Tableof Contents

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| þ |    | ANNUAL      REPORT PURSUANT TO SECTION 13 OR 15(d)OF      THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|--------------|-----------------------------------------------------------------------------------------------|

| o |    | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d)OF      THE SECURITIES EXCHANGE ACT OF 1934 |
|---|--------------|---------------------------------------------------------------------------------------------------|

| Kansas                                                              |    | 48-0290000                                |
|---------------------------------------------------------------------|--------------|-------------------------------------------|
| (State      or other jurisdiction of incorporation or organization) |    | (I.R.S.      Employer Identification No.) |

| 500      Dallas Street, Suite 1000, Houston, Texas 77002           |
|--------------------------------------------------------------------|
| (Address      of principal executive offices, including zip  code) |

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KNIGHT INC. AND SUBSIDIARIES

|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | PageNumber                                                         |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------|
|           | PART I                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                               |   |
| Items 1 and 2: | Business and      Properties                                                                                                                                                  | 4-38                                                               |   |
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Business Strategy                                                  | 5 |   |
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Recent Developments                                                | 6 |   |
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Overview                                                           | 12 |   |
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Natural Gas Pipeline Company of America                            | 13 |   |
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Power                                                              | 14 |   |
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Express Pipeline System                                            | 15 |   |
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Products Pipelines – KMP                                     | 16 |   |
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Natural Gas Pipelines –      KMP                             | 20 |   |
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | CO2 –      KMP                                               | 27 |   |
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Terminals – KMP                                              | 31 |   |
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Trans Mountain – KMP                                         | 32 |   |
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Regulation                                                         | 33 |   |
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Environmental Matters                                              | 36 |   |
| Item 1A:       | Risk      Factors                                                                                                                                                             | 38-44                                                              |   |
| Item 1B:       | Unresolved Staff      Comments                                                                                                                                                | 44                                                                 |   |
| Item 3:        | Legal      Proceedings                                                                                                                                                        | 45                                                                 |   |
| Item 4:        | Submission of Matters to a Vote of Security      Holders                                                                                                                      | 45                                                                 |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                               |   |
|           | PART II                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                               |   |
| Item 5:        | Market for Registrant’s Common Equity, Related      Stockholder                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                               |   |
|           | Matters and Issuer Purchases of Equity      Securities                                                                                                                                       | 46                                                                 |   |
| Item 6:        | Selected Financial      Data                                                                                                                                                  | 46-47                                                              |   |
| Item 7:        | Management’s Discussion and Analysis of Financial Condition      and Results of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 48-91                                                              |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | General                                                            | 48 |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Critical Accounting Policies and      Estimates                    | 49 |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Consolidated FinancialResults                                      | 52 |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Results of Operations                                              | 53 |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Natural Gas Pipeline Company of    America                         | 56 |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Power                                                              | 58 |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Express Pipeline System                                            | 59 |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Products Pipelines – KMP                                     | 59 |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Natural Gas Pipelines – KMP                                  | 62 |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | CO2 –      KMP                                               | 64 |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Terminals – KMP                                              | 66 |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Trans Mountain – KMP                                         | 68 |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Earnings from Our Investment in Kinder Morgan Energy      Partners | 68 |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Interest and Corporate Expenses,      Net                     | 69 |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Income Taxes – Continuing      Operations                    | 70 |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Income Taxes – Realization of Deferred Tax      Assets       | 70 |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Discontinued Operations                                            | 71 |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Liquidity and CapitalResources                                     | 71 |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Investment in Kinder Morgan Energy      Partners                   | 83 |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Cash Flows                                                         | 83 |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Litigation and Environmental      Matters                     | 89 |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Regulation                                                         | 89 |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Recent AccountingPronouncements                                    | 90 |   |
| Item 7A:       | Quantitative and Qualitative Disclosures About Market      Risk                                                                                                               | 91-92                                                              |   |
| Item 8:   | Financial Statements and Supplementary      Data                                                                                                                              | 93-207                                                             |   |
| Item 9:        | Changes in and Disagreements With Accountants on Accounting      and Financial Disclosure                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 207                                                                |   |
| Item 9A:       | Controls and      Procedures                                                                                                                                                  | 208                                                                |   |
|           | Conclusion Regarding the Effectiveness of      Disclosure Controls and Procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 208                                                                |   |
|           | Management’s Report on Internal Control over      Financial Reporting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 208                                                                |   |
|           | Changes in Internal Control over Financial      Reporting                                                                                                                                    | 208                                                                |   |
| Item 9B:       | Other      Information                                                                                                                                                        | 208                                                                |   |

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|    | PART III                                                                                                 |    |   |
|--------------|----------------------------------------------------------------------------------------------------------|---------|--------|
| Item 10:     | Directors, Executive Officers and Corporate      Governance                                              | 209-211 |   |
| Item 11:     | Executive Compensation                                                                                   | 211-220 |   |
| Item 12:     | Security Ownership of Certain Beneficial Owners and      Management and Related Stockholder Matters | 221     |   |
| Item 13:     | Certain Relationships and Related Transactions, and      Director Independence                           | 221-226 |   |
| Item 14:     | Principal Accounting Fees and Services                                                                   | 226     |   |
|    |                                                                                                     |    |   |
|    | PART IV                                                                                                  |    |   |
| Item 15:     | Exhibits, Financial Statement Schedules                                                                  | 227-231 |   |
|    |                                                                                                     |    |   |
| Signatures   | 232                                                                                                      |    |
|    |                                                                                                     |    |   |

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PART I

Items 1. and 2.  Business andProperties.

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| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

Business Strategy

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| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

Recent Developments

|   | · | Going Private      Transaction |
|--------|--------|--------------------------------|

|   | · | Sale of U.S. Retail      Operations |
|--------|--------|-------------------------------------|

|   | · | Sale of Terasen Gas Business      Segment |
|--------|--------|-------------------------------------------|

|   | · | Sale of Corridor Pipeline      System |
|--------|--------|---------------------------------------|

|   | · | Sale of 80% Ownership Interest      in NGPL Business Segment |
|--------|--------|--------------------------------------------------------------|

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| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

|   | · | Debt Securities      Buyback |
|--------|--------|------------------------------|

|   | · | Repayment of Senior Secured      Credit Facilities Debt |
|--------|--------|---------------------------------------------------------|

|   | · | NGPL Re-Contracting      Transportation and StorageCapacity |
|--------|--------|-------------------------------------------------------------|

|   | · | NGPL Storage      Expansions |
|--------|--------|------------------------------|

|   | · | NGPL Amarillo-Gulf Coast Line      Expansion |
|--------|--------|----------------------------------------------|

|   | · | NGPL Louisiana Line      Expansion |
|--------|--------|------------------------------------|

|   | · | Kinder Morgan Illinois      Pipeline |
|--------|--------|--------------------------------------|

|   | · | Products Pipelines – KMP North      System Sale |
|--------|--------|-------------------------------------------------------|

|   | · | Products Pipelines – KMP      Pacific Operations East LineExpansion |
|--------|--------|---------------------------------------------------------------------------|

|   | · | Products Pipelines – KMP CALNEV      Pipeline System Expansion |
|--------|--------|----------------------------------------------------------------------|

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| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

|   | · | Products Pipelines – KMP Cochin      Pipeline System Ownership Interest Increased to  100% |
|--------|--------|--------------------------------------------------------------------------------------------------|

|   | · | Natural Gas Pipelines – KMP      Rockies Express Pipeline |
|--------|--------|-----------------------------------------------------------------|

|   | · | Natural Gas Pipelines – KMP      Texas Intrastate PipelineProject |
|--------|--------|-------------------------------------------------------------------------|

|   | · | Natural Gas Pipelines – KMP      Kinder Morgan LouisianaPipeline |
|--------|--------|------------------------------------------------------------------------|

|   | · | Natural Gas Pipelines – KMP      Kinder Morgan Interstate Gas Transmission Colorado Lateral      Project |
|--------|--------|----------------------------------------------------------------------------------------------------------------|

|   | · | Natural Gas Pipelines – KMP      Midcontinent ExpressPipeline |
|--------|--------|---------------------------------------------------------------------|

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| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

|   | · | Natural Gas Pipelines – KMP      Kinder Morgan Interstate Gas Transmission Pipeline System      Expansion |
|--------|--------|-----------------------------------------------------------------------------------------------------------------|

|   | · | Natural Gas Pipelines – KMP      TransColorado Gas TransmissionExpansion |
|--------|--------|--------------------------------------------------------------------------------|

|   | · | CO2 – KMP Carbon Dioxide Expansion      Projects |
|--------|--------|--------------------------------------------------------|

|   | · | Terminals – KMP Biodiesel      Liquids Terminal Expansion |
|--------|--------|-----------------------------------------------------------------|

|   | · | Terminals – KMP Vancouver      Wharves Terminal Acquisition |
|--------|--------|-------------------------------------------------------------------|

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| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

|   | · | Terminals – KMP Louisiana      Terminal Assets Expansion |
|--------|--------|----------------------------------------------------------------|

|   | · | Terminals – KMP Steel Terminals      Acquisition |
|--------|--------|--------------------------------------------------------|

|   | · | Terminals – KMP Petroleum Coke      Terminal Project |
|--------|--------|------------------------------------------------------------|

|   | · | Trans Mountain – KMP Sale of      Trans Mountain to Kinder Morgan Energy  Partners |
|--------|--------|------------------------------------------------------------------------------------------|

|   | · | Trans Mountain – KMP Trans      Mountain Pipeline Expansion |
|--------|--------|-------------------------------------------------------------------|

|   | · | Kinder Morgan Management Public      Offering |
|--------|--------|-----------------------------------------------|

|   | · | Kinder Morgan Energy Partners      Public Offerings |
|--------|--------|-----------------------------------------------------|

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| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

|   | · | Kinder Morgan Energy Partners      Debt Offerings |
|--------|--------|---------------------------------------------------|

|   | · | Kinder Morgan Energy Partners      Cash Distribution Expectations for2008 |
|--------|--------|---------------------------------------------------------------------------|

|   | · | Kinder Morgan Energy Partners      2007 Capital Expenditures |
|--------|--------|--------------------------------------------------------------|

|   | · | $480.0      million in the Terminals – KMP segment, largely related to expanding the      petroleum products storage capacity at liquids terminal facilities,      including the construction of additional liquids storage tanks at      facilities in Canada and at facilities located on the Houston Ship Channel      and the New York Harbor, and to various expansion projects and      improvements undertaken at multiple terminal  facilities; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $382.5      million in the CO2 –      KMP segment, mostly related to additional infrastructure, including wells      and injection and compression facilities, to support the expanding carbon      dioxide flooding operations at the SACROC and Yates oil field units in      West Texas and to expand Kinder Morgan Energy Partners’ capacity to      produce and deliver CO2 from      the McElmo Dome and Doe Canyon sourcefields; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $305.7      million in the Trans Mountain – KMP segment, mostly related to pipeline      expansion and improvement projects undertaken to increase crude oil and      refined products delivery volumes; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $264.0      million in the Natural Gas Pipelines – KMP segment, mostly related to      current construction of the Kinder Morgan Louisiana Pipeline and to      various expansion and improvement projects on the Texas intrastate natural      gas pipeline systems, including the development of additional natural gas      storage capacity at natural gas storage facilities located at Markham and      Dayton, Texas; and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

|   | · | $259.4      million in the Products Pipelines – KMP segment, mostly related to the      continued expansion work on the Pacific operations’ East Line products      pipeline, completion of construction projects resulting in additional      capacity, and an additional refined products line on the CALNEV Pipeline      in order to increase delivery service to the growing Las Vegas, Nevada      market. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Overview

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| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

|                                                      | Successor      Company                        |   |            | Predecessor      Company                |
|-----------------------------------------------------------|-----------------------------------------------|--------|-----------------|-----------------------------------------|
|                                                      | Seven      Months EndedDecember      31, 2007 |   |            | Five      Months EndedMay      31, 2007 |   | Year      EndedDecember      31, 2006 |
|                                                      | Amount                                        |   | %      of Total |                                    |   | Amount |   | %      of Total |   | Amount |   | %      of Total |
|                                                      | (Dollars      in millions)                    |   |            | (Dollars      in millions)              |
| Net      Pre-tax Impact of Kinder Morgan Energy Partners1 | $                                             | 412.0  |            |                                    | 47.8 | % |   |   | $ | 255.2 |   |   | 47.5 | % |   | $ | 582.9 |   |   | 47.5 | % |
| Segment      Earnings:                                    |                                          |   |            |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NGPL                                                      |                                          | 422.8  |            |                                    | 49.0 | % |   |   |   | 267.4 |   |   | 49.8 | % |   |   | 603.5 |   |   | 49.2 | % |
| Power                                                     |                                          | 13.4   |            |                                    | 1.5 | % |   |   |   | 8.9 |   |   | 1.7 | % |   |   | 23.2 |   |   | 1.9 | % |
| Express                                                   |                                          | 14.4   |            |                                    | 1.7 | % |   |   |   | 5.4 |   |   | 1.0 | % |   |   | 17.2 |   |   | 1.4 | % |
| Total                                                     | $                                             | 862.6  |            |                                    | 100.0 | % |   |   | $ | 536.9 |   |   | 100.00 | % |   | $ | 1,226.8 |   |   | 100.00 | % |

| 1 | Represents      Knight Inc.’s general partner incentive and earnings from its ownership of      limited partner interests in Kinder Morgan Energy Partners, net of      associated minority interests. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Natural Gas Pipeline Company of America

----

| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

Power

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| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

Express Pipeline System

----

| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

|                                                  | Toll      Per Barrel (US$) |
|-------------------------------------------------------|----------------------------|
|                                                  | 2007                       |   | 2006 |
| Hardisty,      Alberta to Casper, Wyoming             | $                          | 1.869 |   | $ | 1.612 |
| Hardisty,      Alberta to Casper, Wyoming (committed) | $                          | 1.340 |   | $ | 1.313 |
| Casper,      Wyoming to Wood River, Illinois          | $                          | 1.562 |   | $ | 1.497 |

Products Pipelines – KMP

----

| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

----

| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

----

| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

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| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

Natural Gas Pipelines – KMP

|   | · | Kinder      Morgan Texas Pipeline; |
|--------|--------|------------------------------------|

|   | · | Kinder      Morgan Tejas Pipeline; |
|--------|--------|------------------------------------|

|   | · | Mier-Monterrey      Mexico Pipeline; and |
|--------|--------|------------------------------------------|

|   | · | Kinder      Morgan North Texas Pipeline. |
|--------|--------|------------------------------------------|

----

| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

----

| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

|   | · | Kinder      Morgan Interstate Gas TransmissionPipeline; |
|--------|--------|---------------------------------------------------------|

|   | · | Trailblazer      Pipeline; |
|--------|--------|----------------------------|

|   | · | Trans-Colorado      Pipeline; and |
|--------|--------|-----------------------------------|

|   | · | 51%      ownership interest in the Rockies Express  Pipeline. |
|--------|--------|---------------------------------------------------------------|

----

| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

----

| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

----

| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

----

| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

|   | · | a      132-mile, 42-inch diameter pipeline with firm capacity of approximately      2.0 billion cubic feet per day of natural gas that will extend from the      Sabine Pass terminal to a point of interconnection with an existing      Columbia Gulf Transmission line in Evangeline Parish, Louisiana (an      offshoot will consist of approximately 2.3 miles of 24-inch diameter      pipeline with firm peak day capacity of approximately 300 million cubic      feet per day extending away from the 42-inch diameter line to the existing      Florida Gas Transmission Company compressor station in Acadia Parish,      Louisiana). This segment is expected to be in service by January 1, 2009;      and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a      1-mile, 36-inch diameter pipeline with firm capacity of approximately 1.2      billion cubic feet per day that will extend from the Sabine Pass terminal      and connect to NGPL’s natural gas pipeline. This portion of the project is      expected to be in service in the third quarter of  2008. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

CO2– KMP

----

| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

----

| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

|                                                                                                                                                                                     | Productive Wells1 |   | Service Wells2 |   | Drilling Wells3 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------|--------|----------------|--------|-----------------|
|                                                                                                                                                                                     | Gross             |   | Net            |   | Gross           |   | Net |   | Gross |   | Net |
| Crude      Oil                               | 2,463             |   | 1,587          |   | 1,066           |   | 789 |   | 2 |   | 2 |
| Natural      Gas                             | 8                 |   | 4              |   | -               |   | - |   | ─ |   | ─ |
| Total      Wells                                                                                                                                                                         | 2,471             |   | 1,591          |   | 1,066           |   | 789 |   | 2 |   | 2 |

| 1 | Includes      active wells and wells temporarily shut-in. As of December 31, 2007,      Kinder Morgan Energy Partners did not operate any productive wells with      multiple completions. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Consists      of injection, water supply, disposal wells and service wells temporarily      shut-in. A disposal well is used for disposal of saltwater into an      underground formation; a service well is a well drilled in a known oil      field in order to inject liquids that enhance recovery or dispose of salt      water. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Consists      of development wells in the process of being drilled as of December 31,      2007. A development well is a well drilled in an already discovered oil      field. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                                                               | 2007   |   | 2006   |   | 2005   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
| Productive                                                                                                                                                                                                                         |   |   |   |   |   |
| Development                                              | 31     |   | 37     |   | 42     |
| Exploratory                                              | -      |   | -      |   | -      |
| Dry                                                                                                                                                                                                                                |   |   |   |   |   |
| Development                                              | -      |   | -      |   | -      |
| Exploratory                                              | -      |   | -      |   | -      |
| Total      Wells                                    | 31     |   | 37     |   | 42     |

----

| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

| Notes: | The      above table includes wells that were completed during each year regardless      of the year in which drilling was initiated, and does not include any      wells where drilling operations were not completed as of the end of the      applicable year. Development wells include wells drilled in the proved      area of an oil or gas reservoir. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                           | Gross  |   | Net    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| Developed      Acres                                       | 72,435 |   | 67,731 |
| Undeveloped      Acres                                     | 8,788  |   | 8,129  |
| Total                                                                | 81,223 |   | 75,860 |

|                                                         | Successor      Company                   |   |   | Predecessor      Company |
|--------------------------------------------------------------|------------------------------------------|--------|--------|--------------------------|
|                                                         | Seven      Months EndedDecember      31, |   |   | Five      Months Ended   |   | Year      Ended December 31, |
|                                                         | 2007                                     |   |   | May      31, 2007        |   | 2006 |   | 2005 |
| Consolidated      Companies1                                 |                                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Production      Costs per Barrel of Oil Equivalent2,3,4      | $                                        | 17.00  |   |                     |   | $ | 15.15 |   |   | $ | 13.30 |   |   | $ | 10.00 |   |
| Crude      Oil Production (MBbl/d)                           |                                     | 34.9   |   |                     |   |   | 36.6 |   |   |   | 37.8 |   |   |   | 37.9 |   |
| Natural      Gas Liquids Production (MBbl/d)4                |                                     | 5.4    |   |                     |   |   | 5.6 |   |   |   | 5.0 |   |   |   | 5.3 |   |
| Natural      Gas liquids Production from Gas Plants(MBbl/d)5 |                                     | 4.2    |   |                     |   |   | 4.1 |   |   |   | 3.9 |   |   |   | 4.1 |   |
| Total      Natural Gas Liquids Production(MBbl/d)            |                                     | 9.6    |   |                     |   |   | 9.7 |   |   |   | 8.9 |   |   |   | 9.4 |   |
| Natural      Gas Production (MMcf/d)4,6                      |                                     | 0.8    |   |                     |   |   | 0.8 |   |   |   | 1.3 |   |   |   | 3.7 |   |
| Natural      Gas Production from Gas Plants(MMcf/d)5,6       |                                     | 0.3    |   |                     |   |   | 0.2 |   |   |   | 0.3 |   |   |   | 3.1 |   |
| Total      Natural Gas Production(MMcf/d)6                   |                                     | 1.1    |   |                     |   |   | 1.0 |   |   |   | 1.6 |   |   |   | 6.8 |   |
| Average      Sales Prices Including Hedge Gains/Losses:      |                                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Crude      Oil Price per Bbl7                                | $                                        | 36.80  |   |                     |   | $ | 35.03 |   |   | $ | 31.42 |   |   | $ | 27.36 |   |
| Natural      Gas Liquids Price per Bbl7                      | $                                        | 57.78  |   |                     |   | $ | 44.55 |   |   | $ | 43.52 |   |   | $ | 38.79 |   |
| Natural      Gas Price per Mcf8                              | $                                        | 5.86   |   |                     |   | $ | 6.41 |   |   | $ | 6.36 |   |   | $ | 5.84 |   |
| Total      Natural Gas Liquids Price per Bbl5                | $                                        | 58.55  |   |                     |   | $ | 45.04 |   |   | $ | 43.90 |   |   | $ | 38.98 |   |
| Total      Natural Gas Price per Mcf5                        | $                                        | 5.65   |   |                     |   | $ | 6.27 |   |   | $ | 7.02 |   |   | $ | 5.80 |   |
| Average      Sales Prices Excluding Hedge Gains/Losses:      |                                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Crude      Oil Price per Bbl7                                | $                                        | 78.65  |   |                     |   | $ | 57.43 |   |   | $ | 63.27 |   |   | $ | 54.45 |   |
| Natural      Gas Liquids Price per Bbl7                      | $                                        | 57.78  |   |                     |   | $ | 44.55 |   |   | $ | 43.52 |   |   | $ | 38.79 |   |
| Natural      Gas Price per Mcf8                              | $                                        | 5.86   |   |                     |   | $ | 6.41 |   |   | $ | 6.36 |   |   | $ | 5.84 |   |

| 1 | Amounts      relate to Kinder Morgan CO2      Company, L.P. and its consolidated  subsidaries. |
|---|------------------------------------------------------------------------------------------------|

| 2 | Computed      using production costs, excluding transportation costs, as defined by the      Securities and Exchange Commisson. Natural gas volumes were converted to      barrels of oil equivalent (BOE) using a conversion factor of six mcf of      natural gas to one barrel of oil. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Production      costs include labor, repairs and maintenance, materials, supplies, fuel      and power, property taxes, severance taxes, and general and administrative      expenses directly related to oil and gas producing    activities. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Includes      only production attributable to leasehold  ownership. |
|---|---------------------------------------------------------------------|

| 5 | Includes      production attributable to Kinder Morgan Energy Partners’ ownership in      processing plants and third-party processing  agreements. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6 | Excludes      natural gas production used asfuel. |
|---|---------------------------------------------------|

| 7 | Hedge      gains/losses for crude oil and natural gas liquids are included with crude      oil. |
|---|-------------------------------------------------------------------------------------------------|

| 8 | Natural      gas sales were not hedged. |
|---|-----------------------------------------|

----

| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

Terminals – KMP

----

| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

Trans Mountain – KMP

----

| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

Regulation

----

| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

|   | · | Order      No. 436 (1985) requiring open-access, nondiscriminatory transportation of      natural gas; |
|--------|--------|--------------------------------------------------------------------------------------------------------|

|   | · | Order      No. 497 (1988) which set forth new standards and guidelines imposing      certain constraints on the interaction between interstate natural gas      pipelines and their marketing affiliates and imposing certain disclosure      requirements regarding that interaction;and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Order      No. 636 (1992) which required interstate natural gas pipelines that      perform open-access transportation under blanket certificates to      “unbundle” or separate their traditional merchant sales services from      their transportation and storage services and to provide comparable      transportation and storage services with respect to all natural gas      supplies whether purchased from the pipeline or from other merchants such      as marketers or producers. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

----

| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

EnvironmentalMatters

----

| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

----

| Items 1. and 2.  Business      and Properties. (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------|-----------------------|

Item 1A.  RiskFactors.

|   | · | limiting      our ability to obtain additional financing to fund our working capital,      capital expenditures, debt service requirements or potential growth or for      other purposes; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | limiting      our ability to use operating cash flow in other areas of our business      because we must dedicate a substantial portion of these funds to make      payments on our debt; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | placing      us at a competitive disadvantage compared to competitors with less debt;      and |
|--------|--------|------------------------------------------------------------------------------------------------|

|   | · | increasing      our vulnerability to adverse economic and industry    conditions. |
|--------|--------|-----------------------------------------------------------------------------------|

----

| Item 1A.  Risk      Factors. (continued) | Knight      Inc. Form 10-K |
|---------------------------------------------------------|----------------------------|

----

| Item 1A.  Risk      Factors. (continued) | Knight      Inc. Form 10-K |
|---------------------------------------------------------|----------------------------|

----

| Item 1A.  Risk      Factors. (continued) | Knight      Inc. Form 10-K |
|---------------------------------------------------------|----------------------------|

|   | · | demands      on management related to the increase in our size after an acquisition, an      expansion, or a completed constructionproject; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      diversion of our management’s attention from the management of daily      operations; |
|--------|--------|------------------------------------------------------------------------------------------------------|

|   | · | difficulties      in implementing or unanticipated costs of accounting, estimating,      reporting and other systems; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | · | difficulties      in the assimilation and retention of necessary employees;    and |
|--------|--------|------------------------------------------------------------------------------------|

|   | · | potential      adverse effects on operatingresults. |
|--------|--------|-----------------------------------------------------|

----

| Item 1A.  Risk      Factors. (continued) | Knight      Inc. Form 10-K |
|---------------------------------------------------------|----------------------------|

----

| Item 1A.  Risk      Factors. (continued) | Knight      Inc. Form 10-K |
|---------------------------------------------------------|----------------------------|

----

| Item 1A.  Risk      Factors. (continued) | Knight      Inc. Form 10-K |
|---------------------------------------------------------|----------------------------|

Item 1B.  Unresolved StaffComments.

----

|   | Knight      Form 10-K |
|--------|-----------------------|

Item 3.    LegalProceedings.

----

|   | Knight      Form 10-K |
|--------|-----------------------|

| Item 5. | Market      for Registrant’s Common Equity, Related Stockholder Matters and Issuer      Purchases of Equity Securities.   |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                        | Market      Price Per Share |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------|
|                                                                                                                                                                                                                                                                                                                                        | 2007                        |   | 2006 |
|                                                                                                                                                                                                                                                                                                                                        | Low                         |   | High |   | Low |   | High |
| Quarter      Ended:                                                                                                                                                                                                                                                                                                                         |                        |   |   |   |   |   |   |
| March      31                                                      | $104.97                     |   | $107.02 |   | $89.13 |   | $103.75 |
| June      301                                                      | $105.32                     |   | $108.14 |   | $81.00 |   | $103.00 |
| September      30                                                                      | n/a                         |   | n/a |   | $99.50 |   | $105.00 |
| December      31                                                                  | n/a                         |   | n/a |   | $104.00 |   | $106.20 |

|                                                                                                                                                                                                                                                                                                                                        | Dividends      Paid Per Share |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------|
|                                                                                                                                                                                                                                                                                                                                        | 2007                          |   | 2006 |
| Quarter      Ended:                                                                                                                                                                                                                                                                                                                         |                          |   |   |
| March      31                                                      | $0.8750                       |   | $0.8750 |
| June      301                                                      | $0.8750                       |   | $0.8750 |
| September      30                                                                      | n/a                           |   | $0.8750 |
| December      31                                                                       | n/a                           |   | $0.8750 |

| 1 | As      a result of the Going Private transaction, our common stock ceased trading      on May 30, 2007. |
|---|----------------------------------------------------------------------------------------------------------|

| Item      6. | Selected FinancialData. |
|--------------|-------------------------|

|                                                                  | SuccessorCompany        |    |   | Predecessor      Company |
|-----------------------------------------------------------------------|-------------------------|---------|--------|--------------------------|
|                                                                  | Seven      Months Ended |    |   | Five      Months         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  | December      31,       |    |   | Ended                    |   | Year      Ended December 31, |
|                                                                  | 20072                   |    |   | May      31, 2007        |   | 20063,4 |   | 20054 |   | 2004 |   | 2003 |
|                                                                  | (In      millions)      |    |   | (In      millions)       |
| Operating      Revenues                                               | $                       | 6,394.7 |   |                     |   | $ | 4,165.1 |   |   | $ | 10,208.6 |   |   | $ | 1,025.6 |   |   | $ | 877.7 |   |   | $ | 848.8 |   |
| Gas      Purchases and Other Costs of Sales                           |                    | 3,656.6 |   |                     |   |   | 2,490.4 |   |   |   | 6,339.4 |   |   |   | 302.6 |   |   |   | 194.2 |   |   |   | 232.1 |   |
| Other      Operating Expenses5,6                                      |                    | 1,695.3 |   |                     |   |   | 1,469.9 |   |   |   | 2,124.0 |   |   |   | 341.7 |   |   |   | 342.5 |   |   |   | 316.5 |   |
| Operating      Income                                                 |                    | 1,042.8 |   |                     |   |   | 204.8 |   |   |   | 1,745.2 |   |   |   | 381.3 |   |   |   | 341.0 |   |   |   | 300.2 |   |
| Other      Income and (Expenses)                                      |                    | (566.9  | )      |                     |   |   | (302.0 | ) |   |   | (858.9 | ) |   |   | 470.0 |   |   |   | 365.2 |   |   |   | 281.5 |   |
| Income      (Loss) from Continuing OperationsBefore      Income Taxes |                    | 475.9   |   |                     |   |   | (97.2 | ) |   |   | 886.3 |   |   |   | 851.3 |   |   |   | 706.2 |   |   |   | 581.7 |   |
| Income      Taxes                                                     |                    | 227.4   |   |                     |   |   | 135.5 |   |   |   | 285.9 |   |   |   | 337.1 |   |   |   | 208.0 |   |   |   | 225.1 |   |
| Income      (Loss) from Continuing Operations                         |                    | 248.5   |   |                     |   |   | (232.7 | ) |   |   | 600.4 |   |   |   | 514.2 |   |   |   | 498.2 |   |   |   | 356.6 |   |
| Income      (Loss) from Discontinued Operations, Net of Tax7          |                    | (1.5    | )      |                     |   |   | 298.6 |   |   |   | (528.5 | ) |   |   | 40.4 |   |   |   | 23.9 |   |   |   | 25.1 |   |
| Net      Income                                                       | $                       | 247.0   |   |                     |   | $ | 65.9 |   |   | $ | 71.9 |   |   | $ | 554.6 |   |   | $ | 522.1 |   |   | $ | 381.7 |   |
|                                                             |                    |    |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital      Expenditures8                                            | $                       | 1,287.0 |   |                     |   | $ | 652.8 |   |   | $ | 1,375.6 |   |   | $ | 134.1 |   |   | $ | 103.2 |   |   | $ | 132.0 |   |

| 1 | Includes      significant impacts from acquisitions and dispositions of assets. See      Notes 4 and 5 of the accompanying Notes to Consolidated Financial      Statements for additionalinformation. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 6.  Selected      Financial Data (continued) | Knight      Form 10-K |
|------------------------------------------------------------------|-----------------------|

| 2 | Includes      significant impacts resulting from the Going Private transaction. See Note      1(B) of the accompanying Notes to Consolidated Financial Statements for      additional information. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Due      to our adoption of EITF No. 04-5, effective January 1, 2006 the accounts,      balances and results of operations of Kinder Morgan Energy Partners are      included in our financial statements and we no longer apply the equity      method of accounting to our investments in Kinder Morgan Energy Partners.      See Note 1(B) of the accompanying Notes to Consolidated Financial      Statements. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Includes      the results of Terasen Inc. subsequent to its November 30, 2005      acquisition by us. See Notes 4, 6 and 7 of the accompanying Notes to      Consolidated Financial Statements for information regarding      Terasen. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5 | Includes      charges of $1.2 million, $6.5 million, $33.5 million, and $44.5 million in      2006, 2005, 2004 and 2003, respectively, to reduce the carrying value of      certain power assets. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6 | Includes      an impairment charge of $377.1 million in the five months ended May 31,      2007 relating to Kinder Morgan Energy Partners’ acquisition of Trans      Mountain pipeline from Knight Inc. on April 30, 2007. See Note 1(I) of the      accompanying Notes to Consolidated Financial  Statements. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7 | Includes      a charge of $650.5 million in 2006 to reduce the carrying value of Terasen      Inc.; see Note 6 of the accompanying Notes to Consolidated Financial      Statements. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8 | Capital      Expenditures shown are for continuing operations  only. |
|---|----------------------------------------------------------------------|

|                                                                                                                                                              | As      of December 31, |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------|
|                                                                                                                                                              |                    |   |   |   |
|                                                                                                                                                              | Successor      Company  |   |   | Predecessor      Company |
|                                                                                                                                                              | 20071                   |   |   |   |   | 20062 |   |   |   | 20053 |   |   |   | 2004 |   |   |   | 2003 |   |   |
|                                                                                                                                                              | (In      millions)      |   |   |   |   | (In      millions, except percentages) |
| Total      Assets                         | $                       | 36,101.0 |   |   |   |   |   | $ | 26,795.6 |   |   |   |   | $ | 17,451.6 |   |   |   |   | $ | 10,116.9 |   |   |   |   | $ | 10,036.7 |   |   |   |
|                                                                                                                                                         |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capitalization:                                                                                                                                                   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common      Equity4                                                                                                                                               | $                       | 8,069.2 |   | 30 | % |   |   | $ | 3,657.5 |   | 20 | % |   | $ | 4,051.4 |   | 34 | % |   | $ | 2,919.5 |   | 45 | % |   | $ | 2,691.8 |   | 39 | % |
| Deferrable      Interest Debentures                                                                                                                               |                    | 283.1 |   | 1 | % |   |   |   | 283.6 |   | 2 | % |   |   | 283.6 |   | 2 | % |   |   | 283.6 |   | 4 | % |   |   | 283.6 |   | 4 | % |
| Capital      Securities                                                                                                                                           |                    | - |   | - |   |   |   |   | 106.9 |   | 1 | % |   |   | 107.2 |   | 1 | % |   |   | - |   | - |   |   |   | - |   | - |   |
| Minority      Interests                                                                                                                                           |                    | 3,314.0 |   | 13 | % |   |   |   | 3,095.5 |   | 17 | % |   |   | 1,247.3 |   | 10 | % |   |   | 1,105.4 |   | 17 | % |   |   | 1,010.1 |   | 15 | % |
| Outstanding      Notes and Debentures5                                                                                                                       |                    | 14,814.6 |   | 56 | % |   |   |   | 10,623.9 |   | 60 | % |   |   | 6,286.8 |   | 53 | % |   |   | 2,258.0 |   | 34 | % |   |   | 2,837.5 |   | 42 | % |
| Total      Capitalization                                                                                                                                         | $                       | 26,480.9 |   | 100 | % |   |   | $ | 17,767.4 |   | 100 | % |   | $ | 11,976.3 |   | 100 | % |   | $ | 6,566.5 |   | 100 | % |   | $ | 6,823.0 |   | 100 | % |

| 1 | Includes      significant impacts resulting from the Going Private transaction. See Note      1(B) of the accompanying Notes to Consolidated Financial Statements for      additional information. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Due      to our adoption of EITF No. 04-5, effective January 1, 2006 the accounts,      balances and results of operations of Kinder Morgan Energy Partners are      included in our financial statements and we no longer apply the equity      method of accounting to our investments in Kinder Morgan Energy Partners.      See Note 1(B) of the accompanying Notes to Consolidated Financial      Statements. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Reflects      the acquisition of Terasen Inc. on November 30, 2005. See Notes 4, 6 and 7      of the accompanying Notes to Consolidated Financial Statements for      information regarding thisacquisition. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Excluding      Accumulated Other ComprehensiveIncome/Loss. |
|---|------------------------------------------------------------|

| 5 | Excluding      the value of interest rate swaps and short-term debt. See Note 10 of the      accompanying Notes to Consolidated Financial  Statements. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Knight      Form 10-K |
|-----------------------|

| Item 7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations. |
|---------|--------------------------------------------------------------------------------------------------------|

General

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

Critical Accounting Policies and Estimates

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

Consolidated Financial Results

|                                                                                                             | Combined      Results                     |     | Successor      Company                    |               |   | Predecessor      Company                 |
|------------------------------------------------------------------------------------------------------------------|-------------------------------------------|----------|-------------------------------------------|--------------------|--------|------------------------------------------|
|                                                                                                             | For      the Year Ended December 31, 2007 |     | Seven      Months Ended December 31, 2007 |               |   | Five      Months Ended May 31, 2007 |   | Year      Ended December 31, 2006 |   | Year      Ended December 31, 2005 |
|                                                                                                             | (In      millions)                        |     |                                      | (In      millions) |
| Equity      in Earnings of Kinder Morgan Energy Partners1,2                                                      | $                                         | -        |                                      |               | $      | -                                        |   |   |   | $ | - |   |   | $ | - |   |   | $ | 605.4 |   |
| Segment      Earnings before Depreciation, Depletion and Amortization of Excess Cost of      Equity Investments: |                                      |     |                                      |               |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NGPL                                                                                                             |                                      | 690.2    |                                      |               |   | 422.8                                    |   |   |   |   | 267.4 |   |   |   | 603.5 |   |   |   | 534.8 |   |
| Power                                                                                                            |                                      | 22.3     |                                      |               |   | 13.4                                     |   |   |   |   | 8.9 |   |   |   | 23.2 |   |   |   | 16.5 |   |
| Express                                                                                                          |                                      | 19.8     |                                      |               |   | 14.4                                     |   |   |   |   | 5.4 |   |   |   | 17.2 |   |   |   | 2.0 |   |
| Products      Pipelines – KMP3                                                                             |                                      | 386.9    |                                      |               |   | 162.5                                    |   |   |   |   | 224.4 |   |   |   | 467.9 |   |   |   | - |   |
| Natural      Gas Pipelines – KMP                                                                           |                                      | 601.8    |                                      |               |   | 373.3                                    |   |   |   |   | 228.5 |   |   |   | 574.8 |   |   |   | - |   |
| CO2 –      KMP                                                                                             |                                      | 643.0    |                                      |               |   | 433.0                                    |   |   |   |   | 210.0 |   |   |   | 488.2 |   |   |   | - |   |
| Terminals      – KMP                                                                                       |                                      | 416.0    |                                      |               |   | 243.7                                    |   |   |   |   | 172.3 |   |   |   | 408.1 |   |   |   | - |   |
| Trans      Mountain – KMP4                                                                                 |                                      | (293.6   | )                                         |               |   | 43.8                                     |   |   |   |   | (337.4 | ) |   |   | 76.5 |   |   |   | - |   |
| Segment      Earnings before Depreciation, Depletion and Amortization of Excess Cost of      Equity Investments  |                                      | 2,486.4  |                                      |               |   | 1,706.9                                  |   |   |   |   | 779.5 |   |   |   | 2,659.4 |   |   |   | 1,158.7 |   |
| Depreciation,      Depletion and Amortization Expense                                                            |                                      | (733.3   | )                                         |               |   | (472.3                                   | ) |   |   |   | (261.0 | ) |   |   | (531.4 | ) |   |   | (104.6 | ) |
| Amortization      of Excess Cost of Equity Investments                                                           |                                      | (5.8     | )                                         |               |   | (3.4                                     | ) |   |   |   | (2.4 | ) |   |   | (5.6 | ) |   |   | - |   |
| Other                                                                                                            |                                      | 3.2      |                                      |               |   | 0.3                                      |   |   |   |   | 2.9 |   |   |   | 8.2 |   |   |   | 6.5 |   |
| Interest      and Other Corporate Expenses, Net5                                                                 |                                      | (1,431.4 | )                                         |               |   | (799.6                                   | ) |   |   |   | (631.8 | ) |   |   | (1,273.3 | ) |   |   | (209.3 | ) |
| Income      (Loss) From Continuing Operations Before Income Taxes6                                               |                                      | 319.1    |                                      |               |   | 431.9                                    |   |   |   |   | (112.8 | ) |   |   | 857.3 |   |   |   | 851.3 |   |
| Income      Taxes6                                                                                               |                                      | (303.3   | )                                         |               |   | (183.4                                   | ) |   |   |   | (119.9 | ) |   |   | (256.9 | ) |   |   | (337.1 | ) |
| Income      (Loss) From Continuing Operations                                                                    |                                      | 15.8     |                                      |               |   | 248.5                                    |   |   |   |   | (232.7 | ) |   |   | 600.4 |   |   |   | 514.2 |   |
| Income      (Loss) From Discontinued Operations, Net of Tax7                                                     |                                      | 297.1    |                                      |               |   | (1.5                                     |  ) |   |   |   | 298.6 |   |   |   | (528.5 |  ) |   |   | 40.4 |   |
| Net      Income                                                                                                  | $                                         | 312.9    |                                      |               | $      | 247.0                                    |   |   |   | $ | 65.9 |   |   | $ | 71.9 |   |   | $ | 554.6 |   |

| 1 | Due      to our adoption of EITF No. 04-5, effective January 1, 2006 the accounts,      balances and results of operations of Kinder Morgan Energy Partners are      included in our financial statements and we no longer apply the equity      method of accounting to our investment in Kinder Morgan Energy Partners.      See Note 1(B) of the accompanying Notes to Consolidated Financial      Statements. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Equity      in Earnings of Kinder Morgan Energy Partners for 2005 includes a reduction      in pre-tax earnings of approximately $63.3 million ($40.3 million after      tax) resulting principally from the effects of certain regulatory,      environmental, litigation and inventory items on Kinder Morgan Energy      Partners’ earnings. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

| 3 | 2007      includes (i) a $136.8 million increase in expense associated with rate      case and other legal liability adjustments (in the seven months ended      December 31, 2007); (ii) a $15.9 million increase in expense associated      with environmental liability adjustments ($2.2 million in the five months      ended May 31, 2007 and $13.7 million in the seven months ended December      31, 2007); (iii) a $15.0 million expense for a litigation settlement      reached with Contra Costa County, California (in the seven months ended      December 31, 2007); (iv) a $3.2 million increase in expense from the      settlement of certain litigation matters related to the West Coast refined      product terminal operations (in the seven months ended December 31, 2007);      and (v) a $1.8 million increase in income resulting from unrealized      foreign currency gains on long-term debt transactions (in the seven months      ended December 31, 2007). 2006 amount includes a $16.5 million increase in      expense associated with environmental liability adjustments and a $5.7      million increase in income resulting from certain transmix contract      settlements. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Trans      Mountain – KMP Segment Earnings before Depreciation, Depletion and      Amortization of Excess Cost of Equity Investments (“Segment Earnings”) for      2007 includes a $377.1 million goodwill impairment charge as discussed      under Intangible      Assets elsewhere in this report. Excluding the impairment charge,      Segment Earnings increased by $7.0 million for the year ended December 31,      2007, over the comparable period in2006. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5 | Interest      and Other Corporate Expenses, Net for 2006 include (i) a reduction in      pre-tax income of $22.3 million ($14.1 million after tax) resulting from      non-cash charges to mark to market certain interest rate swaps and (ii)      miscellaneous other items totaling a net decrease of $0.8 million in      pre-tax income ($0.5 million aftertax). |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6 | Income      taxes of Kinder Morgan Energy Partners of $59.6 million, $44.0 million,      $15.6 million and $29.0 million for the combined year ended December 31,      2007, the seven months ended December 31, 2007, the five months ended May      31, 2007 and the year ended December 31, 2006, respectively, are included      in segment earnings. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7 | 2006      includes a $650.5 million goodwill impairment associated with Terasen (see      Note 6 of the accompanying Notes to Consolidated Financial      Statements). |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

