in connection with the Merger to be filed with the SEC in connection with seeking the adoption and approval of this Agreement and the Merger are collectively referred to herein as the “ Proxy Statement .” The Rule 13E-3 Transaction Statement on Schedule 13E-3 to be filed with the SEC in connection with seeking the adoption and approval of this Agreement and the Merger is referred to herein as the “ Schedule 13E-3 .”

          Section 3.12 Tax Matters .

          (a) (i) There is no action, suit, proceeding, investigation, audit or claim now pending against, or with respect to, any of the Hiland Group Entities in respect of any material Tax or material Tax assessment, nor has any claim for additional material Tax or material Tax assessment been asserted in writing or been proposed by any Tax authority;

               (ii) no written claim has been made by any Tax authority in a jurisdiction where any of the Hiland Group Entities does not currently file a Tax Return that it is

or may be subject to any material Tax in such jurisdiction, nor has any such assertion been threatened or proposed in writing;

               (iii) none of the Hiland Group Entities has been a member of an affiliated group filing a consolidated federal income Tax Return or has any liability for the Taxes of any Person (other than a Hiland Group Entity) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, or foreign Law), as a transferee or successor, by contract, or otherwise.

          (b) In each tax year since the formation of the Partnership up to and including the current tax year, at least 90% of the gross income of the Partnership has been income which is “qualifying income” within the meaning of Section 7704(d) of the Code.

          Section 3.13 Labor Matters . Except as disclosed in Section 3.13 of the Hiland Disclosure Schedule, no Hiland Group Entity, other than Partnership GP, has or has ever had employees. Except for such matters which would not have, individually or in the aggregate, a Hiland Material Adverse Effect, no Hiland Group Entity has received written notice during the past two years of the intent of any Governmental Entity responsible for the enforcement of labor, employment, occupational health and safety or workplace safety and insurance/workers compensation laws to conduct an investigation of the Hiland Group Entities and, to the Knowledge of the Hiland Parties, no such investigation is in progress. Except for such matters which would not have, individually or in the aggregate, a Hiland Material Adverse Effect, (i) there are no (and have not been during the two-year period preceding the date hereof) strikes or lockouts with respect to any employees of, or providing services to, the Hiland Group Entities (“ Employees ”), (ii) to the Knowledge of the Hiland Parties, there is no (and has not been during the two-year period preceding the date hereof) union organizing effort pending or threatened against the Hiland Group Entities, (iii) there is no (and has not been during the two-year period preceding the date hereof) unfair labor practice, labor dispute or labor arbitration proceeding pending or, to the Knowledge of the Hiland Parties, threatened against the Hiland Group Entities, and (iv) there is no (and has not been during the two-year period preceding the date hereof) slowdown or work stoppage in effect or, to the Knowledge of the Hiland Parties, threatened with respect to Employees. No Hiland Group Entity has any liabilities under the Worker Adjustment and Retraining Act and the regulations promulgated thereunder or any similar state or local law as a result of any action taken by a Hiland Group Entity that would have, individually or in the aggregate, a Hiland Material Adverse Effect. No Hiland Group Entity is a party to any collective bargaining agreements.

          Section 3.14 Title to Properties and Rights-of-Way .

          (a) Except as would not have, individually or in the aggregate, a Hiland Material Adverse Effect, each of the Hiland Group Entities has defensible title to all material real property and good title to all material tangible personal property owned by the Hiland Group Entities and which is sufficient for the operation of their respective businesses as presently conducted, free and clear of all Encumbrances except Permitted Encumbrances.

          (b) Each of the Hiland Group Entities has such consents, easements, rights-of-way, permits or licenses from each Person (collectively, “ rights-of-way ”) as are sufficient to

conduct its business in the manner described, and subject to the limitations contained, in the Partnership’s annual report on Form 10-K for the year ended December 31, 2008, except for such rights-of-way the absence of which would not, individually or in the aggregate, result in a Hiland Material Adverse Effect. Each of the Hiland Group Entities has fulfilled and performed all its material obligations with respect to such rights-of-way and no event has occurred that allows, or after notice or lapse of time would allow, revocation or termination thereof or would result in any impairment of the rights of the holder of any such rights-of-way, except for such revocations, terminations and impairments that would not, individually or in the aggregate, result in a Hiland Material Adverse Effect.

