<PAGE>   1
===============================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                   FORM 10-Q


              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                 FOR THE TRANSITION PERIOD FROM _____ TO _____

                          COMMISSION FILE NO. 1-11680


                     LEVIATHAN GAS PIPELINE PARTNERS, L.P.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


                                                     76-0396023
                  DELAWARE                        (I.R.S. EMPLOYER
            (STATE OF ORGANIZATION)              IDENTIFICATION NO.)


                                   600 TRAVIS
                                   SUITE 7200
                              HOUSTON, TEXAS 77002
          (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)

                                 (713) 224-7400
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)



         INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) HAS FILED ALL
REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 DURING THE PRECEDING TWELVE MONTHS (OR FOR SUCH SHORTER PERIOD THAT
THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.   YES  X    NO 
                                                     ---      ---

===============================================================================
<PAGE>   2




                     LEVIATHAN GAS PIPELINE PARTNERS, L.P.
                                AND SUBSIDIARIES

                               TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                   Page
<S>                                                                                                 <C>
PART I.   FINANCIAL INFORMATION

CONSOLIDATED FINANCIAL STATEMENTS:
    Consolidated Balance Sheet as of March 31, 1997
      (unaudited) and December 31, 1996..............................................................3
    Unaudited Consolidated Statement of Operations for the
      Three Months Ended March 31, 1997 and 1996, respectively.......................................4
    Unaudited Consolidated Statement of Cash Flows for the
      Three Months Ended March 31, 1997 and 1996.....................................................5
    Consolidated Statement of Partners' Capital for the Three Months
      Ended March 31, 1997 (unaudited)...............................................................6
    Notes to Consolidated Financial Statements.......................................................7

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS........................................................11

PART II.   OTHER INFORMATION.........................................................................16

    Legal Proceedings
    Changes in Securities
    Defaults Upon Senior Securities
    Submission of Matters to a Vote of Security Holders
    Other Information
    Exhibits and Reports on Form 8-K
</TABLE>



                                       2

<PAGE>   3

             LEVIATHAN GAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                 (In thousands)



<TABLE>
<CAPTION>
                                                                              March 31,          December 31,
                                                                                1997                 1996
                                                                            ------------         -----------
                     ASSETS                                                  (unaudited)
<S>                                                                         <C>                 <C>         
Current assets:
    Cash and cash equivalents                                               $      3,039        $     16,489
    Accounts receivable                                                            6,784               6,237
    Accounts receivable from affiliates                                            9,809              14,107
    Other current assets                                                             275                 859
                                                                            ------------        ------------
       Total current assets                                                       19,907              37,692
                                                                            ------------        ------------

Equity investments                                                               180,110             107,838
                                                                            ------------        ------------

Property and equipment:
    Pipelines                                                                     76,119             151,253
    Platforms and facilities                                                      72,959              72,461
    Oil and gas properties, at cost, using successful efforts method             115,819             109,047
                                                                            ------------         -----------
                                                                                 264,897             332,761
    Less accumulated depreciation, depletion and amortization                     54,228              46,206
                                                                            ------------         -----------
       Property and equipment, net                                               210,669             286,555
                                                                            ------------         -----------
Investment in affiliate                                                            7,500               7,500
Other noncurrent receivable                                                        8,812               8,531
Other noncurrent assets                                                            4,534               5,410
                                                                            ------------         -----------

       Total assets                                                         $    431,532         $   453,526
                                                                            ============         ===========


   LIABILITIES AND PARTNERS' CAPITAL

Current liabilities:
    Accounts payable and accrued liabilities                                $     10,636         $    17,769
    Accounts payable to affiliates                                                 1,726               3,504
                                                                            ------------         -----------
       Total current liabilities                                                  12,362              21,273
Deferred federal income taxes                                                      1,753               1,722
Deferred revenue                                                                   5,806               8,913
Note payable                                                                     219,000             227,000
Other noncurrent liabilities                                                       1,755               2,490
                                                                            ------------         -----------
       Total liabilities                                                         240,676             261,398
                                                                            ------------         -----------
Minority interest                                                                     91                 105
Partners' capital                                                                190,765             192,023
                                                                            ------------         -----------

       Total liabilities and partners' capital                              $    431,532         $   453,526
                                                                            ============         ===========
</TABLE>



   The accompanying notes are an integral part of this financial statement.


                                       3
<PAGE>   4




             LEVIATHAN GAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
                    (In thousands, except per Unit amounts)



<TABLE>
<CAPTION>
                                                    For the three months
                                                       ended March 31,
                                                    --------------------
                                                      1997        1996
                                                    --------    --------
<S>                                                 <C>         <C>     
Revenue:
    Oil and gas sales                               $ 18,100    $  9,308
    Transportation and platform services               5,839       5,583
    Equity in earnings                                 7,089       4,746
                                                    --------    --------
                                                      31,028      19,637
                                                    --------    --------

Costs and expenses:
    Operating expenses                                 3,103       1,876
    Depreciation, depletion and amortization          13,945       5,324
    General and administrative expenses and
      management fee                                   2,473       1,336
                                                    --------    --------
                                                      19,521       8,536
                                                    --------    --------

Operating income                                      11,507      11,101
Interest income and other                                693         336
Interest and other financing costs                    (3,112)       (615)
Minority interest in income                              (90)       (135)
                                                    --------    --------
Income before income taxes                             8,998      10,687
Income tax expense (benefit)                              34        (223)
                                                    --------    --------

Net income                                          $  8,964    $ 10,910
                                                    ========    ========

Net income per Unit                                 $   0.36    $   0.44
                                                    ========    ========

Weighted average number of Units outstanding          24,367      24,367
                                                    ========    ========
</TABLE>




    The accompanying notes are an integral part of this financial statement.