Results of Operations

| Business      Segment                                                   |    | Business      Conducted                                                                                                                                                                                                                                                              |    | Referred to      As:                                  |
|-------------------------------------------------------------------------|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|-------------------------------------------------------|
|                                                               |         |                                                                                                                                                                                                                                                                                 |         |                                                  |
| Natural      Gas Pipeline Company of America and certain affiliates     |         | The      ownership and operation of a major interstate natural gas pipeline and      storage system                                                                                                                                                                        |         | Natural      Gas Pipeline Company of America, or NGPL |
| Power      Generation                                                   |         | The      ownership and operation of natural gas-fired electric generation      facilities                                                                                                                                                                                  |         | Power                                                 |
| Express      Pipeline System                                            |         | The      ownership of a one-third interest in the Express Pipeline System, a crude      oil pipeline system, which investment we account for under the equity      method, and certain related entities                                                                    |         | Express                                               |
| Petroleum      Products Pipelines (Kinder Morgan Energy Partners)  |         | The      ownership and operation of refined petroleum products pipelines that      deliver gasoline, diesel fuel, jet fuel and natural gas liquids to various      markets; plus associated product terminals and petroleum pipeline transmix      processing facilities   |         | Products      Pipelines – KMP                   |

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

| Natural      Gas Pipelines (Kinder Morgan Energy Partners)  |   | The      ownership and operation of major interstate and intrastate natural gas      pipeline and storage systems                                                                                                                                                                                                 |   | Natural      Gas Pipelines – KMP |
|------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|
| CO2      (Kinder Morgan Energy Partners)                    |   | The      production, transportation and marketing of carbon dioxide (CO2) to      oil fields that use CO2 to      increase production of oil; plus ownership interests in and/or operation      of oil fields in West Texas; plus the ownership and operation of a crude      oil pipeline system in West Texas   |   | CO2      – KMP                   |
| Liquids      and Bulk Terminals (Kinder Morgan Energy Partners)  |   | The      ownership and/or operation of liquids and bulk terminal facilities and      rail transloading and materials handling facilities that together      transload, store and deliver a wide variety of bulk, petroleum,      petrochemical and other liquids products                                         |   | Terminals      – KMP             |
| Trans      Mountain Pipeline (Kinder Morgan Energy Partners)     |   | The      ownership and operation of crude oil and refined petroleum pipelines,      principally located in Canada                                                                                                                                                                                                           |   | Trans      Mountain – KMP        |

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

NaturalGas Pipeline Company of America

|                                        | CombinedResults                              |    | SuccessorCompany                            |                                         |   |  Predecessor      Company         |
|---------------------------------------------|----------------------------------------------|---------|---------------------------------------------|----------------------------------------------|--------|----------------------------------------|
|                                        | For      the YearEndedDecember      31,2007  |    | Seven      MonthsEndedDecember      31,2007 |                                         |   | Five      MonthsEndedMay      31, 2007 |   | Year      EndedDecember      31,2006 |   | Year      EndedDecember      31,2005 |
|                                        | (In      millions except systems throughput) |    |                                        | (In      millions except systems throughput) |
| Operating      Revenues                     | $                                            | 1,183.7 |                                        |                                         | $      | 757.2                                  |   |   |   | $ | 426.5 |   |   | $ | 1,118.0 |   |   | $ | 947.3 |   |
| Gas      Purchases and Other Costs of Sales |                                         | (341.4  | )                                           |                                         |   | (242.1                                 | ) |   |   |   | (99.3 | ) |   |   | (362.9 | ) |   |   | (299.2 | ) |
| Other      Operating Expenses               |                                         | (153.7  | )                                           |                                         |   | (93.3                                  | ) |   |   |   | (60.4 | ) |   |   | (154.2 | ) |   |   | (115.3 | ) |
| Equity      in Earnings of Horizon          |                                         | 1.6     |                                        |                                         |   | 1.0                                    |   |   |   |   | 0.6 |   |   |   | 1.8 |   |   |   | 1.8 |   |
| Gain      on Asset Sales                    |                                         | -       |                                        |                                         |   | -                                      |   |   |   |   | - |   |   |   | 0.8 |   |   |   | 0.2 |   |
| Segment      Earnings Before DD&A       | $                                            | 690.2   |                                        |                                         | $      | 422.8                                  |   |   |   | $ | 267.4 |   |   | $ | 603.5 |   |   | $ | 534.8 |   |
|                                   |                                         |    |                                        |                                         |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Systems      Throughput (Trillion Btus)     |                                         | 1,785.7 |                                        |                                         |   | 1,027.2                                |   |   |   |   | 758.5 |   |   |   | 1,696.3 |   |   |   | 1,664.8 |   |

On December 10, 2007, we entered into a definitive agreement tosell an 80% ownership interest in our NGPL business segment to Myria forapproximately $5.9 billion, subject to certain adjustments. The sale closed onFebruary 15, 2008. We will continue to operate NGPL’s assets pursuant to a15-year operating agreement. Myria is comprised of a syndicate of investors ledby Babcock & Brown, an international investment and specialized fund andasset management group.

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

|                                                       | CombinedResults                             |   | SuccessorCompany                            |               |   |  Predecessor      Company         |
|------------------------------------------------------------|---------------------------------------------|--------|---------------------------------------------|--------------------|--------|----------------------------------------|
|                                                       | For      the YearEndedDecember      31,2007 |   | Seven      MonthsEndedDecember      31,2007 |               |   | Five      MonthsEndedMay      31, 2007 |   | Year      EndedDecember      31,2006 |   | Year      EndedDecember      31,2005 |
|                                                       | (In      millions)                          |   |                                        | (In      millions) |
| Operating      Revenues                                    | $                                           | 60.1   |                                        |               | $      | 40.2                                   |   |   |   | $ | 19.9 |   |   | $ | 60.0 |   |   | $ | 54.2 |   |
| Operating      Expenses and Minority Interests             |                                        | (50.9  | )                                           |               |   | (34.8                                  | ) |   |   |   | (16.1 | ) |   |   | (49.6 | ) |   |   | (42.7 | ) |
| Other      Income (Expense)1                               |                                        | -      |                                        |               |   | -                                      |   |   |   |   | - |   |   |   | (1.2 | ) |   |   | (6.5 | ) |
| Equity      in Earnings of Thermo Cogeneration Partnership |                                        | 13.1   |                                        |               |   | 8.0                                    |   |   |   |   | 5.1 |   |   |   | 11.3 |   |   |   | 11.5 |   |
| Gain      on Asset Sales                                   |                                        | -      |                                        |               |   | -                                      |   |   |   |   | - |   |   |   | 2.7 |   |   |   | - |   |
| Segment      Earnings Before DD&A                      | $                                           | 22.3   |                                        |               | $      | 13.4                                   |   |   |   | $ | 8.9 |   |   | $ | 23.2 |   |   | $ | 16.5 |   |

| 1 | To      record the impairment of certain assets, as discussed    below. |
|---|-------------------------------------------------------------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

Express

|                                  | CombinedResults                             |   | SuccessorCompany                            |               |   |  Predecessor      Company         |
|---------------------------------------|---------------------------------------------|--------|---------------------------------------------|--------------------|--------|----------------------------------------|
|                                  | For      the YearEndedDecember      31,2007 |   | Seven      MonthsEndedDecember      31,2007 |               |   | Five      MonthsEndedMay      31, 2007 |   | Year      EndedDecember      31,2006 |   | Year      EndedDecember      31,2005 |
|                                  | (In      millions)                          |   |                                        | (In      millions) |
| Segment      Earnings Before DD&A | $                                           | 19.8   |                                        |               | $      | 14.4                                   |   |   |   | $ | 5.4 |   |   | $ | 17.2 |   |   | $ | 2.0 |   |

Products Pipelines –KMP

|                                                  | CombinedResults                                     |   | SuccessorCompany                            |                                            |   |  Predecessor      Company         |
|-------------------------------------------------------|-----------------------------------------------------|--------|---------------------------------------------|-------------------------------------------------|--------|----------------------------------------|
|                                                  | For      the YearEndedDecember      31,2007         |   | Seven      MonthsEndedDecember      31,2007 |                                            |   | Five      MonthsEndedMay      31, 2007 |   | Year      EndedDecember      31,2006 |   | Year      EndedDecember      31,2005 |
|                                                  | (In      millions, exceptoperating      statistics) |   |                                        | (In      millions, except operating statistics) |
| Operating      Revenues                               | $                                                   | 803.3  |                                        |                                            | $      | 471.6                                  |   |   |   | $ | 331.7 |   |   | $ | 732.5 |   |   | $ | 670.6 |   |
| Operating      Expenses1                              |                                                | (437.0 | )                                           |                                            |   | (320.7                                 | ) |   |   |   | (116.3 | ) |   |   | (285.5 | ) |   |   | (330.8 | ) |
| Other      Income (Expense)2                          |                                                | 0.2    |                                        |                                            |   | 0.8                                    |   |   |   |   | (0.6 | ) |   |   | - |   |   |   | - |   |
| Earnings      from Equity Investments3                |                                                | 23.9   |                                        |                                            |   | 11.5                                   |   |   |   |   | 12.4 |   |   |   | 14.2 |   |   |   | 26.4 |   |
| Interest      Income and Other Income (Expense), Net4 |                                                | 9.4    |                                        |                                            |   | 4.7                                    |   |   |   |   | 4.7 |   |   |   | 11.9 |   |   |   | 6.1 |   |
| Income      Taxes5                                    |                                                | (12.9  | )                                           |                                            |   | (5.4                                   | ) |   |   |   | (7.5 | ) |   |   | (5.2 | ) |   |   | (10.3 | ) |
| Segment      Earnings Before DD&A                 | $                                                   | 386.9  |                                        |                                            | $      | 162.5                                  |   |   |   | $ | 224.4 |   |   | $ | 467.9 |   |   | $ | 362.0 |   |

|                                        | CombinedResults                             |   | SuccessorCompany                            |   |   |  Predecessor      Company         |
|---------------------------------------------|---------------------------------------------|--------|---------------------------------------------|--------|--------|----------------------------------------|
|                                        | For      the YearEndedDecember      31,2007 |   | Seven      MonthsEndedDecember      31,2007 |   |   | Five      MonthsEndedMay      31, 2007 |   | Year      EndedDecember      31,2006 |   | Year      EndedDecember      31,2005 |
| Gasoline      (MMBbl)                       |                                        | 435.5  |                                        |   |   | 252.7                                  |   |   |   |   | 182.8 |   |   |   | 449.8 |   |   |   | 452.1 |   |
| Diesel      Fuel (MMBbl)                    |                                        | 164.1  |                                        |   |   | 97.5                                   |   |   |   |   | 66.6 |   |   |   | 158.2 |   |   |   | 163.1 |   |
| Jet      Fuel (MMBbl)                       |                                        | 125.1  |                                        |   |   | 73.8                                   |   |   |   |   | 51.3 |   |   |   | 119.5 |   |   |   | 118.1 |   |
| Total      Refined Products Volumes (MMBbl) |                                        | 724.7  |                                        |   |   | 424.0                                  |   |   |   |   | 300.7 |   |   |   | 727.5 |   |   |   | 733.3 |   |
| Natural      Gas Liquids (MMBbl)            |                                        | 30.4   |                                        |   |   | 16.7                                   |   |   |   |   | 13.7 |   |   |   | 34.0 |   |   |   | 33.5 |   |
| Total      Delivery Volumes (MMBbl)6        |                                        | 755.1  |                                        |   |   | 440.7                                  |   |   |   |   | 314.4 |   |   |   | 761.5 |   |   |   | 766.8 |   |

| 1 | 2007,      2006 and 2005 amounts include increases in expense of $15.9 million ($2.2      million in the five months ended May 31, 2007 and $13.7 million in the      seven months ended December 31, 2007), $13.5 million and $19.6 million,      respectively, associated with environmental liability adjustments. 2007      amount also includes a $136.7 million increase in expense associated with      rate case and other legal liability adjustments, a $15.0 million expense      for a litigation settlement reached with Contra Costa County, California,      and a $3.2 million increase in expense from the settlement of certain      litigation matters related to our West Coast refined product terminal      operations (all in the seven months ended December 31, 2007). 2005 amount      also includes a $105.0 million increase in expense associated with a rate      case liability adjustment. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | 2007      amount includes a $1.8 million decrease in segment earnings resulting from      valuation adjustments, related to assets sold in June, recorded in the      application of the purchase method of accounting to the Going Private      transaction. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | 2007      amount includes a $0.1 million increase in expense associated with legal      liability adjustments on Plantation Pipe Line Company. 2006 amount      includes a $4.9 million increase in expense associated with environmental      liability adjustments on Plantation Pipe Line  Company. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | 2007      amount includes a $1.8 million increase in income resulting from      unrealized foreign currency gains on long-term debt transactions (in the      seven months ended December 31, 2007). 2006 amount includes a $5.7 million      increase in income resulting from transmix contract      settlements. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

| 5 | 2006      amount includes a $1.9 million decrease in expense associated with the tax      effect on our share of environmental expenses incurred by Plantation Pipe      Line Company and described in footnote3. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6 | Includes      Pacific, Plantation, CALNEV, Central Florida, Cochin, and Cypress pipeline      volumes. |
|---|--------------------------------------------------------------------------------------------------------|

| Year Ended December      31, 2007 versus Year Ended December 31, 2006 |
|-----------------------------------------------------------------------|
|                                                                  | EBDAincrease/(decrease) |   | Revenuesincrease/(decrease) |
|                                                                  | (In      millions, except percentages) |
| Cochin      Pipeline System                                           | $ | 30.0 |   |   | 212 | % |   | $ | 39.2 |   |   | 110 | % |
| West      Coast Terminals                                             |   | 12.3 |   |   | 34 | % |   |   | 7.5 |   |   | 12 | % |
| Plantation      Pipeline                                              |   | 8.6 |   |   | 27 | % |   |   | 1.0 |   |   | 2 | % |
| Transmix      operations                                              |   | 8.0 |   |   | 36 | % |   |   | 10.6 |   |   | 32 | % |
| Pacific      operations                                               |   | 5.8 |   |   | 2 | % |   |   | 18.4 |   |   | 5 | % |
| CALNEV      Pipeline                                                  |   | 5.1 |   |   | 11 | % |   |   | 3.4 |   |   | 5 | % |
| Southeast      Terminals                                              |   | 5.0 |   |   | 13 | % |   |   | (12.9 | ) |   | (16 | )% |
| All      other (including eliminations)                               |   | 4.3 |   |   | 11 | % |   |   | 3.5 |   |   | 7 | % |
| Total      Products Pipelines                                         | $ | 79.1 |   |   | 17 | % |   | $ | 70.7 |   |   | 10 | % |

| Year Ended December      31, 2006 versus Year Ended December 31, 2005 |
|-----------------------------------------------------------------------|
|                                                                  | EBDAincrease/(decrease) |   | Revenuesincrease/(decrease) |
|                                                                  | (In      millions, except percentages) |
| Cochin      Pipeline System                                           | $ | (5.2 | ) |   | (27 | )% |   | $ | (0.5 | ) |   | (1 | )% |
| Southeast      Terminals                                              |   | 4.9 |   |   | 15 | % |   |   | 24.5 |   |   | 43 | % |
| Plantation      Pipeline                                              |   | (4.2 | ) |   | (12 | )% |   |   | 1.5 |   |   | 4 | % |
| Pacific      operations                                               |   | (5.4 | ) |   | (2 | )% |   |   | 16.2 |   |   | 5 | % |
| West      Coast Terminals                                             |   | (2.6 | ) |   | (7 | )% |   |   | 6.5 |   |   | 11 | % |
| Transmix      operations                                              |   | 2.6 |   |   | 13 | % |   |   | 3.9 |   |   | 13 | % |
| All      other (including eliminations)                               |   | 2.0 |   |   | 3 | % |   |   | 9.9 |   |   | 9 | % |
| Total      Products Pipelines                                         | $ | (7.9 | ) |   | (2 | )% |   | $ | 62.0 |   |   | 9 | % |

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

|   | · | a      $4.9 million (15%) increase from the Southeast refined products terminal      operations, driven by higher liquids throughput volumes at higher rates,      relative to 2005, and higher margins from ethanol blending and sales      activities; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a      $4.1 million (1%) increase from the combined Pacific and CALNEV Pipeline      operations, primarily due to a $22.6 million (6%) increase in operating      revenues, which more than offset an $18.3 million (18%) increase in      combined operating expenses. The increase in operating revenues consisted      of a $14.7 million (5%) increase from refined products deliveries and a      $7.9 million (8%) increase from terminal and other fee revenue. The      increase in operating expenses was primarily due to higher fuel and power      expenses; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

|   | · | a      $3.7 million (12%) increase from the Central Florida Pipeline, mainly due      to higher product delivery revenues in 2006 driven by higher average      tariff and terminal rates. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Natural Gas Pipelines –KMP

|                                                 | CombinedResults                                     |     | SuccessorCompany                            |                                            |   |  Predecessor      Company         |
|------------------------------------------------------|-----------------------------------------------------|----------|---------------------------------------------|-------------------------------------------------|--------|----------------------------------------|
|                                                 | For      the YearEndedDecember      31,2007         |     | Seven      MonthsEndedDecember      31,2007 |                                            |   | Five      MonthsEndedMay      31, 2007 |   | Year      EndedDecember      31,2006 |   | Year      EndedDecember      31,2005 |
|                                                 | (In      millions, exceptoperating      statistics) |     |                                        | (In      millions, except operating statistics) |
| Operating      Revenues                              | $                                                   | 6,466.5  |                                        |                                            | $      | 3,825.9                                |   |   |   | $ | 2,640.6 |   |   | $ | 6,577.7 |   |   | $ | 7,718.4 |   |
| Operating      Expenses1                             |                                                | (5,879.9 | )                                           |                                            |   | (3,461.4                               | ) |   |   |   | (2,418.5 | ) |   |   | (6,057.8 | ) |   |   | (7,255.0 | ) |
| Earnings      from Equity Investments2               |                                                | 19.2     |                                        |                                            |   | 10.3                                   |   |   |   |   | 8.9 |   |   |   | 40.5 |   |   |   | 36.8 |   |
| Other      Income (Expense)3                         |                                                | 1.8      |                                        |                                            |   | 1.9                                    |   |   |   |   | (0.1 | ) |   |   | 15.1 |   |   |   | - |   |
| Interest      Income and Other Income (Expense), Net |                                                | 0.2      |                                        |                                            |   | -                                      |   |   |   |   | 0.2 |   |   |   | 0.7 |   |   |   | 2.7 |   |
| Income      taxes                                    |                                                | (6.0     | )                                           |                                            |   | (3.4                                   | ) |   |   |   | (2.6 | ) |   |   | (1.4 | ) |   |   | (2.6 | ) |
| Segment      Earnings Before DD&A                | $                                                   | 601.8    |                                        |                                            | $      | 373.3                                  |   |   |   | $ | 228.5 |   |   | $ | 574.8 |   |   | $ | 500.3 |   |
|                                            |                                                |     |                                        |                                            |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      Statistics:                           |                                                |     |                                        |                                            |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Natural      Gas Transport Volumes (Trillion Btus)4  |                                                | 1,577.3  |                                        |                                            |   | 931.7                                  |   |   |   |   | 645.6 |   |   |   | 1,440.9 |   |   |   | 1,317.9 |   |
| Natural      Gas Sales Volumes (Trillion Btus)5      |                                                | 865.5    |                                        |                                            |   | 519.7                                  |   |   |   |   | 345.8 |   |   |   | 909.3 |   |   |   | 924.6 |   |

| 1 | Seven      months ended December 31, 2007 amount includes a gain of $7.4 million      resulting from valuation adjustments related to derivative contracts in      place and a settlement of tax reserves, partially offset by a $4.4 million      charge related to the revaluation of cushion gas at the time of the Going      Private transaction and recorded in the application of the purchase method      of accounting. Seven months ended December 31, 2007 and year ended      December 31, 2006 and 2005 amounts include a $0.4 million decrease in      expense, a $1.5 million increase in expense and a $0.1 million decrease in      expense, respectively, associated with environmental liability      adjustments. 2006 amount also includes a $6.3 million reduction in expense      due to the revaluation of a reserve related to a natural gas      purchase/sales contract. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Five      months ended May 31, 2007 amount includes an expense of $1.0 million      reflecting Kinder Morgan Energy Partners’ portion of a loss from the early      extinguishment of debt by Red Cedar Gathering  Company. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Seven      months ended December 31, 2007 amount includes a $1.4 million charge      resulting from valuation adjustments, related to assets sold in June,      recorded in the application of the purchase method of accounting to the      Going Private transaction. 2006 amount includes a $15.1 million gain from      the combined sale of Kinder Morgan Energy Partners’ Douglas natural gas      gathering system and Painter Unit fractionation  facility. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Includes      Rocky Mountain pipeline group and Texas intrastate natural gas pipeline      group pipeline volumes. |
|---|--------------------------------------------------------------------------------------------------------------------|

| 5 | Represents      Texas intrastate natural gas pipelinegroup. |
|---|-------------------------------------------------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

| Year Ended December      31, 2007 versus Year Ended December 31, 2006 |
|-----------------------------------------------------------------------|
|                                                                  | EBDAincrease/(decrease) |   | Revenuesincrease/(decrease) |
|                                                                  | (In      millions, except percentages) |
| Texas      Intrastate Natural Gas Pipeline Group                      | $ | 57.0 |   |   | 19 | % |   | $ | (142.2 | ) |   | (2 | )% |
| Casper      and Douglas gas processing                                |   | 8.6 |   |   | 67 | % |   |   | 5.6 |   |   | 6 | % |
| Rocky      Mountain Pipeline Group                                    |   | (11.6 | ) |   | (6 | )% |   |   | 29.0 |   |   | 10 | % |
| Red      Cedar Gathering Company                                      |   | (7.4 | ) |   | (20 | )% |   |   | - |   |   | - |   |
| All      others                                                       |   | (0.7 | ) |   | (15 | )% |   |   | (3.8 | ) |   | (94 | )% |
| Intrasegment      Eliminations                                        |   | - |   |   | - |   |   |   | 0.2 |   |   | 11 | % |
| Total      Natural Gas Pipelines                                      | $ | 45.9 |   |   | 8 | % |   | $ | (111.2 | ) |   | (2 | )% |

| Year Ended December      31, 2006 versus Year Ended December 31, 2005 |
|-----------------------------------------------------------------------|
|                                                                  | EBDAincrease/(decrease) |   | Revenuesincrease/(decrease) |
|                                                                  | (In      millions, except percentages) |
| Texas      Intrastate Natural Gas Pipeline Group                      | $ | 34.6 |   |   | 13 | % |   | $ | (1,165.7 | ) |   | (16 | )% |
| Rocky      Mountain Pipeline Group                                    |   | 14.3 |   |   | 8 | % |   |   | 27.9 |   |   | 11 | % |
| Red      Cedar Gathering Company                                      |   | 4.3 |   |   | 13 | % |   |   | - |   |   | - |   |
| Casper      and Douglas gas processing                                |   | 2.9 |   |   | 30 | % |   |   | (6.4 | ) |   | (6 | )% |
| All      others                                                       |   | (1.4 | ) |   | (21 | )% |   |   | 2.5 |   |   | 167 | % |
| Intrasegment      Eliminations                                        |   | - |   |   | - |   |   |   | 1.0 |   |   | 39 | % |
| Total      Natural Gas Pipelines                                      | $ | 54.7 |   |   | 11 | % |   | $ | (1,140.7 | ) |   | (15 | )% |

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

CO2 –KMP

|                                                                     | CombinedResults                                 |   | SuccessorCompany                            |                                            |   |  Predecessor      Company         |
|--------------------------------------------------------------------------|-------------------------------------------------|--------|---------------------------------------------|-------------------------------------------------|--------|----------------------------------------|
|                                                                     | For      the YearEndedDecember      31,2007     |   | Seven      MonthsEndedDecember      31,2007 |                                            |   | Five      MonthsEndedMay      31, 2007 |   | Year      EndedDecember      31,2006 |   | Year      EndedDecember      31,2005 |
|                                                                     | (In      millions, except operating statistics) |   |                                        | (In      millions, except operating statistics) |
| Operating      Revenues1                                                 | $                                               | 930.1  |                                        |                                            | $      | 605.9                                  |   |   |   | $ | 324.2 |   |   | $ | 736.5 |   |   | $ | 657.6 |   |
| Operating      Expenses2                                                 |                                            | (304.2 | )                                           |                                            |   | (182.7                                 | ) |   |   |   | (121.5 | ) |   |   | (268.1 | ) |   |   | (212.6 | ) |
| Earnings      from Equity Investments                                    |                                            | 19.2   |                                        |                                            |   | 10.5                                   |   |   |   |   | 8.7 |   |   |   | 19.2 |   |   |   | 26.3 |   |
| Other      Income (Expense), Net                                         |                                            | -      |                                        |                                            |   | 0.1                                    |   |   |   |   | (0.1 | ) |   |   | 0.8 |   |   |   | - |   |
| Income      Taxes                                                        |                                            | (2.1   | )                                           |                                            |   | (0.8                                   | ) |   |   |   | (1.3 | ) |   |   | (0.2 | ) |   |   | (0.4 | ) |
| Segment      Earnings Before DD&A                                    | $                                               | 643.0  |                                        |                                            | $      | 433.0                                  |   |   |   | $ | 210.0 |   |   | $ | 488.2 |   |   | $ | 470.9 |   |
|                                                                |                                            |   |                                        |                                            |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      Statistics:                                               |                                            |   |                                        |                                            |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Carbon      Dioxide Delivery Volumes (Bcf)3                              |                                            | 637.3  |                                        |                                            |   | 365.0                                  |   |   |   |   | 272.3 |   |   |   | 669.2 |   |   |   | 649.3 |   |
| SACROC      Oil Production (Gross)(MBbl/d)4                              |                                            | 27.6   |                                        |                                            |   | 26.5                                   |   |   |   |   | 29.1 |   |   |   | 30.8 |   |   |   | 32.1 |   |
| SACROC      Oil Production (Net)(MBbl/d)5                                |                                            | 23.0   |                                        |                                            |   | 22.1                                   |   |   |   |   | 24.2 |   |   |   | 25.7 |   |   |   | 26.7 |   |
| Yates      Oil Production (Gross)(MBbl/d)4                               |                                            | 27.0   |                                        |                                            |   | 27.4                                   |   |   |   |   | 26.4 |   |   |   | 26.1 |   |   |   | 24.2 |   |
| Yates      Oil Production (Net)(MBbl/d)5                                 |                                            | 12.0   |                                        |                                            |   | 12.2                                   |   |   |   |   | 11.7 |   |   |   | 11.6 |   |   |   | 10.8 |   |
| Natural      Gas Liquids Sales Volumes (Net)(MBbl/d)5                    |                                            | 9.6    |                                        |                                            |   | 9.5                                    |   |   |   |   | 9.7 |   |   |   | 8.9 |   |   |   | 9.4 |   |
| Realized      Weighted Average Oil Price per Bbl6,7                      | $                                               | 36.05  |                                        |                                            | $      | 36.80                                  |   |   |   | $ | 35.03 |   |   | $ | 31.42 |   |   | $ | 27.36 |   |
| Realized      Weighted Average Natural Gas Liquids Price per Bbl7,8 | $                                               | 52.91  |                                        |                                            | $      | 58.55                                  |   |   |   | $ | 45.04 |   |   | $ | 43.90 |   |   | $ | 38.98 |   |

| 1 | 2007      results include an increase of $106.0 million in segment earnings,      resulting from valuation adjustments related to assets sold in June 2007      and derivative contracts in place at the time of the Going Private      transaction and recorded in the application of the purchase method of      accounting. 2006 amount also includes a $1.8 million loss (from a decrease      in revenues) on derivative contracts used to hedge forecasted crude oil      sales. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | 2007      and 2005 amounts include increases in expense associated with      environmental liability adjustments of $0.2 million (in the seven months      ended December 31, 2007) and $0.3 million,  respectively. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Includes      Cortez, Central Basin, Canyon Reef Carriers, Centerline and Pecos pipeline      volumes. |
|---|--------------------------------------------------------------------------------------------------------|

| 4 | Represents      100% of the production from the field. Kinder Morgan Energy Partners owns      an approximate 97% working interest in the SACROC unit and an approximate      50% working interest in the Yatesunit. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5 | Net      to Kinder Morgan, after royalties and outside working      interests. |
|---|--------------------------------------------------------------------------------|

| 6 | Includes      all Kinder Morgan crude oil production  properties. |
|---|-------------------------------------------------------------------|

| 7 | Hedge      gains/losses for crude oil and natural gas liquids are included with crude      oil. |
|---|-------------------------------------------------------------------------------------------------|

| 8 | Includes      production attributable to leasehold ownership and production attributable      to our ownership in processing plants and third-party processing      agreements. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

| Year Ended December      31, 2007 versus Year Ended December 31, 2006                                                                                                                                                                                                                                                |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                 | EBDAincrease/(decrease) |   | Revenuesincrease/(decrease) |
|                                                                                                                                                                                                                                                                                                                 | (In      millions, except percentages) |
| Sales      and Transportation Activities                                                                                                                                                                                                                                                                             | $ | (9.3 | ) |   | (5 | )% |   | $ | (8.8 | ) |   | (4 | )% |
| Oil      and Gas Producing Activities                                                                                                                                                                                                                                                                                |   | 56.5 |   |   | 19 | % |   |   | 81.6 |   |   | 14 | % |
| Intrasegment      Eliminations                                                                                                                                                                                                                                                                                       |   | - |   |   | - |   |   |   | 13.0 |   |   | 21 | % |
| Total      CO2                                                  | $ | 47.2 |   |   | 10 | % |   | $ | 85.8 |   |   | 12 | % |

| Year Ended December      31, 2006 versus Year Ended December 31, 2005                                                                                                                                                                                                                                                |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                 | EBDAincrease/(decrease) |   | Revenuesincrease/(decrease) |
|                                                                                                                                                                                                                                                                                                                 | (In      millions, except percentages) |
| Sales      and Transportation Activities                                                                                                                                                                                                                                                                             | $ | 24.4 |   |   | 15 | % |   | $ | 35.7 |   |   | 22 | % |
| Oil      and Gas Producing Activities                                                                                                                                                                                                                                                                                |   | (5.6 | ) |   | (2 | )% |   |   | 57.1 |   |   | 10 | % |
| Intrasegment      Eliminations                                                                                                                                                                                                                                                                                       |   | - |   |   | - |   |   |   | (12.1 | ) |   | (25 | )% |
| Total      CO2                                                  | $ | 18.8 |   |   | 4 | % |   | $ | 80.7 |   |   | 12 | % |

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

Terminals –KMP

|                                                 | CombinedResults                                     |   | SuccessorCompany                            |                                            |   |  Predecessor      Company         |
|------------------------------------------------------|-----------------------------------------------------|--------|---------------------------------------------|-------------------------------------------------|--------|----------------------------------------|
|                                                 | For      the YearEndedDecember      31,2007         |   | Seven      MonthsEndedDecember      31,2007 |                                            |   | Five      MonthsEndedMay      31, 2007 |   | Year      EndedDecember      31,2006 |   | Year      EndedDecember      31,2005 |
|                                                 | (In      millions, exceptoperating      statistics) |   |                                        | (In      millions, except operating statistics) |
| Operating      Revenues                              | $                                                   | 963.7  |                                        |                                            | $      | 599.2                                  |   |   |   | $ | 364.5 |   |   | $ | 864.8 |   |   | $ | 699.3 |   |
| Operating      Expenses1                             |                                                | (536.4 | )                                           |                                            |   | (344.2                                 | ) |   |   |   | (192.2 | ) |   |   | (461.9 | ) |   |   | (373.4 | ) |
| Other      Income2                                   |                                                | 6.3    |                                        |                                            |   | 3.3                                    |   |   |   |   | 3.0 |   |   |   | 15.2 |   |   |   | - |   |
| Earnings      from Equity Investments                |                                                | 0.6    |                                        |                                            |   | 0.6                                    |   |   |   |   | - |   |   |   | 0.2 |   |   |   | 0.1 |   |
| Interest      Income and Other Income (Expense), Net |                                                | 1.0    |                                        |                                            |   | 0.7                                    |   |   |   |   | 0.3 |   |   |   | 2.1 |   |   |   | (0.2 | ) |
| Income      Taxes3                                   |                                                | (19.2  | )                                           |                                            |   | (15.9                                  | ) |   |   |   | (3.3 | ) |   |   | (12.3 | ) |   |   | (11.2 | ) |
| Segment      Earnings Before DD&A                | $                                                   | 416.0  |                                        |                                            | $      | 243.7                                  |   |   |   | $ | 172.3 |   |   | $ | 408.1 |   |   | $ | 314.6 |   |
|                                            |                                                |   |                                        |                                            |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      Statistics:                           |                                                |   |                                        |                                            |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bulk      Transload Tonnage (MMtons)4                |                                                | 87.1   |                                        |                                            |   | 53.4                                   |   |   |   |   | 33.7 |   |   |   | 95.1 |   |   |   | 85.5 |   |
| Liquids      Leaseable Capacity (MMBbl)              |                                                | 47.5   |                                        |                                            |   | 47.5                                   |   |   |   |   | 43.6 |   |   |   | 43.5 |   |   |   | 42.4 |   |
| Liquids      Utilization %                           |                                                | 95.9   | %                                           |                                            |   | 95.9                                   | % |   |   |   | 97.5 | % |   |   | 96.3 | % |   |   | 95.4 | % |

| 1 | 2007      and 2005 amounts include increases in expense associated with      environmental liability adjustments of $2.0 million (in the seven      months ended December 31, 2007) and $3.5 million, respectively. 2007      amount also includes a $25.0 million increase in expense from the      settlement of certain litigation matters related to the Coral coal      terminal, and a $1.2 million increase in expense associated with legal      liability adjustments (both in the seven months ended December 31, 2007).      2006 amount includes a $2.8 million increase in expense related to      hurricane clean-up and repairactivities. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | 2007      and 2006 amounts include increases in income of $1.8 million (in the five      months ended May 31, 2007) and $15.2 million, respectively, from property      casualty gains associated with the 2005 hurricane  season. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | 2006      amount includes a $1.1 million increase in expense associated with      hurricane expenses and casualtygain. |
|---|------------------------------------------------------------------------------------------------------------------------|

| 4 | Volumes      for acquired terminals are included for 2007 and  2006. |
|---|----------------------------------------------------------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

|   | · | all      of the membership interests of Transload Services, LLC, which provides      material handling and steel processing services at 14 steel-related      terminal facilities located in the Chicago metropolitan area and various      cities in the United States, acquired November 20,  2006; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | all      of the membership interests of Devco USA L.L.C., which includes a      proprietary technology that transforms molten sulfur into solid pellets      that are environmentally friendly and easier to transport, acquired      December 1, 2006; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      Vancouver Wharves bulk marine terminal, which includes five deep-sea      vessel berths and terminal assets located on the north shore of the Port      of Vancouver’s main harbor. The assets include significant rail      infrastructure, dry bulk and liquid storage, and material handling      systems, and were acquired May 30, 2007;and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      terminal assets and operations acquired from Marine Terminals, Inc., which      are primarily involved in the handling and storage of steel and alloys and      consist of two separate facilities located in Blytheville, Arkansas, and      individual terminal facilities located in Decatur, Alabama, Hertford,      North Carolina, and Berkley, South Carolina. The assets were acquired      effective September 1, 2007. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      Texas Petcoke terminals, located in and around the Ports of Houston and      Beaumont, Texas, acquired effective April 29,  2005; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | three      terminals acquired separately in July 2005: the Kinder Morgan Staten      Island terminal, a dry-bulk terminal located in Hawesville, Kentucky and a      liquids/dry-bulk facility located in Blytheville, Arkansas;      and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | all      of the ownership interests in General Stevedores, L.P., which operates a      break-bulk terminal facility located along the Houston Ship Channel,      acquired effective July 31, 2005. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

TransMountain – KMP

|                                                 | CombinedResults                                     |   | SuccessorCompany                            |                                            |   | Predecessor      Company               |
|------------------------------------------------------|-----------------------------------------------------|--------|---------------------------------------------|-------------------------------------------------|--------|----------------------------------------|
|                                                 | For      the YearEndedDecember      31,2007         |   | Seven      MonthsEndedDecember      31,2007 |                                            |   | Five      MonthsEndedMay      31, 2007 |   | Year      EndedDecember      31,2006 |
|                                                 | (In      millions, exceptoperating      statistics) |   |                                        | (In      millions, except operating statistics) |
| Operating      Revenues                              | $                                                   | 160.8  |                                        |                                            | $      | 98.9                                   |   |   |   | $ | 61.9 |   |   | $ | 137.8 |   |
| Operating      Expenses                              |                                                | (65.9  | )                                           |                                            |   | (42.9                                  | ) |   |   |   | (23.0 | ) |   |   | (53.3 | ) |
| Other      Income (Expense)1                         |                                                | (377.1 | )                                           |                                            |   | -                                      |   |   |   |   | (377.1 | ) |   |   | 0.9 |   |
| Interest      Income and Other Income (Expense), Net |                                                | 8.0    |                                        |                                            |   | 6.3                                    |   |   |   |   | 1.7 |   |   |   | 1.0 |   |
| Income      Tax Benefit (Expense)                    |                                                | (19.4  | )                                           |                                            |   | (18.5                                  | ) |   |   |   | (0.9 | ) |   |   | (9.9 | ) |
| Segment      Earnings Before DD&A2               | $                                                   | (293.6 | )                                           |                                            | $      | 43.8                                   |   |   |   | $ | (337.4 | ) |   | $ | 76.5 |   |
|                                            |                                                |   |                                        |                                            |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Operating      Statistics:                           |                                                |   |                                        |                                            |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Transport      Volumes (MMBbl)                       |                                                | 94.4   |                                        |                                            |   | 58.0                                   |   |   |   |   | 36.4 |   |   |   | 83.7 |   |

| 1 | Amount      for the year ended December 31, 2007 and the five months ended May 31,      2007 represents a goodwill impairmentexpense. |
|---|---------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Amounts      for the year and the seven months ended December 31, 2007 include a $1.3      million decrease in income from an oil loss  allowance. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------|

Earnings from Our Investment in Kinder Morgan EnergyPartners

|                                                                                                       | Year      Ended December 31, |
|------------------------------------------------------------------------------------------------------------|------------------------------|
|                                                                                                       | 2005                         |
|                                                                                                       | (In      millions)           |
| General      Partner Interest, Including Minority Interest in the Operating      Limited Partnerships | $                            | 484.6 |   |
| Limited      Partner Units (Kinder Morgan Energy Partners)                                                 |                         | 32.3 |   |
| Limited      Partner i-units (Kinder Morgan Management)                                                    |                         | 88.5 |   |
|                                                                                                       |                         | 605.4 |   |
| Pre-tax      Minority Interest in Kinder Morgan Management                                                 |                         | (70.6 | ) |
| Pre-tax      Earnings from Investment in Kinder Morgan Energy Partners1                                    | $                            | 534.8 |   |

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

| 1 | Pre-tax      earnings from our investment in Kinder Morgan Energy Partners in 2005,      when we accounted for Kinder Morgan Energy Partners under the equity      method, was negatively impacted by approximately $63.3 million due      principally to the effects of certain regulatory, environmental,      litigation and inventory items on Kinder Morgan Energy Partners’ 2005      earnings. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Interest and Corporate Expenses,Net

|                                                         | CombinedResults                             |     | SuccessorCompany                            |               |   |  Predecessor      Company         |
|--------------------------------------------------------------|---------------------------------------------|----------|---------------------------------------------|--------------------|--------|----------------------------------------|
|                                                         | For      the YearEndedDecember      31,2007 |     | Seven      MonthsEndedDecember      31,2007 |               |   | Five      MonthsEndedMay      31, 2007 |   | Year      EndedDecember      31,2006 |   | Year      EndedDecember      31,2005 |
|                                                         | (In      millions)                          |     |                                        | (In      millions) |
| General      and Administrative Expense                      | $                                           | (459.2   | )                                           |               | $      | (175.6                                 | ) |   |   | $ | (283.6 | ) |   | $ | (305.1 | ) |   | $ | (64.1 | ) |
| Interest      Expense, Net                                   |                                        | (839.7   | )                                           |               |   | (587.8                                 | ) |   |   |   | (251.9 | ) |   |   | (559.0 | ) |   |   | (147.5 | ) |
| Interest      Expense – Deferrable Interest Debentures |                                        | (21.9    | )                                           |               |   | (12.8                                  | ) |   |   |   | (9.1 | ) |   |   | (21.9 | ) |   |   | (21.9 | ) |
| Minority      Interests                                      |                                        | (128.3   | )                                           |               |   | (37.6                                  | ) |   |   |   | (90.7 | ) |   |   | (374.2 | ) |   |   | (50.5 | ) |
| Loss      on Mark-to-market Interest Rate Swaps              |                                        | -        |                                        |               |   | -                                      |   |   |   |   | - |   |   |   | (22.3 | ) |   |   | - |   |
| Gain      on Sale of Kinder Morgan Management Shares         |                                        | -        |                                        |               |   | -                                      |   |   |   |   | - |   |   |   | - |   |   |   | 78.5 |   |
| Contribution      to Kinder Morgan Foundation                |                                        | -        |                                        |               |   | -                                      |   |   |   |   | - |   |   |   | - |   |   |   | (15.0 | ) |
| Other,      Net                                              |                                        | 17.7     |                                        |               |   | 14.2                                   |   |   |   |   | 3.5 |   |   |   | 9.2 |   |   |   | 11.2 |   |
|                                                         | $                                           | (1,431.4 | )                                           |               | $      | (799.6                                 | ) |   |   | $ | (631.8 | ) |   | $ | (1,273.3 | ) |   | $ | (209.3 | ) |