          Section 3.15 Opinion of Financial Advisor . The Conflicts Committee has received the written opinion of Jefferies & Company, Inc., dated as of the date of this Agreement, to the effect that, as of the date hereof, the Merger Consideration is fair to the holders of Common Units (excluding Common Units owned by Partnership GP and its Affiliates (including Holdings)) from a financial point of view.

          Section 3.16 Required Approvals . Partnership GP has approved this Agreement and the transactions contemplated by this Agreement and directed that this Agreement and the Merger be submitted to a vote of Unitholders as required under Section 17-211 of the DRULPA and under Articles XIII and XIV of the Partnership Agreement. The Board of Directors, upon the unanimous recommendation of its Conflicts Committee, at a meeting duly called and held, has, (i) determined that this Agreement and the transactions contemplated hereby are advisable, fair to and in the best interests of the Partnership and the holders of Common Units (excluding Common Units owned by Partnership GP and its Affiliates (including Holdings)), (ii) approved the Merger and this Agreement and (iii) recommended that this Agreement and the Merger be approved by holders of Common Units (excluding Common Units owned by Partnership GP and its Affiliates (including Holdings)) (including the Conflicts Committee’s recommendation, the “ Recommendation ”). The members of Partnership GP have approved this Agreement and the Merger.

          Section 3.17 Material Contracts .

          (a) Except for this Agreement or as designated as an exhibit to the Partnership’s annual report on Form 10-K for the year ended December 31, 2008 or to a Hiland SEC Document filed thereafter and prior to the date of this Agreement, neither the Partnership nor any of its Subsidiaries is a party to or bound by, as of the date hereof, any Contract (whether written or oral) which is a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) (all contracts of the type described in this Section 3.17(a) being referred to herein as “ Material Contracts ”).

          (b) (i) Each Material Contract (other than the Hiland Operating Credit Agreement) is valid and binding on the Partnership and any of its Subsidiaries that is a party thereto, as applicable, and in full force and effect, except where the failure to be valid, binding and in full force and effect, either individually or in the aggregate, would not have a Hiland Material Adverse Effect, (ii) the Partnership and each of its Subsidiaries has in all material respects performed all obligations required to be performed by it under each Material Contract (other than the Hiland Operating Credit Agreement), except where such noncompliance, either

individually or in the aggregate, would not have a Hiland Material Adverse Effect, and (iii) neither the Partnership nor any of its Subsidiaries knows of, or has received notice of, the existence of any event or condition which constitutes, or, after notice or lapse of time or both, will constitute, a material default on the part of the Partnership or any of its Subsidiaries under any such Material Contract (other than the Hiland Operating Credit Agreement), except where such default, either individually or in the aggregate, would not have a Hiland Material Adverse Effect.

          (c) The Hiland Operating Credit Agreement is valid and binding on Hiland Operating, LLC and in full force and effect. Except for a Ratio Default, (i) each Hiland Group Entity has performed all obligations required to be performed by it under the Hiland Operating Credit Agreement, and (ii) no Hiland Group Entity is in breach, default (or after notice or lapse of time or both, would be in default) or violation in the performance of any obligation, agreement or condition contained in the Hiland Operating Credit Agreement.

          Section 3.18 State Takeover Laws . No approvals are required under state takeover or similar laws in connection with the performance by the Hiland Parties or their Affiliates of their obligations under this Agreement, the Support Agreement, the Rollover Commitments or the transactions contemplated hereby or thereby.

          Section 3.19 Finders or Brokers . Except for Jefferies & Company, Inc., none of the Hiland Parties (including through its respective board of directors (or similar governing body) or any committee thereof) has engaged any investment banker, broker or finder in connection with the transactions contemplated by this Agreement who would be entitled to any fee or any commission in connection with or upon consummation of the Merger or the other transactions contemplated hereby.

          Section 3.20 No Other Representations or Warranties . Except for the representations and warranties contained in this Article III and except as otherwise expressly set forth in this Agreement or in the agreements or certificates entered into in connection herewith or contemplated hereby, none of the Hiland Parties nor any other Person on behalf of the Hiland Parties makes any other representation or warranty of any kind or nature, express or implied, in connection with this Agreement or the transactions contemplated by this Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE PARENT PARTIES

          Except as disclosed in a section of the disclosure schedule delivered concurrently herewith by Parent to the Hiland Parties immediately prior to the execution of this Agreement (the “ Parent Disclosure Schedule ”) corresponding to the applicable sections of this Article IV to which such disclosure applies ( provided , however , that any information set forth in one section of such Parent Disclosure Schedule also shall be deemed to apply to each other section of this Agreement to which its relevance is reasonably apparent), the Parent Parties hereby represent and warrant, jointly and severally, to the Hiland Parties as follows:

          Section 4.1 Qualification; Organization .