                                       4
<PAGE>   5



             LEVIATHAN GAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                For the three months
                                                                                   ended March 31,
                                                                           -------------------------------
                                                                                1997             1996
                                                                           -------------     -------------
<S>                                                                        <C>               <C>          
Cash flows from operating activities:
    Net income                                                             $       8,964     $      10,910
    Adjustments to reconcile net income to net cash
      provided by (used in) operating activities:
       Amortization of debt issue costs                                              241               148
       Depreciation, depletion and amortization                                   13,945             5,324
       Minority interest in income                                                    90               135
       Equity in earnings                                                         (7,089)           (4,746)
       Distributions from equity investments                                       5,275             5,673
       Deferred income taxes                                                          31              (226)
       Other noncash items                                                        (4,006)           (1,657)
       Changes in operating working capital:
         Increase in accounts receivable                                            (547)           (2,664)
         Decrease (increase) in accounts receivable from affiliates                4,298            (6,929)
         Decrease (increase) in other current assets                                 584               (66)
         Decrease in accounts payable and accrued liabilities                     (7,133)          (15,226)
         (Decrease) increase in payable to affiliates                             (1,778)            1,050
                                                                           -------------     -------------
              Net cash provided by (used in) operating activities                 12,875            (8,274)
                                                                           -------------     -------------

Cash flows from investing activities:
    Additions to pipelines, platforms and facilities                              (1,821)           (7,156)
    Equity investments                                                               (24)           (9,897)
    Development of oil and gas properties                                         (6,772)          (14,287)
                                                                           -------------     -------------
              Net cash used in investing activities                               (8,617)          (31,340)
                                                                           -------------     -------------

Cash flows from financing activities:
    Decrease in restricted cash                                                      716               --
    Proceeds from note payable                                                       --             39,720
    Repayments of note payable                                                    (8,000)              --
    Debt issue costs                                                                 (98)           (1,546)
    Distributions to partners                                                    (10,326)           (7,459)
                                                                           -------------     -------------
              Net cash (used in) provided by financing activities                (17,708)           30,715
                                                                           -------------     -------------

Decrease in cash and cash equivalents                                            (13,450)           (8,899)
Cash and cash equivalents at beginning of year                                    16,489            15,506
                                                                           -------------     -------------
Cash and cash equivalents at end of period                                 $       3,039     $       6,607
                                                                           =============     =============

Cash paid for interest, net of amounts capitalized                         $       2,930     $         --
Cash paid for income taxes                                                 $           2     $         --
</TABLE>



    The accompanying notes are an integral part of this financial statement.





                                       5
<PAGE>   6



             LEVIATHAN GAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
                                 (In thousands)



<TABLE>
<CAPTION>
                                           Preference        Common        General
                                          Unitholders      Unitholder      Partner          Total
                                          -----------     -----------    -----------    -----------
<S>                                       <C>             <C>            <C>            <C>        
Partners' capital at
    December 31, 1996                     $   196,224     $    (3,969)   $      (232)   $   192,023

Net income for the three months
    ended March 31, 1997 (unaudited)            5,754           1,989          1,221          8,964

Cash distributions (unaudited)                 (7,230)         (2,517)          (475)       (10,222)
                                          -----------     -----------    -----------    -----------

Partners' capital at
    March 31, 1997 (unaudited)            $   194,748     $    (4,497)   $       514    $   190,765
                                          ===========     ===========    ===========    ===========

Limited partnership Units
    outstanding at December 31, 1996
    and March 31, 1997 (unaudited)             18,075           6,292            (a)         24,367
                                          ===========     ===========    ===========    ===========
</TABLE>


------------
(a)  Leviathan Gas Pipeline Company owns a 1% general partner interest in 
     Leviathan Gas Pipeline Partners, L.P.







    The accompanying notes are an integral part of this financial statement.



                                       6

<PAGE>   7
             LEVIATHAN GAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION:

Leviathan Gas Pipeline Partners, L.P. (the "Partnership"), a publicly held
Delaware limited partnership formed in December 1992, is engaged in the
gathering and transportation of natural gas and crude oil through its pipeline
systems located in the Gulf of Mexico (the "Gulf") and in the development and
production of oil and gas reserves from its proved properties. The
Partnership's assets include interests in (i) eight natural gas pipelines, (ii)
a crude oil pipeline system, (iii) five strategically located multi-purpose
platforms, (iv) three producing oil and gas properties, (v) an overriding
royalty interest and (vi) a dehydration facility.

Leviathan Gas Pipeline Company ("Leviathan"), a Delaware corporation and
wholly-owned subsidiary of Leviathan Holdings Company ("Leviathan Holdings"),
an 85%-owned subsidiary of DeepTech International Inc. ("DeepTech"), is the
general partner of the Partnership. The remaining 15% of Leviathan Holdings is
principally owned by members of the management of DeepTech. DeepTech also owns
and controls several other operating subsidiaries which are engaged in various
oil and gas related activities.

The accompanying consolidated financial statements have been prepared without
audit pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, the statements reflect all normal recurring
adjustments which are, in the opinion of management, necessary for a fair
statement of the results of operations for the period covered by such
statements. These interim financial statements should be read in conjunction
with the audited consolidated financial statements and notes thereto contained
in the Partnership's Annual Report on Form 10-K for the year ended December 31,
1996. In addition, all number of Units and per Unit disclosures have been
restated to reflect a two for one Preference and Common Unit split for the
Unitholders of record as of the close of business on December 31, 1996.