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

Income Taxes – Continuing Operations

Income Taxes – Realization of Deferred TaxAssets

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

Discontinued Operations

Liquidity and Capital Resources

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

|                                                                                                                                                                                                                                                 | SuccessorCompany           |                 |   | Predecessor      Company   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------|----------------------|--------|----------------------------|
|                                                                                                                                                                                                                                                 | December      31,          |                 |   | December      31,          |
|                                                                                                                                                                                                                                                 | 2007                       |                 |   | 2006                       |   | 2005 |
|                                                                                                                                                                                                                                                 | (Dollars      in millions) |                 |   | (Dollars      in millions) |
| Long-term      Debt:                                                                                                                                                                                                                                 |                       |                 |   |                       |   |   |   |   |   |   |   |   |
| Outstanding      Notes and Debentures                                                                                                                                                                                                                | $                          | 14,714.6             |   |                       |   | $ | 10,623.9 |   |   | $ | 6,286.8 |   |
| Deferrable      Interest Debentures Issued to Subsidiary Trusts                                                                                                                                                                                      |                       | 283.1                |   |                       |   |   | 283.6 |   |   |   | 283.6 |   |
| Preferred      Interest in General Partner of KMP                                                                                                                                                                                                    |                       | 100.0                |   |                       |   |   |   |   |   |   |   |   |
| Capital      Securities                                                                                                                                                                                                                              |                       | -                    |   |                       |   |   | 106.9 |   |   |   | 107.2 |   |
| Value      of Interest Rate Swaps1                                                                                                                                                                                                                   |                       | 199.7                |   |                       |   |   | 46.4 |   |   |   | 51.8 |   |
|                                                                                                                                                                                                                                                 |                       | 15,297.4             |   |                       |   |   | 11,060.8 |   |   |   | 6,729.4 |   |
| Minority      Interests                                                                                                                                                                                                                              |                       | 3,314.0              |   |                       |   |   | 3,095.5 |   |   |   | 1,247.3 |   |
| Common      Equity, Excluding AccumulatedOther      Comprehensive Loss                                                                                                                                                                               |                       | 8,069.2              |   |                       |   |   | 3,657.5 |   |   |   | 4,051.4 |   |
|                                                                                                                                                                                                                                                 |                       | 26,680.6             |   |                       |   |   | 17,813.8 |   |   |   | 12,028.1 |   |
| Value      of Interest Rate Swaps                                                                                                                                                                                                                    |                       | (199.7               | )      |                       |   |   | (46.4 | ) |   |   | (51.8 | ) |
| Capitalization                                                                                                                                                                                                                                       |                       | 26,480.9             |   |                       |   |   | 17,767.4 |   |   |   | 11,976.3 |   |
| Short-term      Debt, Less Cash and Cash Equivalents2                                                                                                                                                                                                |                       | 819.3                |   |                       |   |   | 2,046.7 |   |   |   | 841.4 |   |
| Invested      Capital                                                                                                                                                                                                                                | $                          | 27,300.2             |   |                       |   | $ | 19,814.1 |   |   | $ | 12,817.7 |   |
|                                                                                                                                                                                                                                            |                       |                 |   |                       |   |   |   |   |   |   |   |   |
| Capitalization:                                                                                                                                                                                                                                      |                       |                 |   |                       |   |   |   |   |   |   |   |   |
| Outstanding      Notes and Debentures                                                                                                                                                                                                                |                       | 55.5%                |   |                       |   |   | 59.8% |   |   |   | 52.5% |   |
| Minority      Interests                                                                                                                                                                                                                              |                       | 12.5%                |   |                       |   |   | 17.4% |   |   |   | 10.4% |   |
| Common      Equity                                                                                                                                                                                                                                   |                       | 30.5%                |   |                       |   |   | 20.6% |   |   |   | 33.8% |   |
| Deferrable      Interest Debentures Issued to Subsidiary Trusts                                                                                                                                                                                      |                       |  1.1%           |   |                       |   |   |  1.6% |   |   |   |  2.4% |   |
| Preferred      Interest in General Partners of KMP                                                                                                                                                                                                   |                       |  0.4%           |   |                       |   |   |    -% |   |   |   |    -% |   |
| Capital      Securities                                                                                                                                                                                                                              |                       |    -% |   |                       |   |   |  0.6% |   |   |   |  0.9% |   |
|                                                                                                                                                                                                                                            |                       |                 |   |                       |   |   |   |   |   |   |   |   |
| Invested      Capital:                                                                                                                                                                                                                               |                       |                 |   |                       |   |   |   |   |   |   |   |   |
| Net      Debt3,      4                                                                                                                                                                                                                               |                       | 56.9%                |   |                       |   |   | 63.9% |   |   |   | 55.6% |   |
| Common      Equity, Excluding Accumulated Other Comprehensive Loss and Including      Deferrable Interest Debentures Issued to Subsidiary Trusts, Preferred      Interest in General Partners of KMP, Capital Securities and Minority      Interests |                       | 43.1%                |   |                       |   |   | 36.1% |   |   |   | 44.4% |   |

| 1 | See      “Interest Rate Swaps” following. |
|---|-------------------------------------------------------|

| 2 | Cash      and cash equivalents netted against short-term debt were $148.6 million,      $129.8 million and $116.6 million at December 31, 2007, 2006 and 2005,      respectively. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Outstanding      notes and debentures plus short-term debt, less cash and cash      equivalents. |
|---|--------------------------------------------------------------------------------------------------|

| 4 | Our      ratio of net debt to invested capital at December 31, 2007 and 2006, not      including the effects of consolidating Kinder Morgan Energy Partners      (effective January 1, 2006), was 45.6% and 56.2%,      respectively. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

|                                                              | At      December 31, 2007 |   | At      February 29, 2008  |
|-------------------------------------------------------------------|---------------------------|--------|----------------------------|
|                                                              | Short-termDebtOutstanding |   | AvailableBorrowingCapacity |   | Short-termDebtOutstanding |   | AvailableBorrowingCapacity |
|                                                              | (In      millions)        |
| Credit      Facilities:                                           |                      |   |                       |   |   |   |   |   |   |   |   |
| Knight Inc.1                                                      |                      |   |                       |   |   |   |   |   |   |   |   |
| $1.0      billion, six-year secured revolver, due May 2013        | $                         | 299.0  |                       | $ | 558.0 |   | $ | - |   | $ | 857.0 |
|                                                         |                      |   |                       |   |   |   |   |   |   |   |   |
| Commercial      Paper:                                            |                      |   |                       |   |   |   |   |   |   |   |   |
| Kinder Morgan Energy      Partners2                               |                      |   |                       |   |   |   |   |   |   |   |   |
| $1.85      billion, five-year unsecured revolver, due August 2010 | $                         | 589.1  |                       | $ | 723.1 |   | $ | 589.6 |   | $ | 682.4 |

| 1 | On      January 5, 2007, after shareholder approval of the Going Private      transaction was announced, Kinder Morgan, Inc.’s secured senior debt      rating was downgraded by Standard & Poor’s Rating Services to BB- due      to the anticipated increase in debt related to the proposed transaction.      On April 11, 2007 and May 30, 2007, Fitch and Moody’s Investor Services      lowered their ratings to BB and Ba2, respectively, also related to the      transaction. Following the sale of an 80% ownership interest in our NGPL      business segment on February 15, 2008 (see Note 1(M) of the accompanying      Notes to Consolidated Financial Statements), Standard & Poor’s Rating      Services upgraded Knight Inc.’s secured senior debt to BB, and Fitch      upgraded its rating to BB+. Because we have a non-investment grade credit      rating, we no longer have access to the commercial paper market. As a      result, we are currently utilizing our $1.0 billion revolving credit      facility for Knight Inc.’s short-term borrowing  needs. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As      discussed following, the loan agreements we had in place prior to the      Going Private transaction were cancelled and replaced with a new loan      agreement. Our indentures related to publicly issued notes do not contain      covenants related to maintenance of credit ratings. Accordingly, no such      covenants were impacted by the downgrade in our credit ratings occasioned      by the Going Private transaction. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | On      January 5, 2007, after shareholder approval of the Going Private      transaction was announced, Kinder Morgan Energy Partners’ unsecured senior      debt was downgraded to BBB by Standard & Poor’s Rating Services due to      the anticipated increase in our unsecured senior debt related to the      proposed transaction. Kinder Morgan Energy Partners’ debt was downgraded      by Fitch Ratings from BBB+ to BBB on April 11, 2007 and, upon completion      of the Going Private transaction, was downgraded from Baa1 to Baa2 by      Moody’s Investors Service. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

|   | · | a      $1.0 billion senior secured Tranche A term loan facility with a term of      six years and six months (subsequently retired, see  below); |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a      $3.3 billion senior secured Tranche B term loan facility, with a term of      seven years (subsequently retired, seebelow); |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a      $455 million senior secured Tranche C term loan facility with a term of      three years (subsequently retired, see below)  and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a      $1.0 billion senior secured revolving credit facility with a term of six      years. This revolving credit facility includes a sublimit of $300 million      for the issuance of letters of credit and a sublimit of $50 million for      swingline loans. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

|   | · | a      rate equal to LIBOR (London Interbank Offered Rate) plus an applicable      margin, or |
|--------|--------|-----------------------------------------------------------------------------------------------|

|   | · | a      rate equal to the higher of (a) U.S. prime rate and (b) the federal funds      effective rate plus 0.50%, in each case, plus an applicable      margin. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a      rate equal to the higher of (a) U.S. prime rate or (b) the federal funds      effective rate plus 0.50%, in each case, plus an applicable      margin. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

|                                                         |   | Off-Balance      Sheet ArrangementsAt      December 31, 2007 |   |              |
|--------------------------------------------------------------|--------|--------------------------------------------------------------|--------|-------------------|
| Entity                                                       |   | InvestmentAmount                                             |   | InvestmentPercent |   | EntityAssets1 |   | EntityDebt |   | Our      DebtResponsibility |
|                                                         |   | (Millions      of Dollars)                                   |
| Ft.      Lupton Power Plant                                  |   | $                                                            | 53.5   | 2                 |   |   | 49.5 | % |   |   | $ | 127.4 |   |   | $ | 38.3 | 3 |   |   | $ | - |   |
| Express      System                                          |   |                                                         | 402.1  |              |   |   | 33.3 | % |   |   |   | 942.6 |   |   |   | 416.7 | 3 |   |   |   | - |   |
| Horizon      Pipeline Company4                               |   |                                                         | 14.6   |              |   |   | 50 | % |   |   |   | 87.1 |   |   |   | 49.5 | 3 |   |   |   | - |   |
| Plantation      Pipeline Company                             |   |                                                         | 351.4  |              |   |   | 51 | % |   |   |   | 264.6 |   |   |   | 175.3 | 3 |   |   |   | - |   |
| Red      Cedar Gathering Company                             |   |                                                         | 135.6  |              |   |   | 49 | % |   |   |   | 261.4 |   |   |   | 100.0 | 3 |   |   |   | - |   |
| Cortez      Pipeline Company                                 |   |                                                         | 14.2   |              |   |   | 50 | % |   |   |   | 79.9 |   |   |   | 157.3 |   |   |   |   | 78.7 | 5 |
| West2East      Pipeline LLC7                                 |   |                                                         | 191.9  |              |   |   | 51 | % |   |   |   | 2,730.2 |   |   |   | 2,225.4 |   |   |   |   | 1,135.0 | 6 |
| Midcontinent      Express Pipeline LLC                       |   |                                                         | 63.0   |              |   |   | 50.0 | % |   |   |   | 136.8 |   |   |   | - |   |   |   |   | 97.7 | 8 |
| Nassau      County, Florida Ocean Highway and Port Authority |   |                                                         | N/A    |              |   |   | N/A |   |   |   | N/A |   |   |   | N/A |   |   |   |   | 22.5 |  9 |

| 1 | At      recorded value, in each case consisting principally of property, plant and      equipment. |
|---|----------------------------------------------------------------------------------------------------|

| 2 | Does      not include any portion of the goodwill recognized in conjunction with the      1998 acquisition of the ThermoCompanies. |
|---|------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Debtors      have recourse only to the assets of the entity, not to the      owners. |
|---|--------------------------------------------------------------------------------------|

| 4 | Included      in the caption “Assets Held for Sale, Non-current” in the accompanying      Consolidated Balance Sheet. |
|---|-----------------------------------------------------------------------------------------------------------------------------------|

| 5 | Kinder      Morgan Energy Partners is severally liable for its percentage ownership      share of the Cortez Pipeline Company debt. As of December 31, 2007, Shell      Oil Company shares Kinder Morgan Energy Partners’ several guaranty      obligations jointly and severally for $64.3 million of Cortez’s debt      balance; however, Kinder Morgan Energy Partners is obligated to indemnify      Shell for liabilities it incurs in connection with such guaranty.      Accordingly, as of December 31, 2007 Kinder Morgan Energy Partners has a      letter of credit in the amount of $37.5 million issued by JP Morgan Chase,      in order to secure its indemnification obligations to Shell for 50% of the      Cortez debt balance of $64.3million. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Further,      pursuant to a Throughput and Deficiency Agreement, the partners of Cortez      Pipeline Company are required to contribute capital to Cortez in the event      of a cash deficiency. The agreement contractually supports the financings      of Cortez Capital Corporation, a wholly owned subsidiary of Cortez      Pipeline Company, by obligating the partners of Cortez Pipeline to fund      cash deficiencies at Cortez Pipeline, including anticipated deficiencies      and cash deficiencies relating to the repayment of principal and interest      on the debt of Cortez Capital Corporation. The partners’ respective parent      or other companies further severally guarantee the obligations of the      Cortez Pipeline owners under thisagreement. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6 | Debt      responsibility of Kinder Morgan EnergyPartners. |
|---|-----------------------------------------------------------|

| 7 | West2East      Pipeline LLC is a limited liability company and is the sole owner of      Rockies Express Pipeline LLC. As of December 31, 2007, the remaining      limited liability member interests in West2East Pipeline LLC are owned by      ConocoPhillips (24%) and Sempra Energy (25%). Kinder Morgan Energy      Partners owned a 66 2/3% ownership interest in West2East Pipeline LLC from      October 21, 2005 until June 30, 2006, and included its results in its      consolidated financial statements until June 30, 2006. On June 30, 2006,      Kinder Morgan Energy Partners’ ownership interest was reduced to 51%,      West2East Pipeline LLC was deconsolidated, and Kinder Morgan Energy      Partners subsequently accounted for its investment under the equity method      of accounting. Upon completion of the pipeline, Kinder Morgan Energy      Partners’ ownership percentage is expected to be reduced to      50%. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8 | Midcontinent      Express Pipeline LLC is a limited liability company. As of December 31,      2007, the remaining limited liability interest in Midcontinent Express      Pipeline LLC is owned by Energy Transfer Partners, L.P. Debt      responsibility represents Kinder Morgan Energy Partners’ guarantee of its      proportionate share of letters of credit outstanding at December 31,      2007. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

| 9 | Arose      from Kinder Morgan Energy Partners’ Vopak terminal acquisition in July      2001. Nassau County, Florida Ocean Highway and Port Authority is a      political subdivision of the state of Florida. During 1990, Ocean Highway      and Port Authority issued its Adjustable Demand Revenue Bonds in the      aggregate principal amount of $38.5 million for the purpose of      constructing certain port improvements located in Fernandino Beach, Nassau      County, Florida. A letter of credit was issued as security for the      Adjustable Demand Revenue Bonds and was guaranteed by the parent company      of Nassau Terminals LLC, the operator of the port facilities. In July      2002, Kinder Morgan Energy Partners acquired Nassau Terminals LLC and      became guarantor under the letter of credit agreement. In December 2002,      Kinder Morgan Energy Partners issued a $28 million letter of credit under      its credit facilities and the former letter of credit guarantee was      terminated. As of December 31, 2007, the face amount of this letter of      credit outstanding under Kinder Morgan Energy Partners’ credit facility      was $22.5 million. Principal payments on the bonds are made on the first      of December each year and reductions are made to the letter of      credit. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Aggregate      Contractual Obligations |
|--------|----------------------------------------|

|   | Aggregate      Contractual Obligations |
|--------|----------------------------------------|

|                                               | Total              |     | Less      than1      year |   | 2-3      years |   | 4-5      years |    | After      5 years |
|----------------------------------------------------|--------------------|----------|---------------------------|--------|----------------|--------|----------------|---------|--------------------|
|                                               | (In      millions) |
| Contractual      Obligations:                      |               |     |                      |   |           |   |           |    |               |   |   |   |   |   |
| Short-term      Borrowings                         | $                  | 888.1    |                      | $      | 888.1          |   | $              | -       |               | $ | - |   | $ | - |
| Long-term      Debt, Including Current Maturities: |               |     |                      |   |           |   |           |    |               |   |   |   |   |   |
| Principal      Payments                            |               | 18,284.1 |                      |   | 79.8           |   |           | 633.0   |               |   | 4,777.4 |   |   | 12,793.9 |
| Interest      Payments1                            |               | 14,942.1 |                      |   | 1,195.9        |   |           | 2,310.2 |               |   | 2,083.7 |   |   | 9,352.3 |
| Lease      Obligations2,3                          |               | 676.2    |                      |   | 58.1           |   |           | 96.2    |               |   | 82.0 |   |   | 439.9 |
| Pension      and Postretirement Benefit Plans4     |               | 62.1     |                      |   | 4.6            |   |           | 9.7     |               |   | 10.9 |   |   | 36.9 |
| Total      Contractual Cash Obligations7           | $                  | 34,852.6 |                      | $      | 2,226.5        |   | $              | 3,049.1 |               | $ | 6,954.0 |   | $ | 22,623.0 |
|                                          |               |     |                      |   |           |   |           |    |               |   |   |   |   |   |
| Other      Commercial Commitments:                 |               |     |                      |   |           |   |           |    |               |   |   |   |   |   |
| Standby      Letters of Credit5                    | $                  | 815.6    |                      | $      | 768.5          |   | $              | 9.6     |               | $ | - |   | $ | 37.5 |
| Capital      Expenditures6                         | $                  | 259.1    |                      | $      | 259.1          |   | $              | -       |               | $ | - |   | $ | - |

| 1 | Interest      payments have not been adjusted for any amounts receivable related to our      interest rate swaps outstanding. See Item 7A Quantitative and Qualitative      Disclosures About Market Risk. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Represents      commitments for capital leases, including interest, and operating      leases. |
|---|------------------------------------------------------------------------------------------------|

| 3 | Approximately      $458.2 million, $20.6 million, $41.2 million, $41.6 million and $354.8      million in each respective column is attributable to the lease obligation      associated with the Jackson, Michigan power generation      facility. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | In      addition to the amounts shown, we are also required to contribute $0.2      million per year to these plans. We currently do not expect to make any      additional significant contributions to these plans in the next few years,      although we could elect or be required to make such contributions      depending on, among other factors, the return generated by plan assets and      changes in actuarial assumptions. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5 | Letters      of credit totaling $815.6 million outstanding at December 31, 2007      consisted of the following: (i) four letters of credit, totaling $323.0      million, supporting our hedging of commodity risk, (ii) a $100 million      letter of credit that supports certain proceedings with the California      Public Utilities commission involving refined products tariff charges on      the intrastate common carrier operations of Kinder Morgan Energy Partners’      Pacific operations’ pipelines in the State of California, (iii) a combined      $58.3 million in ten letters of credit supporting Kinder Morgan Energy      Partners’ Trans Mountain pipeline system operations, (iv) a $52.1 million      letter of credit supporting our Canadian pipeline operations (v) a $37.5      million letter of credit supporting Kinder Morgan Energy Partners’      indemnification obligations on the Series D note borrowings of Cortez      Capital Corporation, (vi) Kinder Morgan Energy Partners’ $30.3 million      guarantee under letters of credit totaling $45.5 million supporting its      International Marine Terminals Partnership Plaquemines, Louisiana Port,      Harbor, and Terminal Revenue Bonds, (vii) a $25.3 million letter of credit      supporting Kinder Morgan Energy Partners’ Kinder Morgan Liquids Terminals      LLC New Jersey Economic Development Revenue Bonds, (viii) a $24.1 million      letter of credit supporting Kinder Morgan Energy Partners’ Kinder Morgan      Operating L.P. “B” tax-exempt bonds, (ix) a $22.5 million letter of credit      supporting Nassau County, Florida Ocean Highway and Port Authority      tax-exempt bonds, (x) four letters of credit, totaling $21.4 million,      required under provisions of our property and casualty, worker’s      compensation and general liability insurance policies, (xi) a $19.9      million letter of credit supporting the construction of Kinder Morgan      Energy Partners’ Kinder Morgan Louisiana Pipeline, (xii) a $15.3 million      letter of credit to fund the Debt Service Reserve Account required under      the Express System’s trust indenture, (xiii) a $15.5 million letter of      credit supporting Kinder |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

|   | Morgan      Energy Partners’ pipeline and terminal operations in Canada, (xiv) two      letters of credit totaling $20.3 million supporting the subordination of      operating fees payable to us for operation of the Jackson, Michigan power      generation facility to payments due under the operating lease of the      facilities and (xv) 14 letters of credit, totaling $34.9 million      supporting various companyfunctions. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6 | Represents      commitments for the purchase of property, plant and equipment at December      31, 2007. |
|---|----------------------------------------------------------------------------------------------------------|

| 7 | As      of December 31, 2007, the liability for uncertain income tax positions,      excluding associated interest and penalties, was $41.5 million pursuant to      FASB Interpretation No. 48. This liability represents an estimate of tax      positions that we have taken in our tax returns which may ultimately not      be sustained upon examination by the tax authorities. Since the ultimate      amount and timing of any future cash settlements cannot be predicted with      reasonable certainty, this estimated liability has been excluded from the      Aggregate Contractual Obligations. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Contingent      Liabilities:                                  |   | Contingency                  |   | Amount      of Contingent Liabilityat      December 31, 2007                      |
|---------------------------------------------------------------|--------|------------------------------|--------|-----------------------------------------------------------------------------------|
| Guarantor      of the Bushton GasProcessing      Plant Lease1 |   | Default      by ONEOK, Inc.  |   | Total      $103.0 million; Averages $23 million per year through 2012   |
|                                                          |   |                         |   |                                                                              |
| Jackson,      Michigan Power PlantIncremental      Investment |   | Operational      Performance |   | $3      to $8 million per year for 12 years                                       |
|                                                          |   |                         |   |                                                                              |
| Jackson,      Michigan Power PlantIncremental      Investment |   | Cash      Flow Performance   |   | Up      to a total of $25 million beginning in2018                                |

| 1 | In      conjunction with our sale of the Bushton gas processing facility to ONEOK,      Inc., at December 31, 1999, ONEOK became primarily liable under the      associated operating lease and we became secondarily liable. Should ONEOK,      Inc. fail to make payments as required under the lease, we would be      required to make such payments, with recourse only to    ONEOK. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Investment in Kinder Morgan Energy Partners

Cash Flows

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

|                                                                                             |               |      | Successor      Company |               |   | Predecessor      Company |
|--------------------------------------------------------------------------------------------------|--------------------|-----------|------------------------|--------------------|--------|--------------------------|
|                                                                                             | Combined           |      | Seven      Months      |               |   |                     |   |   |   |   |
|                                                                                             | Year      Ended    |      | Ended                  |               |   | Five      Months         |   |   |   |   |
|                                                                                             | December      31,  |      | December      31,      |               |   | Ended                    |   | Year      Ended December 31, |
|                                                                                             | 2007               |      | 2007                   |               |   | May      31, 2007        |   | 2006 |   | 2005 |
|                                                                                             | (In      millions) |      |                   | (In      millions) |
| INCREASE      (DECREASE) IN CASH AND CASH EQUIVALENTS                                            |               |      |                   |               |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      Flows from Operating Activities:                                                       |               |      |                   |               |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Income                                                                                  | $                  | 312.9     |                   |               | $      | 247.0                    |   |   |   | $ | 65.9 |   |   | $ | 71.9 |   |   | $ | 554.6 |   |
| Adjustments      to Reconcile Net Income to Net Cash Flows from Operating      Activities:       |               |      |                   |               |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      (Income) from Discontinued Operations, Net of Tax                                      |               | (286.4    | )                      |               |   | 1.5                      |   |   |   |   | (287.9 | ) |   |   | 542.8 |   |   |   | (40.4 | ) |
| Loss      from Impairment of Assets                                                              |               | 377.1     |                   |               |   | -                        |   |   |   |   | 377.1 |   |   |   | 1.2 |   |   |   | 6.5 |   |
| Depreciation      and Amortization                                                               |               | 741.1     |                   |               |   | 476.2                    |   |   |   |   | 264.9 |   |   |   | 540.3 |   |   |   | 104.6 |   |
| Deferred      Income Taxes                                                                       |               | 48.9      |                   |               |   | (89.8                    | ) |   |   |   | 138.7 |   |   |   | 10.8 |   |   |   | 92.1 |   |
| Equity      in Earnings of Kinder Morgan Energy Partners                                         |               | -         |                   |               |   | -                        |   |   |   |   | - |   |   |   | - |   |   |   | (605.4 | ) |
| Distributions      from Kinder Morgan Energy Partners                                            |               | -         |                   |               |   | -                        |   |   |   |   | - |   |   |   | - |   |   |   | 530.8 |   |
| Equity      in Earnings of Other Equity Investments                                              |               | (93.4     | )                      |               |   | (54.3                    | ) |   |   |   | (39.1 | ) |   |   | (100.6 | ) |   |   | (15.3 | ) |
| Distributions      from Other Equity Investees                                                   |               | 134.7     |                   |               |   | 86.5                     |   |   |   |   | 48.2 |   |   |   | 74.8 |   |   |   | 8.1 |   |
| Minority      Interests in Income of Consolidated Subsidiaries                                   |               | 138.7     |                   |               |   | 48.0                     |   |   |   |   | 90.7 |   |   |   | 374.2 |   |   |   | 50.5 |   |
| Gains      from Property Casualty Indemnifications                                               |               | (1.8      | )                      |               |   | -                        |   |   |   |   | (1.8 | ) |   |   | (15.2 | ) |   |   | - |   |
| Net      Gains on Sales of Assets                                                                |               | (8.9      | )                      |               |   | (6.3                     | ) |   |   |   | (2.6 | ) |   |   | (22.0 | ) |   |   | (76.4 | ) |
| Mark-to-Market      Interest Rate Swap Loss                                                      |               | -         |                   |               |   | -                        |   |   |   |   | - |   |   |   | 22.3 |   |   |   | - |   |
| Foreign      Currency Loss (Gain)                                                                |               | 15.5      |                   |               |   | -                        |   |   |   |   | 15.5 |   |   |   | - |   |   |   | (5.0 | ) |
| Pension      Contribution in Excess of Expense                                                   |               | -         |                   |               |   | -                        |   |   |   |   | - |   |   |   | - |   |   |   | (23.8 | ) |
| Changes      in Gas in Underground Storage                                                       |               | (32.9     | )                      |               |   | 51.3                     |   |   |   |   | (84.2 | ) |   |   | (35.3 | ) |   |   | 6.5 |   |
| Changes      in Working Capital Items                                                            |               | (98.9     | )                      |               |   | 104.0                    |   |   |   |   | (202.9 | ) |   |   | 80.0 |   |   |   | (13.4 | ) |
| (Payment      for) Proceeds from Termination of Interest Rate Swap                               |               | 49.7      |                   |               |   | (2.2                     | ) |   |   |   | 51.9 |   |   |   | - |   |   |   | (3.5 | ) |
| Kinder      Morgan Energy Partners’ Rate Reparations, Refunds and Reserve      Adjustments |               | 140.0     |                   |               |   | 140.0                    |   |   |   |   | - |   |   |   | (19.1 | ) |   |   | - |   |
| Other,      Net                                                                                  |               | 104.6     |                   |               |   | 45.8                     |   |   |   |   | 58.8 |   |   |   | (31.4 | ) |   |   | 0.7 |   |
| Net      Cash Flows Provided by Continuing Operations                                            |               | 1,540.9   |                   |               |   | 1,047.7                  |   |   |   |   | 493.2 |   |   |   | 1,494.7 |   |   |   | 571.2 |   |
| Net      Cash Flows (Used in) Provided by Discontinued Operations                                |               | 106.6     |                   |               |   | (3.2                     | ) |   |   |   | 109.8 |   |   |   | 212.6 |   |   |   | 45.0 |   |
| Net      Cash Flows Provided by Operating Activities                                             |               | 1,647.5   |                   |               |   | 1,044.5                  |   |   |   |   | 603.0 |   |   |   | 1,707.3 |   |   |   | 616.2 |   |
|                                                                                        |               |      |                   |               |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      Flows from Investing Activities:                                                       |               |      |                   |               |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Purchase      of Predecessor Stock                                                               |               | (11,534.3 | )                      |               |   | (11,534.3                | ) |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Capital      Expenditures                                                                        |               | (1,939.8  | )                      |               |   | (1,287.0                 | ) |   |   |   | (652.8 | ) |   |   | (1,375.6 | ) |   |   | (134.1 | ) |
| Terasen      Acquisition, Net of $73.7 Cash Acquired                                             |               | -         |                   |               |   | -                        |   |   |   |   | - |   |   |   | (10.6 | ) |   |   | (2,065.5 | ) |
| Other      Acquisitions                                                                          |               | (164.1    | )                      |               |   | (122.0                   | ) |   |   |   | (42.1 | ) |   |   | (396.5 | ) |   |   | - |   |
| Investment      in Kinder Morgan Energy Partners                                                 |               | -         |                   |               |   | -                        |   |   |   |   | - |   |   |   | - |   |   |   | (4.5 | ) |
| Investment      in NGPL PipeCo LLC Restricted Cash                                               |               | (3,030.0  | )                      |               |   | (3,030.0                 | ) |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Net      (Investments in) Proceeds from Margin Deposits                                          |               | (94.1     | )                      |               |   | (39.3                    | ) |   |   |   | (54.8 | ) |   |   | 38.6 |   |   |   | 27.5 |   |
| Other      Investments                                                                           |               | (276.1    | )                      |               |   | (246.4                   | ) |   |   |   | (29.7 | ) |   |   | (6.1 | ) |   |   | (0.4 | ) |
| Proceeds      from Sales of Kinder Morgan Management, LLC Shares                                 |               | -         |                   |               |   | -                        |   |   |   |   | - |   |   |   | - |   |   |   | 254.8 |   |
| Change      in Natural Gas Storage and NGL Line Fill Inventory                                   |               | 18.4      |                   |               |   | 10.0                     |   |   |   |   | 8.4 |   |   |   | (12.9 | ) |   |   | - |   |
| Property      Casualty Indemnifications                                                          |               | 8.0       |                   |               |   | -                        |   |   |   |   | 8.0 |   |   |   | 13.1 |   |   |   | - |   |
| Net      Proceeds (Costs of Removal) from Sales of Assets                                        |               | 299.8     |                   |               |   | 301.3                    |   |   |   |   | (1.5 | ) |   |   | 92.2 |   |   |   | (4.1 | ) |
| Net      Cash Flows Used in Continuing Investing Activities                                      |               | (16,712.2 | )                      |               |   | (15,947.7                | ) |   |   |   | (764.5 | ) |   |   | (1,657.8 | ) |   |   | (1,926.3 | ) |
| Net      Cash Flows Provided by (Used in) Discontinued Investing      Activities                 |               | 1,684.8   |                   |               |   | 196.6                    |   |   |   |   | 1,488.2 |   |   |   | (138.1 | ) |   |   | (52.4 | ) |
| Net      Cash Flows (Used in) Provided by Investing Activities                                   | $                  | (15,027.4 | )                      |               | $      | (15,751.1                | ) |   |   | $ | 723.7 |   |   | $ | (1,795.9 | ) |   | $ | (1,978.7 | ) |

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

|                                                                              |               |     | Successor      Company |               |   | Predecessor      Company |
|-----------------------------------------------------------------------------------|--------------------|----------|------------------------|--------------------|--------|--------------------------|
|                                                                              | Combined           |     | Seven      Months      |               |   |                     |   |   |   |   |
|                                                                              | Year      Ended    |     | Ended                  |               |   | Five      Months         |   |   |   |   |
|                                                                              | December      31,  |     | December      31,      |               |   | Ended                    |   | Year      Ended December 31, |
|                                                                              | 2007               |     | 2007                   |               |   | May      31, 2007        |   | 2006 |   | 2005 |
|                                                                              | (In      millions) |     |                   | (In      millions) |
| Cash      Flows from Financing Activities:                                        |               |     |                   |               |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Short-term      Debt, Net                                                         | $                  | (300.1   | )                      |               | $      | (52.6                    | ) |   |   | $ | (247.5 | ) |   | $ | 1,009.5 |   |   | $ | 25.0 |   |
| Bridge      Facility Issued                                                       |               | -        |                   |               |   | -                        |   |   |   |   | - |   |   |   | - |   |   |   | 2,134.7 |   |
| Bridge      Facility Retired                                                      |               | -        |                   |               |   | -                        |   |   |   |   | - |   |   |   | - |   |   |   | (2,129.7 | ) |
| Long-term      Debt Issued                                                        |               | 9,805.0  |                   |               |   | 8,805.0                  |   |   |   |   | 1,000.0 |   |   |   | - |   |   |   | 2,400.0 |   |
| Long-term      Debt Retired                                                       |               | (1,131.6 | )                      |               |   | (829.2                   | ) |   |   |   | (302.4 | ) |   |   | (140.7 | ) |   |   | (505.0 | ) |
| Issuance      of Kinder Morgan, G.P., Inc. Preferred Stock                        |               | 100.0    |                   |               |   | 100.0                    |   |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Cash      Book Overdraft                                                          |               | (28.9    | )                      |               |   | (14.0                    | ) |   |   |   | (14.9 | ) |   |   | 17.9 |   |   |   | - |   |
| Issuance      of Shares by Kinder Morgan Management, LLC                          |               | 297.9    |                   |               |   | -                        |   |   |   |   | 297.9 |   |   |   | - |   |   |   | - |   |
| Other      Common Stock Issued                                                    |               | 9.9      |                   |               |   | -                        |   |   |   |   | 9.9 |   |   |   | 38.7 |   |   |   | 62.8 |   |
| Excess      Tax Benefits from Share-based Payments                                |               | 56.7     |                   |               |   | -                        |   |   |   |   | 56.7 |   |   |   | 18.6 |   |   |   | - |   |
| Cash      Paid to Share-based Award Holders Due to Going Private      Transaction |               | (181.1   | )                      |               |   | (181.1                   | ) |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Contributions      from Successor Investors                                       |               | 5,112.0  |                   |               |   | 5,112.0                  |   |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Short-term      Advances from (to) Unconsolidated Affiliates                      |               | 13.2     |                   |               |   | 10.9                     |   |   |   |   | 2.3 |   |   |   | (4.9 | ) |   |   | (11.7 | ) |
| Treasury      Stock Acquired                                                      |               | -        |                   |               |   | -                        |   |   |   |   | - |   |   |   | (34.3 | ) |   |   | (317.1 | ) |
| Cash      Dividends, Common Stock                                                 |               | (234.9   | )                      |               |   | -                        |   |   |   |   | (234.9 | ) |   |   | (468.5 | ) |   |   | (355.2 | ) |
| Minority      Interests, Distributions                                            |               | (508.5   | )                      |               |   | (259.6                   | ) |   |   |   | (248.9 | ) |   |   | (575.0 | ) |   |   | (2.4 | ) |
| Minority      Interests, Contributions                                            |               | 342.9    |                   |               |   | 342.9                    |   |   |   |   | - |   |   |   | 353.8 |   |   |   | - |   |
| Debt      Issuance Costs                                                          |               | (94.6    | )                      |               |   | (81.5                    | ) |   |   |   | (13.1 | ) |   |   | (4.8 | ) |   |   | (14.3 | ) |
| Other,      Net                                                                   |               | (0.3     | )                      |               |   | 4.0                      |   |   |   |   | (4.3 | ) |   |   | (3.5 | ) |   |   | - |   |
| Net      Cash Flows Provided by Continuing Financing Activities                   |               | 13,257.6 |                   |               |   | 12,956.8                 |   |   |   |   | 300.8 |   |   |   | 206.8 |   |   |   | 1,287.1 |   |
| Net      Cash Flows Provided by (Used in) Discontinued Financing      Activities  |               | 140.1    |                   |               |   | -                        |   |   |   |   | 140.1 |   |   |   | (118.1 | ) |   |   | 15.2 |   |
| Net      Cash Flows Provided by Financing Activities                              |               | 13,397.7 |                   |               |   | 12,956.8                 |   |   |   |   | 440.9 |   |   |   | 88.7 |   |   |   | 1,302.3 |   |
|                                                                              |               |     |                   |               |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect      of Exchange Rate Changes on Cash                                      |               | 4.8      |                   |               |   | (2.8                     | ) |   |   |   | 7.6 |   |   |   | 6.6 |   |   |   | 0.3 |   |
|                                                                         |               |     |                   |               |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect      of Accounting Change on Cash                                          |               | -        |                   |               |   | -                        |   |   |   |   | - |   |   |   | 12.1 |   |   |   | - |   |
|                                                                         |               |     |                   |               |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      Balance Included in Assets Held for Sale                                |               | (3.8     | )                      |               |   | (1.1                     | ) |   |   |   | (2.7 | ) |   |   | (5.6 | ) |   |   | - |   |
|                                                                         |               |     |                   |               |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Increase (Decrease) in Cash and Cash Equivalents                         |               | 18.8     |                   |               |   | (1,753.7                 | ) |   |   |   | 1,772.5 |   |   |   | 13.2 |   |   |   | (59.9 | ) |
| Cash      and Cash Equivalents at Beginning of Period                             |               | 129.8    |                   |               |   | 1,902.3                  |   |   |   |   | 129.8 |   |   |   | 116.6 |   |   |   | 176.5 |   |
| Cash      and Cash Equivalents at End of Period                                   | $                  | 148.6    |                   |               | $      | 148.6                    |   |   |   | $ | 1,902.3 |   |   | $ | 129.8 |   |   | $ | 116.6 |   |

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

|   | · | first,      98% to the owners of all classes of units pro rata and 2% to Kinder Morgan      G.P., Inc. as general partner of Kinder Morgan Energy Partners until the      owners of all classes of units have received a total of $0.15125 per unit      in cash or equivalent i-units for suchquarter; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | second,      85% of any available cash then remaining to the owners of all classes of      units pro rata and 15% to Kinder Morgan G.P., Inc. as general partner of      Kinder Morgan Energy Partners until the owners of all classes of units      have received a total of $0.17875 per unit in cash or equivalent i-units      for such quarter; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | third,      75% of any available cash then remaining to the owners of all classes of      units pro rata and 25% to Kinder Morgan G.P., Inc. as general partner of      Kinder Morgan Energy Partners until the owners of all classes of units      have received a total of $0.23375 per unit in cash or equivalent i-units      for such quarter; and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | fourth,      50% of any available cash then remaining to the owners of all classes of      units pro rata, to owners of common units in cash and to Kinder Morgan      Management as owners of i-units in the equivalent number of i-units, and      50% to Kinder Morgan G.P., Inc. as general partner of Kinder Morgan Energy      Partners. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

|   |   | During      the seven months ended December 31, 2007 and the five months ended May 31,      2007, Kinder Morgan Energy Partners paid distributions of $1.73 and $1.66      per common unit, respectively, of which $257.3 million and $246.6 million,      respectively, was paid to the public holders (represented in minority      interests) of Kinder Morgan Energy Partners’ common units. On January 16,      2008, Kinder Morgan Energy Partners declared a quarterly distribution of      $0.92 per common unit for the quarterly period ended December 31, 2007.      The distribution was paid on February 14, 2008, to unitholders of record      as of January 31, 2008. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Litigation and Environmental Matters

Regulation

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

Recent Accounting Pronouncements

|   | · | price      trends and overall demand for natural gas liquids, refined petroleum      products, oil, carbon dioxide, natural gas, electricity, coal and other      bulk materials and chemicals in NorthAmerica; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | economic      activity, weather, alternative energy sources, conservation and      technological advances that may affect price trends and      demand; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes      in our tariff rates or those of Kinder Morgan Energy Partners implemented      by the FERC, the NEB or another regulatory agency or, with respect to      Kinder Morgan Energy Partners, the California Public Utilities      Commission; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Kinder      Morgan Energy Partners’ ability and our ability to acquire new businesses      and assets and integrate those operations into existing operations, as      well as the ability to expand our respective  facilities; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | difficulties      or delays experienced by railroads, barges, trucks, ships or pipelines in      delivering products to or from Kinder Morgan Energy Partners’ terminals or      pipelines or our terminals orpipelines; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Kinder      Morgan Energy Partners’ ability and our ability to successfully identify      and close acquisitions and make cost-saving changes in      operations; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | shut-downs      or cutbacks at major refineries, petrochemical or chemical plants, ports,      utilities, military bases or other businesses that use Kinder Morgan      Energy Partners’ or our services or provide services or products to Kinder      Morgan Energy Partners or us; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | crude      oil and natural gas production from exploration and production areas that      we serve, such as the Permian Basin area of West Texas, the U.S. Rocky      Mountains and the Alberta oilsands; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes      in laws or regulations, third-party relations and approvals, decisions of      courts, regulators and governmental bodies that may adversely affect our      business or our ability to compete; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes      in accounting pronouncements that impact the measurement of our results of      operations, the timing of when such measurements are to be made and      recorded, and the disclosures surrounding these  activities; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our      ability to offer and sell equity securities and debt securities or obtain      debt financing in sufficient amounts to implement that portion of our      business plan that contemplates growth through acquisitions of operating      businesses and assets and expansions of our  facilities; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our      indebtedness could make us vulnerable to general adverse economic and      industry conditions, limit our ability to borrow additional funds, and/or      place us at competitive disadvantages compared to our competitors that      have less debt or have other adverse  consequences; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | interruptions      of electric power supply to our facilities due to natural disasters, power      shortages, strikes, riots, terrorism, war or other  causes; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our      ability to obtain insurance coverage without significant levels of      self-retention of risk; |
|--------|--------|----------------------------------------------------------------------------------------------------------|

|   | · | acts      of nature, sabotage, terrorism or other similar acts causing damage      greater than our insurance coveragelimits; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------|

----

| Item      7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations (continued) | Knight      Form 10-K |
|--------------|-------------------------------------------------------------------------------------------------------------------|-----------------------|

|   | · | capital      markets conditions; |
|--------|--------|----------------------------------|

|   | · | the      political and economic stability of the oil producing nations of the      world; |
|--------|--------|-------------------------------------------------------------------------------------------|

|   | · | national,      international, regional and local economic, competitive and regulatory      conditions and developments; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|

|   | · | our      ability to achieve cost savings and revenue  growth; |
|--------|--------|---------------------------------------------------------------|

|   | · | inflation; |
|--------|--------|------------|

|   | · | interest      rates; |
|--------|--------|----------------------|

|   | · | the      pace of deregulation of retail natural gas and  electricity; |
|--------|--------|-----------------------------------------------------------------------|

|   | · | foreign      exchange fluctuations; |
|--------|--------|-------------------------------------|

|   | · | the      timing and extent of changes in commodity prices for oil, natural gas,      electricity and certain agriculturalproducts; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      extent of Kinder Morgan Energy Partners’ success in discovering,      developing and producing oil and gas reserves, including the risks      inherent in exploration and development drilling, well completion and      other development activities; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | engineering      and mechanical or technological difficulties that Kinder Morgan Energy      Partners may experience with operational equipment, in well completions      and workovers, and in drilling newwells; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      uncertainty inherent in estimating future oil and natural gas production      or reserves that Kinder Morgan Energy Partners may    experience; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      ability to complete expansion projects on time and on    budget; |
|--------|--------|---------------------------------------------------------------------------|

|   | · | the      timing and success of Kinder Morgan Energy Partners’ and our business      development efforts; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------|

|   | · | unfavorable      results of litigation and the fruition of contingencies referred to in the      accompanying Notes to Consolidated Financial  Statements. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

Item 7A.  Quantitative and QualitativeDisclosures About Market Risk.