          (a) Each of the Parent Parties is a legal entity validly existing and in good standing under the Laws of its respective jurisdiction of formation. Each of the Parent Parties has all requisite limited liability company power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted in all material respects.

          (b) Each of the Parent Parties is duly registered or qualified to do business and is in good standing as a foreign limited liability company in each jurisdiction where the ownership, leasing or operation of its assets or properties or the conduct of its business requires such registration or qualification, except where the failure to be so registered, qualified or in good standing would not, individually or in the aggregate, have a Parent Material Adverse Effect. The organizational or governing documents of the Parent Parties, as previously made available to the Hiland Parties, are in full force and effect. None of the Parent Parties is in violation of its organizational or governing documents.

          Section 4.2 Authority; No Violation; Consents and Approvals .

          (a) Each of the Parent Parties has all requisite limited liability company power and authority to enter into this Agreement and to carry out its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance by each Parent Party of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all requisite limited liability company action on the part of such Parent Party, and no other limited liability company proceedings on the part of a Parent Party are necessary to consummate the transactions contemplated by this Agreement.

          (b) This Agreement has been duly executed and delivered by each Parent Party and, assuming the due authorization, execution and delivery hereof by the Hiland Parties, constitutes a legal, valid and binding agreement of such Parent Party, enforceable against such Parent Party in accordance with its terms (except insofar as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law)).

          (c) Except for matters expressly contemplated by this Agreement and matters described in clauses (ii), (iii) or (iv) below that would not, individually or in the aggregate, have a Parent Material Adverse Effect, neither the execution and delivery by the Parent Parties of this Agreement, nor the consummation by the Parent Parties of the transactions contemplated hereby and the performance by the Parent Parties of this Agreement will (i) violate or conflict with any provision of the governing documents of the Parent Parties; (ii) require any consent, approval, authorization or permit of, registration, declaration or filing with, or notification to, any Governmental Entity or any other person; (iii) result in any breach of or constitute a default (or an event that, with notice or lapse of time or both, would become a default) under, or give to others any right of termination, cancellation, amendment or acceleration of any obligation or the loss of any benefit under any agreement or instrument to which any of the Parent Parties is a party or by or to which any of their properties are bound; (iv) result in the creation of an

Encumbrance upon any of the assets of any of the Parent Parties; or (v) violate or conflict in any material respect with any material Law applicable to the Parent Parties.

          (d) Section 4.2(d) of the Parent Disclosure Schedule identifies all material consents, approvals and authorizations of any Governmental Entity or third party that are required to be obtained by any Parent Parties in connection with (1) the execution and delivery by the Parent Parties of this Agreement or (2) the consummation by the Parent Parties of the transactions contemplated by this Agreement, except for such consents, approvals and authorizations that, if not obtained, would not, individually or in the aggregate, have a Parent Material Adverse Effect.

          Section 4.3 Proxy Statement; Other Information . None of the information supplied or to be supplied by the Parent Parties, their controlling Affiliates, Continental Gas Holdings, Inc., a Delaware corporation (“ Continental Gas ”), the Harold Hamm DST Trust or the Harold Hamm HJ Trust (together with the Harold Hamm DST Trust, the “ Trusts ”) in writing for inclusion in the Proxy Statement will at the time of the mailing of the Proxy Statement to the Unitholders of the Partnership, at the time of the Partnership Meeting (as such Proxy Statement shall have been amended or supplemented prior to the date of the Partnership Meeting), and at the time of any amendments thereof or supplements thereto, and none of the information supplied or to be supplied by the Parent Parties, their controlling Affiliates, Continental Gas or the Trusts in writing for inclusion in the Schedule 13E-3 to be filed with the SEC concurrently with the filing of the Proxy Statement, will, at the time of its filing with the SEC, and at the time of any amendments thereof or supplements thereto, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

          Section 4.4 Funding . On the Closing Date, the Parent Parties will have sufficient cash to enable them to make payment of the aggregate Merger Consideration and the Parent Parties’ related fees and expenses (the “ Funding ”). For the avoidance of doubt, it shall not be a condition to the obligati