NOTE 2 - EQUITY INVESTMENTS:

In January 1997, the Partnership and affiliates of Marathon Oil Company
("Marathon") and Shell Oil Company ("Shell") formed Nautilus Pipeline Company,
L.L.C. ("Nautilus") to build and operate an interstate natural gas pipeline
system and Manta Ray Offshore Gathering Company, L.L.C. ("Manta Ray Offshore")
to acquire, operate and extend an existing gathering system that will be
connected to the Nautilus system, once the Nautilus system is constructed. Each
of the two new companies was formed to serve growing production areas in the
Green Canyon area of the Gulf and are indirectly owned 50% by Shell, 24.3% by
Marathon and 25.7% by the Partnership. The total cost of the two systems,
including substantially all of the Manta Ray Offshore system which was
contributed to Manta Ray Offshore by the Partnership, is estimated to be
approximately $270.0 million. The Nautilus system, a new jurisdictional
interstate pipeline, will consist of a 30-inch line downstream from Ship Shoal
Block 207 connecting to the Exxon Company USA operated Garden City gas
processing plant, onshore Louisiana. Upstream of the Ship Shoal 207 terminal,
the existing Manta Ray Offshore gathering system will be extended into a
broader gathering system that will serve shelf and deepwater production areas
around Ewing Bank Block 873 to the east and Green Canyon Block 65 to the west.
Affiliates of Marathon and Shell have committed to each of the Nautilus and
Manta Ray Offshore systems significant deep water acreage positions in the
area, including the recently announced Troika field (Green Canyon Block 244),
and will provide the majority of the capital funding for the new construction.
The Partnership will provide some funding in addition to the contribution of
Manta Ray Offshore system.

In addition, the Partnership owns interests of 50% in Viosca Knoll Gathering
System ("Viosca Knoll"), 36% in Poseidon Oil Pipeline Company, L.L.C.
("POPCO"), 50% in Stingray Pipeline Company ("Stingray"), 40% in High Island
Offshore System ("HIOS"), 33 1/3% in U-T Offshore System ("UTOS") and 50% in
West Cameron Dehydration Company, L.L.C. ("West Cameron Dehy"). The summarized
financial information for these investments which are accounted for using the
equity method is as follows:


                                       7

<PAGE>   8
             LEVIATHAN GAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                  (UNAUDITED)

                    SUMMARIZED HISTORICAL OPERATING RESULTS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                       For the three months ended March 31, 1997
                       ---------------------------------------------------------------------------------------------------
                                                                                         West        Manta Ray
                         Viosca                                                         Cameron      Offshore/
                         Knoll        POPCO        HIOS       Stingray       UTOS         Dehy       Nautilus      Total
<S>                    <C>          <C>          <C>          <C>          <C>          <C>          <C>          <C>
Operating revenue      $  4,926     $  4,131     $ 11,679     $  6,214     $    959     $    796     $  1,103
Other income                 --           44          114          233            8            7          110
Operating expenses         (607)        (825)      (3,872)      (2,833)        (607)         (41)        (371)
Depreciation               (586)        (895)      (1,194)      (1,802)        (141)          (4)        (333)
Other expenses             (456)      (1,265)          --         (368)          --           --           --
                       --------     --------     --------     --------     --------     --------     --------         
Net earnings              3,277        1,190        6,727        1,444          219          758          509
Ownership percentage         50%          36%          40%          50%        33.3%          50%        25.7%
                       --------     --------     --------     --------     --------     --------     --------         
                          1,639          428        2,691          722           73          379          131
Adjustments:
- Depreciation (a)           --           --          211          238            9           --           --
- Contract
  amortization (a)           --           --          (26)         (85)          --           --           -- 
- Other                      --          109          (39)         (12)          (8)          --          629 (b)
                       --------     --------     --------     --------     --------     --------     --------         
Equity in earnings     $  1,639     $    537     $  2,837     $    863     $     74     $    379     $    760     $  7,089
                       ========     ========     ========     ========     ========     ========     ========     ========
Distributions (c)      $  1,350     $     --     $  3,200     $    550     $     --     $    175     $     --     $  5,275
                       ========     ========     ========     ========     ========     ========     ========     ========
</TABLE>

<TABLE>
<CAPTION>
                                               For the three months ended March 31, 1996
                        --------------------------------------------------------------------------------------
                                       Viosca                              West Cameron
                          HIOS         Knoll      Stingray       UTOS         Dehy        POPCO         Total
<S>                     <C>          <C>          <C>          <C>          <C>          <C>     
Operating revenue       $ 11,011     $  2,991     $  6,118     $  1,092     $    435     $    146
Other income                  47           --          412           17           --           --
Operating expenses        (4,276)          10       (3,098)        (631)         (46)          (5)
Depreciation              (1,193)        (560)      (1,715)        (140)          (4)          --
Other expenses               (24)          --         (419)          --           --           --
                        --------     --------     --------     --------     --------     --------     
Net earnings               5,565        2,441        1,298          338          385          141
Ownership percentage          40%          50%          50%        33.3%          50%          50%
                        --------     --------     --------     --------     --------     --------     
                           2,226        1,220          649          113          193           71
Adjustments:
- Depreciation (a)           227           --          240            8           --           --
- Contract
  amortization (a)           (26)          --          (86)          --           --           --
- Rate refund reserve        (49)          --           --           --           --           --
- Other                      (20)          --          (12)          (8)          --           --
                        --------     --------     --------     --------     --------     --------     
Equity in earnings      $  2,358     $  1,220     $    791     $    113     $    193     $     71     $  4,746
                        ========     ========     ========     ========     ========     ========     ========
Distributions (c)       $  3,000     $  1,200     $    923     $    400     $    150     $     --     $  5,673
                        ========     ========     ========     ========     ========     ========     ========
</TABLE>

------------
(a)    Adjustments result from purchase price adjustments made in accordance
       with Accounting Principles Board No. 16 "Business Combinations".