----

| Item 7A.  Quantitative      and Qualitative Disclosures About Market Risk. (continued) | Knight      Form 10-K |
|-------------------------------------------------------------------------------------------------------|-----------------------|

----

| Knight      Form 10-K |
|-----------------------|

Item 8.    Financial Statements andSupplementary Data.

|                                                         | Page    |
|--------------------------------------------------------------|---------|
|                                                    |    |
| Report of Independent Registered Public      Accounting Firm | 94-95   |
| Consolidated Statements of    Operations                     | 96      |
| Consolidated Statements of Comprehensive      Income         | 97      |
| Consolidated Balance Sheets                                  | 98-99   |
| Consolidated Statements of Stockholders’      Equity   | 100-101 |
| Consolidated Statements of Cash      Flows                   | 102-103 |
| Notes to Consolidated Financial    Statements                | 104-202 |
| Selected Quarterly Financial Data      (Unaudited)           | 203     |
| Supplementary Information on Oil and Gas      Producing      |    |
| Activities (Unaudited)                                       | 203-207 |
|                                                    |    |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

Report of IndependentRegistered Public Accounting Firm

|   | · | The      Vancouver Wharves bulk marine terminal, acquired May 30, 2007;      and |
|--------|--------|----------------------------------------------------------------------------------|

|   | · | The      terminal assets and operations acquired from Marine Terminals, Inc.,      effective September 30, 2007, |
|--------|--------|------------------------------------------------------------------------------------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                              | SuccessorCompany       |    |   |   | Predecessor      Company |
|-------------------------------------------------------------------|------------------------|---------|--------|--------|--------------------------|
|                                                              | Seven      MonthsEnded |    |   |   | Five      Months         |   |   |
|                                                              | December      31,      |    |   |   | Ended                    |   | Year      Ended December 31, |
|                                                              | 2007                   |    |   |   | May      31, 2007        |   | 2006 |   | 2005 |
|                                                              | (In      millions)     |    |   |   | (In      millions)       |
| Operating      Revenues:                                          |                   |    |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Natural      Gas Sales                                            | $                      | 3,623.1 |   |   |                     |   | $ | 2,430.6 |   |   | $ | 6,225.6 |   |   | $ | 199.1 |   |
| Transportation      and Storage                                   |                   | 2,012.8 |   |   |                     |   |   | 1,332.6 |   |   |   | 3,080.3 |   |   |   | 753.0 |   |
| Oil      and Product Sales                                        |                   | 621.4   |   |   |                     |   |   | 325.8 |   |   |   | 740.2 |   |   |   | 3.0 |   |
| Other                                                             |                   | 137.4   |   |   |                     |   |   | 76.1 |   |   |   | 162.5 |   |   |   | 70.5 |   |
| Total      Operating Revenues                                     |                   | 6,394.7 |   |   |                     |   |   | 4,165.1 |   |   |   | 10,208.6 |   |   |   | 1,025.6 |   |
|                                                         |                   |    |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      Costs and Expenses:                                |                   |    |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Purchases      and Other Costs of Sales                           |                   | 3,656.6 |   |   |                     |   |   | 2,490.4 |   |   |   | 6,339.4 |   |   |   | 302.6 |   |
| Operations      and Maintenance                                   |                   | 943.3   |   |   |                     |   |   | 476.1 |   |   |   | 1,155.4 |   |   |   | 135.7 |   |
| General      and Administrative                                   |                   | 175.6   |   |   |                     |   |   | 283.6 |   |   |   | 305.1 |   |   |   | 64.1 |   |
| Depreciation      and Amortization                                |                   | 472.3   |   |   |                     |   |   | 261.0 |   |   |   | 531.4 |   |   |   | 104.6 |   |
| Taxes,      Other Than Income Taxes                               |                   | 110.1   |   |   |                     |   |   | 74.4 |   |   |   | 165.0 |   |   |   | 30.8 |   |
| Other      Expenses (Income)                                      |                   | (6.0    | )      |   |                     |   |   | (2.3 | ) |   |   | (34.1 | ) |   |   | - |   |
| Impairment      of Assets                                         |                   | -       |   |   |                     |   |   | 377.1 |   |   |   | 1.2 |   |   |   | 6.5 |   |
| Total      Operating Costs and Expenses                           |                   | 5,351.9 |   |   |                     |   |   | 3,960.3 |   |   |   | 8,463.4 |   |   |   | 644.3 |   |
| Operating      Income                                             |                   | 1,042.8 |   |   |                     |   |   | 204.8 |   |   |   | 1,745.2 |   |   |   | 381.3 |   |
|                                                         |                   |    |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Income and (Expenses):                                 |                   |    |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity      in Earnings of Kinder Morgan Energy Partners          |                   | -       |   |   |                     |   |   | - |   |   |   | - |   |   |   | 605.4 |   |
| Equity      in Earnings of Other Equity Investments               |                   | 53.4    |   |   |                     |   |   | 38.3 |   |   |   | 98.6 |   |   |   | 15.3 |   |
| Interest      Expense, Net                                        |                   | (587.8  | )      |   |                     |   |   | (251.9 | ) |   |   | (559.0 | ) |   |   | (147.5 | ) |
| Interest      Expense – Deferrable Interest Debentures      |                   | (12.8   | )      |   |                     |   |   | (9.1 | ) |   |   | (21.9 | ) |   |   | (21.9 | ) |
| Minority      Interests                                           |                   | (37.6   | )      |   |                     |   |   | (90.7 | ) |   |   | (374.2 | ) |   |   | (50.5 | ) |
| Other,      Net                                                   |                   | 17.9    |   |   |                     |   |   | 11.4 |   |   |   | (2.4 | ) |   |   | 69.2 |   |
| Total      Other Income and (Expenses)                            |                   | (566.9  | )      |   |                     |   |   | (302.0 | ) |   |   | (858.9 | ) |   |   | 470.0 |   |
| Income      (Loss) from Continuing Operations Before Income Taxes |                   | 475.9   |   |   |                     |   |   | (97.2 | ) |   |   | 886.3 |   |   |   | 851.3 |   |
| Income      Taxes                                                 |                   | 227.4   |   |   |                     |   |   | 135.5 |   |   |   | 285.9 |   |   |   | 337.1 |   |
| Income      (Loss) from Continuing Operations                     |                   | 248.5   |   |   |                     |   |   | (232.7 | ) |   |   | 600.4 |   |   |   | 514.2 |   |
| Income      (Loss) from Discontinued Operations, Net of Tax       |                   | (1.5    | )      |   |                     |   |   | 298.6 |   |   |   | (528.5 | ) |   |   | 40.4 |   |
| Net      Income                                                   | $                      | 247.0   |   |   |                     |   | $ | 65.9 |   |   | $ | 71.9 |   |   | $ | 554.6 |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

|                                                                                                                                                                                                                                                                                                                                                                                                                                                | SuccessorCompany       |   |   |   | Predecessor      Company |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------|--------|--------|--------|--------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                | Seven      MonthsEnded |   |   |   | Five      Months         |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                | December      31,      |   |   |   | Ended                    |   | Year      Ended December 31, |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                | 2007                   |   |   |   | May      31, 2007        |   | 2006 |   | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                | (In      millions)     |   |   |   | (In      millions)       |
| Net      Income                                                                       | $                      | 247.0  |   |   |                     |   | $ | 65.9 |   |   | $ | 71.9 |   |   | $ | 554.6 |   |
| Other      Comprehensive Income (Loss), Net of Tax:                                                                                                                                                                                                                                                                                                                                                                                                 |                   |   |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Change      in Fair Value of Derivatives Utilized for Hedging Purposes (Net of Tax      Benefit of $140.8 and $19.1, Tax of $26.8 and Tax Benefit of $106.1,      Respectively)                                                                                                                                                                                                                                                                     |                   | (249.6 | )      |   |                     |   |   | (21.3 | ) |   |   | 44.6 |   |   |   | (174.7 | ) |
| Reclassification      of Change in Fair Value of Derivatives to Net Income (Net of Tax Benefit      of $0.6, Tax of $12.8, $11.9 and $60.6, Respectively)                                                                                                                                                                                                                                                                                           |                   | -      |   |   |                     |   |   | 10.3 |   |   |   | 21.7 |   |   |   | 102.3 |   |
| Employee      Benefit Plans:                                                                                                                                                                                                                                                                                                                                                                                                                        |                   |   |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Prior      Service Cost Arising During Period (Net of Tax Benefit of      $1.0)                                                                                                                                                                                                                                                                                                                                                                     |                   | -      |   |   |                     |   |   | (1.7 | ) |   |   | - |   |   |   | - |   |
| Net      Gain Arising During Period (Net of Tax Benefit of $15.3 and Tax of $6.7,      Respectively)                                                                                                                                                                                                                                                                                                                                                |                   | (28.4  | )      |   |                     |   |   | 11.4 |   |   |   | - |   |   |   | - |   |
| Amortization      of Prior Service Cost Included in Net Periodic Benefit Costs (Net of Tax      Benefit of $0.2)                                                                                                                                                                                                                                                                                                                                    |                   | -      |   |   |                     |   |   | (0.4 | ) |   |   | - |   |   |   | - |   |
| Amortization      of Net Loss Included in Net Periodic Benefit Costs (Net of Tax Benefit of      Less than $0.1 and Tax of $0.8, Respectively)                                                                                                                                                                                                                                                                                                      |                   | (0.2   | )      |   |                     |   |   | 1.4 |   |   |   | - |   |   |   | - |   |
| Change      in Foreign Currency Translation Adjustment                                                                                                                                                                                                                                                                                                                                                                                              |                   | 27.6   |   |   |                     |   |   | 40.1 |   |   |   | (31.9 | ) |   |   | 3.4 |   |
| Adjustment      to Recognize Minimum Pension Liability (Net of Tax of $1.7 and Tax Benefit      of $1.6, Respectively)                                                                                                                                                                                                                                                                                                                              |                   | -      |   |   |                     |   |   | - |   |   |   | 3.5 |   |   |   | (3.3 | ) |
| Total      Other Comprehensive Income (Loss)                                                                                                                                                                                                                                                                                                                                                                                                        |                   | (250.6 | )      |   |                     |   |   | 39.8 |   |   |   | 37.9 |   |   |   | (72.3 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |                   |   |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      Income                                                                                                                                                                                                                                                                                                                                                                                                                           | $                      | (3.6   | )      |   |                     |   | $ | 105.7 |   |   | $ | 109.8 |   |   | $ | 482.3 |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Successor      Company |     |   | Predecessor      Company |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------|----------|--------|--------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | December      31,      |     |   | December      31,        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 2007                   |     |   | 2006                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | (In      millions)     |     |   | (In      millions)       |
| ASSETS:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                   |     |   |                     |   |   |   |   |
| Current      Assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                   |     |   |                     |   |   |   |   |
| Cash      and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | $                      | 148.6    |   |                     |   | $ | 129.8 |   |
| Restricted      Deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                   | 67.9     |   |                     |   |   | - |   |
| Accounts      Receivable, Net:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                   |     |   |                     |   |   |   |   |
| Trade                                                                                                                   |                   | 970.0    |   |                     |   |   | 1,173.3 |   |
| Related      Parties                                                                                                    |                   | 5.2      |   |                     |   |   | 10.4 |   |
| Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                   | 37.8     |   |                     |   |   | 275.0 |   |
| Gas      Imbalances                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                   | 26.9     |   |                     |   |   | 14.9 |   |
| Rate      Stabilization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                   | -        |   |                     |   |   | 124.3 |   |
| Assets      Held for Sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                   | 3,353.3  |   |                     |   |   | 87.9 |   |
| Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                   | 73.9     |   |                     |   |   | 204.2 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                   | 4,683.6  |   |                     |   |   | 2,019.8 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                   |     |   |                     |   |   |   |   |
| Notes      Receivable – Related Parties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                   | 87.9     |   |                     |   |   | 89.7 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                   |     |   |                     |   |   |   |   |
| Investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                   | 1,996.2  |   |                     |   |   | 1,084.6 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                   |     |   |                     |   |   |   |   |
| Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                   | 8,174.0  |   |                     |   |   | 3,043.8 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                   |     |   |                     |   |   |   |   |
| Other      Intangibles, Net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                   | 321.1    |   |                     |   |   | 229.5 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                   |     |   |                     |   |   |   |   |
| Property,      Plant and Equipment, Net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                   | 14,803.9 |   |                     |   |   | 18,839.6 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                   |     |   |                     |   |   |   |   |
| Assets      Held for Sale, Non-current                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                   | 5,634.6  |   |                     |   |   | 422.3 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                   |     |   |                     |   |   |   |   |
| Deferred      Charges and Other Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                   | 399.7    |   |                     |   |   | 1,066.3 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                   |     |   |                     |   |   |   |   |
| Total      Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | $                      | 36,101.0 |   |                     |   | $ | 26,795.6 |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Successor      Company |     |   | Predecessor      Company |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------|----------|--------|--------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | December      31,      |     |   | December      31,        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 2007                   |     |   | 2006                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | (In      millions)     |     |   | (In      millions)       |
| LIABILITIES      AND STOCKHOLDERS’ EQUITY:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                   |     |   |                     |   |   |   |   |
| Current      Liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                   |     |   |                     |   |   |   |   |
| Current      Maturities of Long-term Debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | $                      | 79.8     |   |                     |   | $ | 511.2 |   |
| Notes      Payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                   | 888.1    |   |                     |   |   | 1,665.3 |   |
| Cash      Book Overdrafts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                   | 30.7     |   |                     |   |   | 59.6 |   |
| Accounts      Payable, Net:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                   |     |   |                     |   |   |   |   |
| Trade                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                   | 943.1    |   |                     |   |   | 1,115.5 |   |
| Related      Parties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                   | 0.6      |   |                     |   |   | - |   |
| Accrued      Interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                   | 242.7    |   |                     |   |   | 220.4 |   |
| Accrued      Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                   | 61.8     |   |                     |   |   | 85.5 |   |
| Gas      Imbalances                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                   | 23.7     |   |                     |   |   | 29.2 |   |
| Rate      Stabilization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                   | -        |   |                     |   |   | 11.4 |   |
| Liabilities      Held for Sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                   | 168.2    |   |                     |   |   | 78.3 |   |
| Deferred      Income Taxes – Current                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                   | 666.4    |   |                     |   |   | - |   |
| Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                   | 834.7    |   |                     |   |   | 840.0 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                   | 3,939.8  |   |                     |   |   | 4,616.4 |   |
| Other      Liabilities and Deferred Credits:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                   |     |   |                     |   |   |   |   |
| Deferred      Income Taxes, Non-current                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                   | 1,849.4  |   |                     |   |   | 3,144.0 |   |
| Liabilities      Held for Sale, Non-current                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                   | 2,424.1  |   |                     |   |   | 7.9 |   |
| Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                   | 1,454.8  |   |                     |   |   | 1,349.4 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                   | 5,728.3  |   |                     |   |   | 4,501.3 |   |
| Long-term      Debt:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                   |     |   |                     |   |   |   |   |
| Outstanding      Notes and Debentures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                   | 14,714.6 |   |                     |   |   | 10,623.9 |   |
| Deferrable      Interest Debentures Issued to Subsidiary Trusts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                   | 283.1    |   |                     |   |   | 283.6 |   |
| Preferred      Interest in General Partner of KMP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                   | 100.0    |   |                     |   |   | - |   |
| Capital      Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                   | -        |   |                     |   |   | 106.9 |   |
| Value      of Interest Rate Swaps                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                   | 199.7    |   |                     |   |   | 46.4 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                   | 15,297.4 |   |                     |   |   | 11,060.8 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                   |     |   |                     |   |   |   |   |
| Minority Interests in Equity of Subsidiaries                                                                                                      |                   | 3,314.0  |   |                     |   |   | 3,095.5 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                   |     |   |                     |   |   |   |   |
| Commitments      and Contingent Liabilities (Notes 14 and 17)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                   |     |   |                     |   |   |   |   |
| Stockholders’      Equity:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                   |     |   |                     |   |   |   |   |
| Common      Stock-                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                   |     |   |                     |   |   |   |   |
| Authorized      – 100 Shares, Par Value $0.01 Per Share at December 31, 2007 and 300,000      Shares Par Value $5 Per Share at December 31, 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                   |     |   |                     |   |   |   |   |
| Outstanding      – 100 Shares at December 31, 2007 and 149,166,709 Shares at December 31,      2006 Before Deducting 15,022,751 Shares Held in Treasury                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                   | -        |   |                     |   |   | 745.8 |   |
| Additional      Paid-in Capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                   | 7,822.2  |   |                     |   |   | 3,048.9 |   |
| Retained      Earnings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                   | 247.0    |   |                     |   |   | 778.7 |   |
| Treasury      Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                   | -        |   |                     |   |   | (915.9 | ) |
| Accumulated      Other Comprehensive Loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                   | (247.7   | )      |                     |   |   | (135.9 | ) |
| Total      Stockholders’ Equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                   | 7,821.5  |   |                     |   |   | 3,521.6 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                   |     |   |                     |   |   |   |   |
| Total Liabilities and Stockholders’ Equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | $                      | 36,101.0 |   |                     |   | $ | 26,795.6 |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’EQUITY

|                                                                        | Successor Company                        |
|-----------------------------------------------------------------------------|-----------------------------------------------|
|                                                                        | Seven      Months EndedDecember      31, 2007 |
|                                                                        | Shares                                        |   | Amount |
|                                                                        | (Dollars      in millions)                    |
| Common      Stock:                                                          |                                          | 100 |   |   | $ | - |   |
|                                                                   |                                          |   |   |   |   |   |   |
| Additional      Paid-in Capital:                                            |                                          |   |   |   |   |   |   |
| Beginning      Balance                                                      |                                          |   |   |   |   | - |   |
| MBO      Purchase Price                                                     |                                          |   |   |   |   | 7,831.2 |   |
| Revaluation      of Kinder Morgan Energy Partners (KMP) Investment (Note 5) |                                          |   |   |   |   | (13.4 | ) |
| A-1      Unit Amortization                                                  |                                          |   |   |   |   | 4.4 |   |
| Ending      Balance                                                         |                                          |   |   |   |   | 7,822.2 |   |
|                                                                   |                                          |   |   |   |   |   |   |
| Retained      Earnings:                                                     |                                          |   |   |   |   |   |   |
| Beginning      Balance                                                      |                                          |   |   |   |   | - |   |
| Net      Income                                                             |                                          |   |   |   |   | 247.0 |   |
| Ending      Balance                                                         |                                          |   |   |   |   | 247.0 |   |
|                                                                        |                                          |   |   |   |   |   |   |
| Accumulated      Other Comprehensive  Loss (Net of Tax):          |                                          |   |   |   |   |   |   |
| Derivatives:                                                                |                                          |   |   |   |   |   |   |
| Beginning Balance                                                      |                                          |   |   |   |   | 2.9 |   |
| Change      in Fair Value of Derivatives Utilized for Hedging Purposes      |                                          |   |   |   |   | (249.6 | ) |
| Reclassification      of Change in Fair Value of Derivatives to Net Income  |                                          |   |   |   |   | - |   |
| Ending      Balance                                                         |                                          |   |   |   |   | (246.7 | ) |
| Foreign      Currency Translation:                                          |                                          |   |   |   |   |   |   |
| Beginning      Balance                                                      |                                          |   |   |   |   | - |   |
| Currency      Translation Adjustment                                        |                                          |   |   |   |   | 27.6 |   |
| Ending      Balance                                                         |                                          |   |   |   |   | 27.6 |   |
| Employee      Benefit Plans:                                                |                                          |   |   |   |   |   |   |
| Beginning      Balance                                                      |                                          |   |   |   |   | - |   |
| Benefit      Plan Adjustments                                               |                                          |   |   |   |   | (28.4 | ) |
| Benefit      Plan Amortization                                              |                                          |   |   |   |   | (0.2 | ) |
| Ending      Balance                                                         |                                          |   |   |   |   | (28.6 | ) |
|                                                                        |                                          |   |   |   |   |   |   |
| Total      Accumulated Other Comprehensive Loss                             |                                          |   |   |   |   | (247.7 | ) |
|                                                                   |                                          |   |   |   |   |   |   |
| Total      Stockholders’ Equity                                       |                                          | 100 |   |   | $ | 7,821.5 |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                                                       | Predecessor      Company       |
|--------------------------------------------------------------------------------------------|--------------------------------|
|                                                                                       | Five      Months Ended May 31, |   | Year      Ended December 31, |
|                                                                                       | 2007                           |   | 2006 |   | 2005 |
|                                                                                       | Shares                         |   | Amount |   | Shares |   | Amount |   | Shares |   | Amount |
|                                                                                       | (Dollars      in millions)     |
| Common      Stock:                                                                         |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning      Balance                                                                     | 149,166,709                    |   |   | $ | 745.8 |   |   | 148,479,863 |   |   | $ | 742.4 |   |   | 134,198,905 |   |   | $ | 671.0 |   |
| Acquisition      of Terasen                                                                | -                              |   |   |   | - |   |   | - |   |   |   | - |   |   | 12,476,974 |   |   |   | 62.4 |   |
| Employee      Benefit Plans                                                                | 149,894                        |   |   |   | 0.8 |   |   | 686,846 |   |   |   | 3.4 |   |   | 1,803,984 |   |   |   | 9.0 |   |
| Ending      Balance                                                                        | 149,316,603                    |   |   |   | 746.6 |   |   | 149,166,709 |   |   |   | 745.8 |   |   | 148,479,863 |   |   |   | 742.4 |   |
| Additional      Paid-in Capital:                                                           |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning      Balance                                                                     |                           |   |   |   | 3,048.9 |   |   |   |   |   |   | 3,056.3 |   |   |   |   |   |   | 1,863.2 |   |
| Acquisition      of Terasen                                                                |                           |   |   |   | - |   |   |   |   |   |   | - |   |   |   |   |   |   | 1,084.4 |   |
| Revaluation      of Kinder Morgan Energy Partners (KMP) Investment      (Note 5) |                           |   |   |   | 3.4 |   |   |   |   |   |   | (40.3 | ) |   |   |   |   |   | 7.8 |   |
| Employee      Benefit Plans                                                                |                           |   |   |   | 7.7 |   |   |   |   |   |   | 33.2 |   |   |   |   |   |   | 78.9 |   |
| Tax      Benefits from Employee Benefit Plans                                              |                           |   |   |   | 56.7 |   |   |   |   |   |   | 18.6 |   |   |   |   |   |   | 22.0 |   |
| Implementation      of SFAS No. 123(R) Deferred Compensation Balance                       |                           |   |   |   | - |   |   |   |   |   |   | (36.9 | ) |   |   |   |   |   | - |   |
| Deferred      Compensation (Note 13)                                                       |                           |   |   |   | 21.9 |   |   |   |   |   |   | 18.0 |   |   |   |   |   |   | - |   |
| Ending      Balance                                                                        |                           |   |   |   | 3,138.6 |   |   |   |   |   |   | 3,048.9 |   |   |   |   |   |   | 3,056.3 |   |
| Retained      Earnings:                                                                    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning      Balance                                                                     |                           |   |   |   | 778.7 |   |   |   |   |   |   | 1,175.3 |   |   |   |   |   |   | 975.9 |   |
| Net      Income                                                                            |                           |   |   |   | 65.9 |   |   |   |   |   |   | 71.9 |   |   |   |   |   |   | 554.6 |   |
| Cash      Dividends, Common Stock                                                          |                           |   |   |   | (234.9 | ) |   |   |   |   |   | (468.5 | ) |   |   |   |   |   | (355.2 | ) |
| Implementation      of FIN 48 (Note 18)                                                    |                           |   |   |   | (4.8 | ) |   |   |   |   |   | - |   |   |   |   |   |   | - |   |
| Ending      Balance                                                                        |                           |   |   |   | 604.9 |   |   |   |   |   |   | 778.7 |   |   |   |   |   |   | 1,175.3 |   |
| Treasury      Stock at Cost:                                                               |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning      Balance                                                                     | (15,022,751                    | ) |   |   | (915.9 | ) |   | (14,712,901 | ) |   |   | (885.7 | ) |   | (10,666,801 | ) |   |   | (558.9 | ) |
| Treasury      Stock Acquired                                                               | -                              |   |   |   | - |   |   | (339,800 | ) |   |   | (31.5 | ) |   | (3,865,800 | ) |   |   | (314.1 | ) |
| Employee      Benefit Plans                                                                | (7,384                         | ) |   |   | (0.5 | ) |   | 29,950 |   |   |   | 1.3 |   |   | (180,300 | ) |   |   | (12.7 | ) |
| Ending      Balance                                                                        | (15,030,135                    | ) |   |   | (916.4 | ) |   | (15,022,751 | ) |   |   | (915.9 | ) |   | (14,712,901 | ) |   |   | (885.7 | ) |
| Deferred      Compensation Plans:                                                          |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning      Balance                                                                     |                           |   |   |   | - |   |   |   |   |   |   | (36.9 | ) |   |   |   |   |   | (31.7 | ) |
| Current      Year Activity (Note 13)                                                       |                           |   |   |   | - |   |   |   |   |   |   | - |   |   |   |   |   |   | (5.2 | ) |
| Implementation      of SFAS No. 123(R) Balance Transfer to Additional Paid-in      Capital |                           |   |   |   | - |   |   |   |   |   |   | 36.9 |   |   |   |   |   |   | - |   |
| Ending      Balance                                                                        |                           |   |   |   | - |   |   |   |   |   |   | - |   |   |   |   |   |   | (36.9 | ) |
| Accumulated      Other Comprehensive Loss (Net of Tax):                          |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Derivatives:                                                                               |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning Balance                                                                     |                           |   |   |   | (60.8 | ) |   |   |   |   |   | (127.1 | ) |   |   |   |   |   | (54.7 | ) |
| Change      in Fair Value of Derivatives Utilized for Hedging Purposes                     |                           |   |   |   | (21.3 | ) |   |   |   |   |   | 44.6 |   |   |   |   |   |   | (174.7 | ) |
| Reclassification      of Change in Fair Value of Derivatives to Net Income                 |                           |   |   |   | 10.3 |   |   |   |   |   |   | 21.7 |   |   |   |   |   |   | 102.3 |   |
| Ending      Balance                                                                        |                           |   |   |   | (71.8 | ) |   |   |   |   |   | (60.8 | ) |   |   |   |   |   | (127.1 | ) |
| Foreign      Currency Translation:                                                         |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning      Balance                                                                     |                           |   |   |   | (24.5 | ) |   |   |   |   |   | 7.4 |   |   |   |   |   |   | - |   |
| Terasen      Acquisition                                                                   |                           |   |   |   | - |   |   |   |   |   |   | - |   |   |   |   |   |   | 4.0 |   |
| Currency      Translation Adjustment                                                       |                           |   |   |   | 40.1 |   |   |   |   |   |   | (31.9 | ) |   |   |   |   |   | 3.4 |   |
| Ending      Balance                                                                        |                           |   |   |   | 15.6 |   |   |   |   |   |   | (24.5 | ) |   |   |   |   |   | 7.4 |   |
| Minimum      Pension Liability:                                                            |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning      Balance                                                                     |                           |   |   |   | - |   |   |   |   |   |   | (7.3 | ) |   |   |   |   |   | - |   |
| Terasen      Acquisition                                                                   |                           |   |   |   | - |   |   |   |   |   |   | - |   |   |   |   |   |   | (4.0 | ) |
| Minimum      Pension Liability Adjustments                                                 |                           |   |   |   | - |   |   |   |   |   |   | 7.3 |   |   |   |   |   |   | (3.3 | ) |
| Ending      Balance                                                                        |                           |   |   |   | - |   |   |   |   |   |   | - |   |   |   |   |   |   | (7.3 | ) |
| Employee      Retirement Benefits:                                                         |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning      Balance                                                                     |                           |   |   |   | (50.6 | ) |   |   |   |   |   | - |   |   |   |   |   |   | - |   |
| Adjustment      to Initially Apply SFAS No. 158                                            |                           |   |   |   | - |   |   |   |   |   |   | (50.6 | ) |   |   |   |   |   | - |   |
| SFAS      No. 158 Amortization/Adjustments                                                 |                           |   |   |   | 10.7 |   |   |   |   |   |   | - |   |   |   |   |   |   | - |   |
| Ending      Balance                                                                        |                           |   |   |   | (39.9 | ) |   |   |   |   |   | (50.6 | ) |   |   |   |   |   | - |   |
|                                                                                       |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Accumulated Other Comprehensive Loss                                            |                           |   |   |   | (96.1 | ) |   |   |   |   |   | (135.9 | ) |   |   |   |   |   | (127.0 | ) |
|                                                                                  |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Stockholders’ Equity                                                      | 134,286,468                    |   |   | $ | 3,477.6 |   |   | 134,143,958 |   |   | $ | 3,521.6 |   |   | 133,766,962 |   |   | $ | 3,924.4 |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Successor      Company |      |   | Predecessor      Company |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------|-----------|--------|--------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Seven      Months      |      |   |                     |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Ended                  |      |   | Five      Months         |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | December      31,      |      |   | Ended                    |   | Year      Ended December 31, |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 2007                   |      |   | May      31, 2007        |   | 2006 |   | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | (In      millions)     |      |   | (In      millions)       |
| INCREASE      (DECREASE) IN CASH AND CASH EQUIVALENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                   |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      Flows from Operating Activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                   |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | $                      | 247.0     |   |                     |   | $ | 65.9 |   |   | $ | 71.9 |   |   | $ | 554.6 |   |
| Adjustments      to Reconcile Net Income to Net Cash Flows from Operating      Activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                   |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      (Income) from Discontinued Operations, Net of Tax                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                   | 1.5       |   |                     |   |   | (287.9 | ) |   |   | 542.8 |   |   |   | (40.4 | ) |
| Loss      from Impairment of Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                   | -         |   |                     |   |   | 377.1 |   |   |   | 1.2 |   |   |   | 6.5 |   |
| Depreciation      and Amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                   | 476.2     |   |                     |   |   | 264.9 |   |   |   | 540.3 |   |   |   | 104.6 |   |
| Deferred      Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                   | (89.8     | )      |                     |   |   | 138.7 |   |   |   | 10.8 |   |   |   | 92.1 |   |
| Equity      in Earnings of Kinder Morgan Energy Partners                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                   | -         |   |                     |   |   | - |   |   |   | - |   |   |   | (605.4 | ) |
| Distributions      from Kinder Morgan Energy Partners                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                   | -         |   |                     |   |   | - |   |   |   | - |   |   |   | 530.8 |   |
| Equity      in Earnings of Other Equity Investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                   | (54.3     | )      |                     |   |   | (39.1 | ) |   |   | (100.6 | ) |   |   | (15.3 | ) |
| Distributions      from Other Equity Investees                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                   | 86.5      |   |                     |   |   | 48.2 |   |   |   | 74.8 |   |   |   | 8.1 |   |
| Minority      Interests in Income of Consolidated Subsidiaries                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                   | 48.0      |   |                     |   |   | 90.7 |   |   |   | 374.2 |   |   |   | 50.5 |   |
| Gains      from Property Casualty Indemnifications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                   | -         |   |                     |   |   | (1.8 | ) |   |   | (15.2 | ) |   |   | - |   |
| Net      Gains on Sales of Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                   | (6.3      | )      |                     |   |   | (2.6 | ) |   |   | (22.0 | ) |   |   | (76.4 | ) |
| Mark-to-Market      Interest Rate Swap Loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                   | -         |   |                     |   |   | - |   |   |   | 22.3 |   |   |   | - |   |
| Foreign      Currency Loss (Gain)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                   | -         |   |                     |   |   | 15.5 |   |   |   | - |   |   |   | (5.0 | ) |
| Pension      Contribution in Excess of Expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                   | -         |   |                     |   |   | - |   |   |   | - |   |   |   | (23.8 | ) |
| Changes      in Gas in Underground Storage                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                   | 51.3      |   |                     |   |   | (84.2 | ) |   |   | (35.3 | ) |   |   | 6.5 |   |
| Changes      in Working Capital Items (Note 1(R))                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                   | 104.0     |   |                     |   |   | (202.9 | ) |   |   | 80.0 |   |   |   | (13.4 | ) |
| (Payment      for) Proceeds from Termination of Interest Rate Swap                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                   | (2.2      | )      |                     |   |   | 51.9 |   |   |   | - |   |   |   | (3.5 | ) |
| Kinder      Morgan Energy Partners’ Rate Reparations, Refunds and      Reserve Adjustments                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                   | 140.0     |   |                     |   |   | - |   |   |   | (19.1 | ) |   |   | - |   |
| Other,      Net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                   | 45.8      |   |                     |   |   | 58.8 |   |   |   | (31.4 | ) |   |   | 0.7 |   |
| Net      Cash Flows Provided by Continuing      Operations                                                                                  |                   | 1,047.7   |   |                     |   |   | 493.2 |   |   |   | 1,494.7 |   |   |   | 571.2 |   |
| Net      Cash Flows (Used in) Provided by Discontinued Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                   | (3.2      | )      |                     |   |   | 109.8 |   |   |   | 212.6 |   |   |   | 45.0 |   |
| Net      Cash Flows Provided by Operating Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                   | 1,044.5   |   |                     |   |   | 603.0 |   |   |   | 1,707.3 |   |   |   | 616.2 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                   |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      Flows from Investing Activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                   |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Purchase      of Predecessor Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                   | (11,534.3 | )      |                     |   |   | - |   |   |   | - |   |   |   | - |   |
| Capital      Expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                   | (1,287.0  | )      |                     |   |   | (652.8 | ) |   |   | (1,375.6 | ) |   |   | (134.1 | ) |
| Terasen      Acquisition, Net of $73.7 Cash Acquired                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                   | -         |   |                     |   |   | - |   |   |   | (10.6 | ) |   |   | (2,065.5 | ) |
| Other      Acquisitions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                   | (122.0    | )      |                     |   |   | (42.1 | ) |   |   | (396.5 | ) |   |   | - |   |
| Investment      in Kinder Morgan Energy Partners (Note 2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                   | -         |   |                     |   |   | - |   |   |   | - |   |   |   | (4.5 | ) |
| Investment      in NGPL PipeCo LLC Restricted Cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                   | (3,030.0  | )      |                     |   |   | - |   |   |   | - |   |   |   | - |   |
| Net      (Investments in) Proceeds from Margin Deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                   | (39.3     | )      |                     |   |   | (54.8 | ) |   |   | 38.6 |   |   |   | 27.5 |   |
| Other      Investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                   | (246.4    | )      |                     |   |   | (29.7 | ) |   |   | (6.1 | ) |   |   | (0.4 | ) |
| Proceeds      from Sales of Kinder Morgan Management, LLC Shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                   | -         |   |                     |   |   | - |   |   |   | - |   |   |   | 254.8 |   |
| Change      in Natural Gas Storage and NGL Line Fill Inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                   | 10.0      |   |                     |   |   | 8.4 |   |   |   | (12.9 | ) |   |   | - |   |
| Property      Casualty Indemnifications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                   | -         |   |                     |   |   | 8.0 |   |   |   | 13.1 |   |   |   | - |   |
| Net      Proceeds (Costs of Removal) from Sales of Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                   | 301.3     |   |                     |   |   | (1.5 | ) |   |   | 92.2 |   |   |   | (4.1 | ) |
| Net      Cash Flows Used in Continuing Investing Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                   | (15,947.7 | )      |                     |   |   | (764.5 | ) |   |   | (1,657.8 | ) |   |   | (1,926.3 | ) |
| Net      Cash Flows Provided by (Used in) Discontinued Investing      Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                   | 196.6     |   |                     |   |   | 1,488.2 |   |   |   | (138.1 | ) |   |   | (52.4 | ) |
| Net      Cash Flows (Used in) Provided by Investing Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | $                      | (15,751.1 | )      |                     |   | $ | 723.7 |   |   | $ | (1,795.9 | ) |   | $ | (1,978.7 | ) |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Successor      Company |     |   | Predecessor      Company |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------|----------|--------|--------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Seven      Months      |     |   |                     |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Ended                  |     |   | Five      Months         |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | December      31,      |     |   | Ended                    |   | Year      Ended December 31, |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 2007                   |     |   | May      31, 2007        |   | 2006 |   | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | (In      millions)     |     |   | (In      millions)       |
| Cash      Flows from Financing Activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                   |     |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Short-term      Debt,      Net                                                                                                                                            | $                      | (52.6    | )      |                     |   | $ | (247.5 | ) |   | $ | 1,009.5 |   |   | $ | 25.0 |   |
| Bridge      Facility      Issued                                                                                                                                          |                   | -        |   |                     |   |   | - |   |   |   | - |   |   |   | 2,134.7 |   |
| Bridge      Facility      Retired                                                                                                                                         |                   | -        |   |                     |   |   | - |   |   |   | - |   |   |   | (2,129.7 | ) |
| Long-term      Debt      Issued                                                                                                                                           |                   | 8,805.0  |   |                     |   |   | 1,000.0 |   |   |   | - |   |   |   | 2,400.0 |   |
| Long-term      Debt      Retired                                                                                                                                          |                   | (829.2   | )      |                     |   |   | (302.4 | ) |   |   | (140.7 | ) |   |   | (505.0 | ) |
| Issuance of Kinder Morgan, G.P., Inc. Preferred Stock                                                                                  |                   | 100.0    |   |                     |   |   | - |   |   |   | - |   |   |   | - |   |
| Cash      Book      Overdraft                                                                                                                                             |                   | (14.0    | )      |                     |   |   | (14.9 | ) |   |   | 17.9 |   |   |   | - |   |
| Issuance      of Shares by Kinder Morgan Management, LLC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                   | -        |   |                     |   |   | 297.9 |   |   |   | - |   |   |   | - |   |
| Other      Common Stock Issued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                   | -        |   |                     |   |   | 9.9 |   |   |   | 38.7 |   |   |   | 62.8 |   |
| Excess      Tax Benefits from Share-based Payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                   | -        |   |                     |   |   | 56.7 |   |   |   | 18.6 |   |   |   | - |   |
| Cash      Paid to Share-based Award Holders Due to Going Private      Transaction                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                   | (181.1   | )      |                     |   |   | - |   |   |   | - |   |   |   | - |   |
| Contributions      from Successor Investors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                   | 5,112.0  |   |                     |   |   | - |   |   |   | - |   |   |   | - |   |
| Short-term      Advances from (to) Unconsolidated Affiliates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                   | 10.9     |   |                     |   |   | 2.3 |   |   |   | (4.9 | ) |   |   | (11.7 | ) |
| Treasury      Stock Acquired                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                   | -        |   |                     |   |   | - |   |   |   | (34.3 | ) |   |   | (317.1 | ) |
| Cash      Dividends, Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                   | -        |   |                     |   |   | (234.9 | ) |   |   | (468.5 | ) |   |   | (355.2 | ) |
| Minority      Interests, Distributions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                   | (259.6   | )      |                     |   |   | (248.9 | ) |   |   | (575.0 | ) |   |   | (2.4 | ) |
| Minority      Interests, Contributions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                   | 342.9    |   |                     |   |   | - |   |   |   | 353.8 |   |   |   | - |   |
| Debt      Issuance Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                   | (81.5    | )      |                     |   |   | (13.1 | ) |   |   | (4.8 | ) |   |   | (14.3 | ) |
| Other,      Net                                                                                                                                                           |                   | 4.0      |   |                     |   |   | (4.3 | ) |   |   | (3.5 | ) |   |   | - |   |
| Net      Cash Flows Provided by Continuing Financing Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                   | 12,956.8 |   |                     |   |   | 300.8 |   |   |   | 206.8 |   |   |   | 1,287.1 |   |
| Net      Cash Flows Provided by (Used in) Discontinued Financing      Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                   | -        |   |                     |   |   | 140.1 |   |   |   | (118.1 | ) |   |   | 15.2 |   |
| Net Cash Flows Provided by Financing Activities                                                                                             |                   | 12,956.8 |   |                     |   |   | 440.9 |   |   |   | 88.7 |   |   |   | 1,302.3 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                   |     |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect of Exchange Rate Changes on       Cash                                                                                               |                   | (2.8     | )      |                     |   |   | 7.6 |   |   |   | 6.6 |   |   |   | 0.3 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                   |     |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect of Accounting Change      on Cash                                                                                                              |                   | -        |   |                     |   |   | - |   |   |   | 12.1 |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                   |     |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash Balance Included in Assets Held for Sale                                                                                          |                   | (1.1     | )      |                     |   |   | (2.7 | ) |   |   | (5.6 | ) |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                   |     |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Increase (Decrease) in Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                   | (1,753.7 | )      |                     |   |   | 1,772.5 |   |   |   | 13.2 |   |   |   | (59.9 | ) |
| Cash      and Cash Equivalents at Beginning of Period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                   | 1,902.3  |   |                     |   |   | 129.8 |   |   |   | 116.6 |   |   |   | 176.5 |   |
| Cash      and Cash Equivalents at End of Period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | $                      | 148.6    |   |                     |   | $ | 1,902.3 |   |   | $ | 129.8 |   |   | $ | 116.6 |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | (In      millions) |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|
| The      Total Purchase Price Consisted of the Following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |               |   |   |
| Cash      Paid                                                                                      | $                  | 5,112.0 |   |
| Kinder      Morgan, Inc. Shares      Contributed                                                                                                                                                                                 |               | 2,719.2 |   |
| Equity      Contributed                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               | 7,831.2 |   |
| Cash      from Issuances of Long-term Debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |               | 4,696.2 |   |
| Total      Purchase      Price                                                                                                                                                                                                                                                                                                                                                                                                                                                             | $                  | 12,527.4 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |               |   |   |
| The      Preliminary Allocation of the Purchase Price is asFollows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |               |   |   |
| Current      Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | $                  | 1,551.2 |   |
| Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |               | 13,407.2 |   |
| Investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |               | 1,072.2 |   |
| Property,      Plant and Equipment, Net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               | 15,638.7 |   |
| Deferred      Charges and Other Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |               | 1,673.6 |   |
| Current      Liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |               | (3,279.5 | ) |
| Deferred      Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |               | (2,588.0 | ) |
| Other      Deferred Credits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |               | (1,777.5 | ) |
| Long-term      Debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |               | (9,855.9 | ) |
| Minority      Interests                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               | (3,314.6 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | $                  | 12,527.4 |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Successor      Company |   |   | Predecessor      Company |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------|--------|--------|--------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | December      31,      |   |   | December      31,        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 2007                   |   |   | 2006                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | (In      millions)     |   |   | (In      millions)       |
| Regulatory      Assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                   |   |   |                     |   |   |
| Employee      Benefit Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $                      | 0.6    |   |                     | $ | 12.5 |
| Deferred      Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                   | -      |   |                     |   | 19.1 |
| Rate      Regulation and Application Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                   | 5.8    |   |                     |   | 6.8 |
| Debt      Issuance Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                   | -      |   |                     |   | 11.1 |
| Foreign      Currency Rate Stabilization                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                   | -      |   |                     |   | 71.4 |
| Changes      in Fair Value of Derivatives                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                   | -      |   |                     |   | 114.9 |
| Deferred      Development Costs on Capital Projects                                                                                                                                                                                                                                                                                                                                                                                                                                         |                   | -      |   |                     |   | 20.2 |
| Commercial      Commodity Unbundling Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                   | -      |   |                     |   | 2.2 |
| Replacement      Transportation Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                   | -      |   |                     |   | 3.2 |
| Tax      Reassessment Dispute                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                   | -      |   |                     |   | 8.6 |
| Other      Regulatory Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                   | -      |   |                     |   | 17.5 |
| Total      Regulatory Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                   | 6.4    |   |                     |   | 287.5 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                   |   |   |                     |   |   |
| Regulatory      Liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                   |   |   |                     |   |   |
| Deferred      Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                   | -      |   |                     |   | 13.0 |
| Rate      Regulation and Application Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                   | -      |   |                     |   | 25.3 |
| Foreign      Currency Rate Stabilization                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                   | -      |   |                     |   | 11.4 |
| Changes      in Fair Value of Derivatives                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                   | -      |   |                     |   | 1.1 |
| Other      Regulatory Liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                   | -      |   |                     |   | 30.5 |
| Total      Regulatory Liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                   | -      |   |                     |   | 81.3 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                   |   |   |                     |   |   |
| Net      Regulatory      Assets                                                                           | $                      | 6.4    |   |                     | $ | 206.2 |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                          | Successor      Company |   |   | Predecessor      Company |
|-----------------------------------------------|------------------------|--------|--------|--------------------------|
|                                          | Seven      Months      |   |   |                     |   |   |   |   |
|                                          | Ended                  |   |   | Five      Months         |   |   |   |   |
|                                          | December      31,      |   |   | Ended                    |   | Year      Ended December 31, |
|                                          | 2007                   |   |   | May      31, 2007        |   | 2006 |   | 2005 |
|                                          | (In      millions)     |   |   | (In      millions)       |
| Beginning      Balance1                       | $                      | -      |   |                     |   | $ | 14.0 |   |   | $ | 5.8 |   |   | $ | 3.1 |   |
| Additions:      Charged to Cost and Expenses2 |                   | 0.4    |   |                     |   |   | 0.7 |   |   |   | 16.9 |   |   |   | 4.9 |   |
| Deductions:                                   |                   |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Write-off      of Uncollectible Accounts      |                   | (0.5   | )      |                     |   |   | (4.7 | ) |   |   | (7.8 | ) |   |   | (2.2 | ) |
| Reclassification      to Assets Held for Sale |                   | -      |   |                     |   |   | - |   |   |   | (0.9 | ) |   |   | - |   |
| Reclassification      to Accounts Receivable  |                   | 0.1    |   |                     |   |   | - |   |   |   | - |   |   |   | - |   |
| Ending      Balance                           | $                      | -      |   |                     |   | $ | 10.0 |   |   | $ | 14.0 |   |   | $ | 5.8 |   |

