Toronto, November 29, 2012 -- Moody's Investors Service changed Niska Gas Storage Partners LLC's (Niska) outlook to stable from negative and affirmed its B1 Corporate Family Rating (CFR) and Probability of Default Rating, Ba1 senior secured revolving credit facility rating, and B2 senior unsecured rating. The Speculative Grade Liquidity rating of SGL-3 was unchanged.

"Moody's changed Niska's rating outlook to stable, reflecting the company's improved operating performance and decreased leverage," said Terry Marshall, Moody's Senior Vice President. "We expect EBITDA to remain flat as Niska maintains a high percentage of committed natural gas storage contracts and continued low seasonal gas price differentials."

..Issuer: AECO Gas Storage Partnership

....Senior Secured Bank Credit Facility, Ba1, LGD2, 12%

..Issuer: Niska Gas Storage US, LLC

....Senior Secured Bank Credit Facility, Ba1, LGD2, 12%

....Senior Unsecured Regular Bond/Debenture, B2, LGD4, 69%

Outlook Actions:

..Issuer: AECO Gas Storage Partnership

....Outlook, Changed To Stable From Negative

..Issuer: Niska Gas Storage Partners LLC

....Outlook, Changed To Stable From Negative

..Issuer: Niska Gas Storage US, LLC

....Outlook, Changed To Stable From Negative

RATING RATIONALE

Niska's B1 CFR reflects the volatility of Niska's contango arbitrage business, which comprises about 20% of storage capacity utilization, coupled with large cash distributions. The rating also considers the large working capital requirements tied to the contango arbitrage business, the price and re-contracting risks of the third-party term storage contracts, and the practice of contracting only 60% of storage capacity to third-party users on a long term basis. The rating is supported by the strategic value of Niska's physical gas storage in Alberta, California and Oklahoma, and the durability and low reinvestment requirements of these assets. The rating also considers working capital borrowings under the revolvers that are required to support the contango arbitrage business, but which are mostly backed by purchased natural gas inventory.

The SGL-3 Speculative Grade Liquidity rating reflects adequate liquidity through the third quarter of fiscal year 2014 (December 31, 2013). At September 30, 2012, Niska had minimal cash and $217 million available under its $400 million senior secured borrowing base revolver, which matures in 2016. The revolver is available in the amount of $200 million each to AECO Gas Storage Partnership and Niska Gas US, LLC. We expect Niska to generate positive free cash flow of about $20 million through the third quarter of fiscal year 2014. The company is expected to easily remain compliant with the fixed charge coverage ratio (1.1x) under its revolver that governs the ability to draw more than 85% of the revolver commitment. The company has no major debt maturities. Niska's has little in the way of non-core assets that could be sold, but it has considerable value in its key storage assets that could be tapped if necessary.

The senior secured revolver is rated Ba1, three notches higher than the CFR of B1 under Moody's Loss Given Default (LGD) Methodology. The secured debt benefits from its prior ranking to the $644 million senior unsecured notes, which are rated B2,one notch lower than the B1 Corporate Family Rating.

The stable outlook assumes that the compression in summer-winter spreads has bottomed and adjusted EBITDA will remain at about $180 million, including $60 million of Moody's standard adjustments, and that third-party term contracts continue to comprise about 80% of storage capacity. The rating could be upgraded if debt to EBITDA at fiscal year end, when inventory borrowings are low, is likely to remain below 3.5x. An upgrade would also be contingent on continued contracting of about 80% of storage capacity. The rating could be downgraded if debt to EBITDA at fiscal year end is likely to be sustained above 5x. A reliance on the proprietary optimization business for more than 25% of storage capacity or debt funded resumption of the subordinated distributions could also lead to a downgrade.

The principal methodology used in rating Niska was the Global Midstream Energy Industry Methodology published in December 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

Headquartered in Houston, Texas, with assets in Alberta, California and Oklahoma, Niska Gas Storage owns 217 Bcf of natural gas storage assets.

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Terry Marshall Senior Vice President Corporate Finance Group Moody'sCanada Inc.70 York Street Suite 1400 Toronto, ON M5J 1S9 Canada(416) 214-1635Donald S. Carter, CFA MD - Corporate Finance Corporate Finance Group(416) 214-1635 Releasing Office: Moody's Canada Inc.70 York Street Suite 1400 Toronto, ON M5J 1S9 Canada(416) 214-1635(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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