(b)    Represents additional net earnings specifically allocated to the
       Partnership related to the assets contributed by the Partnership to the
       Manta Ray Offshore joint venture.

(c)    Future distributions could be restricted by the terms of the equity
       investees' respective credit agreements.

       NOTE 3 - PARTNERS' CAPITAL INCLUDING CASH DISTRIBUTIONS:

       As of March 31, 1997, the Partnership had 18,075,000 Preference Units
       and 6,291,894 Common Units outstanding. All of the Preference Units are
       owned by the public, representing a 72.7% effective limited partnership
       interest in the Partnership. Leviathan, through its ownership of all of
       the Common Units, its 1% general partner interest in the 



                                       8
<PAGE>   9
             LEVIATHAN GAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                  (UNAUDITED)


Partnership and its approximate 1% nonmanaging interest in certain of the
Partnership's subsidiaries, owns a 27.3% effective interest in the Partnership.

Distributions by the Partnership of its Available Cash are effectively made 98%
to Unitholders and 2% to Leviathan, subject to the payment of incentive
distributions to Leviathan if certain target levels of cash distributions to
Unitholders are achieved (the "Incentive Distributions"). As an incentive, the
general partner's interest in the portion of quarterly cash distributions in
excess of $0.325 per Unit and less than or equal to $0.375 per Unit is
increased to 15%. For quarterly cash distributions over $0.375 per Unit but
less than or equal to $0.425 per Unit, the general partner receives 25% of such
incremental amount and for all quarterly cash distributions in excess of $0.425
per Unit, the general partner receives 50% of the incremental amount.

On January 14, 1997, the Partnership declared a cash distribution of $0.40 per
Preference and Common Unit for the period from October 1, 1996 through December
31, 1996. This distribution was paid on February 14, 1997 to Unitholders of
record as of January 31, 1997. As a result of this distribution, Leviathan, as
general partner, received an incentive distribution of $0.4 million.

On April 17, 1997, the Partnership declared a cash distribution of $0.425 per
Preference and Common Unit for the period from January 1, 1997 through March
31, 1997. This distribution will be paid on May 15, 1997 to Unitholders of
record as of April 30, 1997. As a result of this distribution, Leviathan, as
general partner, will receive an incentive distribution of $0.6 million.

Statement of Financial Accounting Standard ("SFAS") No. 128, "Earnings per
Share", was issued in February 1997. SFAS No. 128 establishes new guidelines
for computing and presenting earnings per share and is effective for financial
statements for both interim and annual periods ending after December 15, 1997.
Earlier application of SFAS No. 128 is not permitted; however, pro forma
earnings per share may be disclosed in the notes to the consolidated financial
statements in the periods prior to adoption. Pro forma basic net income per
unit is equal to the presented primary earnings per unit for the three months
ended March 31, 1997.

NOTE 4 - RELATED PARTY TRANSACTIONS:

Management fees. For the three months ended March 31, 1997, Leviathan charged
the Partnership $1.7 million pursuant to the Partnership Agreement which
provides for reimbursement of expenses Leviathan incurs as general partner of
the Partnership, including reimbursement of expenses incurred by DeepTech in
providing management services to Leviathan and the Partnership. In addition,
the management agreement requires a payment by Leviathan to compensate DeepTech
for certain tax liabilities resulting from, among other things, additional
taxable income allocated to Leviathan due to (i) the issuance of additional
Preference Units (including the sale of the Preference Units by the Partnership
pursuant to the public offering of additional Preference Units) and (ii) the
investment of such proceeds in additional acquisitions or construction
projects. During the three months ended March 31, 1997, Leviathan charged the
Partnership $0.2 million to compensate DeepTech for additional taxable income
allocated to Leviathan. The management agreement has a term expiring on June
30, 2002, and may thereafter be terminated on 90 days' notice by either party.

Transportation and platform access agreements. Tatham Offshore, Inc. ("Tatham
Offshore"), an affiliate of DeepTech, is obligated to pay commodity charges,
based on the volume of oil and gas transported or processed, to the Partnership
pursuant to certain transportation agreements. Tatham Offshore is also
obligated to pay certain platform access fees and processing fees to the
Partnership. For the three months ended March 31, 1997, the Partnership
received $0.6 million from Tatham Offshore pursuant to these agreements.

For the three months ended March 31, 1997, Viosca Knoll and POPCO charged the
Partnership $1.2 million and $0.5 million, respectively, for transportation
services relating to transporting production from the Viosca Knoll Block 817
and the Garden Banks Block 72 and 117 leases.

The Partnership charged Viosca Knoll $0.5 million for platform access fees
related to the Viosca Knoll 817 platform during the three months ended March
31, 1997.

Oil and gas sales. The Partnership has agreed to sell all of its oil and gas
production to Offshore Gas Marketing, Inc. ("Offshore Marketing"), an affiliate
of the Partnership, on a month to month basis. The agreement with Offshore
Marketing provides Offshore Marketing fees equal to 2% of the sales value of
crude oil and condensate and $0.015 per dekatherm of natural gas for selling
the Partnership's production. During the three months ended March 31, 1997, the
Partnership sold $18.0 million of oil and gas to Offshore Marketing. 