|   | 1 | The      beginning balance as of June 1, 2007 has been adjusted to reflect the fair      value of accounts receivable as the result of the Going Private      transaction (see Note 1(B)). |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2 | Additions      include $0.7 million and $2.4 million associated with assets classified as      held for sale for the five months ended May 31, 2007 and the year ended      December 31, 2006, respectively, as discussed in Note 7, and $6.5 million      representing allowance for doubtful accounts balances of Kinder Morgan      Energy Partners as of December 31, 2005. Due to our adoption of EITF No.      04-5, beginning January 1, 2006, the accounts and balances of Kinder      Morgan Energy Partners are included in our consolidated results as      discussed in Note 1(B). Additions in 2005 include $3.1 million acquired      with Terasen. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                      | Successor      Company |   |   | Predecessor      Company |
|-------------------------------------------|------------------------|--------|--------|--------------------------|
|                                      | December      31,      |   |   | December      31,        |
|                                      | 2007                   |   |   | 20061                    |
|                                      | (In      millions)     |   |   | (In      millions)       |
| Gas      in Underground Storage (Current) | $                      | -      |   |                     | $ | 225.2 |
| Product      Inventory                    |                   | 19.5   |   |                     |   | 20.4 |
| Materials      and Supplies               |                   | 18.3   |   |                     |   | 29.4 |
|                                      | $                      | 37.8   |   |                     | $ | 275.0 |

|                                                                                                      | Successor      Company |   |   | Predecessor      Company |
|-----------------------------------------------------------------------------------------------------------|------------------------|--------|--------|--------------------------|
|                                                                                                      | December      31,      |   |   | December      31,        |
|                                                                                                      | 2007                   |   |   | 2006                     |
|                                                                                                      | (In      millions)     |   |   | (In      millions)       |
| Assets      Held for Sale - Turbines and Boilers1                                                         | $                      | 0.7    |   |                     |   | $ | 4.9 |
| Current      Deferred Tax Asset                                                                 |                   | -      |   |                     |   |   | 12.9 |
| Derivatives                                                                           |                   | 47.0   |   |                     |   |   | 134.0 |
| Prepaid      Expenses               |                   | 22.3   |   |                     |   |   | 32.2 |
| Income      Tax Overpayments                                           |                   | -      |   |                     |   |   | 6.5 |
| Other                                                                                                |                   | 3.9    |   |                     |   |   | 13.7 |
|                                                                                                      | $                      | 73.9   |   |                     |   | $ | 204.2 |

| 1 | See      Notes 5 and 6. |
|---|-------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                               | Predecessor      Company       |
|------------------------------------|--------------------------------|
|                               | Balance      December 31, 2005 |   | KMP      Goodwill Consolidated into KMI1 |   | Reallocation      of Equity Method Goodwill |   | Acquisitions      and Purchase Price Adjustments |   | Other2 |   | BalanceDecember      31,2006 |
|                               | (In      millions)             |
| Kinder      Morgan Energy Partners | $                              | 859.4 |   | $ | - |   | $ | (859.4 | ) |   | $ | - |   |   | $ | - |   |   | $ | - |
| Power      Segment                 |                           | 24.8 |   |   | - |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 24.8 |
| Kinder      Morgan Canada Segment3 |                           | 658.2 |   |   | - |   |   | - |   |   |   | - |   |   |   | (1.2 | ) |   |   | 657.0 |
| Terasen      Gas Segment3          |                           | 1,238.6 |   |   | - |   |   | - |   |   |   | 100.0 |   |   |   | (646.0 | ) |   |   | 692.6 |
| Products      Pipelines Segment    |                           | - |   |   | 263.2 |   |   | 695.5 |   |   |   | - |   |   |   | (15.3 | ) |   |   | 943.4 |
| Natural      Gas Pipelines Segment |                           | - |   |   | 288.4 |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 288.4 |
| CO2      Segment                   |                           | - |   |   | 46.1 |   |   | 26.9 |   |   |   | - |   |   |   | (0.6 | ) |   |   | 72.4 |
| Terminals      Segment             |                           | - |   |   | 201.2 |   |   | 137.0 |   |   |   | 30.0 |   |   |   | (3.0 | ) |   |   | 365.2 |
|                          |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated      Total            | $                              | 2,781.0 |   | $ | 798.9 |   | $ | - |   |   | $ | 130.0 |   |   | $ | (666.1 | ) |   | $ | 3,043.8 |

| 1 | At      January 1, 2006. |
|---|--------------------------|

| 2 | Other      adjustments include the translation of goodwill denominated in foreign      currencies and reductions of the reallocation of equity method goodwill      due to reductions in Knight Inc.’s ownership percentage of KMP. The      adjustment of $646.0 to the Terasen Gas Segment was due mainly to an      impairment charge (see Note 6). |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Goodwill      assigned to the Kinder Morgan Canada and Terasen Gas business segments is      based on the purchase price allocation for our November 30, 2005      acquisition of Terasen (see Note4). |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                           | Predecessor      Company     |
|------------------------------------------------|------------------------------|
|                                           | BalanceDecember      31,2006 |   | AcquisitionsandPurchase      Price Adjustments |   | Dispositions |   | Other3 |   | BalanceMay      31, 2007 |
|                                           | (In      millions)           |
| Power      Segment                             | $                            | 24.8 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 24.8 |   |
| Kinder      Morgan Canada Segment1             |                         | 65.0 |   |   |   | - |   |   |   | (65.0 | ) |   |   | - |   |   |   | - |   |
| Terasen      Gas Segment2                      |                         | 692.6 |   |   |   | - |   |   |   | (692.6 | ) |   |   | - |   |   |   | - |   |
| KMP      – Products Pipelines Segment    |                         | 943.4 |   |   |   | - |   |   |   | - |   |   |   | (14.1 | ) |   |   | 929.3 |   |
| KMP      – Natural Gas Pipelines Segment |                         | 288.4 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 288.4 |   |
| KMP      – CO2      Segment              |                         | 72.4 |   |   |   | - |   |   |   | - |   |   |   | (0.5 | ) |   |   | 71.9 |   |
| KMP      – Terminals Segment             |                         | 365.2 |   |   |   | (2.7 | ) |   |   | - |   |   |   | - |   |   |   | 362.5 |   |
| KMP      – Trans Mountain Segment1       |                         | 592.0 |   |   |   | - |   |   |   | - |   |   |   | (360.2 | ) |   |   | 231.8 |   |
|                                      |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated      Total                        | $                            | 3,043.8 |   |   | $ | (2.7 | ) |   | $ | (757.6 | ) |   | $ | (374.8 | ) |   | $ | 1,908.7 |   |

|                                           | Successor      Company  |
|------------------------------------------------|-------------------------|
|                                           | BalanceJune      1,2007 |   | AcquisitionsandPurchase      Price Adjustments |   | Dispositions |   | Other3 |   | BalanceDecember      31, 2007 |
|                                           | (In      millions)      |
| NGPL      Segment4                             | $                       | 4,624.3 |   |   | $ | 592.1 |   |   | $ | (5,216.4 | ) |   | $ | - |   |   | $ | - |   |
| KMP      – Products Pipelines Segment    |                    | 2,586.9 |   |   |   | (398.4 | ) |   |   | - |   |   |   | (9.1 | ) |   |   | 2,179.4 |   |
| KMP      – Natural Gas Pipelines Segment |                    | 3,058.7 |   |   |   | 155.5 |   |   |   | - |   |   |   | (13.2 | ) |   |   | 3,201.0 |   |
| KMP      – CO2      Segment              |                    | 1,454.2 |   |   |   | (372.1 | ) |   |   | - |   |   |   | (4.5 | ) |   |   | 1,077.6 |   |
| KMP      – Terminals Segment             |                    | 1,546.1 |   |   |   | (74.1 | ) |   |   | - |   |   |   | (6.1 | ) |   |   | 1,465.9 |   |
| KMP      – Trans Mountain Segment1       |                    | 231.8 |   |   |   | - |   |   |   | - |   |   |   | 18.3 |   |   |   | 250.1 |   |
|                                      |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated      Total                        | $                       | 13,502.0 |   |   | $ | (97.0 | ) |   | $ | (5,216.4 | ) |   | $ | (14.6 | ) |   | $ | 8,174.0 |   |

| 1 | Kinder      Morgan Energy Partners acquired Trans Mountain from us on April 30, 2007.      Prior to this transaction, Trans Mountain was in the Kinder Morgan Canada      Segment. After the $377.1 million impairment of this asset, discussed      further below, the remaining goodwill related to Trans Mountain was      transferred to the KMP – Trans Mountain Segment. As a result of the sale      of Terasen Pipelines (Corridor) Inc. and the transfer of Trans Mountain to      Kinder Morgan Energy Partners, the business segment referred to in      previous filings as Kinder Morgan Canada is no longer reported. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | As      discussed in Note 6, we closed the sale of our Terasen Gas segment on May      17, 2007. |
|---|--------------------------------------------------------------------------------------------------|

| 3 | Adjustments      include (i) the translation of goodwill denominated in foreign currencies,      (ii) reductions in the allocation of goodwill due to reductions in      Knight’s ownership percentage of KMP and (iii) the $377.1 million goodwill      impairment on the KMP-Trans MountainSegment. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | In      the fourth quarter of 2007 the assets, including goodwill, of the NGPL      Segment were transferred to assets held for sale. See Note      1(M). |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Successor      Company |   |   | Predecessor      Company |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------|--------|--------|--------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | December      31,      |   |   | December      31,        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 2007                   |   |   | 2006                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | (In      millions)     |   |   | (In      millions)       |
| Customer      Relationships, Contracts and Agreements:                                                                                                                                                                                                                                                                                                                                                                                                                                 |                   |   |   |                     |   |   |   |   |
| Gross      Carrying      Amount                                                                                               | $                      | 321.3  |   |                     |   | $ | 253.8 |   |
| Accumulated      Amortization                                                                                                 |                   | (11.6  | )      |                     |   |   | (36.2 | ) |
| Net      Carrying      Amount                                                                                                 |                   | 309.7  |   |                     |   |   | 217.6 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                   |   |   |                     |   |   |   |   |
| Technology-based      Assets, Lease Value and Other:                                                                                                                                                                                                                                                                                                                                                                                                                                   |                   |   |   |                     |   |   |   |   |
| Gross      Carrying      Amount                                                                                               |                   | 11.7   |   |                     |   |   | 13.3 |   |
| Accumulated      Amortization                                                                                                 |                   | (0.3   | )      |                     |   |   | (1.4 | ) |
| Net      Carrying      Amount                                                                                                 |                   | 11.4   |   |                     |   |   | 11.9 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                   |   |   |                     |   |   |   |   |
| Total      Other Intangibles,      Net                                                                         | $                      | 321.1  |   |                     |   | $ | 229.5 |   |

|                                                  | Successor      Company |   |   | Predecessor      Company     |
|-------------------------------------------------------|------------------------|--------|--------|------------------------------|
|                                                  | Seven      Months      |   |   | Year      Ended December 31, |
|                                                  | Ended                  |   |   | Five      Months             |   |   |   |   |
|                                                  | December      31, 2007 |   |   | EndedMay      31, 2007       |   | 2006 |   | 2005 |
|                                                  | (In      millions)     |   |   | (In      millions)           |
| Customer      Relationships, Contracts and Agreements | $                      | 11.6   |   |                         |   | $ | 6.1 |   |   | $ | 15.0 |   | $ | 1.5 |
| Technology-based      Assets, Lease Value and Other   |                   | 0.3    |   |                         |   |   | 0.2 |   |   |   | 0.2 |   |   | - |
| Total      Amortizations                              | $                      | 11.9   |   |                         |   | $ | 6.3 |   |   | $ | 15.2 |   | $ | 1.5 |

|   | · | NGPL      PipeCo LLC (20%, see Note 1(M)); |
|--------|--------|--------------------------------------------|

|   | · | Express      Pipeline System (33.33%); |
|--------|--------|----------------------------------------|

|   | · | Plantation      Pipe Line Company (51%); |
|--------|--------|------------------------------------------|

|   | · | Thermo      Cogeneration Partnership, L.P. and Greenhouse Holdings, LLC (Thermo      Companies) (49.5%); |
|--------|--------|----------------------------------------------------------------------------------------------------------|

|   | · | West2East      Pipeline LLC (51%); |
|--------|--------|------------------------------------|

|   | · | Red      Cedar Gathering Company (49%); |
|--------|--------|-----------------------------------------|

|   | · | Midcontinent      Express Pipeline LLC (50%); |
|--------|--------|-----------------------------------------------|

|   | · | Thunder      Creek Gas Services, LLC (25%); |
|--------|--------|---------------------------------------------|

|   | · | Cortez      Pipeline Company (50%); and |
|--------|--------|-----------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|   | · | Horizon      Pipeline Company (50%); |
|--------|--------|--------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | SuccessorCompany   |    |   | PredecessorCompany |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|---------|--------|--------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | December      31,  |    |   | December      31,  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 2007               |    |   | 2006               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | (In      millions) |    |   | (In      millions) |
| NGPL      PipeCo      LLC                                                                                                      | $                  | 720.0   |   |               | $ | - |
| Express      Pipeline      System                                                                                              |               | 402.1   |   |               |   | 449.7 |
| Plantation      Pipe Line Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |               | 351.4   |   |               |   | 199.6 |
| Thermo      Companies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |               | 53.5    |   |               |   | 153.9 |
| West      2 East Pipeline LLC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |               | 191.9   |   |               |   | - |
| Red      Cedar Gathering Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |               | 135.6   |   |               |   | 160.7 |
| Midcontinent      Express Pipeline LLC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |               | 63.0    |   |               |   | - |
| Customer      Works      LP                                                                                                                                                                                                                                                                                                                                                                                                                |               | -       |   |               |   | 30.0 |
| Thunder      Creek Gas Services, LLC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |               | 37.0    |   |               |   | 37.2 |
| Cortez      Pipeline Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |               | 14.2    |   |               |   | 16.2 |
| Horizon      Pipeline Company1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |               | -       |   |               |   | 16.0 |
| Subsidiary      Trusts Holding Solely Debentures of Kinder Morgan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |               | 8.6     |   |               |   | 8.6 |
| All      Others                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |               | 18.9    |   |               |   | 12.7 |
| Total      Equity Investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | $                  | 1,996.2 |   |               | $ | 1,084.6 |

|   | ______________ |
|--------|----------------|

| 1 | Balance      for 2007 is included in the caption “Assets Held for Sale, Non-current” in      the accompanying Consolidated BalanceSheet. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                 | SuccessorCompany                        |   |   | Predecessor      Company          |
|--------------------------------------|-----------------------------------------|--------|--------|-----------------------------------|
|                                 | Seven      MonthsEndedDecember      31, |   |   | Five      MonthsEndedMay      31, |   | Year      Ended December 31, |
|                                 | 2007                                    |   |   | 2007                              |   | 2006 |   | 2005 |
|                                 | (In      millions)                      |   |   |                              | (In      millions) |
| Cortez      Pipeline Company         | $                                       | 10.5   |   |                              |   | $ | 8.7 |   |   | $ | 19.2 |   |   | $ | - |   |
| Express      Pipeline System         |                                    | 14.9   |   |                              |   |   | 5.0 |   |   |   | 17.1 |   |   |   | 2.0 |   |
| Plantation      Pipe Line Company    |                                    | 10.8   |   |                              |   |   | 11.9 |   |   |   | 12.8 |   |   |   | - |   |
| Thermo      Companies                |                                    | 8.0    |   |                              |   |   | 5.1 |   |   |   | 11.3 |   |   |   | 11.6 |   |
| Red      Cedar Gathering Company     |                                    | 16.1   |   |                              |   |   | 11.9 |   |   |   | 36.3 |   |   |   | - |   |
| Customer      Works LP1              |                                    | -      |   |                              |   |   | - |   |   |   | - |   |   |   | - |   |
| Thunder      Creek Gas Services, LLC |                                    | 1.2    |   |                              |   |   | 1.0 |   |   |   | 2.5 |   |   |   | - |   |
| Midcontinent      Express Pipeline   |                                    | 1.2    |   |                              |   |   | 0.2 |   |   |   | - |   |   |   | - |   |
| West2East      Pipeline LLC          |                                    | (8.2   | )      |                              |   |   | (4.2 | ) |   |   | - |   |   |   | - |   |
| Horizon      Pipeline Company        |                                    | 1.0    |   |                              |   |   | 0.6 |   |   |   | 1.8 |   |   |   | 1.7 |   |
| Heartland      Pipeline Company2     |                                    | -      |   |                              |   |   | - |   |   |   | - |   |   |   | - |   |
| All      Others                      |                                    | 1.3    |   |                              |   |   | 0.5 |   |   |   | 3.2 |   |   |   | - |   |
| Total                                | $                                       | 56.8   |   |                              |   | $ | 40.7 |   |   | $ | 104.2 |   |   | $ | 15.3 |   |
| Amortization      of Excess Costs    | $                                       | (3.4   | )      |                              |   | $ | (2.4 | ) |   | $ | (5.6 | ) |   | $ | - |   |

| 1 | This      investment was part of the Terasen Inc. sale, therefore our earnings from      it are included in “(Loss) Income from Discontinued Operations, Net of      Tax” in the accompanying Consolidated Statements of Operations; see Note      7. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | This      investment was part of the North System sale, therefore our earnings from      it are included in “(Loss) Income from Discontinued Operations, Net of      Tax” in the accompanying Consolidated Statements of Operations; see Note      7. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                          | Year      Ended December 31, |
|-------------------------------|------------------------------|
|                          | 2007                         |   | 2006 |   | 2005 |
|                          | (In      millions)           |
| Revenues                      | $                            | 738.4 |   |   | $ | 692.1 |   |   | $ | 76.7 |   |
| Costs      and Expenses  |                         | 534.4 |   |   |   | 483.2 |   |   |   | 48.1 |   |
| Net      Income          | $                            | 204.0 |   |   | $ | 208.9 |   |   | $ | 28.6 |   |

|                                                                                                              | December      31,  |
|-------------------------------------------------------------------------------------------------------------------|--------------------|
|                                                                                                              | 20071              |   | 2006 |
|                                                                                                              | (In      millions) |
| Current      Assets                                                                 | $                  | 3,566.2 |   | $ | 241.2 |
| Non-current      Assets                                                                                 |               | 11,469.5 |   |   | 2,580.3 |
| Current      Liabilities                                                                           |               | 572.3 |   |   | 319.6 |
| Non-current      Liabilities                                                   |               | 6,078.4 |   |   | 1,671.2 |
| Minority      Interest in Equity of Subsidiaries                                                                  |               | 1.7 |   |   | - |
| Partners’/Owners’      Equity             |               | 8,383.2 |   |   | 830.7 |

| 1 | Includes      amounts associated with our NGPL business segment. In December 2007, we      entered into a definitive agreement to sell an 80% ownership interest in      our NGPL business segment. The closing of the sale occurred on February      15, 2008 (see Note 1(M)). |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                        | SuccessorCompany                            |   |   | Predecessor      Company               |
|---------------------------------------------|---------------------------------------------|--------|--------|----------------------------------------|
|                                        | Seven      MonthsEndedDecember      31,2007 |   |   | Five      MonthsEndedMay      31, 2007 |   | Year      EndedDecember      31,2006 |
|                                        | (In      millions)                          |   |   | (In      millions)                     |
| Balance      at Beginning of Period         | $                                           | 53.1   |   |                                   |   | $ | 52.5 |   |   | $ | 3.2 |   |
| KMP      ARO Consolidated into Knight Inc.1 |                                        | n/a    |   |                                   |   |   | n/a |   |   |   | 43.2 |   |
| Additions                                   |                                        | 1.2    |   |                                   |   |   | 0.2 |   |   |   | 6.8 |   |
| Liabilities      Settled                    |                                        | (0.8   | )      |                                   |   |   | (0.7 | ) |   |   | (3.2 | ) |
| Accretion      Expense                      |                                        | 1.5    |   |                                   |   |   | 1.1 |   |   |   | 2.5 |   |
| Balance      at End of Period               | $                                           | 55.0   |   |                                   |   | $ | 53.1 |   |   | $ | 52.5 |   |

| 1 | Represents      asset retirement obligation balances of Kinder Morgan Energy Partners as      of December 31, 2005. Due to our adoption of EITF No. 04-5, beginning      January 1, 2006, the accounts and balances of Kinder Morgan Energy      Partners are included in our consolidated results as discussed in Note      1(B). |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                                       | Successor      Company                  |   |   | Predecessor      Company |
|----------------------------------------------------------------------------|-----------------------------------------|--------|--------|--------------------------|
|                                                                       | Seven      MonthsEndedDecember      31, |   |   | Five      MonthsEnded    |   | Year      Ended December 31, |
|                                                                       | 2007                                    |   |   | May      31, 2007        |   | 2006 |   | 2005 |
|                                                                       | (In      millions)                      |   |   | (In      millions)       |
| Interest      Expense                                                      | $                                       | 609.7  |   |                     |   | $ | 264.1 |   |   | $ | 582.3 |   |   | $ | 148.7 |   |
| Capitalized      Interest1                                                 |                                    | (25.5  | )      |                     |   |   | (12.2 | ) |   |   | (23.3 | ) |   |   | (1.2 | ) |
| Interest      Expense, Net                                                 |                                    | 584.2  |   |                     |   |   | 251.9 |   |   |   | 559.0 |   |   |   | 147.5 |   |
| Interest      Expense – Preferred Interest in General Partner of KMP |                                    | 3.6    |   |                     |   |   | - |   |   |   | - |   |   |   | - |   |
| Interest      Expense – Deferrable Interest Debentures               |                                    | 12.8   |   |                     |   |   | 9.1 |   |   |   | 21.9 |   |   |   | 21.9 |   |
| Total      Interest Expense                                                | $                                       | 600.6  |   |                     |   | $ | 261.0 |   |   | $ | 580.9 |   |   | $ | 169.4 |   |

| 1 | Includes      the debt component of the allowance for funds used during construction for      our regulated utility operations, which are accounted for in accordance      with the provisions of SFAS No. 71, Accounting for the Effects of      Certain Types of Regulation. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                 | SuccessorCompany                        |   |   | Predecessor      Company |
|------------------------------------------------------|-----------------------------------------|--------|--------|--------------------------|
|                                                 | Seven      MonthsEndedDecember      31, |   |   | Five      MonthsEnded    |   | Year      Ended December 31, |
|                                                 | 2007                                    |   |   | May      31, 2007        |   | 2006 |   | 2005 |
|                                                 | (In      millions)                      |   |   | (In      millions)       |
| Accounts      Receivable                             | $                                       | (64.3  | )      |                     |   | $ | (31.9 | ) |   | $ | 192.5 |   |   | $ | (15.1 | ) |
| Materials      and Supplies Inventory                |                                    | (8.1   | )      |                     |   |   | (1.7 | ) |   |   | (0.5 | ) |   |   | (0.1 | ) |
| Other      Current Assets                            |                                    | (65.2  | )      |                     |   |   | 0.5 |   |   |   | 103.2 |   |   |   | (52.0 | ) |
| Accounts      Payable                                |                                    | 68.7   |   |                     |   |   | 26.3 |   |   |   | (243.4 | ) |   |   | 6.6 |   |
| Income      Tax Benefits from Employee Benefit Plans |                                    | -      |   |                     |   |   | - |   |   |   | - |   |   |   | 22.0 |   |
| Other      Current Liabilities                       |                                    | 172.9  |   |                     |   |   | (196.1 | ) |   |   | 28.2 |   |   |   | 25.2 |   |
|                                                 | $                                       | 104.0  |   |                     |   | $ | (202.9 | ) |   | $ | 80.0 |   |   | $ | (13.4 | ) |

|                                      | SuccessorCompany                        |   |   | Predecessor      Company |
|-------------------------------------------|-----------------------------------------|--------|--------|--------------------------|
|                                      | Seven      MonthsEndedDecember      31, |   |   | Five      MonthsEnded    |   | Year      Ended December 31, |
|                                      | 2007                                    |   |   | May      31, 2007        |   | 2006 |   | 2005 |
|                                      | (In      millions)                      |   |   | (In      millions)       |
| Cash      Paid for:                       |                                    |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      (Net of Amount Capitalized) | $                                       | 586.5  |   |                     |   | $ | 381.8 |   |   | $ | 731.6 |   |   | $ | 184.0 |   |
| Income      Taxes Paid (Net of Refunds)1  | $                                       | 146.4  |   |                     |   | $ | 133.3 |   |   | $ | 314.9 |   |   | $ | 204.0 |   |

| 1 | Income      taxes paid includes taxes paid related to prior  periods. |
|---|-----------------------------------------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                        | SuccessorCompany                        |   |   | Predecessor      Company |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------|--------|--------|--------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                        | Seven      MonthsEndedDecember      31, |   |   | Five      MonthsEnded    |   | Year      Ended December 31, |
|                                                                                                                                                                                                                                                                                                                                                                                                                        | 2007                                    |   |   | May      31, 2007        |   | 2006 |   | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                        | (In      millions)                      |   |   | (In      millions)       |
| Natural      Gas Transportation and Storage                                                                                                                                                                                                                                                                                                                                                                                 | $                                       | 6.7    |   |                     |   | $ | 4.5 |   |   | $ | 6.1 |   |   | $ | 4.4 |   |
| Natural      Gas      Sales                                                                 |                                    | -      |   |                     |   |   | - |   |   |   | - |   |   |   | 9.4 |   |
| Other      Revenues                                                                         |                                    | -      |   |                     |   |   | - |   |   |   | - |   |   |   | 1.6 |   |
| Total      Related-party Operating Revenues                                                                                                                                                                                                                                                                                                                                                                                 | $                                       | 6.7    |   |                     |   | $ | 4.5 |   |   | $ | 6.1 |   |   | $ | 15.4 |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                      | SuccessorCompany   |    |   | PredecessorCompany |
|-------------------------------------------|--------------------|---------|--------|--------------------|
|                                      | December      31,  |    |   | December      31,  |
|                                      | 2007               |    |   | 2006               |
|                                      | (In      millions) |    |   | (In      millions) |
| Kinder      Morgan Energy Partners        | $                  | 1,616.0 |   |               |   | $ | 1,727.7 |   |
| Kinder      Morgan Management, LLC        |               | 1,657.7 |   |               |   |   | 1,328.4 |   |
| Triton      Power               |               | 29.2    |   |               |   |   | 25.9 |   |
| Other       |               | 11.1    |   |               |   |   | 13.5 |   |
|                                      | $                  | 3,314.0 |   |               |   | $ | 3,095.5 |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                                    | Year      EndedDecember      31, 2005 |
|-------------------------------------------------------------------------|---------------------------------------|
|                                                                    | (In      millions)                    |
| Operating      Revenues         |                                  | $ | 9,787.1 |   |
| Operating      Expenses                                       |                                  |   | 8,773.6 |   |
| Operating      Income                                         |                                  | $ | 1,013.5 |   |
|                                                               |                                  |   |   |   |
| Net      Income                                                    |                                  | $ | 812.2 |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

| The Total Purchase      Price Consisted of the Following:           | (In      millions) |
|---------------------------------------------------------------------|--------------------|
| Total      Market Value of Kinder Morgan, Inc. Common Shares Issued | $                  | 1,146.8 |   |
| Cash      Paid – U.S. Dollar Equivalent             |               | 2,134.3 |   |
| Transaction      Fees                                               |               | 15.7 |   |
| Total      Purchase Price                                      | $                  | 3,296.8 |   |

| The Allocation of the      Purchase Price was as Follows:                                                                                   | (In      millions) |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------------------|
| Current      Assets                     | $                  | 812.7 |   |
| Goodwill                                                                                                                          |               | 1,990.4 |   |
| Investments                                                                                                             |               | 504.8 |   |
| Property,      Plant and Equipment                                                                                                     |               | 3,592.7 |   |
| Deferred      Charges and Other Assets                                                                                                 |               | 602.4 |   |
| Current      Liabilities                                                                                 |               | (1,517.8 | ) |
| Deferred      Income      Taxes                                                      |               | (667.2 | ) |
| Other      Deferred      Credits                            |               | (264.5 | ) |
| Long-term      Debt                               |               | (1,756.7 | ) |
|                                                                                                                                        | $                  | 3,296.8 |   |

| Allocation of      Goodwill:          | (In      millions) |
|---------------------------------------|--------------------|
| Terasen      Gas            | $                  | 1,334.3 |
| Kinder      Morgan Canada   |               | 656.1 |
|                                  | $                  | 1,990.4 |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

| Purchase      Price:                        |   |   |
|---------------------------------------------|--------|--------|
| Cash      Paid, Including Transaction Costs | $      | 244.6  |
| Liabilities      Assumed                    |   | -      |
| Total      Purchase Price                   | $      | 244.6  |
|                                        |   |   |
| Allocation      of Purchase Price:          |   |   |
| Current      Assets                         | $      | -      |
| Property,      Plant and Equipment          |   | 244.6  |
| Deferred      Charges and Other Assets      |   | -      |
|                                        | $      | 244.6  |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

| Purchase      Price:                        |   |   |
|---------------------------------------------|--------|--------|
| Cash      Paid, Including Transaction Costs | $      | 60.0   |
| Liabilities      Assumed                    |   | 3.6    |
| Total      Purchase Price                   | $      | 63.6   |
|                                        |   |   |
| Allocation      of Purchase Price:          |   |   |
| Current      Assets                         | $      | 0.1    |
| Property,      Plant and Equipment          |   | 63.5   |
|                                        | $      | 63.6   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

| Purchase      Price:                        |   |   |
|---------------------------------------------|--------|--------|
| Cash      Paid, Including Transaction Costs | $      | 61.6   |
| Liabilities      Assumed                    |   | 0.3    |
| Total      Purchase Price                   | $      | 61.9   |
|                                        |   |   |
| Allocation      of Purchase Price:          |   |   |
| Current      Assets                         | $      | 0.5    |
| Property,      Plant and Equipment          |   | 43.6   |
| Goodwill                                    |   | 17.8   |
|                                        | $      | 61.9   |

| Purchase      Price:                        |   |   |
|---------------------------------------------|--------|--------|
| Cash      Paid, Including Transaction Costs | $      | 15.8   |
| Liabilities      Assumed                    |   | 0.8    |
| Total      Purchase Price                   | $      | 16.6   |
|                                        |   |   |
| Allocation      of Purchase Price:          |   |   |
| Current      Assets                         | $      | 1.6    |
| Property,      Plant and Equipment          |   | 6.6    |
| Goodwill                                    |   | 8.4    |
|                                        | $      | 16.6   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

| Purchase      Price:                        |   |   |
|---------------------------------------------|--------|--------|
| Cash      Paid, Including Transaction Costs | $      | 4.8    |
| Issuance      of Common Units               |   | 1.6    |
| Liabilities      Assumed                    |   | 0.9    |
| Total      Purchase Price                   | $      | 7.3    |
|                                        |   |   |
| Allocation      of Purchase Price:          |   |   |
| Current      Assets                         | $      | 0.8    |
| Deferred      Charges and Other Assets      |   | 6.5    |
|                                        | $      | 7.3    |

| Purchase      Price:                        |   |   |
|---------------------------------------------|--------|--------|
| Cash      Paid, Including Transaction Costs | $      | 6.4    |
| Liabilities      Assumed                    |   | -      |
| Total      Purchase Price                   | $      | 6.4    |
|                                        |   |   |
| Allocation      of Purchase Price:          |   |   |
| Property,      Plant and Equipment          | $      | 6.4    |
|                                        | $      | 6.4    |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

| Purchase      Price:                        |   |   |
|---------------------------------------------|--------|--------|
| Cash      Paid, Including Transaction Costs | $      | 5.5    |
| Notes      Payable (Fair Value)             |   | 42.3   |
| Total      Purchase Price                   | $      | 47.8   |
|                                        |   |   |
| Allocation      of Purchase Price:          |   |   |
| Property,      Plant and Equipment          | $      | 47.8   |
|                                        | $      | 47.8   |

| Purchase      Price:                        |   |   |
|---------------------------------------------|--------|--------|
| Cash      Paid, Including Transaction Costs | $      | 38.8   |
| Assumed      Liabilities                    |   | 18.4   |
| Total      Purchase Price                   | $      | 57.2   |
|                                        |   |   |
| Allocation      of Purchase Price:          |   |   |
| Current      Assets                         | $      | 6.5    |
| Property,      Plant and Equipment          |   | 50.7   |
|                                        | $      | 57.2   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

| Purchase      Price:                        |   |   |
|---------------------------------------------|--------|--------|
| Cash      Paid, Including Transaction Costs | $      | 100.3  |
| Assumed      Liabilities                    |   | 1.2    |
| Total      Purchase Price                   | $      | 101.5  |
|                                        |   |   |
| Allocation      of Purchase Price:          |   |   |
| Current      Assets                         | $      | 0.2    |
| Property,      Plant and Equipment          |   | 60.8   |
| Deferred      Charges and Other             |   | 40.5   |
|                                        | $      | 101.5  |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                                  | SuccessorCompany                        |   |   | Predecessor      Company |
|-----------------------------------------------------------------------|-----------------------------------------|--------|--------|--------------------------|
|                                                                  | Seven      MonthsEndedDecember      31, |   |   | Five      MonthsEnded    |   | Year      Ended December 31, |
|                                                                  | 2007                                    |   |   | May      31, 2007        |   | 2006 |   | 2005 |
|                                                                  | (In      millions)                      |   |   | (In      millions)       |
| Operating      Revenues                                               | $                                       | 24.1   |   |                     |   | $ | 921.8 |   |   | $ | 1,999.3 |   |   | $ | 569.0 |   |
|                                                                  |                                    |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (Loss) from Discontinued Operations Before Income Taxes | $                                       | (10.2  | )      |                     |   | $ | 393.2 |   |   | $ | (530.6 | ) |   | $ | 65.8 |   |
| Income      Taxes                                                     |                                    | 8.7    |   |                     |   |   | (94.6 | ) |   |   | 2.1 |   |   |   | (25.4 | ) |
| Earnings      (Loss) from Discontinued Operations                     | $                                       | (1.5   | )      |                     |   | $ | 298.6 |   |   | $ | (528.5 | ) |   | $ | 40.4 |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                                    | SuccessorCompany   |     |   | PredecessorCompany |
|-------------------------------------------------------------------------|--------------------|----------|--------|--------------------|
|                                                                    | December      31,  |     |   | December      31,  |
|                                                                    | 2007               |     |   | 2006               |
|                                                                    | (In      millions) |     |   | (In      millions) |
| Knight      Inc.:                                                       |               |     |   |               |   |   |   |   |
| Natural      Gas and Liquids Pipelines                                  | $                  | 16.1     |   |               |   | $ | 4,320.4 |   |
| Storage      Facilities                                                 |               | -        |   |               |   |   | 1,035.2 |   |
| Electric      Generation                                                |               | 10.3     |   |               |   |   | 37.9 |   |
| General      and Other                                                  |               | 43.9     |   |               |   |   | 149.0 |   |
| Terasen:                                                                |               |     |   |               |   |   |   |   |
| Natural      Gas Pipelines                                              |               | -        |   |               |   |   | 968.8 |   |
| Petroleum      Pipelines                                                |               | -        |   |               |   |   | 1,104.9 |   |
| Retail      Natural Gas Distribution                                    |               | -        |   |               |   |   | 1,180.7 |   |
| General      and Other                                                  |               | -        |   |               |   |   | 381.0 |   |
| Kinder Morgan Energy      Partners1:                                    |               |     |   |               |   |   |   |   |
| Natural      Gas, Liquids and Carbon Dioxide Pipelines                  |               | 6,572.6  |   |               |   |   | 4,559.7 |   |
| Pipeline      and Terminals Station Equipment                           |               | 5,596.0  |   |               |   |   | 4,508.8 |   |
| General      and Other                                                  |               | 1,095.9  |   |               |   |   | 850.8 |   |
|                                                               |               |     |   |               |   |   |   |   |
| Accumulated      Amortization, Depreciation and Depletion               |               | (277.0   | )      |               |   |   | (2,306.3 | ) |
|                                                                    |               | 13,057.8 |   |               |   |   | 16,790.9 |   |
| Land                                                                    |               | 297.3    |   |               |   |   | 273.9 |   |
| Natural      Gas, Liquids (including Line Fill) and Transmix Processing |               | 168.2    |   |               |   |   | 615.9 |   |
| Construction      Work in Process                                       |               | 1,280.6  |   |               |   |   | 1,158.9 |   |
| Property,      Plant and Equipment, Net                                 | $                  | 14,803.9 |   |               |   | $ | 18,839.6 |   |

|   | ____________ |
|--------|--------------|

| 1 | Includes      allocation of purchase accounting adjustment associated with the Going      Private transaction (see note1(B)). |
|---|-------------------------------------------------------------------------------------------------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                                                                                                                                                                                                                         | SuccessorCompany                        |   |   | Predecessor      Company |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------|--------|--------|--------------------------|
|                                                                                                                                                                                                                                                         | Seven      MonthsEndedDecember      31, |   |   | Five      MonthsEnded    |   | Year      Ended December 31, |
|                                                                                                                                                                                                                                                         | 2007                                    |   |   | May      31, 2007        |   | 2006 |   | 2005 |
|                                                                                                                                                                                                                                                         | (In      millions)                      |   |   | (In      millions)       |
| United      States                                        | $                                       | 474.2  |   |                     |   | $ | 279.2 |   |   | $ | 903.6 |   |   | $ | 844.8 |   |
| Foreign                                                   |                                    | 1.7    |   |                     |   |   | (376.4 | ) |   |   | (17.3 | ) |   |   | 6.5 |   |
| Total                                                     | $                                       | 475.9  |   |                     |   | $ | (97.2 | ) |   | $ | 886.3 |   |   | $ | 851.3 |   |

|                         | SuccessorCompany                        |   |   | Predecessor      Company |
|------------------------------|-----------------------------------------|--------|--------|--------------------------|
|                         | Seven      MonthsEndedDecember      31, |   |   | Five      MonthsEnded    |   | Year      Ended December 31, |
|                         | 2007                                    |   |   | May      31, 2007        |   | 2006 |   | 2005 |
|                         | (In      millions)                      |   |   | (In      millions)       |
| Current      Tax Provision:  |                                    |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                         |                                    |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                      | $                                       | 268.6  |   |                     |   | $ | (7.0 | ) |   | $ | 246.6 |   |   | $ | 213.9 |   |
| State                        |                                    | 25.1   |   |                     |   |   | 3.2 |   |   |   | 10.2 |   |   |   | 27.4 |   |
| Foreign                      |                                    | 23.5   |   |                     |   |   | 0.6 |   |   |   | 18.3 |   |   |   | 3.8 |   |
|                         |                                    | 317.2  |   |                     |   |   | (3.2 | ) |   |   | 275.1 |   |   |   | 245.1 |   |
|                    |                                    |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred      Tax Provision: |                                    |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                         |                                    |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                      |                                    | (95.2  | )      |                     |   |   | 134.0 |   |   |   | 46.9 |   |   |   | 86.3 |   |
| State                        |                                    | 0.5    |   |                     |   |   | 6.4 |   |   |   | (36.3 | ) |   |   | 5.5 |   |
| Foreign                      |                                    | 4.9    |   |                     |   |   | (1.7 | ) |   |   | 0.2 |   |   |   | 0.2 |   |
|                         |                                    | (89.8  | )      |                     |   |   | 138.7 |   |   |   | 10.8 |   |   |   | 92.0 |   |
| Total      Tax Provision     | $                                       | 227.4  |   |                     |   | $ | 135.5 |   |   | $ | 285.9 |   |   | $ | 337.1 |   |
|                         |                                    |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Effective      Tax Rate      |                                    | 47.8   | %      |                     |   |   | 139.3 | % |   |   | 32.3 | % |   |   | 39.6 | % |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                                                                                | Successor      Company                   |   |   | Predecessor      Company |
|---------------------------------------------------------------------------------------------------------------------|------------------------------------------|--------|--------|--------------------------|
|                                                                                                                | Seven      Months EndedDecember      31, |   |   | Five      Months Ended   |   | Year      Ended December 31, |
|                                                                                                                | 2007                                     |   |   | May      31, 2007        |   | 2006 |   | 2005 |
|                                                                                                                | (In      millions)                       |   |   | (In      millions)       |
| Federal      Income Tax Rate                                                                                        |                                     | 35.0   | %      |                     |   |   | (35.0 | %) |   |   | 35.0 | % |   |   | 35.0 | % |
| Increase      (Decrease) as a Result of:                                                                            |                                     |   |   |                     |   |   |   | % |   |   |   |   |   |   |   |   |
| Nondeductible      Goodwill Impairment                                                                              |                                     | -      |   |                     |   |   | 135.8 | % |   |   | - |   |   |   | - |   |
| Terasen      Acquisition Financing Structure                                                                        |                                     | -      |   |                     |   |   | (17.1 | %) |   |   | (5.1 | %) |   |   | - |   |
| Nondeductible      Going Private Costs                                                                              |                                     | -      |   |                     |   |   | 31.6 | % |   |   | - |   |   |   | - |   |
| Deferred      Tax Rate Change                                                                                       |                                     | -      |   |                     |   |   | - |   |   |   | (4.3 | %) |   |   | - |   |
| Kinder      Morgan Management Minority Interest                                                                     |                                     | 2.7    | %      |                     |   |   | 6.4 | % |   |   | 2.7 | % |   |   | 1.9 | % |
| Foreign      Earnings Subject to Different Tax Rates                                                                |                                     | 5.8    | %      |                     |   |   | 8.6 | % |   |   | 2.6 | % |   |   | - |   |
| Net      Effects of Consolidating Kinder Morgan Energy Partners’ United      States Income Tax Provision |                                     | 2.5    | %      |                     |   |   | 4.1 | % |   |   | 1.4 | % |   |   | - |   |
| State      Income Tax, Net of Federal Benefit                                                                       |                                     | 2.3    | %      |                     |   |   | 6.9 | % |   |   | 1.7 | % |   |   | 2.4 | % |
| Other                                                                                                               |                                     | (0.5   | %)     |                     |   |   | (2.0 | %) |   |   | (1.7 | %) |   |   | 0.3 | % |
| Effective      Tax Rate                                                                                             |                                     | 47.8   | %      |                     |   |   | 139.3 | % |   |   | 32.3 | % |   |   | 39.6 | % |

|                         | Successor      Company                   |   |   | Predecessor      Company |
|------------------------------|------------------------------------------|--------|--------|--------------------------|
|                         | Seven      Months EndedDecember      31, |   |   | Five      Months Ended   |   | Year      Ended December 31, |
|                         | 2007                                     |   |   | May      31, 2007        |   | 2006 |   | 2005 |
|                         | (In      millions)                       |   |   | (In      millions)       |
| Continuing      Operations   | $                                        | 227.4  |   |                     |   | $ | 135.5 |   |   | $ | 285.9 |   |   | $ | 337.1 |   |
| Discontinued      Operations |                                     | (8.7   | )      |                     |   |   | 94.6 |   |   |   | (2.1 | ) |   |   | 25.4 |   |
| Equity      Items            |                                     | (219.4 | )      |                     |   |   | (51.7 | ) |   |   | (22.2 | ) |   |   | (121.2 | ) |
| Total                        | $                                        | (0.7   | )      |                     |   | $ | 178.4 |   |   | $ | 261.6 |   |   | $ | 241.3 |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                         | SuccessorCompany   |    |   | PredecessorCompany |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|---------|--------|--------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                         | December      31,  |    |   | December      31,  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                         | 2007               |    |   | 2006               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                         | (In      millions) |    |   | (In      millions) |
| Deferred      Tax Assets:                                                                                                                                                                                                                                                                                                                                                                                                                    |               |    |   |               |   |   |   |   |
| Postretirement      Benefits                                                                                                                                                                                                                                                                                                                                                                                                                 | $                  | 12.1    |   |               |   | $ | 57.7 |   |
| Book      Accruals                                                                                                                                                                                                                                                                                                                                                                                                                           |               | -       |   |               |   |   | 10.4 |   |
| Derivatives                                                                                                                                                                                                                                                                                                                                                                                                                                  |               | 270.9   |   |               |   |   | 118.6 |   |
| Capital      Loss Carryforwards                                                                                                                                                                                                                                                                                                                                                                                                              |               | 279.5   |   |               |   |   | 0.9 |   |
| Rate      Matters                                                                                                                                                                                                                                                                                                                                                                                                                            |               | -       |   |               |   |   | 29.3 |   |
| Other                                                                                                                                                                                                                                                                                                                                                                                                                                        |               | -       |   |               |   |   | 5.7 |   |
| Total      Deferred Tax      Assets                                                                          |               | 562.5   |   |               |   |   | 222.6 |   |
| Deferred      Tax Liabilities:                                                                                                                                                                                                                                                                                                                                                                                                               |               |    |   |               |   |   |   |   |
| Property,      Plant and Equipment                                                                                                                                                                                                                                                                                                                                                                                                           |               | 125.2   |   |               |   |   | 2,380.0 |   |
| Investments                                                                                                                                                                                                                                                                                                                                                                                                                                  |               | 1,909.0 |   |               |   |   | 953.6 |   |
| Book      Accruals                                                                                                                                                                                                                                                                                                                                                                                                                           |               | 62.1    |   |               |   |   | - |   |
| Rate      Matters                                                                                                                                                                                                                                                                                                                                                                                                                            |               | 0.4     |   |               |   |   | - |   |
| Prepaid      Pension Costs                                                                                                                                                                                                                                                                                                                                                                                                                   |               | 17.9    |   |               |   |   | 16.5 |   |
| Assets/Liabilities      Held for Sale                                                                                                                                                                                                                                                                                                                                                                                                        |               | 897.5   |   |               |   |   | - |   |
| Other                                                                                                                                                                                                                                                                                                                                                                                                                                        |               | 66.2    |   |               |   |   | 3.5 |   |
| Total      Deferred Tax      Liabilities                                                                     |               | 3,078.3 |   |               |   |   | 3,353.6 |   |
| Net      Deferred Tax      Liabilities                                                                       | $                  | 2,515.8 |   |               |   | $ | 3,131.0 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                    |               |    |   |               |   |   |   |   |
| Current      Deferred Tax      Asset                                                                         | $                  | -       |   |               |   | $ | 13.0 |   |
| Current      Deferred Tax      Liability                                                                     |               | 666.4   |   |               |   |   | - |   |
| Non-current      Deferred Tax      Liability                                                                 |               | 1,849.4 |   |               |   |   | 3,144.0 |   |
| Net      Deferred Tax      Liabilities                                                                       | $                  | 2,515.8 |   |               |   | $ | 3,131.0 |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

| Credit      Facilities                                                                  |
|-----------------------------------------------------------------------------------------|
|                                                                                    |
| Knight      Inc.                                                                        |
| $1.0      billion, six-year secured revolver, due May 2013                              |
| $1.0      billion, six-year and six-month secured term facility, due November      2013 |
| $3.3      billion, seven-year secured term facility, due May 2014                       |
| Kinder      Morgan Energy Partners                                                      |
| $1.85      billion, five-year unsecured revolver, due August  2010                      |

|                               |   | Successor      Company                                            |
|------------------------------------|--------|-------------------------------------------------------------------|
|                               |   | December      31, 2007                                            |
|                               |   | Short-termBorrowingsOutstandingUnderRevolvingCredit      Facility |   | Commercial      PaperOutstanding |   | Weighted      AverageInterest      Rate ofShort-term      DebtOutstanding |
|                               |   | (In      millions)                                                |
| Knight      Inc.                   |   |                                                              |   |   |   |   |   |   |   |   |   |   |   |
| $1.0      billion                  |   | $                                                                 | 299.0 |   |   | $ | - |   |   |   | 6.42 | % |   |
| Kinder      Morgan Energy Partners |   |                                                              |   |   |   |   |   |   |   |   |   |   |   |
| $1.85      billion                 |   | $                                                                 | - |   |   | $ | 589.1 |   |   |   | 5.58 | % |   |

|                                   |   | Predecessor      Company                                                |
|----------------------------------------|--------|-------------------------------------------------------------------------|
|                                   |   | December      31, 2006                                                  |
|                                   |   | Short-termBorrowingsOutstandingUnder      RevolvingCredit      Facility |   | Commercial      Paperand      Bankers’AcceptancesOutstanding |   | Weighted-AverageInterest      Rate ofShort-term      DebtOutstanding |
|                                   |   | (In      millions of U.S. dollars)                                      |
| Knight      Inc.                       |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| $800      million                      |   | $                                                                       | 90.0 |   |   | $ | - |   |   |   | 5.70 | % |   |
| Kinder      Morgan Energy Partners     |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| $1.85      billion                     |   | $                                                                       | - |   |   | $ | 1,098.2 |   |   |   | 5.42 | % |   |
| Terasen                                |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| C$450      million                     |   | $                                                                       | - |   |   | $ | 97.8 |   |   |   | 4.34 | % |   |
| Terasen      Gas Inc.                  |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| C$500      million                     |   | $                                                                       | - |   |   | $ | 186.2 |   |   |   | 4.22 | % |   |
| Terasen      Pipelines (Corridor) Inc. |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| C$225      million                     |   | $                                                                       | - |   |   | $ | 193.1 |   |   |   | 4.22 | % |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                  | Successor      Company                        |   |                                                                 | Predecessor      Company                |
|-------------------------------------------------------|-----------------------------------------------|--------|----------------------------------------------------------------------|-----------------------------------------|
|                                                  | Seven      Months EndedDecember      31, 2007 |   |                                                                 | Five      Months EndedMay      31, 2007 |   | Twelve      Months EndedDecember      31, 2006 |
|                                                  | AverageShort-termDebtOutstanding              |   | Weighted-AverageInterest      Rate ofShort-term      DebtOutstanding |                                    |   | AverageShort-termDebtOutstanding |   | Weighted-AverageInterest      Rate ofShort-term      DebtOutstanding |   | AverageShort-termDebtOutstanding |   | Weighted-AverageInterest      Rate ofShort-term      DebtOutstanding |
|                                                  | (In      millions of U.S. dollars)            |   |                                                                 | (In      millions of U.S. dollars)      |
| Credit      Facilities:                               |                                          |   |                                                                 |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Knight Inc.1                                          |                                          |   |                                                                 |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $1.0      billion                                     | $                                             | 346.0  |                                                                 |                                    |   | 6.61 | % |   |   |   | $ | - |   |   |   | - | % |   |   | $ | - |   |   |   | - | % |   |
| Kinder Morgan, Inc.2                                  |                                          |   |                                                                 |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $800      million                                     | $                                             | -      |                                                                 |                                    |   | - | % |   |   |   | $ | 134.5 |   |   |   | 5.81 | % |   |   | $ | 114.6 |   |   |   | 5.77 | % |   |
|                                             |                                          |   |                                                                 |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial      Paper and Bankers’ Acceptances: |                                          |   |                                                                 |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Kinder Morgan, Inc.2                                  |                                          |   |                                                                 |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $800      million                                     | $                                             | -      |                                                                 |                                    |   | - | % |   |   |   | $ | - |   |   |   | - | % |   |   | $ | 6.6 |   |   |   | 4.77 | % |   |
| Kinder      Morgan Energy Partners                    |                                          |   |                                                                 |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $1.85      billion                                    | $                                             | 575.2  |                                                                 |                                    |   | 5.46 | % |   |   |   | $ | 614.0 |   |   |   | 5.40 | % |   |   | $ | 1,000.8 |   |   |   | 5.16 | % |   |
| Terasen Inc.3                                         |                                          |   |                                                                 |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| C$450      million                                    | $                                             | -      |                                                                 |                                    |   | - | % |   |   |   | $ | 79.9 |   |   |   | 4.34 | % |   |   | $ | 92.0 |   |   |   | 4.69 | % |   |
| Terasen Gas Inc.3                                     |                                          |   |                                                                 |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| C$500      million                                    | $                                             | -      |                                                                 |                                    |   | - | % |   |   |   | $ | 141.5 |   |   |   | 4.23 | % |   |   | $ | 169.3 |   |   |   | 4.03 | % |   |
| Terasen Pipelines (Corridor)      Inc.3               |                                          |   |                                                                 |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| C$375      million                                    | $                                             | 443.7  |                                                                 |                                    |   | 4.33 | % |   |   |   | $ | 298.8 |   |   |   | 4.24 | % |   |   | $ | 134.9 |   |   |   | 3.93 | % |   |

| 1 | In      conjunction with the Going Private transaction, Knight Inc. entered into a      $5.755 billion credit agreement dated May 30, 2007, which included three      term credit facilities, discussed following, and one revolving credit      facility. Knight Inc. does not have a commercial paper      program. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Our      $800 million credit facility was terminated on May 30,    2007. |
|---|--------------------------------------------------------------------------|

| 3 | On      February 26, 2007 and March 5, 2007, we entered into two definitive      agreements to sell Terasen Inc., including Terasen Gas Inc., and Terasen      Pipelines (Corridor) Inc., respectively. These transactions closed on May      17, 2007 and June 15, 2007, respectively (See Note 7). Accordingly, the      average short-term debt outstanding and the associated weighted-average      interest rate under the Terasen Inc. facilities for the five months ended      May 31, 2007 and under the Terasen Pipelines (Corridor) Inc. facility for      the seven months ended December 31, 2007 are only through the respective      dates of sale. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a      $1.0 billion senior secured Tranche A term loan facility with a term of      six years and six months (subsequently retired in February 2008, see      below); |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a      $3.3 billion senior secured Tranche B term loan facility, with a term of      seven years (subsequently retired in February 2008, see      below); |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a      $455 million senior secured Tranche C term loan facility with a term of      three years (subsequently retired in June 2007, see below)    and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a      $1.0 billion senior secured revolving credit facility with a term of six      years. The revolving credit facility includes a sublimit of $300 million      for the issuance of letters of credit and a sublimit of $50 million for      swingline loans. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|   | · | a      rate equal to LIBOR (London Interbank Offered Rate) plus an applicable      margin, or |
|--------|--------|-----------------------------------------------------------------------------------------------|

|   | · | a      rate equal to the higher of (a) U.S. prime rate and (b) the federal funds      effective rate plus 0.50%, in each case, plus an applicable      margin. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a      rate equal to the higher of (a) U.S. prime rate and (b) the federal funds      effective rate plus 0.50%, in each case, plus an applicable      margin. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Total      debt divided by earnings before interest, income taxes, depreciation and      amortization for (i) the test period ending December 31, 2007 may not      exceed 8.75:1.00, (ii) January 1, 2008 to December 31, 2008 may not exceed      8.00:1.00, (iii) January 1, 2009 to December 31, 2009 may not exceed      7.00:1.00 and (iv) thereafter may not exceed  6.00:1.00 |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Certain      limitations on indebtedness, including payments and      amendments; |
|--------|--------|-----------------------------------------------------------------------------------|

|   | · | Certain      limitations on entering into mergers, consolidations, sales of assets and      investments; |
|--------|--------|----------------------------------------------------------------------------------------------------------|

|   | · | Limitations      on granting liens; and |
|--------|--------|-----------------------------------------|

|   | · | Prohibitions      on making any dividend to shareholders if an event of default exists or      would exist upon making suchdividend. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Nonpayment      of interest, principal or fees; |
|--------|--------|-------------------------------------------------|

|   | · | Failure      to make required payments under other agreements that exceed      $75,000,000; |
|--------|--------|---------------------------------------------------------------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|   | · | Unsatisfied      and unbonded judgments (for a period of 60 days from entry) in excess of      $75,000,000; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------|

|   | · | Voluntary      or involuntary bankruptcy orliquidation. |
|--------|--------|---------------------------------------------------------|

|   | · | Total      debt divided by earnings before interest, income taxes, depreciation and      amortization for the preceding four quarters may not exceed (i) 5.5, in      the case of any such period ended on the last day of (1) a fiscal quarter      in which Kinder Morgan Energy Partners makes any Specified Acquisition, or      (2) the first or second fiscal quarter next succeeding such a fiscal      quarter or (ii) 5.0, in the case of any such period ended on the last day      of any other fiscal quarter; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Certain      limitations on entering into mergers, consolidations and sales of      assets; |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | Limitations      on granting liens; and |
|--------|--------|-----------------------------------------|

|   | · | Prohibitions      on making any distribution to holders of units if an event of default      exists or would exist upon making such  distribution. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|   | · | Nonpayment      of interest, principal or fees; |
|--------|--------|-------------------------------------------------|

|   | · | Failure      to make required payments under hedging agreements that equal or exceed      $75 million; |
|--------|--------|--------------------------------------------------------------------------------------------------------|

|   | · | Failure      of the general partner of Kinder Morgan Energy Partners to make required      payments equal to or in excess of $75million; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Adverse      judgments in excess of $75 million;and |
|--------|--------|-----------------------------------------------------|

|   | · | Voluntary      or involuntary bankruptcy orliquidation. |
|--------|--------|---------------------------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | December      31,  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 2007               |   | 2006 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | (In      millions) |
| Knight Inc.1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |               |   |   |   |   |   |   |
| Debentures:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |               |   |   |   |   |   |   |
| 6.50%      Series, Due      2013                                                                                           | $                  | 30.1 |   |   | $ | 35.0 |   |
| 6.67%      Series, Due      2027                                                                                           |               | 148.3 |   |   |   | 150.0 |   |
| 7.25%      Series, Due      2028                                                                                           |               | 494.3 |   |   |   | 493.0 |   |
| 7.45%      Series, Due      2098                                                                                           |               | 146.3 |   |   |   | 150.0 |   |
| Senior      Notes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |               |   |   |   |   |   |   |
| 6.80%      Series, Due      2008                                                                                           |               | - |   |   |   | 300.0 |   |
| 6.50%      Series, Due      2012                                                                                           |               | 1,010.5 |   |   |   | 1,000.0 |   |
| 5.15%      Series, Due      2015                                                                                           |               | 231.2 |   |   |   | 250.0 |   |
| Senior      Secured Credit Term Loan Facilities (See Note 10(A)):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |               |   |   |   |   |   |   |
| Tranche      A Term Loan, Due 2013                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |               | 997.5 |   |   |   | - |   |
| Tranche      B Term Loan, Due 2014                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |               | 3,191.7 |   |   |   | - |   |
| Deferrable      Interest Debentures Issued to Subsidiary Trusts:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |               |   |   |   |   |   |   |
| 8.56%      Junior Subordinated Deferrable Interest Debentures Due2027                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |               | 106.9 |   |   |   | 103.1 |   |
| 7.63%      Junior Subordinated Deferrable Interest Debentures Due2028                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |               | 176.2 |   |   |   | 180.5 |   |
| Carrying Value Adjustment for      Interest Rate Swaps2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               | - |   |   |   | 24.1 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |               |   |   |   |   |   |   |
| Unamortized      Gain (Loss) on Termination of Interest Rate Swap                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |               | 11.5 |   |   |   | (2.7 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |               |   |   |   |   |   |   |
| Kinder Morgan Finance Company,      ULC1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |               |   |   |   |   |   |   |
| 5.35%      Series, Due 2011                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |               | 738.5 |   |   |   | 750.0 |   |
| 5.70%      Series, Due 2016                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |               | 801.9 |   |   |   | 850.0 |   |
| 6.40%      Series, Due 2036                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |               | 503.8 |   |   |   | 550.0 |   |
| Carrying Value Adjustment for      Interest Rate Swaps2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               | 23.2 |   |   |   | (18.7 | ) |
| Unamortized      Gain on Termination of Interest Rate Swap                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |               | 11.6 |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |               |   |   |   |   |   |   |
| $1,000      Liquidation Value Series A Fixed-to-Floating Rate Term Cumulative      Preferred Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |               | 100.0 |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |               |   |   |   |   |   |   |
| Kinder Morgan Energy      Partners1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |               |   |   |   |   |   |   |
| Senior      Notes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |               |   |   |   |   |   |   |
| 5.35%      Series, Due      2007                                                                                           |               | - |   |   |   | 250.0 |   |
| 6.30%      Series, Due      2009                                                                                           |               | 250.9 |   |   |   | 250.0 |   |
| 7.50%      Series, Due      2010                                                                                           |               | 255.7 |   |   |   | 250.0 |   |
| 6.75%      Series, Due      2011                                                                                           |               | 710.6 |   |   |   | 700.0 |   |
| 7.125%      Series, Due      2012                                                                                          |               | 461.1 |   |   |   | 450.0 |   |
| 5.85%      Series, Due      2012                                                                                           |               | 500.0 |   |   |   | - |   |
| 5.00%      Series, Due      2013                                                                                           |               | 489.8 |   |   |   | 500.0 |   |
| 5.125%      Series, Due      2014                                                                                          |               | 488.9 |   |   |   | 500.0 |   |
| 6.00%      Series, Due      2017                                                                                           |               | 597.5 |   |   |   | - |   |
| 7.40%      Series, Due      2031                                                                                           |               | 310.5 |   |   |   | 300.0 |   |
| 7.75%      Series, Due      2032                                                                                           |               | 316.7 |   |   |   | 300.0 |   |
| 7.30%      Series, Due      2033                                                                                           |               | 514.1 |   |   |   | 500.0 |   |
| 5.80%      Series, Due      2035                                                                                           |               | 477.1 |   |   |   | 500.0 |   |
| 6.50%      Series, Due      2037                                                                                           |               | 395.7 |   |   |   | - |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

| 6.95%      Series, Due      2038                                                                                          |   | 550.0  |   |   |   | -      |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Other                                                                                                                     |   | 1.1    |   |   |   | 1.1    |   |
| Carrying Value Adjustment for      Interest Rate Swaps2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | 146.2  |   |   |   | 42.6   |   |
| Unamortized      Gain on Termination of Interest Rate Swap                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | 7.2    |   |   |   | -      |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |
| Central      Florida Pipe Line LLC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |
| 7.84%      Series, Due      2008                                                                                          |   | 5.0    |   |   |   | 10.0   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |
| Arrow Terminals      L.P.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |
| Illinois      Development Finance Authority Adjustable Rate Industrial Development      Revenue Bonds, Due 2010, weighted-average interest rate of 3.87% for the      five months ended May 31, 2007 and 3.77% for the seven months ended      December 31, 2007 (2006 - 4.089%)                                                                                                                                                                                                                                                                                                       |   | 5.3    |   |   |   | 5.3    |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |
| Kinder      Morgan Texas Pipeline, L.P.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |   |   |   |   |   |
| 8.85%      Series, Due      2014                                                                                          |   | 43.2   |   |   |   | 49.1   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |
| KM      Liquids Terminals LLC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |
| New      Jersey Economic Development Revenue Refunding Bonds, Due 2018,      weighted-average interest rate of 3.63% for the five months ended May 31,      2007 and 3.48 % for the seven months ended December 31, 2007 (2006 -      3.87%)                                                                                                                                                                                                                                                                                                                                      |   | 25.0   |   |   |   | 25.0   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |
| Kinder      Morgan Operating, L.P. “A” and Kinder Morgan Canada                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |
| 5.40%      Note, Due 2012                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 44.6   |   |   |   | -      |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |
| Kinder      Morgan Operating, L.P. “B”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |
| Jackson-Union      Counties Illinois Regional Port District Tax-exempt Floating Rate Bonds,      Due 2024, weighted-average interest rate of 3.58% for the five months      ended May 31, 2007 and 3.68% for the seven months ended December 31, 2007      (2006 - 3.90%)                                                                                                                                                                                                                                                                                                              |   | 23.7   |   |   |   | 23.7   |   |
| Other                                                                                                      |   | 0.2    |   |   |   | 0.2    |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |
| International      Marine Terminals                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |
| Plaquemines      Port, Harbor and Terminal District (Louisiana) Adjustable Rate Annual      Tender Port Facilities Revenue Refunding Bonds, Due 2025, weighted-average      interest rate of 3.59% for the five months ended May 31, 2007 and 3.65%      for the seven months ended December 31, 2007 (2006 -3.50%)                                                                                                                                                                                                                                                                    |   | 40.0   |   |   |   | 40.0   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |
| Terasen Inc.3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |
| Medium      Term Notes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |
| 6.30%      Series 1, Due 20084                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | -      |   |   |   | 178.3  |   |
| 5.56%      Series 3, Due 20144                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | -      |   |   |   | 112.4  |   |
| 8% Capital Securities, Due      20404                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | -      |   |   |   | 106.9  |   |
| Carrying Value Adjustment for      Interest Rate Swaps2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | -      |   |   |   | 1.1    |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |
| Terasen Gas Inc.      3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |
| Purchase      Money Mortgages:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |
| 11.80%      Series A, Due 2015                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | -      |   |   |   | 64.3   |   |
| 10.30%      Series B, Due 2016                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | -      |   |   |   | 171.6  |   |
| Debentures      and Medium Term Notes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |
| 10.75%      Series E, Due 2009                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | -      |   |   |   | 51.4   |   |
| 6.20%      Series 9, Due 2008                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | -      |   |   |   | 161.4  |   |
| 6.95%      Series 11, Due 2029                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | -      |   |   |   | 128.7  |   |
| 6.50%      Series 13, Due 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | -      |   |   |   | 85.8   |   |
| 6.50%      Series 18, Due 2034                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | -      |   |   |   | 128.7  |   |
| 5.90%      Series 19, Due 2035                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | -      |   |   |   | 128.7  |   |
| 5.55%      Series 21, Due 2036                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | -      |   |   |   | 103.0  |   |
| Floating      Rate Series 20, interest rate of 4.55% in 2006, Due 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | -      |   |   |   | 128.7  |   |
| Obligations      under Capital Leases, at interest rate of 5.62% in 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | -      |   |   |   | 6.2    |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |
| Terasen Gas (Vancouver Island)      Inc.3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

| Syndicated      credit facility at short-term floating rates,weighted-averageinterest      rate of 4.43% for the five months ended May 31, 2007 (2006 –      4.41%)                                                                                                                                                                                                                                                                                                                                                                                                                              |   | -        |   |   |   | 257.2    |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|--------|--------|----------|--------|
| Government      Loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | -        |   |   |   | 3.1      |   |
| Terasen Pipelines (Corridor)      Inc.3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |     |   |   |   |     |   |
| Debentures:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |     |   |   |   |     |   |
| 4.24%      Series A, Due 2010                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | -        |   |   |   | 128.7    |   |
| 5.033%      Series B, Due 2015                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | -        |   |   |   | 128.7    |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |     |   |   |   |     |   |
| Unamortized      Premium on Long-term Debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | -        |   |   |   | 2.5      |   |
| Unamortized      Debt Discount on Long-term Debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | (6.4     | )      |   |   | (16.7    | )      |
| Current      Maturities of Long-term Debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | (79.8    | )      |   |   | (511.2   | )      |
| Total      Long-term      Debt                                                                                             | $      | 15,297.4 |   |   | $      | 11,060.8 |   |

| 1 | Includes      purchase accounting adjustments to the carrying value of the debt to      reflect fair value at the time of the Going Private transaction (See Note      1(B)). The purchase accounting adjustments are being amortized over the      remaining lives of the debtsecurities. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Adjustment      of carrying value of long-term securities subject to outstanding interest      rate swaps; see Note 11. |
|---|-------------------------------------------------------------------------------------------------------------------------|

| 3 | We      closed transactions to sell Terasen Inc., which included Terasen Gas Inc.      and Terasen Gas (Vancouver Island) Inc., and Terasen Pipelines (Corridor)      Inc. on May 17, 2007 and June 15, 2007, respectively (see Note 7).      Accordingly, the weighted-average interest rate under the Terasen Gas      (Vancouver Island) Inc. facility for the five months ended May 31, 2007 is      only through the Terasen Inc. date of sale. Debt shown in the above table      for Terasen Inc. and its subsidiaries is denominated in Canadian dollars      but has been converted to and reported above in U.S. dollars at the      exchange rate at December 31, 2006 of 0.8581 U.S. dollars per Canadian      dollar. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Includes      purchase accounting adjustments made to adjust the carrying values of the      debt instruments and related interest rate swap agreements to their fair      values at the date of acquisition. The adjustments were being amortized      over the remaining lives of the Medium-Term Notes and Capital Securities      until their disposition (see Note4). |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                                                     | SuccessorCompany   |   |   | PredecessorCompany |
|------------------------------------------------------------------------------------------|--------------------|--------|--------|--------------------|
|                                                                                     | December      31,  |   |   | December      31,  |
|                                                                                     | 2007               |   |   | 2006               |
|                                                                                     | (In      millions) |   |   | (In      millions) |
| Derivatives      Asset (Liability)                                                       |               |   |   |               |   |   |   |   |
| Current      Assets: Other                                                               | $                  | 37.1   |   |               |   | $ | 133.6 |   |
| Current      Assets: Assets Held for Sale                                                | $                  | 8.4    |   |               |   | $ | 9.0 |   |
| Deferred      Charges and Other Assets                                                   | $                  | 4.4    |   |               |   | $ | 13.8 |   |
| Assets      Held for Sale, Non-current                                                   | $                  | -      |   |               |   | $ | 0.1 |   |
| Current      Liabilities: Other                                                          | $                  | (594.7 | )      |               |   | $ | (556.9 | ) |
| Current      Liabilities: Liabilities Held for Sale                                      | $                  | (0.4   | )      |               |   | $ | (18.0 | ) |
| Other      Liabilities and Deferred Credits: Other                                       | $                  | (836.8 | )      |               |   | $ | (510.2 | ) |
| Other      Liabilities and Deferred Credits: Liabilities Held for Sale,      Non-current | $                  | -      |   |               |   | $ | (0.1 | ) |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                    | SuccessorCompany                        |   |   | Predecessor      Company |
|-----------------------------------------|-----------------------------------------|--------|--------|--------------------------|
|                                    | Seven      MonthsEndedDecember      31, |   |   | Five      MonthsEnded    |   | Year      Ended December 31, |
|                                    | 2007                                    |   |   | May      31, 2007        |   | 2006 |   | 2005 |
|                                    | (In      millions)                      |   |   | (In      millions)       |
| Net      Periodic Pension Benefit Cost: |                                    |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Service      Cost                       | $                                       | 5.6    |   |                     |   | $ | 4.5 |   |   | $ | 10.6 |   |   | $ | 9.6 |   |
| Interest      Cost                      |                                    | 8.1    |   |                     |   |   | 5.6 |   |   |   | 12.7 |   |   |   | 12.1 |   |
| Expected      Return on Assets          |                                    | (14.0  | )      |                     |   |   | (9.6 | ) |   |   | (21.3 | ) |   |   | (20.2 | ) |
| Amortization      of Transition Asset   |                                    | -      |   |                     |   |   | - |   |   |   | - |   |   |   | (0.1 | ) |
| Amortization      of Prior Service Cost |                                    | -      |   |                     |   |   | 0.1 |   |   |   | 0.2 |   |   |   | 0.2 |   |
| Amortization      of Loss               |                                    | -      |   |                     |   |   | 0.2 |   |   |   | 0.9 |   |   |   | 0.6 |   |
| Net      Periodic Pension Benefit Cost  | $                                       | (0.3   | )      |                     |   | $ | 0.8 |   |   | $ | 3.1 |   |   | $ | 2.2 |   |

|                                           | SuccessorCompany                             |   |   | Predecessor      Company               |
|------------------------------------------------|----------------------------------------------|--------|--------|----------------------------------------|
|                                           | Seven      MonthsEndedDecember      31, 2007 |   |   | Five      MonthsEndedMay      31, 2007 |   | Year      EndedDecember      31, 2006 |
|                                           | (In      millions)                           |   |   | (In      millions)                     |
| Benefit      Obligation at Beginning of Period | $                                            | 236.5  |   |                                   |   | $ | 232.0 |   |   | $ | 224.5 |   |
| Service      Cost                              |                                         | 5.6    |   |                                   |   |   | 4.5 |   |   |   | 10.6 |   |
| Interest      Cost                             |                                         | 8.1    |   |                                   |   |   | 5.6 |   |   |   | 12.7 |   |
| Actuarial      Loss (Gain)                     |                                         | 18.5   |   |                                   |   |   | (2.5 | ) |   |   | (4.3 | ) |
| Plan      Amendments                           |                                         | -      |   |                                   |   |   | 2.7 |   |   |   | - |   |
| Business      Combinations/Mergers             |                                         | -      |   |                                   |   |   | - |   |   |   | 0.2 |   |
| Benefits      Paid                             |                                         | (10.7  | )      |                                   |   |   | (5.8 | ) |   |   | (11.7 | ) |
| Benefit      Obligation at End of Period       | $                                            | 258.0  |   |                                   |   | $ | 236.5 |   |   | $ | 232.0 |   |

|                                                  | SuccessorCompany                             |   |   | Predecessor      Company               |
|-------------------------------------------------------|----------------------------------------------|--------|--------|----------------------------------------|
|                                                  | Seven      MonthsEndedDecember      31, 2007 |   |   | Five      MonthsEndedMay      31, 2007 |   | Year      EndedDecember      31, 2006 |
|                                                  | (In      millions)                           |   |   | (In      millions)                     |
| Fair      Value of Plan Assets at Beginning of Period | $                                            | 273.4  |   |                                   |   | $ | 261.6 |   |   | $ | 242.4 |   |
| Actual      Return on Plan Assets During the Period   |                                         | 1.9    |   |                                   |   |   | 17.6 |   |   |   | 30.7 |   |
| Contributions      by Employer                        |                                         | -      |   |                                   |   |   | - |   |   |   | - |   |
| Benefits      Paid During the Period                  |                                         | (10.7  | )      |                                   |   |   | (5.8 | ) |   |   | (11.7 | ) |
| Business      Combinations/Mergers                    |                                         | -      |   |                                   |   |   | - |   |   |   | 0.2 |   |
| Fair      Value of Plan Assets at End of Period       |                                         | 264.6  |   |                                   |   |   | 273.4 |   |   |   | 261.6 |   |
| Benefit      Obligation at End of Period              |                                         | (258.0 | )      |                                   |   |   | (236.5 | ) |   |   | (232.0 | ) |
| Funded      Status at End of Period                   | $                                            | 6.6    |   |                                   |   | $ | 36.9 |   |   | $ | 29.6 |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                    | SuccessorCompany                             |   |   | Predecessor      Company               |
|---------------------------------------------------------|----------------------------------------------|--------|--------|----------------------------------------|
|                                                    | Seven      MonthsEndedDecember      31, 2007 |   |   | Five      MonthsEndedMay      31, 2007 |   | Year      EndedDecember      31, 2006 |
|                                                    | (In      millions)                           |   |   | (In      millions)                     |
| Application      of SFAS 158 – Net Loss           | $                                            | -      |   |                                   |   | $ | - |   |   | $ | 19.6 |   |
| Application      of SFAS 158 – Prior Service Cost |                                         | -      |   |                                   |   |   | - |   |   |   | 1.5 |   |
| Net      (Gain)/Loss Arising During Period              |                                         | 30.6   |   |                                   |   |   | (10.5 | ) |   |   | - |   |
| Prior      Service Cost Arising During Period           |                                         | -      |   |                                   |   |   | 2.7 |   |   |   | - |   |
| Business      Combinations                              |                                         | -      |   |                                   |   |   | (13.0 | ) |   |   | - |   |
| Amortization      of (Gain)/Loss                        |                                         | -      |   |                                   |   |   | (0.2 | ) |   |   | - |   |
| Amortization      of Prior Service Cost                 |                                         | -      |   |                                   |   |   | (0.1 | ) |   |   | - |   |
|                                                    | $                                            | 30.6   |   |                                   |   | $ | (21.1 | ) |   | $ | 21.1 |   |