                                       9
<PAGE>   10
             LEVIATHAN GAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                  (UNAUDITED)


Other. During the three months ended March 31, 1997, the Partnership was
charged $2.3 million by Sedco Forex Division of Schlumberger Technology
Corporation ("Sedco Forex") for contract drilling services rendered by the
semisubmersible drilling rig, the FPS Laffit Pincay, at its Garden Banks Block
117 project. The FPS Laffit Pincay is owned by an affiliate of DeepTech and
managed by Sedco Forex.

POPCO entered into certain agreements with the Partnership to provide for use
by POPCO of certain pipelines and platforms owned by the Partnership for fees
which consist of a monthly rental fee of $100,000 per month for the period from
February 1996 to January 1997.

For the three months ended March 31, 1997, the Partnership charged $25,000 and
$62,000, respectively, to Viosca Knoll and Manta Ray Offshore pursuant to
management agreements with each affiliate.







                                      10
<PAGE>   11
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
           RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Partnership's
consolidated financial statements and notes thereto included in Part I of this
quarterly report. Unless the context otherwise requires, all references herein
to the Partnership with respect to the operations and ownership of the
Partnership's assets are also references to its subsidiaries.

OVERVIEW

The Partnership's assets include interests in (i) eight natural gas pipelines
(the "Gas Pipelines"), (ii) a crude oil pipeline system, (iii) five
strategically located multi-purpose platforms, (iv) three producing oil and gas
properties, (v) an overriding royalty interest and (vi) a dehydration facility.

The Gas Pipelines are strategically located offshore Louisiana and eastern
Texas and gather and transport natural gas for producers, marketers, pipelines
and end-users for a fee. The Gas Pipelines include 984 miles of pipeline with a
throughput capacity of 5.9 billion cubic feet ("Bcf") of gas per day. Each of
the Gas Pipelines interconnects with one or more long line transportation
pipelines that provide access to multiple markets in the eastern half of the
United States. The Partnership's interest in the Gas Pipelines consists of: a
100% interest in each of Ewing Bank Gathering Company, L.L.C. ("Ewing Bank"),
Manta Ray Gathering Company, L.L.C. ("Manta Ray"), Green Canyon Pipe Line
Company, L.L.C. ("Green Canyon") and Tarpon Transmission Company ("Tarpon"); a
50% partnership interest in each of Stingray and Viosca Knoll; a 40%
partnership interest in HIOS; a 33 1/3% partnership interest in UTOS; and a
25.7% interest in each of Manta Ray Offshore and Nautilus.

The Partnership owns a 36% interest in POPCO which was formed to construct and
operate the Poseidon Oil Pipeline ("Poseidon"). Poseidon is a major new sour
crude oil pipeline system that was built in response to an increased demand for
additional sour crude oil pipeline capacity in the central Gulf. Poseidon,
which has a capacity of approximately 400,000 barrels per day, was placed in
service in two phases, in April and December 1996. In March 1997, POPCO began
construction of the third phase of Poseidon, a new 24-inch diameter pipeline
from Calliou Island to Houma, Louisiana, which is expected to be operational in
late 1997. Poseidon is currently transporting an average of approximately
41,000 barrels of oil per day.

The Partnership owns interests in five strategically located multi-purpose
platforms in the Gulf that have processing capabilities which complement the
Partnership's pipeline operations. The multi-purpose platforms serve as
junctions in the pipeline grid and enable the Partnership to perform
maintenance functions on its pipelines. In addition, the multi-purpose
platforms serve as landing sites for deeper water production and as sites for
the location of gas compression facilities and drilling operations.

The Partnership owns an interest in and is operator of three producing leases
in the Gulf. The properties, which are subject to certain reversionary rights
held by Tatham Offshore, include a 75% working interest in Viosca Knoll Block
817, a 50% working interest in Garden Banks Block 72 and a 50% working interest
in Garden Banks Block 117. The Viosca Knoll Block 817 project is currently
producing an aggregate of approximately 106.0 million cubic feet ("MMcf") of
gas and 313 barrels of oil per day. In addition, the Partnership has placed on
production five wells on the Garden Banks Block 72 lease and one well on Garden
Banks Block 117. The Garden Banks Block 72 wells, which began producing in May
1996, are currently producing a total of approximately 3,250 barrels of oil,
12.5 MMcf of gas and 130 barrels of water per day. The Garden Banks Block 117
#1 well, which began producing in July 1996, is currently producing a total of
approximately 1,500 barrels of oil, 3.3 MMcf of gas and 4,000 barrels of water
per day. The Partnership has successfully drilled a second well at Garden Banks
Block 117 which should be placed on production during May 1997.

The Partnership owns an overriding royalty interest in the six-lease block
Ewing Bank 915 Unit, which is operated by Tatham Offshore, as well as certain
other minority interests in oil and gas leases which are not material to the
business of the Partnership. The Partnership also owns a 50% interest in West
Cameron Dehy, which owns certain dehydration facilities located at the northern
terminus of the Stingray system, onshore Louisiana.




                                      11
<PAGE>   12
RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1997 COMPARED WITH THREE MONTHS ENDED 
MARCH 31, 1996

Revenue from oil and gas sales totaled $18.1 million for the three months ended
March 31, 1997 as compared with $9.3 million for the same period in 1996. The
increase in oil and gas sales of $8.8 million is attributable to increased
production from the Partnership's oil and gas properties as a result of
initiating production from the Viosca Knoll Block 817 lease in December 1995,
the Garden Banks Block 72 lease in May 1996 and the Garden Banks Block 117
lease in July 1996. During the three months ended March 31, 1997, the
Partnership sold 6,191 MMcf of gas and 203,000 barrels of oil at average prices
of $2.15 per thousand cubic feet ("Mcf") and $22.53 per barrel, respectively.
During the same period in 1996, the Partnership sold 2,998 MMcf of gas at an
average price of $3.00 per Mcf.