| Fiscal      Year |   | ExpectedNet      BenefitPayments |
|------------------|--------|----------------------------------|
|             |   | (In      millions)               |
| 2008             |   | $                                | 13.7 |   |
| 2009             |   | $                                | 14.9 |   |
| 2010             |   | $                                | 15.9 |   |
| 2011             |   | $                                | 17.4 |   |
| 2012             |   | $                                | 18.8 |   |
| 2013-2016        |   | $                                | 114.2 |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                           | SuccessorCompany                        |   |   | Predecessor      Company |
|------------------------------------------------|-----------------------------------------|--------|--------|--------------------------|
|                                           | Seven      MonthsEndedDecember      31, |   |   | Five      MonthsEnded    |   | Year      Ended December 31, |
|                                           | 2007                                    |   |   | May      31, 2007        |   | 2006 |   | 2005 |
|                                           | (In      millions)                      |   |   | (In      millions)       |
| Net      Periodic Postretirement Benefit Cost: |                                    |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Service      Cost                              | $                                       | 0.2    |   |                     |   | $ | 0.2 |   |   | $ | 0.4 |   |   | $ | 0.4 |   |
| Interest      Cost                             |                                    | 2.7    |   |                     |   |   | 1.9 |   |   |   | 4.9 |   |   |   | 5.3 |   |
| Expected      Return on Assets                 |                                    | (3.9   | )      |                     |   |   | (2.7 | ) |   |   | (5.8 | ) |   |   | (5.7 | ) |
| Amortization      of Prior Service Credit      |                                    | -      |   |                     |   |   | (0.7 | ) |   |   | (1.6 | ) |   |   | (1.7 | ) |
| Amortization      of Loss                      |                                    | -      |   |                     |   |   | 2.0 |   |   |   | 5.2 |   |   |   | 5.0 |   |
| Net      Periodic Postretirement Benefit Cost  | $                                       | (1.0   | )      |                     |   | $ | 0.7 |   |   | $ | 3.1 |   |   | $ | 3.3 |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                           | SuccessorCompany                            |   |   | Predecessor      Company               |
|------------------------------------------------|---------------------------------------------|--------|--------|----------------------------------------|
|                                           | Seven      MonthsEndedDecember      31,2007 |   |   | Five      MonthsEndedMay      31, 2007 |   | December      31,2006 |
|                                           | (In      millions)                          |   |   | (In      millions)                     |
| Benefit      Obligation at Beginning of Period | $                                           | 78.7   |   |                                   |   | $ | 84.0 |   |   | $ | 89.8 |   |
| Service      Cost                              |                                        | 0.2    |   |                                   |   |   | 0.2 |   |   |   | 0.4 |   |
| Interest      Cost                             |                                        | 2.7    |   |                                   |   |   | 1.9 |   |   |   | 4.9 |   |
| Actuarial      Loss (Gain)                     |                                        | 7.5    |   |                                   |   |   | (3.5 | ) |   |   | (3.5 | ) |
| Benefits      Paid                             |                                        | (8.5   | )      |                                   |   |   | (5.3 | ) |   |   | (10.8 | ) |
| Retiree      Contributions                     |                                        | 1.4    |   |                                   |   |   | 1.4 |   |   |   | 2.7 |   |
| Plan      Amendments                           |                                        | -      |   |                                   |   |   | - |   |   |   | 0.5 |   |
| Benefit      Obligation at End of Period       | $                                           | 82.0   |   |                                   |   | $ | 78.7 |   |   | $ | 84.0 |   |

|                                                  | SuccessorCompany                            |   |   | Predecessor      Company               |
|-------------------------------------------------------|---------------------------------------------|--------|--------|----------------------------------------|
|                                                  | Seven      MonthsEndedDecember      31,2007 |   |   | Five      MonthsEndedMay      31, 2007 |   | December      31,2006 |
|                                                  | (In      millions)                          |   |   | (In      millions)                     |
| Fair      Value of Plan Assets at Beginning of Period | $                                           | 76.9   |   |                                   |   | $ | 67.5 |   |   | $ | 59.4 |   |
| Actual      Return on Plan Assets                     |                                        | 0.1    |   |                                   |   |   | 4.5 |   |   |   | 7.2 |   |
| Contributions      by Employer                        |                                        | -      |   |                                   |   |   | 8.7 |   |   |   | 8.7 |   |
| Retiree      Contributions                            |                                        | 1.6    |   |                                   |   |   | 1.2 |   |   |   | 2.7 |   |
| Transfers      In                                     |                                        | 0.1    |   |                                   |   |   | - |   |   |   | - |   |
| Benefits      Paid                                    |                                        | (9.5   | )      |                                   |   |   | (5.0 | ) |   |   | (10.5 | ) |
| Fair      Value of Plan Assets at End of Period       |                                        | 69.2   |   |                                   |   |   | 76.9 |   |   |   | 67.5 |   |
| Benefit      Obligation at End of Period              |                                        | (82.0  | )      |                                   |   |   | (78.7 | ) |   |   | (84.0 | ) |
| Funded      Status at End of Period                   | $                                           | (12.8  | )      |                                   |   | $ | (1.8 | ) |   | $ | (16.5 | ) |

|                                                    | SuccessorCompany                             |   |   | Predecessor      Company               |
|---------------------------------------------------------|----------------------------------------------|--------|--------|----------------------------------------|
|                                                    | Seven      MonthsEndedDecember      31, 2007 |   |   | Five      MonthsEndedMay      31, 2007 |   | Year      EndedDecember      31, 2006 |
|                                                    | (In      millions)                           |   |   | (In      millions)                     |
| Application      of SFAS 158 – Net Loss           | $                                            | -      |   |                                   |   | $ | - |   |   | $ | 60.2 |   |
| Application      of SFAS 158 – Prior Service Cost |                                         | -      |   |                                   |   |   | - |   |   |   | (15.8 | ) |
| Net      (Gain)/Loss Arising During Period              |                                         | 12.0   |   |                                   |   |   | (5.4 | ) |   |   | - |   |
| Business      Combinations                              |                                         | -      |   |                                   |   |   | (37.7 | ) |   |   | - |   |
| Amortization      of (Gain)/Loss                        |                                         | -      |   |                                   |   |   | (2.0 | ) |   |   | - |   |
| Amortization      of Prior Service Cost                 |                                         | -      |   |                                   |   |   | 0.7 |   |   |   | - |   |
|                                                    | $                                            | 12.0   |   |                                   |   | $ | (44.4 | ) |   | $ | 44.4 |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

| Fiscal      Year |   | ExpectedNet      BenefitPayments |
|------------------|--------|----------------------------------|
|             |   | (In      millions)               |
| 2008             |   | $                                | 7.7 |   |
| 2009             |   | $                                | 7.5 |   |
| 2010             |   | $                                | 7.2 |   |
| 2011             |   | $                                | 7.0 |   |
| 2012             |   | $                                | 6.8 |   |
| 2013-2016        |   | $                                | 31.8 |   |

|                                                   | SuccessorCompany                        |   |   | Predecessor      Company |
|--------------------------------------------------------|-----------------------------------------|--------|--------|--------------------------|
|                                                   | Seven      MonthsEndedDecember      31, |   |   | Five      MonthsEnded    |   | Year      Ended December 31, |
|                                                   | 2007                                    |   |   | May      31, 2007        |   | 2006 |   | 2005 |
| Discount      Rate                                     |                                    | 5.75   | %      |                     |   |   | 6.00 | % |   |   | 6.00% |   |   |   | 5.75% |   |
| Expected      Long-term Return on Assets               |                                    | 9.00   | %      |                     |   |   | 9.00 | % |   |   | 9.00% |   |   |   | 9.00% |   |
| Rate      of Compensation Increase (Pension Plan Only) |                                    | 3.50   | %      |                     |   |   | 3.50 | % |   |   | 3.50% |   |   |   | 3.50% |   |

|                                                   | SuccessorCompany                        |   |   | Predecessor      Company |
|--------------------------------------------------------|-----------------------------------------|--------|--------|--------------------------|
|                                                   | Seven      MonthsEndedDecember      31, |   |   | Five      MonthsEnded    |   | Year      Ended December 31, |
|                                                   | 2007                                    |   |   | May      31, 2007        |   | 2006 |   | 2005 |
| Discount      Rate                                     |                                    | 6.00   | %      |                     |   |   | 6.00 | % |   |   | 5.75% |   |   |   | 6.00% |   |
| Expected      Long-term Return on Assets               |                                    | 9.00   | %      |                     |   |   | 9.00 | % |   |   | 9.00% |   |   |   | 9.00% |   |
| Rate      of Compensation Increase (Pension Plan Only) |                                    | 3.50   | %      |                     |   |   | 3.50 | % |   |   | 3.50% |   |   |   | 3.50% |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                                                    | SuccessorCompany                        |   |   | Predecessor      Company |
|-----------------------------------------------------------------------------------------|-----------------------------------------|--------|--------|--------------------------|
|                                                                                    | Seven      MonthsEndedDecember      31, |   |   | Five      MonthsEnded    |   | Year      Ended December 31, |
|                                                                                    | 2007                                    |   |   | May      31, 2007        |   | 2006 |   | 2005 |
| Healthcare      Cost Trend Rate Assumed for Next Year                                   |                                    | 3.0%   |   |                     |   |   | 3.0% |   |   |   | 3.0% |   |   |   | 3.0% |   |
| Rate      to which the Cost Trend Rate is Assumed to Decline (Ultimate Trend      Rate) |                                    | 3.0%   |   |                     |   |   | 3.0% |   |   |   | 3.0% |   |   |   | 3.0% |   |
| Year      the Rate Reaches the Ultimate Trend Rate                                      |                                    | 2007   |   |                     |   |   | 2007 |   |   |   | 2006 |   |   |   | 2005 |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                   | Year      EndedDecember      31, 2006 |   | Month      EndedDecember      31, 2005 |
|----------------------------------------|---------------------------------------|--------|----------------------------------------|
|                                   | PensionBenefit      Plans             |   | Postretirement Benefit      Plans |   | PensionBenefit      Plans |   | PostretirementBenefit      Plans |
|                                   | (In      millions)                    |
| Service      Cost                      | $                                     | 7.7    |                                   |   | $ | 1.5 |   |   | $ | 0.7 |   |   | $ | 0.1 |   |
| Interest      Cost                     |                                  | 14.8   |                                   |   |   | 3.6 |   |   |   | 1.2 |   |   |   | 0.3 |   |
| Expected      Return on Assets         |                                  | (17.4  | )                                      |   |   | - |   |   |   | (1.6 | ) |   |   | - |   |
| Expense      Load                      |                                  | 0.1    |                                   |   |   | 0.1 |   |   |   | - |   |   |   | - |   |
| Actuarial      Loss                    |                                  | 0.2    |                                   |   |   | - |   |   |   | - |   |   |   | - |   |
| Special      Termination Benefits      |                                  | 0.4    |                                   |   |   | - |   |   |   | - |   |   |   | - |   |
| Net      Periodic Pension Benefit Cost |                                  | 5.8    |                                   |   |   | 5.2 |   |   |   | 0.3 |   |   |   | 0.4 |   |
| Defined      Contribution Cost         |                                  | 0.1    |                                   |   |   | - |   |   |   | 0.2 |   |   |   | - |   |
| Total      Benefit Expense             | $                                     | 5.9    |                                   |   | $ | 5.2 |   |   | $ | 0.5 |   |   | $ | 0.4 |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                           | Year      EndedDecember      31, 2006 |
|------------------------------------------------|---------------------------------------|
|                                           | PensionBenefit      Plans             |   | PostretirementBenefit      Plans |
|                                           | (In      millions)                    |
| Benefit      Obligation at Beginning of Period | $                                     | 296.1 |   |   | $ | 70.5 |   |
| Change      in Foreign Exchange Rates          |                                  | (0.6 | ) |   |   | (0.2 | ) |
| Service      Cost                              |                                  | 7.7 |   |   |   | 1.5 |   |
| Interest      Cost                             |                                  | 14.8 |   |   |   | 3.6 |   |
| Change      in Discount Rate                   |                                  | - |   |   |   | - |   |
| Actuarial      Loss                            |                                  | 11.5 |   |   |   | 3.0 |   |
| Contributions      by Members                  |                                  | 2.9 |   |   |   | - |   |
| Special      Termination Benefits              |                                  | 0.4 |   |   |   | - |   |
| Benefits      Paid                             |                                  | (15.3 | ) |   |   | (1.5 | ) |
| Benefit      Obligation at End of Period       | $                                     | 317.5 |   |   | $ | 76.9 |   |

|                                                  | Year      EndedDecember      31, 2006 |
|-------------------------------------------------------|---------------------------------------|
|                                                  | PensionBenefit      Plans             |   | PostretirementBenefit      Plans |
|                                                  | (In      millions)                    |
| Fair      Value of Plan Assets at Beginning of Period | $                                     | 256.7 |   |   | $ | - |   |
| Change      in Foreign Exchange Rates                 |                                  | (0.5 | ) |   |   | - |   |
| Actual      Return on Plan Assets During the Period   |                                  | 35.9 |   |   |   | - |   |
| Contributions      by Employer                        |                                  | 7.6 |   |   |   | 1.6 |   |
| Contributions      by Members                         |                                  | 2.9 |   |   |   | - |   |
| Expense      Load                                     |                                  | (0.1 | ) |   |   | (0.1 | ) |
| Benefits      Paid During the Period                  |                                  | (15.3 | ) |   |   | (1.5 | ) |
| Fair      Value of Plan Assets at End of Year         |                                  | 287.2 |   |   |   | - |   |
| Benefit      Obligation at End of Year                |                                  | (317.5 | ) |   |   | (76.9 | ) |
| Funded      Status at End of Year                     | $                                     | (30.3 | ) |   | $ | (76.9 | ) |

|                         | December      31, 2006    |
|------------------------------|---------------------------|
|                         | PensionBenefit      Plans |   | PostretirementBenefit      Plans |
|                         | (In      millions)        |
| Non-current      Assets      | $                         | 10.2 |   |   | $ | - |   |
| Non-current      Liabilities |                      | (40.5 | ) |   |   | (76.9 | ) |
|                         | $                         | (30.3 | ) |   | $ | (76.9 | ) |

|                              | December      31, 2006    |
|-----------------------------------|---------------------------|
|                              | PensionBenefit      Plans |   | PostretirementBenefit      Plans |
|                              | (In      millions)        |
| Net      Loss                     | $                         | 2.2 |   |   | $ | 5.4 |   |
| Prior      Service Cost (Credit)1 |                      | - |   |   |   | - |   |
|                              | $                         | 2.2 |   |   | $ | 5.4 |   |

| 1 | Net      prior service credit for the pension benefit plan was less than $0.1      million at December 31, 2006. |
|---|------------------------------------------------------------------------------------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|   | (C)      Actuarial Assumptions |
|--------|--------------------------------|

|                                                    | December      31, |
|---------------------------------------------------------|-------------------|
|                                                    | 2006              |   | 2005 |
| Discount      Rate                                      | 5.00%             |   | 5.00% |
| Expected      Long-term Return on Assets                | 7.25%             |   | 7.50% |
| Rate      of Compensation Increase (Pension Plan Only)1 | 3.84%             |   | 3.50% |

| 1 | Rate      of compensation increase is for the next five years. Thereafter, the rate      decreases to 3.50%. |
|---|--------------------------------------------------------------------------------------------------------------|

|                                                   | Year      EndedDecember      31, |   | Month      EndedDecember      31, |
|--------------------------------------------------------|----------------------------------|--------|-----------------------------------|
|                                                   | 2006                             |   | 2005                              |
| Discount      Rate                                     | 5.00%                            |   | 5.25%                             |
| Expected      Long-term Return on Assets               | 7.25%                            |   | 7.50%                             |
| Rate      of Compensation Increase (Pension Plan Only) | 3.84%                            |   | 3.50%                             |

|                                                                                    | December      31, |
|-----------------------------------------------------------------------------------------|-------------------|
|                                                                                    | 2006              |   | 2005 |
| Healthcare      Cost Trend Rate Assumed for Next Year                                   | 10.0%             |   | 7.0% |
| Rate      to which the Cost Trend Rate is Assumed to Decline (Ultimate Trend      Rate) | 5.0%              |   | 5.0% |
| Year      the Rate Reaches the Ultimate Trend Rate                                      | 2011              |   | 2008 |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                                           | Predecessor      Company            |
|--------------------------------------------------------------------------------|-------------------------------------|
|                                                                           | Five      Months EndedMay 31, 20071 |   | Year      EndedDecember      31, 2006 |
|                                                                           | Shares                              |   | WeightedAverageGrant      DateFair      Value |   | Shares |   | WeightedAverageGrant      DateFair      Value |
|                                                                           | (Dollars      in millions)          |
| Outstanding      at Beginning of Period                                        | 812,240                             |   |   | $ | 55.6 |   |   | 880,310 |   |   | $ | 56.6 |   |
| Granted                                                                        | -                                   |   |   |   | - |   |   | 89,400 |   |   |   | 8.7 |   |
| Reinstated                                                                     | -                                   |   |   |   | - |   |   | 50,000 |   |   |   | 2.7 |   |
| Vested                                                                         | (59,117                             | ) |   |   | (4.8 | ) |   | (193,620 | ) |   |   | (11.3 | ) |
| Forfeited                                                                      | (12,016                             | ) |   |   | (1.0 | ) |   | (13,850 | ) |   |   | (1.1 | ) |
| Outstanding      at End of Period                                              | 741,107                             |   |   | $ | 49.8 |   |   | 812,240 |   |   | $ | 55.6 |   |
|                                                                           |                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Intrinsic      Value of Restricted Stock Vested    During the Period |                                |   |   | $ | 3.6 |   |   |   |   |   | $ | 19.2 |   |

| 1 | As      discussed above, all remaining restricted stock at the end of the period      became fully vested and was exercised upon the closing of the Going      Private transaction. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                                                      | Predecessor      Company |
|-------------------------------------------------------------------------------------------|--------------------------|
|                                                                                      | Five      Months Ended   |   | Year      Ended December 31, |
|                                                                                      | May 31, 20071            |   | 2006 |   | 2005 |
|                                                                                      | Shares                   |   | WeightedAverageExercise      Price |   | Shares |   | WeightedAverageExercise      Price |   | Shares |   | WeightedAverageExercise      Price |
| Outstanding      at Beginning of Period                                                   | 2,604,217                |   |   | $ | 46.02 |   |   | 3,421,849 |   |   | $ | 45.21 |   |   | 5,026,436 |   |   | $ | 44.18 |   |
| Granted                                                                                   | -                        |   |   | $ | - |   |   | - |   |   | $ | - |   |   | - |   |   | $ | - |   |
| Exercised                                                                                 | (160,838                 | ) |   | $ | 44.67 |   |   | (618,746 | ) |   | $ | 44.82 |   |   | (1,505,399 | ) |   | $ | 41.48 |   |
| Forfeited                                                                                 | (35,975                  | ) |   | $ | 50.10 |   |   | (198,886 | ) |   | $ | 41.95 |   |   | (99,188 | ) |   | $ | 50.48 |   |
| Outstanding      at End of Period                                                         | 2,407,404                |   |   | $ | 46.06 |   |   | 2,604,217 |   |   | $ | 46.02 |   |   | 3,421,849 |   |   | $ | 45.21 |   |
|                                                                                      |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exercisable      at End of Period                                                         | 2,183,379                |   |   | $ | 44.55 |   |   | 2,310,392 |   |   | $ | 44.49 |   |   | 2,260,059 |   |   | $ | 41.01 |   |
| Weighted-Average      Fair Value of Options Granted                                       |                     |   |   | $ | - |   |   |   |   |   | $ | - |   |   |   |   |   | $ | - |   |
| Aggregate      Intrinsic Value of Options Exercisable at End of Period (in      millions) |                     |   |   | $ | 142.0 |   |   |   |   |   | $ | 147.9 |   |   |   |   |   |   |   |   |
| Intrinsic      Value of Options Exercised During the Period (In millions)                 |                     |   |   | $ | 9.9 |   |   |   |   |   | $ | 34.1 |   |   |   |   |   |   |   |   |
| Cash      Received from Exercise of Options During the Period (In      millions)          |                     |   |   | $ | 7.2 |   |   |   |   |   | $ | 27.7 |   |   |   |   |   |   |   |   |

| 1 | As      discussed above, all remaining stock options at the end of the period      became fully vested and were exercised upon the closing of the Going      Private transaction. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Predecessor      Company     |
|------------------------------|
| Options      Outstanding     |   | Options      Exercisable |
|   Price      Range |   |  Number      Outstanding |   | Wtd.      Avg. ExercisePrice |   | Wtd.      Avg. Remaining Contractual Life |   |  Number      Exercisable |   | Wtd.      Avg. ExercisePrice |
| $00.00      - $23.81         |   | 358,280 |   | $ | 23.81 |   | 2.35      years |   | 358,280 |   | $ | 23.81 |
| $24.75      - $43.10         |   | 505,674 |   | $ | 35.99 |   | 4.02      years |   | 505,474 |   | $ | 35.99 |
| $49.00      - $53.20         |   | 585,278 |   | $ | 50.76 |   | 3.74      years |   | 585,078 |   | $ | 50.76 |
| $53.60      - $60.18         |   | 663,097 |   | $ | 55.00 |   | 3.75      years |   | 663,072 |   | $ | 55.00 |
| $60.79      - $61.40         |   | 295,075 |   | $ | 60.91 |   | 4.52      years |   | 71,475 |   | $ | 61.30 |
|                         |   | 2,407,404 |   | $ | 46.06 |   | 3.69      years |   | 2,183,379 |   | $ | 44.55 |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

| Year                                                                                                                                                                                                       |   | OperatingLeases1 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|
| 2008                                       | $      | 57.9             |   |
| 2009                                       |   | 49.4             |   |
| 2010                                       |   | 46.4             |   |
| 2011                                       |   | 42.5             |   |
| 2012                                       |   | 39.1             |   |
| Thereafter                                 |   | 439.3            |   |
| Total                                      | $      | 674.6            |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

| 1 | Approximately      $2.3 million, $0.3 million, $0.3 million, $0.3 million, $0.3 million and      $2.2 million in 2008, 2009, 2010, 2011, 2012 and thereafter, respectively,      is attributable to operating lease obligations associated with our NGPL      business segment classified as held forsale. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                            | SuccessorCompany       |   |   | Predecessor      Company |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------|--------|--------|--------------------------|
|                                                                                                                                                                                                                                                                                                                                                            | December      31, 2007 |   |   | December 31, 20061       |
|                                                                                                                                                                                                                                                                                                                                                            |                   |   |   |                     |   |   |   |   |   |   |   |   |
| Property,      Plant and      Equipment                                                     |                   | $      | 2.2    |                     |   |   |   |   | $ | 22.6 |   |   |
| Less:      Accumulated Amortization                                                                                                                                                                                                                                                                                                                             |                   |   | (0.3   | )                        |   |   |   |   |   | (15.3 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                            |                   | $      | 1.9    |                     |   |   |   |   | $ | 7.3 |   |   |

| 1 | Approximately      $18.5 million of property, plant and equipment and $12.3 million of      accumulated amortization are associated with our discontinued      operations. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|   | 15.      Business Segment Information |
|--------|---------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                                                                                           | Successor      Company                   |    |   | Predecessor      Company |
|--------------------------------------------------------------------------------------------------------------------------------|------------------------------------------|---------|--------|--------------------------|
|                                                                                                                           | Seven      Months EndedDecember      31, |    |   | Five      Months Ended   |   | Year      Ended December 31, |
|                                                                                                                           | 2007                                     |    |   | May      31, 2007        |   | 2006 |   | 2005 |
| Segment      Earnings before Depreciation, Depletion, Amortization and Amortization of      Excess Cost of Equity Investments: |                                     |    |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| NGPL                                                                                                                           | $                                        | 422.8   |   |                     |   | $ | 267.4 |   |   | $ | 603.5 |   |   | $ | 534.8 |   |
| Power                                                                                                                          |                                     | 13.4    |   |                     |   |   | 8.9 |   |   |   | 23.2 |   |   |   | 16.5 |   |
| Express                                                                                                                        |                                     | 14.4    |   |                     |   |   | 5.4 |   |   |   | 17.2 |   |   |   | 2.0 |   |
| Products      Pipelines – KMP1                                                                                           |                                     | 162.5   |   |                     |   |   | 224.4 |   |   |   | 467.9 |   |   |   | - |   |
| Natural      Gas Pipelines – KMP1                                                                                        |                                     | 373.3   |   |                     |   |   | 228.5 |   |   |   | 574.8 |   |   |   | - |   |
| CO2 –      KMP1                                                                                                          |                                     | 433.0   |   |                     |   |   | 210.0 |   |   |   | 488.2 |   |   |   | - |   |
| Terminals      – KMP1                                                                                                    |                                     | 243.7   |   |                     |   |   | 172.3 |   |   |   | 408.1 |   |   |   | - |   |
| Trans      Mountain – KMP1                                                                                               |                                     | 43.8    |   |                     |   |   | (337.4 | ) |   |   | 76.5 |   |   |   | - |   |
| Total      Segment Earnings Before DD&A                                                                                    |                                     | 1,706.9 |   |                     |   |   | 779.5 |   |   |   | 2,659.4 |   |   |   | 553.3 |   |
| Depreciation,      Depletion and Amortization                                                                                  |                                     | (472.3  | )      |                     |   |   | (261.0 | ) |   |   | (531.4 | ) |   |   | (104.6 | ) |
| Amortization      of Excess Cost of Equity Investments                                                                         |                                     | (3.4    | )      |                     |   |   | (2.4 | ) |   |   | (5.6 | ) |   |   | - |   |
| Earnings      from Investment in Kinder Morgan Energy Partners2                                                                |                                     | -       |   |                     |   |   | - |   |   |   | - |   |   |   | 605.4 |   |
| Other                                                                                                                          |                                     | 0.3     |   |                     |   |   | 2.9 |   |   |   | 8.2 |   |   |   | 6.5 |   |
| Interest      and Corporate Expenses, Net3, 4,      5,                                                                         |                                     | (799.6  | )      |                     |   |   | (631.8 | ) |   |   | (1,273.3 | ) |   |   | (209.3 | ) |
| Add      Back Income Taxes Included in Segments Above1                                                                         |                                     | 44.0    |   |                     |   |   | 15.6 |   |   |   | 29.0 |   |   |   | - |   |
| Income      from Continuing Operations Before Income Taxes                                                                     | $                                        | 475.9   |   |                     |   | $ | (97.2 | ) |   | $ | 886.3 |   |   | $ | 851.3 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                | Successor      Company                   |    |   | Predecessor      Company |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------|---------|--------|--------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                | Seven      Months EndedDecember      31, |    |   | Five      Months Ended   |   | Year      Ended December 31, |
|                                                                                                                                                                                                                                                                                                                                                                                                                | 2007                                     |    |   | May      31, 2007        |   | 2006 |   | 2005 |
| Revenues      from External Customers                                                                                                                                                                                                                                                                                                                                                                               |                                     |    |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| NGPL                                                                                                                                                                                                                                                                                                                                                                                                                | $                                        | 752.4   |   |                     |   | $ | 424.5 |   |   | $ | 1,114.4 |   |   | $ | 947.3 |   |
| Power                                                                                                                                                                                                                                                                                                                                                                                                               |                                     | 40.2    |   |                     |   |   | 19.9 |   |   |   | 60.0 |   |   |   | 54.2 |   |
| Products      Pipelines – KMP                                                                                                                                                                                                                                                                                                                                                                                 |                                     | 471.4   |   |                     |   |   | 331.9 |   |   |   | 732.5 |   |   |   | - |   |
| Natural      Gas Pipelines – KMP                                                                                                                                                                                                                                                                                                                                                                              |                                     | 3,825.9 |   |                     |   |   | 2,637.6 |   |   |   | 6,558.4 |   |   |   | - |   |
| CO2 –      KMP                                                                                                                                                                                                                                                                                                                                                                                                |                                     | 605.9   |   |                     |   |   | 324.2 |   |   |   | 736.5 |   |   |   | - |   |
| Terminals      – KMP                                                                                                                                                                                                                                                                                                                                                                                          |                                     | 598.8   |   |                     |   |   | 364.2 |   |   |   | 864.1 |   |   |   | - |   |
| Trans      Mountain – KMP                                                                                                                                                                                                                                                                                                                                                                                     |                                     | 98.0    |   |                     |   |   | 62.8 |   |   |   | 137.8 |   |   |   | - |   |
| Other6                                                                                                                                                                                                                                                                                                                                                                                                              |                                     | 2.1     |   |                     |   |   | - |   |   |   | 4.9 |   |   |   | 24.1 |   |
| Total      Revenues                                                                 | $                                        | 6,394.7 |   |                     |   | $ | 4,165.1 |   |   | $ | 10,208.6 |   |   | $ | 1,025.6 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                  | Successor      Company                   |   |   | Predecessor      Company |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------|--------|--------|--------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                  | Seven      Months EndedDecember      31, |   |   | Five      Months Ended   |   | Year      Ended December 31, |
|                                                                                                                                                                                                                                                                                                                                                                                                                                  | 2007                                     |   |   | May      31, 2007        |   | 2006 |   | 2005 |
| Intersegment      Revenues                                                                                                                                                                                                                                                                                                                                                                                                            |                                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| NGPL                                                                                                                                                                                                                                                                                                                                                                                                                                  | $                                        | 4.8    |   |                     |   | $ | 2.0 |   |   | $ | 3.6 |   |   | $ | - |   |
| Natural      Gas Pipelines – KMP                                                                                                                                                                                                                                                                                                                                                                                                |                                     | -      |   |                     |   |   | 3.0 |   |   |   | 19.3 |   |   |   | - |   |
| Terminals      – KMP                                                                                                                                                                                                                                                                                                                                                                                                            |                                     | 0.4    |   |                     |   |   | 0.3 |   |   |   | 0.7 |   |   |   | - |   |
| Total      Intersegment      Revenues                                                                 | $                                        | 5.2    |   |                     |   | $ | 5.3 |   |   | $ | 23.6 |   |   | $ | - |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                             | Successor      Company                   |   |   | Predecessor      Company |
|------------------------------------------------------------------|------------------------------------------|--------|--------|--------------------------|
|                                                             | Seven      Months EndedDecember      31, |   |   | Five      Months Ended   |   | Year      Ended December 31, |
|                                                             | 2007                                     |   |   | May      31, 2007        |   | 2006 |   | 2005 |
| Depreciation,      Depletion and Amortization                    |                                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| NGPL                                                             | $                                        | 42.3   |   |                     |   | $ | 45.3 |   |   | $ | 104.5 |   |   | $ | 99.6 |   |
| Power                                                            |                                     | 0.2    |   |                     |   |   | (4.2 | ) |   |   | 2.1 |   |   |   | 3.3 |   |
| Products      Pipelines – KMP                              |                                     | 58.1   |   |                     |   |   | 33.6 |   |   |   | 74.0 |   |   |   | - |   |
| Natural      Gas Pipelines – KMP                           |                                     | 52.3   |   |                     |   |   | 26.8 |   |   |   | 65.4 |   |   |   | - |   |
| CO2 –      KMP                                             |                                     | 243.5  |   |                     |   |   | 116.3 |   |   |   | 190.9 |   |   |   | - |   |
| Terminals      – KMP                                       |                                     | 62.1   |   |                     |   |   | 34.4 |   |   |   | 74.6 |   |   |   | - |   |
| Trans      Mountain – KMP                                  |                                     | 13.3   |   |                     |   |   | 8.2 |   |   |   | 19.0 |   |   |   | - |   |
| Other                                                            |                                     | 0.5    |   |                     |   |   | 0.6 |   |   |   | 0.9 |   |   |   | 1.7 |   |
| Total      Consolidated Depreciation, Depletion and Amortization | $                                        | 472.3  |   |                     |   | $ | 261.0 |   |   | $ | 531.4 |   |   | $ | 104.6 |   |

|                                         | Successor      Company                   |    |   | Predecessor      Company |
|----------------------------------------------|------------------------------------------|---------|--------|--------------------------|
|                                         | Seven      Months EndedDecember      31, |    |   | Five      Months Ended   |   | Year      Ended December 31, |
|                                         | 2007                                     |    |   | May      31, 2007        |   | 2006 |   | 2005 |
| Capital      Expenditures                    |                                     |    |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| NGPL                                         | $                                        | 152.0   |   |                     |   | $ | 77.3 |   |   | $ | 193.4 |   |   | $ | 129.7 |   |
| Power                                        |                                     | -       |   |                     |   |   | - |   |   |   | - |   |   |   | - |   |
| Products      Pipelines – KMP          |                                     | 179.9   |   |                     |   |   | 79.5 |   |   |   | 196.0 |   |   |   | - |   |
| Natural      Gas Pipelines – KMP       |                                     | 197.4   |   |                     |   |   | 66.6 |   |   |   | 271.6 |   |   |   | - |   |
| CO2 –      KMP                         |                                     | 249.2   |   |                     |   |   | 133.3 |   |   |   | 283.0 |   |   |   | - |   |
| Terminals      – KMP                   |                                     | 310.1   |   |                     |   |   | 169.9 |   |   |   | 307.7 |   |   |   | - |   |
| Trans      Mountain – KMP              |                                     | 196.7   |   |                     |   |   | 109.0 |   |   |   | 123.8 |   |   |   | - |   |
| Other                                        |                                     | 1.7     |   |                     |   |   | 17.2 |   |   |   | 0.1 |   |   |   | 4.4 |   |
| Total      Consolidated Capital Expenditures | $                                        | 1,287.0 |   |                     |   | $ | 652.8 |   |   | $ | 1,375.6 |   |   | $ | 134.1 |   |

|                                             | SuccessorCompany |     |   | Predecessor      Company |
|--------------------------------------------------|------------------|----------|--------|--------------------------|
|                                             | 2007             |     |   | 2006                     |   | 2005 |
| Assets      at December 317                      |             |     |   |                     |   |   |   |   |   |   |   |   |
| NGPL                                             | $                | 720.0    |   |                     |   | $ | 5,728.9 |   |   | $ | 5,597.8 |   |
| Power                                            |             | 120.6    |   |                     |   |   | 387.4 |   |   |   | 372.5 |   |
| Express                                          |             | 404.3    |   |                     |   |   | 449.7 |   |   |   | 431.9 |   |
| Products      Pipelines – KMP              |             | 6,941.4  |   |                     |   |   | 4,812.9 |   |   |   | - |   |
| Natural      Gas Pipelines – KMP           |             | 8,439.8  |   |                     |   |   | 3,796.6 |   |   |   | - |   |
| CO2 –      KMP                             |             | 3,919.2  |   |                     |   |   | 1,875.6 |   |   |   | - |   |
| Terminals      – KMP                       |             | 4,643.3  |   |                     |   |   | 2,564.1 |   |   |   | - |   |
| Trans      Mountain – KMP                  |             | 1,473.5  |   |                     |   |   | 2,094.8 |   |   |   | - |   |
| Total      segment assets                        |             | 26,662.1 |   |                     |   |   | 21,710.0 |   |   |   | 6,402.2 |   |
| Investment      in Kinder Morgan Energy Partners |             | -        |   |                     |   |   | - |   |   |   | 2,202.9 |   |
| Goodwill7                                        |             | -        |   |                     |   |   | - |   |   |   | 2,781.0 |   |
| Assets      Held for Sale                        |             | 8,987.9  |   |                     |   |   | 510.2 |   |   |   | - |   |
| Other8                                           |             | 451.0    |   |                     |   |   | 4,575.4 |   |   |   | 6,065.5 |   |
| Total      Consolidated Assets                   | $                | 36,101.0 |   |                     |   | $ | 26,795.6 |   |   | $ | 17,451.6 |   |

| 1 | Income      taxes of Kinder Morgan Energy Partners of $44.0 million, $15.6 million and      $29.0 million for the seven months ended December 31, 2007, the five      months ended May 31, 2007 and the twelve months ended December 31, 2006,      respectively, are included in segmentearnings |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

| 2 | Equity      in Earnings of Kinder Morgan Energy Partners for 2005 includes a reduction      in pre-tax earnings of approximately $63.3 million ($40.3 million after      tax) resulting principally from the effects of certain regulatory,      environmental, litigation and inventory items on Kinder Morgan Energy      Partners’ earnings. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Includes      (i) general and administrative expense, (ii) interest expense, (iii)      minority interests and (iv) miscellaneous other income and expenses not      allocated to business segments. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Results      for 2006 include a reduction in pre-tax income of $22.3 million ($14.1      million after tax) resulting from non-cash charges to mark to market      certain interest rate swaps. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5 | Results      for 2005 include (i) pre-tax gains of $78.5 million from the sale of      Kinder Morgan Management shares and (ii) a pre-tax charge of $15.0 million      for our contribution to the Kinder Morgan  Foundation. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6 | Includes      revenues of $10.8 million from KM Insurance Ltd., our wholly owned      subsidiary that was formed during the second quarter of 2005 for the      purpose of providing insurance services to Knight Inc. and Kinder Morgan      Energy Partners. KM Insurance Ltd. was formed as a Class 2 Bermuda      insurance company, the sole business of which is to issue policies for      Knight Inc. and Kinder Morgan Energy Partners to secure the deductible      portion of our workers’ compensation, automobile liability and general      liability policies placed in the commercial insurance market. Due to our      adoption of EITF 04-5 (see Note 1(B)), effective January 1, 2006 the      results of operations of Kinder Morgan Energy Partners are included in our      consolidated results of operations and, consequently, all 2006 revenues of      KM Insurance Ltd. have been eliminated in  consolidation. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7 | For      2007 and 2006, segment assets include goodwill allocated to the      segments. |
|---|-----------------------------------------------------------------------------------------|

| 8 | Includes      assets of discontinued operations, cash, restricted deposits, market value      of derivative instruments (including interest rate swaps) and      miscellaneous corporate assets (such as information technology and      telecommunications equipment) not allocated to individual      segments. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Geographic      Information |
|--------|-----------------------------|

|                                   | Successor      Company                    |
|----------------------------------------|-------------------------------------------|
|                                   | Seven      Months Ended December 31, 2007 |
|                                   | UnitedStates                              |   | Canada |   | Mexico      andOther1 |   | Total |
|                                   | (In      millions)                        |
| NGPL                                   | $                                         | 752.4 |   | $ | - |   | $ | - |   | $ | 752.4 |
| Power                                  |                                      | 40.2 |   |   | - |   |   | - |   |   | 40.2 |
| Products      Pipelines – KMP    |                                      | 449.8 |   |   | 21.6 |   |   | - |   |   | 471.4 |
| Natural      Gas Pipelines – KMP |                                      | 3,817.7 |   |   | - |   |   | 8.2 |   |   | 3,825.9 |
| CO2 –      KMP                   |                                      | 605.9 |   |   | - |   |   |   |   |   | 605.9 |
| Terminals      – KMP             |                                      | 566.4 |   |   | 29.1 |   |   | 3.3 |   |   | 598.8 |
| Trans      Mountain                    |                                      | 7.3 |   |   | 90.7 |   |   | - |   |   | 98.0 |
| Other                                  |                                      | - |   |   | 2.1 |   |   | - |   |   | 2.1 |
|                                   | $                                         | 6,239.7 |   | $ | 143.5 |   | $ | 11.5 |   | $ | 6,394.7 |

|                                             | Predecessor      Company            |
|--------------------------------------------------|-------------------------------------|
|                                             | Five      Months Ended May 31, 2007 |
|                                             | UnitedStates                        |   | Canada |   | Mexico and Other1 |   | Total |
|                                             | (In      millions)                  |
| NGPL                                             | $                                   | 424.5 |   | $ | - |   | $ | - |   | $ | 424.5 |
| Power                                            |                                | 19.9 |   |   | - |   |   | - |   |   | 19.9 |
| Products      Pipelines – KMP    |                                | 319.7 |   |   | 12.2 |   |   | - |   |   | 331.9 |
| Natural      Gas Pipelines – KMP |                                | 2,631.8 |   |   | - |   |   | 5.8 |   |   | 2,637.6 |
| CO2 – KMP                        |                                | 324.2 |   |   | - |   |   | - |   |   | 324.2 |
| Terminals – KMP                  |                                | 362.0 |   |   | - |   |   | 2.2 |   |   | 364.2 |
| Trans      Mountain                              |                                | 4.5 |   |   | 58.3 |   |   | - |   |   | 62.8 |
|                                             | $                                   | 4,086.6 |   | $ | 70.5 |   | $ | 8.0 |   | $ | 4,165.1 |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                  | Predecessor      Company          |
|-------------------------------------------------------|-----------------------------------|
|                                                  | Year      Ended December 31, 2006 |
|                                                  | UnitedStates                      |   | Canada |   | Mexico and Other1 |   | Total |
|                                                  | (In      millions)                |
| NGPL                                                  | $                                 | 1,114.4 |   | $ | - |   | $ | - |   | $ | 1,114.4 |
| Power                                                 |                              | 60.0 |   |   | - |   |   | - |   |   | 60.0 |
| Products      Pipelines – KMP         |                              | 720.8 |   |   | 11.7 |   |   | - |   |   | 732.5 |
| Natural Gas Pipelines – KMP |                              | 6,544.3 |   |   | - |   |   | 14.1 |   |   | 6,558.4 |
| CO2 – KMP                             |                              | 736.5 |   |   | - |   |   | - |   |   | 736.5 |
| Terminals – KMP                       |                              | 858.7 |   |   | - |   |   | 5.4 |   |   | 864.1 |
| Trans Mountain                                   |                              | 11.2 |   |   | 126.6 |   |   | - |   |   | 137.8 |
| Other                                                 |                              | - |   |   | 4.9 |   |   | - |   |   | 4.9 |
|                                                  | $                                 | 10,045.9 |   | $ | 143.2 |   | $ | 19.5 |   | $ | 10,208.6 |

|   | Predecessor      Company          |
|--------|-----------------------------------|
|   | Year      Ended December 31, 2005 |
|   | UnitedStates                      |   | Canada |   | Mexico and Other1 |   | Total |
|   | (In      millions)                |
| NGPL   | $                                 | 947.3 |   | $ | - |   | $ | - |   | $ | 947.3 |
| Power  |                              | 54.2 |   |   | - |   |   | - |   |   | 54.2 |
| Other  |                              | 0.9 |   |   | 12.4 |   |   | 10.8 |   |   | 24.1 |
|   | $                                 | 1,002.4 |   | $ | 12.4 |   | $ | 10.8 |   | $ | 1,025.6 |

|                                             | Successor      Company    |
|--------------------------------------------------|---------------------------|
|                                             | At      December 31, 2007 |   |
|                                             | UnitedStates              |   | Canada |   | Mexico and Other1 |   | Total |   |
|                                             | (In      millions)        |   |
| NGPL                                             | $                         | 720.0 |   | $ | - |   | $ | - |   | $ | 720.0 |   |
| Power                                            |                      | 95.4 |   |   | - |   |   | - |   |   | 95.4 |   |
| Express                                          |                      | 281.5 |   |   | 120.6 |   |   | - |   |   | 402.1 |   |
| Products      Pipelines – KMP    |                      | 4,552.0 |   |   | 109.5 |   |   | - |   |   | 4,661.5 |   |
| Natural      Gas Pipelines – KMP |                      | 4,513.6 |   |   | - |   |   | 82.7 |   |   | 4,596.3 |   |
| CO2 – KMP                        |                      | 2,656.5 |   |   | - |   |   | - |   |   | 2,656.5 |   |
| Terminals – KMP                  |                      | 2,533.7 |   |   | 196.1 |   |   | 5.5 |   |   | 2,735.3 |   |
| Trans Mountain – KMP        |                      | 17.7 |   |   | 1,128.3 |   |   | - |   |   | 1,146.0 |   |
| Assets Held for Sale              |                      | 418.2 |   |   | - |   |   | - |   |   | 418.2 |   |
| Other                                            |                      | 263.3 |   |   | 11.3 |   |   | - |   |   | 274.6 |   |
|                                             | $                         | 16,051.9 |   | $ | 1,565.8 |   | $ | 88.2 |   | $ | 17,705.9 |   |