Revenue from transportation and platform services totaled $5.8 million for the
three months ended March 31, 1997 as compared with $5.6 million for the same
period in 1996. The increase of $0.2 million is comprised of (i) a $0.8 million
increase in platform services from the Partnership's Viosca Knoll 817 platform,
(ii) a $0.9 million increase from the Tarpon and Green Canyon systems primarily
related to the deregulation of the Tarpon system allowing the Partnership to
recognize additional revenue during the current period related to
transportation fees collected in prior periods, (iii) a decrease of $1.4
million as a result of the contribution of a significant portion of the Manta
Ray system to Manta Ray Offshore in January 1997 resulting in revenue from
these assets being included in equity in earnings for the remainder of the
quarter and (iv) a decrease of $0.1 million related to decreased throughput on
the Ewing Bank system. Transportation volumes for the Partnership's Green
Canyon system increased 2% for the three months ended March 31, 1997 as
compared with the same period in 1996 due to increased production from the
Texaco operated Shasta field located in Green Canyon Block 6. Transportation
volumes from the Manta Ray system, prior to its contribution to Manta Ray
Offshore, declined 38% as compared with 1996 as a result of temporary platform
related production problems from two of the fields connected to the Manta Ray
system. Transportation volumes from the Partnership's Ewing Bank and Tarpon
systems declined a total of 38% during the first quarter of 1997 as compared
with the first quarter of 1996 as a result of normal decline in the producing
fields attached to such systems.

Revenue from the Partnership's equity interests in Stingray, HIOS, UTOS, Viosca
Knoll, POPCO, Manta Ray Offshore, Nautilus and West Cameron Dehy (the "Equity
Investees") totaled $7.1 million for the three months ended March 31, 1997 as
compared with $4.7 million for the same period in 1996. The increase of $2.4
million primarily reflects increases of (i) $0.9 million from Viosca Knoll,
Stingray and HIOS as a result of increased throughput, (ii) $0.5 million from
POPCO, which placed Poseidon in service in two-phases, April 1996 and December
1996, (iii) $0.2 million from West Cameron Dehy and (iv) $0.8 million from
Manta Ray Offshore related to the Manta Ray assets contributed by the
Partnership. Total gas throughput volumes for the Equity Investees increased
11% from the three months ended March 31, 1996 to the three months ended March
31, 1997 primarily as a result of increased throughput on the Viosca Knoll,
Stingray, HIOS and UTOS systems as well as the addition of the Manta Ray
Offshore system throughput as an equity investee, as discussed above. Total oil
volumes from Poseidon totaled 3.7 million barrels for the three months ended
March 31, 1997.

Operating expenses for the three months ended March 31, 1997 totaled $3.1
million as compared to $1.9 million for the same period in 1996. The increase
of $1.2 million is attributable to the operation by the Partnership of 10
additional oil and gas wells during the three months ended March 31, 1997 as
compared with the same period in 1996.

Depreciation, depletion and amortization totaled $13.9 million for the three
months ended March 31, 1997 as compared with $5.3 million for the same period
in 1996. The increase of $8.6 million is comprised of (i) an $8.7 million
increase in depreciation and depletion on the oil and gas wells and facilities
located on Viosca Knoll Block 817, Garden Banks Block 72 and the Garden Banks
Block 117 leases and (ii) a $0.1 million decrease in depreciation on pipelines,
platforms and facilities.

General and administrative expenses, including the management fee allocated
from the general partner, totaled $2.5 million for the three months ended March
31, 1997 as compared with $1.3 million for the same period in 1996. The




                                      12
<PAGE>   13
Partnership's general and administrative expenses for the three months ended
March 31, 1996 included a one-time $1.4 million reimbursement from POPCO as a
result of the Partnership's management of the initial phase of the construction
of Poseidon. Excluding this one-time reimbursement by POPCO, the Partnership's
general and administrative expenses for the three months ended March 31, 1997
decreased $0.2 million as compared with the same period in 1996. This decrease
reflects (i) a $0.2 million increase in management fees allocated by Leviathan
to the Partnership as a result of increased operational activities, (ii) a $0.2
million increase in direct general and administrative expenses of the
Partnership, also as a result of increased Partnership activities and (iii) a
$0.6 million decrease in the reimbursement to DeepTech for certain tax
liabilities incurred by DeepTech as a result of the Partnership's public
offering of additional Preference Units in June 1994.

Interest income and other totaled $0.7 million for the three months ended March
31, 1997 as compared with $0.3 million for the three months ended March 31,
1996.

Interest and other financing costs, net of capitalized interest, for the three
months ended March 31, 1997 totaled $3.1 million as compared with $0.6 million
for the same period in 1996. During the three months ended March 31, 1997 and
1996, the Partnership capitalized $0.8 million and $4.8 million, respectively,
of such interest costs in connection with construction projects and drilling
activities in progress during such periods.

Net income for the three months ended March 31, 1997 totaled $9.0 million as
compared with $10.9 million for the three months ended March 31, 1996 as a
result of the items discussed above. Net income per Unit for the three months
ended March 31, 1997 totaled $0.36 per Unit as compared with $0.44 per Unit for
the three months ended March 31, 1996.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Cash. The Partnership intends to satisfy its capital requirements
and other working capital needs primarily from cash on hand, cash from
continuing operations and borrowings under the Partnership Credit Facility
(discussed below). Net cash provided by operating activities for the three
months ended March 31, 1997 totaled $12.9 million. At March 31, 1997, the
Partnership had cash and cash equivalents of $3.0 million.

Cash from continuing operations is derived from (i) payments for gathering and
transporting gas through the Partnership's 100% owned pipelines, (ii) platform
access and processing fees, (iii) cash distributions from Equity Investees and
(iv) the sale of oil and gas attributable to the Partnership's interest in
three producing properties. See "-- Overview" for discussion of current
production rates.

The Partnership's cash flows from operations will be affected by the ability of
each Equity Investee to make distributions. Distributions from such entities
are also subject to the discretion of their respective management committees.
Further, each of Stingray, POPCO and Viosca Knoll is party to a credit
agreement under which it has outstanding obligations that may restrict the
payments of distributions to its owners. Distributions from Equity Investees
during the three months ended March 31, 1997 totaled $5.3 million.

In December 1995, Stingray amended an existing term loan agreement to provide
for aggregate outstanding borrowings of up to $29.0 million in principal
amount. The agreement requires the payment of principal by Stingray of $1.45
million per quarter. As of March 31, 1997, Stingray had $21.75 million
outstanding under its term loan agreement, which is principally secured by
current and future gas transportation contracts between Stingray and its
customers.

In April 1996, POPCO entered into a revolving credit facility (the "POPCO
Credit Facility") with a group of commercial banks to provide up to $150
million for the construction of the second and third phases of Poseidon and for
other working capital needs of POPCO. POPCO's ability to borrow money under the
facility is subject to certain customary terms and conditions, including
borrowing base limitations. As of March 31, 1997, POPCO had $101.5 million
outstanding under the POPCO Credit Facility which is secured by a substantial
portion of POPCO's assets and matures on April 30, 2001. Currently,
approximately $14.0 million of additional funds are available under the POPCO
Credit Facility. 




                                      13
<PAGE>   14
In December 1996, Viosca Knoll entered into a revolving credit
facility (the "Viosca Knoll Credit Facility") with a syndicate of commercial
banks to provide up to $100 million for the addition of compression to the
Viosca Knoll system and for other working capital needs of Viosca Knoll,
including funds for a one-time distribution of $25 million to its partners. As
of March 31, 1997, Viosca Knoll had $34.4 million outstanding under the Viosca
Knoll Credit Facility which is secured by a substantial portion of Viosca
Knoll's assets and matures on December 20, 2001. Viosca Knoll's ability to
borrow money under the facility is subject to certain customary terms and
conditions, including borrowing base limitations.

The Partnership Credit Facility is a revolving credit facility providing for up
to $300 million of available credit subject to customary terms and conditions,
including certain incurrence limitations. Proceeds from the Partnership Credit
Facility are available to the Partnership for general partnership purposes,
including financing of capital expenditures, for working capital, and subject
to certain limitations, for paying distributions to the Unitholders. The
Partnership Credit Facility can also be utilized to issue letters of credit as
may be required from time to time; however, no letters of credit are currently
outstanding. As of March 31, 1997, borrowings totaled $219.0 million under the
Partnership Credit Facility bearing interest at an average floating rate of
6.5% per annum. The Partnership Credit Facility matures in December 1999; is
guaranteed by Leviathan and each of the Partnership's subsidiaries; and is
secured by the management agreement with Leviathan, substantially all of the
assets of the Partnership and Leviathan's 1% general partner interest in the
Partnership and approximate 1% interest in certain subsidiaries of the
Partnership.

Uses of Cash. The Partnership's capital requirements consist primarily of (i)
quarterly distributions to Unitholders and to Leviathan as general partner,
including incentive distributions, as applicable, (ii) expenditures for the
maintenance of the pipelines and related infrastructure and the acquisition and
construction of additional pipelines and related facilities for the gathering,
transportation and processing of oil and gas in the Gulf, (iii) expenditures
related to its producing oil and gas properties, (iv) management fees and other
operating expenses, (v) contributions to Equity Investees and (vi) debt service
on its outstanding indebtedness.

For every full quarter since its inception, the Partnership has declared and
subsequently paid a cash distribution to holders of Preference Units and Common
Units an amount equal to or exceeding the Minimum Quarterly Distribution per
Unit per quarter. At the current distribution rate of $0.425 per Unit, the
quarterly Partnership distributions total $11.1 million in respect of the
Preference Units, Common Units and general partner interest ($44.6 million on
an annual basis, including $13.8 million to Leviathan). The Partnership
believes that it will be able to continue to pay at least the current quarterly
distribution of $0.425 per Preference and Common Unit for the foreseeable
future.

Distributions by the Partnership of its Available Cash are effectively made 98%
to Unitholders and 2% to Leviathan, as general partner, subject to the payment
of Incentive Distributions to Leviathan. As an incentive, the general partner's
interest in the portion of quarterly cash distributions in excess of $0.325 per
Unit and less than or equal to $0.375 per Unit is increased to 15%. For
quarterly cash distributions over $0.375 per Unit but less than or equal to
$0.425 per Unit, the general partner receives 25% of such incremental amount
and for all quarterly cash distributions in excess of $0.425 per Unit, the
general partner receives 50% of the incremental amount. In February 1997, the
general partner received an Incentive Distribution of $0.4 million and in May
1997 will receive an Incentive Distribution of $0.6 million.

In January 1997, the Partnership and affiliates of Marathon and Shell formed
Nautilus, to build and operate an interstate natural gas pipeline system, and
Manta Ray Offshore, to acquire, operate and extend an existing gathering system
that will be connected to the Nautilus system, once the Nautilus system is
constructed. Each of the two new companies was formed to serve growing
production areas in the Green Canyon area of the Gulf and are indirectly owned
50% by Shell, 24.3% by Marathon and 25.7% by the Partnership. The total cost of
the two systems, including substantially all of the Manta Ray Offshore system
which was contributed to Manta Ray Offshore by the Partnership, is estimated to
be approximately $270.0 million. The Nautilus system, a new jurisdictional
interstate pipeline, will consist of a 30-inch line downstream from Ship Shoal
Block 207 connecting to the Exxon Company USA operated Garden City gas
processing plant, onshore Louisiana. Upstream of the Ship Shoal 207 terminal,
the existing Manta Ray Offshore gathering system will be extended into a
broader gathering system that will serve shelf 







                                      14
<PAGE>   15

and deepwater production areas around Ewing Bank Block 873 to the east and
Green Canyon Block 65 to the west. Affiliates of Marathon and Shell have
committed to each of the Nautilus and Manta Ray Offshore systems significant
deep water acreage positions in the area, including the recently announced
Troika field (Green Canyon Block 244), and will provide the majority of the
capital funding for the new construction. The Partnership will provide some
funding in addition to its contribution of the Manta Ray Offshore system.

The Partnership anticipates that its capital expenditures and equity
investments for the remaining portion of 1997 will relate to continuing
acquisition and construction activities as well as the remaining expenditures
associated with the initiation of production from the second well at Garden
Banks Block 117. The Partnership anticipates funding such cash requirements
primarily with available cash flow and borrowings under the Partnership Credit
Facility. The Partnership may contribute existing assets to new joint ventures
as partial consideration for its ownership interest therein. As previously
discussed, POPCO, in March 1997, began construction of phase III of Poseidon
which is expected to be operational in late 1997. The majority of these capital
expenditures by POPCO as well as capital expenditures by Viosca Knoll are
anticipated to be funded by borrowings under their respective credit
facilities. In addition, the majority of the capital requirements of Nautilus
and Manta Ray Offshore are anticipated to be funded by the equity contributions
of affiliates of Shell and Marathon. The Partnership's capital expenditures and
equity investments for the three months ended March 31, 1997 were $8.6 million.

Interest costs incurred by the Partnership related to the Partnership Credit
Facility totaled $3.9 million for the three months ended March 31, 1997. The
Partnership capitalized $0.8 million of such interest costs in connection with
construction projects and drilling activities in progress during the period.

UNCERTAINTY OF FORWARD LOOKING STATEMENTS AND INFORMATION

This quarterly report contains certain forward looking statements and
information that are based on management's beliefs as well as assumptions made
by and information currently available to management. Such statements are
typically punctuated by words or phrases such as "anticipate," "estimate,"
"project," "should," "may," "management believes," and words or phrases of
similar import. Although management believes that such statements and
expressions are reasonable and made in good faith, it can give no assurance
that such expectations will prove to have been correct. Such statements are
subject to certain risks, uncertainties and assumptions. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those anticipated,
estimated or projected. Among the key factors that may have a direct bearing on
the Partnership's results of operations and financial condition are: (i)
competitive practices in the industry in which the Partnership competes, (ii)
the impact of current and future laws and government regulations affecting the
industry in general and the Partnership's operations in particular, (iii)
environmental liabilities to which the Partnership may become subject in the
future that are not covered by an indemnity or insurance, (iv) the throughput
levels achieved by the Pipelines and any future pipeline constructed by the
Partnership, (v) the ability of the Partnership to access additional reserves
to offset the natural decline in production from existing wells connected to
the Pipelines, (vi) changes in transportation rates due to changes in
government regulation and/or competitive factors, (vii) the impact of oil and
natural gas price fluctuations, (viii) significant changes from expectations of
capital expenditures and operating expenses and unanticipated project delays
and (ix) the ability of the Equity Investees to make distributions to the
Partnership. The Partnership disclaims any obligation to update any
forward-looking statements to reflect events or circumstances after the date
hereof.





                                      15
<PAGE>   16




PART II.   OTHER INFORMATION

Item 1.           Legal Proceedings
         None.

Item 2.           Changes in Securities
         None.

Item 3.           Defaults Upon Senior Securities
         None.

Item 4.           Submission of Matters to a Vote of Security Holders
         None.

Item 5.           Other Information
         None.

Item 6.           Exhibits and Reports on Form 8-K

         (a)    Exhibits

                None.

         (b)    Reports on Form 8-K

                None.





                                      16
<PAGE>   17


SIGNATURE


         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned and thereunto duly authorized.


LEVIATHAN GAS PIPELINE 
PARTNERS, L.P. 
(Registrant)

By:                                   LEVIATHAN GAS PIPELINE
                                      COMPANY, its General Partner



Date: May 13, 1997                    By: /s/ KEITH B. FORMAN
                                         ---------------------
                                         Keith B. Forman
                                         Chief Financial Officer



Date: May 13, 1997                    By: /s/ DENNIS A. KUNETKA
                                         -----------------------
                                         Dennis A. Kunetka
                                         Senior Vice President - Corporate 
                                         Finance (Principal Accounting Officer)














                                      17

<PAGE>   18
                               INDEX TO EXHIBITS


<TABLE>
<CAPTION> 
                                                                      
EXHIBIT                                                   
NUMBER                                                    
------                                                    

<S>                 <C>                                   
  27                FINANCIAL DATA SCHEDULE

</TABLE>