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                                                                                                                                                                                                                                                                                            | Predecessor      Company  |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------|
|                                                                                                                                                                                                                                                                                                                            | At      December 31, 2006 |   |
|                                                                                                                                                                                                                                                                                                                            | UnitedStates              |   | Canada3 |   | Mexico and Other1 |   | Total |   |
|                                                                                                                                                                                                                                                                                                                            | (In      millions)        |   |
| NGPL                                                                                                                                                                                                                                                                                                                            | $                         | 5,558.2 |   | $ | - |   | $ | - |   | $ | 5,558.2 |   |
| Power                                                                                                                                                                                                                                                                                                                           |                      | 346.4 |   |   | - |   |   | - |   |   | 346.4 |   |
| Express                                                     |                      | 314.8 |   |   | 134.9 |   |   | - |   |   | 449.7 |   |
| Products      Pipelines – KMP                                                                                                                                                                                                                                                                                             |                      | 3,712.1 |   |   | 47.3 |   |   | - |   |   | 3,759.4 |   |
| Natural      Gas Pipelines – KMP                                                                                                                                                                                                                                                                                          |                      | 2,712.7 |   |   | - |   |   | 84.3 |   |   | 2,797.0 |   |
| CO2 –      KMP                                                                                                                                                                                                                                                                                                            |                      | 1,653.1 |   |   | - |   |   | - |   |   | 1,653.1 |   |
| Terminals      – KMP                                                                                                                                                                                                                                                                                                      |                      | 1,820.5 |   |   | 33.2 |   |   | 8.3 |   |   | 1,862.0 |   |
| Trans      Mountain – KMP                                                                                                                                                                                                                                                                                                 |                      | 11.3 |   |   | 1,417.6 |   |   | - |   |   | 1,428.9 |   |
| Assets      Held for Sale                                                                                                                                                                                                                                                                                                       |                      | 397.9 |   |   | - |   |   | 24.4 |   |   | 422.3 |   |
| Other                                                                                                                                                                                                                                                                                                                           |                      | 252.7 |   |   | 2,972.8 |   |   | - |   |   | 3,225.5 |   |
|                                                                                                                                                                                                                                                                                                                            | $                         | 16,779.7 |   | $ | 4,605.8 |   | $ | 117.0 |   | $ | 21,502.5 |   |

| 1 | Terminals      – KMP includes revenues of $3.3 million, $2.2 million and $5.4 million for      the seven months ended December 31, 2007, the five months ended May 31,      2007 and the twelve months ended December 31, 2006, respectively, and      long-lived assets of $5.5 million and 8.3 million at December 31, 2007 and      2006, respectively, attributable to operations in the Netherlands. Other      includes revenues of $10.8 million for the twelve months ended December      31, 2005 attributable to KM InsuranceLtd. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Long-lived      assets exclude goodwill and other intangibles,  net. |
|---|----------------------------------------------------------------------|

| 3 | The      decrease in Canada-based “Long-lived Assets – Other” is the result of the      sale of our Canada-based retail natural gas distribution operations (see      Note 7). |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      Standards of Conduct apply only to the relationship between interstate gas      transmission pipelines and their marketing affiliates, not their energy      affiliates; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | all      risk management personnel can beshared; |
|--------|--------|--------------------------------------------------|

|   | · | the      requirement to post discretionary tariff actions was eliminated (but      interstate gas pipelines must still maintain a log of discretionary tariff      waivers); |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|   | · | lawyers      providing legal advice may be shared employees;  and |
|--------|--------|-------------------------------------------------------------------|

|   | · | new      interstate gas transmission pipelines are not subject to the Standards of      Conduct until they commenceservice. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

| · | FERC      Docket No. OR92-8, et      al.—Complainants/Protestants: Chevron; Navajo; ARCO; BP WCP;      Western Refining; ExxonMobil; Tosco; and Texaco (Ultramar is an      intervenor)—Defendant: SFPP |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Consolidated      proceeding involving shipper complaints against certain East Line and West      Line rates. All five issues (and others) described four paragraphs above      are involved in these proceedings. Portions of this proceeding were      appealed (and re-appealed) to the D.C. Court and remanded to the FERC. BP      WCP, Chevron, and ExxonMobil requested a hearing before the FERC on      remanded grandfathering and income tax allowance issues. The FERC issued      an Order on Rehearing, Remand, Compliance, and Tariff Filings on December      26, 2007, which denied the requests for a hearing, affirmed the income tax      allowance policy and further clarified the implementation of that policy,      and required SFPP to file a compliancefiling; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket Nos. OR92-8-028,      etal.—Complainants/Protestants:      BP WCP; ExxonMobil; Chevron; ConocoPhillips; and Ultramar—Defendant:      SFPP |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|   | Proceeding      involving shipper complaints against SFPP’s Watson Station rates. A      settlement was reached for April 1, 1999 forward; whether SFPP owes      reparations for shipments prior to that date is still before the      FERC; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. OR96-2, et      al.—Complainants/Protestants: All Shippers except Chevron (which is      an intervenor)—Defendant: SFPP |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Consolidated      proceeding involving shipper complaints against all SFPP rates. All five      issues (and others) described four paragraphs above are involved in these      proceedings. Portions of this proceeding were appealed (and re-appealed)      to the D.C. Court and remanded to the FERC. The FERC issued an Order on      Rehearing, Remand, Compliance, and Tariff Filings on December 26, 2007,      which denied the requests for a hearing, affirmed the income tax allowance      policy and further clarified the implementation of that policy, and      required SFPP to file a compliancefiling; |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket Nos. OR02-4 and OR03-5—Complainants/Protestant: Chevron—Defendant:      SFPP |
|--------|-----------------------------------------------------------------------------------------------------------|

|   | Chevron      initiated proceeding to permit Chevron to become complainant in OR96-2.      Appealed to the D.C. Court and held in abeyance pending final disposition      of the OR96-2 proceedings; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. OR04-3—Complainants/Protestants: America West Airlines;      Southwest Airlines; Northwest Airlines; and Continental      Airlines—Defendant: SFPP |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Complaint      alleges that West Line and Watson Station rates are unjust and      unreasonable. Watson Station issues severed and consolidated into a      proceeding focused only on Watson-related issues. The FERC has set the      complaints against the West Line rates for hearing but denied the request      to consolidate the dockets with the ongoing proceedings involving SFPP’s      North and Oregon Line rates; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket Nos. OR03-5, OR05-4 and OR05-5—Complainants/Protestants: BP WCP;      ExxonMobil; and ConocoPhillips (other shippers intervened)—Defendant:      SFPP |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Complaints      allege that SFPP’s interstate rates are not just and reasonable. The FERC      has set the complaints against the West and East Line rates for hearing,      but denied the request to consolidate the dockets with the ongoing      proceedings involving SFPP’s North and Oregon Line  rates; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. OR03-5-001—Complainants/Protestants: BP WCP; ExxonMobil; and      ConocoPhillips (other shippers intervened)—Defendant:  SFPP |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      FERC severed the portions of the complaints in Docket Nos. OR03-5, OR05-4,      and OR05-5 regarding SFPP’s North and Oregon Line rates into a separate      proceeding in Docket No. OR03-5-001, which has been set for      hearing; |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. OR07-1—Complainant/Protestant: Tesoro—Defendant:      SFPP |
|--------|---------------------------------------------------------------------------------------------|

|   | Complaint      alleges that SFPP’s North Line rates are not just and reasonable.      Complaint held in abeyance pending resolution at the D.C. Court of, among      other things, income tax allowance and grandfathering issues. The D.C.      Court issued an opinion on these issues on May 29, 2007, upholding the      FERC’s income tax allowance policy; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. OR07-2—Complainant/Protestant: Tesoro—Defendant:      SFPP |
|--------|---------------------------------------------------------------------------------------------|

|   | Complaint      alleges that SFPP’s West Line rates are not just and reasonable. Complaint      held in abeyance pending resolution at the D.C. Court of, among other      things, income tax allowance and grandfathering issues. The D.C. Court      issued an opinion on these issues on May 29, 2007, upholding the FERC’s      income tax allowance policy. A request that the FERC set the complaint for      hearing – which SFPP opposed – is pending before the  FERC; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. OR07-3—Complainants/Protestants: BP WCP; Chevron; ExxonMobil;      Tesoro; and Valero Marketing—Defendant:SFPP |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Complaint      alleges that SFPP’s North Line indexed rate increase was not just and      reasonable. The FERC has dismissed the complaint and denied rehearing the      dismissal. Petitions for review filed by BP WCP and ExxonMobil at the D.C.      Court; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. OR07-4—Complainants/Protestants: BP WCP; Chevron; and      ExxonMobil—Defendants: SFPP; Kinder Morgan G.P., Inc.; and Knight      Inc. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Complaint      alleges that SFPP’s rates are not just and reasonable. Complaint held in      abeyance pending resolution at the D.C. Court of, among other things,      income tax allowance and grandfathering issues. The D.C. Court issued an      opinion on these issues on May 29, 2007, upholding the FERC’s income tax      allowance policy; |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket Nos. OR07-5 and OR07-7 (consolidated)—Complainants/Protestants:      ExxonMobil and Tesoro—Defendants: Calnev; Kinder Morgan G.P., Inc.; and      Knight Inc. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Complaints      allege that none of Calnev’s current rates are just or reasonable. In      light of the D.C. Court’s May 29, 2007 ruling, on July 19, 2007, the FERC,      among other things, dismissed with prejudice the complaints against Kinder      Morgan G.P. Inc. and Knight Inc. and allowed complainants to file amended      complaints. ExxonMobil filed a request for rehearing of the dismissal of      the complaints against Kinder Morgan G.P., Inc. and Knight Inc., which is      currently pending before the FERC. The FERC has not acted on the amended      complaints; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

| · | FERC      Docket No. OR07-6—Complainant/Protestant: ConocoPhillips—Defendant:      SFPP |
|--------|-----------------------------------------------------------------------------------------------------|

|   | Complaint      alleges that SFPP’s North Line indexed rate increase was not just and      reasonable. The FERC has dismissed the complaint and denied rehearing the      dismissal. The FERC had consolidated this case with OR07-3 and issued      orders that applied to both OR07-3 and OR07-6. Although the FERC orders in      these dockets have been appealed by certain of the complainants in OR07-3,      they have not been appealed by ConocoPhillips in  OR07-6; |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. OR07-8 (consolidated with Docket No.      OR07-11)—Complainant/Protestant: BP WCP—Defendant:  SFPP |
|--------|-------------------------------------------------------------------------------------------------------------------------------------|

|   | Complaint      alleges that SFPP’s 2005 indexed rate increase was not just and      reasonable. On June 6, 2007, the FERC dismissed challenges to SFPP’s      underlying rate but held in abeyance the portion of the Complaint      addressing SFPP’s July 1, 2005 index-based rate increases. SFPP requested      rehearing on July 6, 2007, which the FERC denied. On February 13, 2008,      the FERC set this complaint for hearing, but referred it to settlement      negotiations; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. OR07-9—Complainant/Protestant: BP WCP—Defendant:      SFPP |
|--------|---------------------------------------------------------------------------------------------|

|   | Complaint      alleges that SFPP’s ultra low sulphur diesel (ULSD) recovery fee violates      the filed rate doctrine and that, in any event, the recovery fee is unjust      and unreasonable. On July 6, 2007, the FERC dismissed the complaint. BP      WCP requested a rehearing, which the FERC denied. A petition for review      was filed by BP WCP. The FERC’s motion to dismiss or hold the case in      abeyance is pending; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. OR07-10—Complainants/Protestants: BP WCP; ConocoPhillips;      Valero; and ExxonMobil—Defendant:Calnev |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | Calnev      filed a petition with the FERC on May 14, 2007, requesting that the FERC      issue a declaratory order approving Calnev’s proposed rate methodology and      granting other relief with respect to a substantial proposed expansion of      Calnev’s mainline pipeline system. On July 20, 2007, the FERC granted      Calnev’s petition for declaratoryorder; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. OR07-11 (consolidated with Docket No.      OR07-8)—Complainant/Protestant: ExxonMobil—Defendant:  SFPP |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | Complaint      alleges that SFPP’s 2005 indexed rate increase was not just and      reasonable. On February 13, 2008, the FERC set this complaint for hearing,      but referred it to settlement negotiations. It is now consolidated with      the complaint in Docket No. OR07-8; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. OR07-14—Complainants/Protestants: BP WCP and      Chevron—Defendants: SFPP; Calnev; Operating Limited Partnership “D”;      Kinder Morgan Energy Partners, L.P.; Kinder Morgan Management LLC; Kinder      Morgan G.P., Inc.; Knight Inc.; and Knight Holdco,  LLC |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Complaint      alleges violations of the Interstate Commerce Act and the FERC’s cash      management regulations, seeks review of the FERC Form 6 annual reports of      SFPP and Calnev, and again requests interim refunds and reparations. The      FERC dismissed the complaint; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. OR07-16—Complainant/Protestant: Tesoro—Defendant:      Calnev |
|--------|------------------------------------------------------------------------------------------------|

|   | Complaint      challenges Calnev’s 2005, 2006, and 2007 indexing adjustments. The FERC      dismissed the complaint.  A petition for review was filed by      Tesoro. A scheduling order for briefs and oral argument has not yet been      issued by the D.C. Court; |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. OR07-18—Complainants/Protestants: Airline Complainants;      Chevron; and Valero Marketing—Defendant:Calnev |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | Complaint      alleges that Calnev’s rates are unjust and unreasonable and that none of      Calnev’s rates are grandfathered under EPAct 1992. In December 2007, the      FERC issued an order accepting and holding in abeyance the portion of the      complaint against the non-grandfathered portion of Calnev’s rates. The      order also gave complainants 45 days to amend their complaint against the      grandfathered portion of Calnev’s rates in light of clarifications      provided in the FERC’s order; |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. OR07-19—Complainant/Protestant: ConocoPhillips—Defendant:      Calnev |
|--------|--------------------------------------------------------------------------------------------------------|

|   | Complaint      alleges that Calnev’s rates are unjust and unreasonable and that none of      Calnev’s rates are grandfathered under EPAct 1992. In December 2007, the      FERC issued an order accepting and holding in abeyance the portion of the      complaint against the non-grandfathered portion of Calnev’s rates. The      order also gave complainants 45 days to amend their complaint against the      grandfathered portion of Calnev’s rates in light of clarifications      provided in the FERC’s order; |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. OR07-20—Complainant/Protestant: BP WCP—Defendant:      SFPP |
|--------|----------------------------------------------------------------------------------------------|

|   | Complaint      alleges that SFPP’s 2007 indexed rate increase was not just and      reasonable. In December 2007, the FERC dismissed the complaint.      Complainant filed a request for rehearing which is currently pending      before the FERC. In February 2008, the FERC accepted a joint offer of      settlement that dismisses, with prejudice, the East Line index rate      portion of the complaint inOR07-20; |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

| · | FERC      Docket No. OR07-22—Complainant/Protestant: BP WCP—Defendant:      Calnev |
|--------|------------------------------------------------------------------------------------------------|

|   | Complaint      alleges that Calnev’s rates are unjust and unreasonable and that none of      Calnev’s rates are grandfathered under EPAct 1992. In December 2007, the      FERC issued an order giving complainant 45 days to amend its complaint in      light of guidance provided by theFERC; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. IS05-230 (North Line rate case)—Complainants/Protestants:      Shippers—Defendant: SFPP |
|--------|--------------------------------------------------------------------------------------------------------------------------|

|   | SFPP      filed to increase North Line rates to reflect increased costs due to      installation of new pipe between Concord and Sacramento, California.      Various shippers protested. An administrative law judge decision is      pending before the FERC on exceptions. On August 31, 2007, BP WCP and      ExxonMobil filed a motion to reopen the record on the issue of SFPP’s      appropriate rate of return on equity, which SFPP answered on September 18,      2007. The FERC has yet to issue an order on shipper’s    motion; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. IS05-327—Complainants/Protestants: Shippers—Defendant:      SFPP |
|--------|---------------------------------------------------------------------------------------------------|

|   | SFPP      filed to increase certain rates on its pipelines pursuant to the FERC’s      indexing methodology. Various shippers protested, but the FERC determined      that the tariff filings were consistent with its regulations. The D.C.      Court dismissed a petition for review, citing a lack of jurisdiction to      review a decision by the FERC not to order an    investigation; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. IS06-283 (East Line rate case)—Complainants/Protestants:      Shippers—Defendant: SFPP |
|--------|-------------------------------------------------------------------------------------------------------------------------|

|   | SFPP      filed to increase East Line rates to reflect increased costs due to      installation of new pipe between El Paso, Texas and Tucson, Arizona.      Various shippers protested. In November 2007, the parties submitted a      joint offer of settlement which was certified to the FERC in December      2007. In February 2008, the FERC accepted the joint offer of settlement      which, among other things, resolved all protests and complaints related to      the East Line Phase I ExpansionTariff; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. IS06-296—Complainant/Protestant: ExxonMobil—Defendant:      Calnev |
|--------|-----------------------------------------------------------------------------------------------------|

|   | Calnev      sought to increase its interstate rates pursuant to the FERC’s indexing      methodology. ExxonMobil filed a protest respecting Calnev’s indexing      adjustments. This proceeding is currently held in abeyance pending ongoing      settlement discussions. Calnev has also filed a motion to dismiss or to      hold the investigation in abeyance, which is pending before the FERC.      Calnev and ExxonMobil have reached an agreement in principle to settle      this and other dockets; |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. IS06-356—Complainants/Protestants: Shippers—Defendant:      SFPP |
|--------|---------------------------------------------------------------------------------------------------|

|   | SFPP      filed to increase certain rates on its pipelines pursuant to the FERC’s      indexing methodology. Various shippers protested, but the FERC found the      tariff filings consistent with its regulations. The FERC has rescinded the      index increase for the East Line rates, and SFPP has requested rehearing.      The D.C. Court dismissed a petition for review, citing the rehearing      request pending before the FERC. On September 20, 2007, the FERC denied      SFPP’s request for rehearing. In November 2007, all parties submitted a      joint offer of settlement. In February 2008, the FERC accepted the joint      offer of settlement which, among other things, resolved all protests and      complaints related to the East Line 2006 Index  Tariff; |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. IS07-137 (ULSD surcharge)—Complainants/Protestants:      Shippers—Defendant: SFPP |
|--------|--------------------------------------------------------------------------------------------------------------------|

|   | SFPP      filed tariffs to include a per barrel ULSD recovery fee and a surcharge      for ULSD-related litigation costs on diesel products. Various shippers      protested. Tariffs related to ULSD recovery fee accepted subject to refund      and proceeding is being held in abeyance pending resolution of other      proceedings involving SFPP. SFPP rescinded the ULSD litigation surcharge      in compliance with a FERC order. Request for rehearing filed by Chevron      and Tesoro. Request for rehearing filed by Chevron and Tesoro. The FERC      ultimately denied rehearing in an order issued on November 13,      2007; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. IS07-229—Complainants/Protestants: BP WCP and      ExxonMobil—Defendant: SFPP |
|--------|----------------------------------------------------------------------------------------------------------------|

|   | SFPP      filed to increase certain rates on its pipelines pursuant to the FERC’s      indexing methodology. Two shippers filed protests. The FERC found the      tariff filings consistent with its regulations, but suspended the      increased rates subject to refund pending challenges to SFPP’s underlying      rates. In November 2007, all parties submitted a joint offer of      settlement. In February 2008, the FERC accepted the joint offer of      settlement which, among other things, resolved all protests and complaints      related to the East Line 2007 IndexTariff; |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. IS07-234—Complainants/Protestants: BP WCP and      ExxonMobil—Defendant: Calnev |
|--------|------------------------------------------------------------------------------------------------------------------|

|   | Calnev      filed to increase certain rates on its pipeline pursuant to the FERC’s      indexing methodology. Two shippers protested. The FERC found the tariff      filings consistent with its regulations, but suspended the increased rates      subject to refund pending challenges to SFPP’s underlying rates. Calnev      and ExxonMobil have reached an agreement in principle to settle this and      other dockets; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | FERC      Docket No. IS08-28—Complainants/Protestants: ConocoPhillips; Chevron; BP      WCP; ExxonMobil; Southwest Airlines; Western; and Valero—Defendant:      SFPP |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | SFPP      filed to increase its East Line rates based on costs incurred related to      an expansion. Various shippers filed protests, which SFPP answered. The      FERC issued an order on November 29, 2007 accepting and suspending the      tariff subject to refund. The proceeding is being held in abeyance      pursuant to ongoing settlement negotiations;and |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

| · | Motions      to compel payment of interim damages (various      dockets)—Complainants/Protestants: Shippers—Defendants: SFPP; Kinder      Morgan G.P., Inc.; and Knight Inc. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Motions      seek payment of interim refunds or escrow of funds pending resolution of      various complaints and protests involving SFPP. The FERC denied shippers’      refund requests in an order issued on December 26, 2007 in Docket Nos.      OR92-8, et      al |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 2007   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Balance      at January 1,      2007                                                                                | $      | 63.1 |   |
| Additions      based on current year tax positions                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 9.8 |   |
| Additions      based on prior year tax positions                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 0.5 |   |
| Reductions      based on settlements with taxing authority                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (21.4 | ) |
| Reductions      due to lapse in statute of limitations                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | (2.7 | ) |
| Reductions      for tax positions related to prior year                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | (7.8 | ) |
| Balance      at December 31,      2007                                                                              | $      | 41.5 |   |

|   | · | taxes      assessed by a governmental authority that are directly imposed on a      revenue-producing transaction between a seller and a customer may include,      but are not limited to, sales, use, value added, and some excise taxes;      and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | that      the presentation of such taxes on either a gross (included in revenues and      costs) or a net (excluded from revenues) basis is an accounting policy      decision that should be disclosed pursuant to Accounting Principles Board      Opinion No. 22 (as amended), Disclosure of Accounting      Policies. In addition, for any such taxes that are reported on a      gross basis, a company should disclose the amounts of those taxes in      interim and annual financial statements for each period for which an      income statement is presented if those amounts are significant. The      disclosure of those taxes can be done on an aggregate    basis. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

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| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

SELECTED QUARTERLY FINANCIAL DATA

|                                                              | Predecessor      Company      |    |                 | Successor      Company        |
|-------------------------------------------------------------------|-------------------------------|---------|----------------------|-------------------------------|
|                                                              | Three      MonthsEnded        |    | Two      MonthsEnded |                          |   | One      MonthEnded |   | Three      Months Ended |
|                                                              | March      31                 |    | May      31          |                          |   | June      30 |   | September      30 |   | December      31 |
|                                                              | (In      millions)(Unaudited) |    |                 | (In      millions)(Unaudited) |
| Operating      Revenues                                           | $                             | 2,444.4 |                 | $                             | 1,720.7 |   |   |   | $ | 936.9 |   | $ | 2,609.0 |   | $ | 2,848.8 |   |
| Gas      Purchases and Other Costs of Sales                       |                          | 1,452.5 |                 |                          | 1,037.9 |   |   |   |   | 557.2 |   |   | 1,482.8 |   |   | 1,616.6 |   |
| Other      Operating Expenses                                     |                          | 968.0   |                 |                          | 501.9 |   |   |   |   | 220.5 |   |   | 683.2 |   |   | 791.6 |   |
| Operating      Income                                             |                          | 23.9    |                 |                          | 180.9 |   |   |   |   | 159.2 |   |   | 443.0 |   |   | 440.6 |   |
| Other      Income and (Expenses)                                  |                          | (181.8  | )                    |                          | (120.2 | ) |   |   |   | (110.0 | ) |   | (278.3 | ) |   | (178.6 | ) |
| Income      (Loss) from Continuing Operations Before Income Taxes |                          | (157.9  | )                    |                          | 60.7 |   |   |   |   | 49.2 |   |   | 164.7 |   |   | 262.0 |   |
| Income      Taxes                                                 |                          | 87.7    |                 |                          | 47.8 |   |   |   |   | 21.3 |   |   | 74.6 |   |   | 131.5 |   |
| Income      (Loss) from Continuing Operations                     |                          | (245.6  | )                    |                          | 12.9 |   |   |   |   | 27.9 |   |   | 90.1 |   |   | 130.5 |   |
| Income      (Loss) from Discontinued Operations, Net of Tax       |                          | 233.2   |                 |                          | 65.4 |   |   |   |   | 2.3 |   |   | (4.4 | ) |   | 0.6 |   |
| Net      Income (Loss)                                            | $                             | (12.4   | )                    | $                             | 78.3 |   |   |   | $ | 30.2 |   | $ | 85.7 |   | $ | 131.1 |   |

|                                                            | Predecessor      Company      |
|-----------------------------------------------------------------|-------------------------------|
|                                                            | March      31                 |   | June      30 |   | September      30 |   | December      31 |
|                                                            | (In      millions)(Unaudited) |
| Operating      Revenues                                         | $                             | 2,675.7 |   |   | 2,479.0 |   |   | 2,606.9 |   |   | 2,447.0 |   |
| Gas      Purchases and Other Costs of Sales                     |                          | 1,745.9 |   |   | 1,521.4 |   |   | 1,612.4 |   |   | 1,459.7 |   |
| Other      Operating Expenses                                   |                          | 503.4 |   |   | 534.3 |   |   | 566.3 |   |   | 520.0 |   |
| Operating      Income                                           |                          | 426.4 |   |   | 423.3 |   |   | 428.2 |   |   | 467.3 |   |
| Other      Income and (Expenses)                                |                          | (213.4 | ) |   | (210.3 | ) |   | (206.0 | ) |   | (229.2 | ) |
| Income      from Continuing Operations Before Income Taxes |                          | 213.0 |   |   | 213.0 |   |   | 222.2 |   |   | 238.1 |   |
| Income      Taxes                                               |                          | 79.1 |   |   | 64.3 |   |   | 73.5 |   |   | 69.0 |   |
| Income      from Continuing Operations                          |                          | 133.9 |   |   | 148.7 |   |   | 148.7 |   |   | 169.1 |   |
| Income      (Loss) from Discontinued Operations, Net of Tax     |                          | 59.8 |   |   | 8.5 |   |   | (4.5 | ) |   | (592.3 | ) |
| Net      Income (Loss)                                          | $                             | 193.7 |   |   | 157.2 |   |   | 144.2 |   |   | (423.2 | ) |

Supplemental Information on Oil and Gas ProducingActivities (Unaudited)

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                           | December      31, |
|------------------------------------------------|-------------------|
| Consolidated      Companies                    | 20071             |   | 20061 |   | 20052 |
| Wells      and equipment, facilities and other | $                 | 1,612.5 |   |   | $ | 1,369.5 |   |   | $ | 166.8 |   |
| Leasehold                                      |              | 348.1 |   |   |   | 347.4 |   |   |   | 48.7 |   |
| Total      proved oil and gas properties       |              | 1,960.6 |   |   |   | 1,716.9 |   |   |   | 215.5 |   |
| Accumulated      depreciation and depletion    |              | (725.5 | ) |   |   | (470.2 | ) |   |   | (46.1 | ) |
| Net      capitalized costs                     | $                 | 1,235.1 |   |   | $ | 1,246.7 |   |   | $ | 169.4 |   |

| 1 | Amounts      relate to Kinder Morgan CO2      Company, L.P. and its consolidatedsubsidiaries. |
|---|-----------------------------------------------------------------------------------------------|

| 2 | For      the period presented, we accounted for Kinder Morgan Energy Partners under      the equity method; therefore, amounts reflect our proportionate share of      Kinder Morgan Energy Partners’ capitalized costs related to oil and gas      producing activities. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                      | Successor      Company                   |   |   | Predecessor      Company |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------|--------|--------|--------------------------|
|                                                                                                                                                                                                                                                                                                                                      | Seven      Months EndedDecember      31, |   |   | Five      Months Ended   |   | Year      Ended December 31, |
|                                                                                                                                                                                                                                                                                                                                      | 20071                                    |   |   | May 31, 20071            |   | 20061 |   | 20052 |
| Consolidated      Companies                                                                                                                                                                                                                                                                                                               |                                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Property      Acquisition                                                                                                                                                                                                                                                                                                                 |                                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Proved      oil and gas properties                                                                                                                                                                                                                                                                                                        | $                                        | -      |   |                     |   | $ | - |   |   | $ | 36.6 |   |   | $ | 1.0 |   |
| Development                                                      |                                     | 156.9  |   |                     |   |   | 87.5 |   |   |   | 261.8 |   |   |   | 42.8 |   |

| 1 | Amounts      relate to Kinder Morgan CO2      Company, L.P. and its consolidatedsubsidaries. |
|---|----------------------------------------------------------------------------------------------|

| 2 | During      the period presented, we accounted for Kinder Morgan Energy Partners under      the equity method; therefore, amounts reflect our proportionate share of      Kinder Morgan Energy Partners’ costs incurred in exploration, property      acquisitions and development. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                            | Successor      Company                   |   |   | Predecessor      Company |
|-----------------------------------------------------------------|------------------------------------------|--------|--------|--------------------------|
|                                                            | Seven      Months EndedDecember      31, |   |   | Five      Months Ended   |   | Year      Ended December 31, |
|                                                            | 20071                                    |   |   | May 31, 20071            |   | 20061 |   | 20052 |
| Consolidated      Companies                                     |                                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues3                                                       | $                                        | 352.0  |   |                     |   | $ | 237.7 |   |   | $ | 524.7 |   |   |   |   |   |
| Expenses:                                                       |                                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Production      costs                                           |                                     | 147.2  |   |                     |   |   | 96.7 |   |   |   | 208.9 |   |   |   |   |   |
| Other      operating expenses4                                  |                                     | 34.9   |   |                     |   |   | 22.0 |   |   |   | 66.4 |   |   |   |   |   |
| Depreciation,      depletion and amortization expenses          |                                     | 151.9  |   |                     |   |   | 106.6 |   |   |   | 169.4 |   |   |   |   |   |
| Total      expenses                                             |                                     | 334.0  |   |                     |   |   | 225.3 |   |   |   | 444.7 |   |   |   |   |   |
| Results      of operations for oil and gas producing activities | $                                        | 18.0   |   |                     |   | $ | 12.4 |   |   | $ | 80.0 |   |   | $ | 18.2 |   |

| 1 | Amounts      relate to Kinder Morgan CO2      Company, L.P. and its consolidatedsubsidaries. |
|---|----------------------------------------------------------------------------------------------|

| 2 | During      the period presented, we accounted for Kinder Morgan Energy Partners under      the equity method, therefore, amounts reflect our proportionate share of      Kinder Morgan Energy Partners’ results of operations for oil and gas      producing activities. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Revenues      include losses attributable to our hedging contracts of $311.5 million,      $122.7 million and $441.7 million for the seven months ended December 31,      2007, the five months ended May 31, 2007 and the year ended December 31,      2006, respectively. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Consists      primarily of carbon dioxideexpense. |
|---|---------------------------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                            | Consolidated      Companies |
|-------------------------------------------------|-----------------------------|
|                                            | Crude      Oil(MBbls)       |   | NGLs(MBbls) |   | Nat.      Gas(MMcf)1 |
| Proved      developed and undeveloped reserves: |                        |   |   |   |   |   |   |   |
| As      of December 31, 20042                   | 22,862                      |   |   | 3,741 |   |   | 294 |   |
| As      of December 31, 20052                   | 21,567                      |   |   | 2,884 |   |   | 327 |   |
| As      of December 31, 20063                   | 123,978                     |   |   | 10,333 |   |   | 291 |   |
| Revisions      of Previous Estimates3,4         | 10,361                      |   |   | 2,784 |   |   | 1,077 |   |
| Production3                                     | (12,984                     | ) |   | (2,005 | ) |   | (290 | ) |
| As      of December 31, 20073                   | 121,355                     |   |   | 11,112 |   |   | 1,078 |   |
|                                       |                        |   |   |   |   |   |   |   |
| Proved      developed reserves:                 |                        |   |   |   |   |   |   |   |
| As      of December 31, 20042                   | 13,176                      |   |   | 1,640 |   |   | 251 |   |
| As      of December 31, 20052                   | 11,965                      |   |   | 1,507 |   |   | 251 |   |
| As      of December 31, 20063                   | 69,073                      |   |   | 5,877 |   |   | 291 |   |
| As      of December 31, 20073                   | 70,868                      |   |   | 5,517 |   |   | 1,078 |   |

| 1 | Natural      gas reserves are computed at 14.65 pounds per square inch absolute and 60      degrees Fahrenheit. |
|---|-----------------------------------------------------------------------------------------------------------------|

| 2 | For      the period presented, we accounted for Kinder Morgan Energy Partners under      the equity method, therefore, amounts reflect our proportionate share of      Kinder Morgan Energy Partners’ provedreserves. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Amounts      relate to Kinder Morgan CO2      Company, L.P. and its consolidatedsubsidaries. |
|---|----------------------------------------------------------------------------------------------|

| 4 | Associated      with an expansion of the carbon dioxide flood project area of the SACROC      unit. |
|---|-----------------------------------------------------------------------------------------------------|

|   | · | the      standardized measure includes our estimate of proved crude oil, natural      gas liquids and natural gas reserves and projected future production      volumes based upon year-end economicconditions; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | pricing      is applied based upon year-end market prices adjusted for fixed or      determinable contracts that are in existence at  year-end; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | future      development and production costs are determined based upon actual cost at      year-end; |
|--------|--------|------------------------------------------------------------------------------------------------------|

|   | · | the      standardized measure includes projections of future abandonment costs      based upon actual costs at year-end;and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------|

|   | · | a      discount factor of 10% per year is applied annually to the future net cash      flows. |
|--------|--------|-----------------------------------------------------------------------------------------------|

|                                                          | Year      Ended December 31, |
|---------------------------------------------------------------|------------------------------|
|                                                          | 20071                        |   | 20061 |   | 20052 |
| Consolidated      Companies                                   |                         |   |   |   |   |   |   |   |   |   |   |
| Future      Cash Inflows from Production                      | $                            | 12,099.5 |   |   | $ | 7,534.6 |   |   | $ | 1,390.3 |   |
| Future      Production Costs                                  |                         | (3,536.2 | ) |   |   | (2,617.9 | ) |   |   | (418.8 | ) |
| Future      Development Costs3                                |                         | (1,919.2 | ) |   |   | (1,256.7 | ) |   |   | (132.1 | ) |
| Undiscounted      Future Net Cash Flows                       |                         | 6,644.1 |   |   |   | 3,660.0 |   |   |   | 839.4 |   |
| 10%      Annual Discount                                      |                         | (2,565.7 | ) |   |   | (1,452.2 | ) |   |   | (372.2 | ) |
| Standardized      Measure of Discounted Future Net Cash Flows | $                            | 4,078.4 |   |   | $ | 2,207.8 |   |   | $ | 467.2 |   |

| 1 | Amounts      relate to Kinder Morgan CO2      Company, L.P. and its consolidatedsubsidaries. |
|---|----------------------------------------------------------------------------------------------|

| 2 | During      the period presented, we accounted for Kinder Morgan Energy Partners under      the equity method, therefore, amounts reflect our proportionate share of      Kinder Morgan Energy Partners’ standardized measure of discounted future      net cash flows. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Includes      abandonment costs. |
|---|----------------------------------|

----

| Item 8:  Financial      Statements and Supplementary Data (continued) | Knight      Form 10-K |
|--------------------------------------------------------------------------------------|-----------------------|

|                                                    | Year      Ended December 31, |
|---------------------------------------------------------|------------------------------|
|                                                    | 20071                        |   | 20061 |   | 20052 |
| Consolidated      Companies                             |                         |   |   |   |   |   |   |   |   |   |   |
| Present      Value as of January 1                      | $                            | 2,207.8 |   |   | $ | 3,075.0 |   |   |   |   |   |
| Changes      During the Year:                           |                         |   |   |   |   |   |   |   |   |   |   |
| Revenues      Less Production and Other Costs3          |                         | (722.1 | ) |   |   | (690.0 | ) |   |   |   |   |
| Net      Changes in Prices, Production and Other Costs3 |                         | 2,153.2 |   |   |   | (123.0 | ) |   |   |   |   |
| Development      Costs Incurred                         |                         | 244.5 |   |   |   | 261.8 |   |   |   |   |   |
| Net      Changes in Future Development Costs            |                         | (547.8 | ) |   |   | (446.0 | ) |   |   |   |   |
| Purchases      of Reserves in Place                     |                         | - |   |   |   | 3.2 |   |   |   |   |   |
| Revisions      of Previous Quantity Estimates4          |                         | 510.8 |   |   |   | (179.5 | ) |   |   |   |   |
| Improved      Recovery                                  |                         | - |   |   |   | - |   |   |   |   |   |
| Accretion      of Discount                              |                         | 198.1 |   |   |   | 307.4 |   |   |   |   |   |
| Timing      Differences and Other                       |                         | 33.9 |   |   |   | (1.1 | ) |   |   |   |   |
| Net      Change For the Year                            |                         | 1,870.6 |   |   |   | (867.2 | ) |   |   |   |   |
| Present      Value as of December 31                    | $                            | 4,078.4 |   |   | $ | 2,207.8 |   |   | $ | 467.2 |   |

| 1 | Amounts      relate to Kinder Morgan CO2      Company, L.P. and its consolidatedsubsidaries. |
|---|----------------------------------------------------------------------------------------------|

| 2 | During      the period presented, we accounted for Kinder Morgan Energy Partners under      the equity method, therefore, amounts reflect our proportionate share of      Kinder Morgan Energy Partners’ standardized measure of discounted future      net cash flows. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Excludes      the effect of losses attributable to our hedging contracts of $434.2      million and $441.7 million for the years ended December 31, 2007 and 2006,      respectively. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | 2007      revisions are associated with an expansion of the carbon dioxide flood      project area for the SACROC unit. 2006 revisions are based on lower than      expected recoveries from a section of the SACROC unit carbon dioxide flood      project. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Item 9.    Changes in and Disagreements withAccountants on Accounting and Financial Disclosure.

----

|   | Knight      Form 10-K |
|--------|-----------------------|

Item 9A.  Controls andProcedures.

Conclusion Regarding the Effectiveness of DisclosureControls and Procedures

Management’s Report on Internal Control over FinancialReporting

|   | · | the      Vancouver Wharves bulk marine terminal, acquired May 30, 2007;      and |
|--------|--------|----------------------------------------------------------------------------------|

|   | · | the      terminal assets and operations acquired from Marine Terminals, Inc.,      effective September 1, 2007. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------|

Changes in Internal Control over FinancialReporting

Item 9B.  OtherInformation.

----

|   | Knight      Form 10-K |
|--------|-----------------------|

PART III

Item 10.  Directors, Executive Officers andCorporate Governance

| Name                                                                                                                                                                                                                                          | Age | Position                                                             |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----|----------------------------------------------------------------------|
| Richard      D.      Kinder                                    | 63  | Director,      Chairman and Chief Executive Officer                  |
| C.      Park      Shaper                                       | 39  | Director      and President                                          |
| Steven      J.      Kean                                       | 46  | Executive      Vice President and Chief Operating Officer            |
| Kenneth      A. Pontarelli                                                                                                                                                                                                                    | 44  | Director                                                             |
| Kimberly      A.      Dang                                     | 38  | Vice      President, Investor Relations and Chief Financial  Officer |
| David      D.      Kinder                                      | 33  | Vice      President, Corporate Development and Treasurer             |
| Joseph      Listengart                                         | 39  | Vice      President, General Counsel and Secretary                   |
| Scott      E.      Parker                                      | 47  | Vice      President (President, Natural Gas Pipelines)               |
| James      E.      Street                                      | 51  | Vice      President, Human Resources andAdministration               |

----

| Item 10.  Directors,      Executive Officers and Corporate Governance.      (continued) | Knight      Form 10-K |
|---------------------------------------------------------------------------------------------------|-----------------------|

----

| Item 10.  Directors,      Executive Officers and Corporate Governance.      (continued) | Knight      Form 10-K |
|---------------------------------------------------------------------------------------------------|-----------------------|

Item 11. ExecutiveCompensation.

----

| Item 11.Executive      Compensation. (continued) | Knight      Form 10-K |
|--------------------------------------------------|-----------------------|

----

| Item 11.Executive      Compensation. (continued) | Knight      Form 10-K |
|--------------------------------------------------|-----------------------|

----

| Item 11.Executive      Compensation. (continued) | Knight      Form 10-K |
|--------------------------------------------------|-----------------------|

|   | · | our      EBITDA less capital spending, or the EBITDA less capital spending of one      of our subsidiaries or businessunits; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------|

|   | · | our      net income or the net income of one of our subsidiaries or business      units; |
|--------|--------|------------------------------------------------------------------------------------------|

|   | · | our      revenues or the revenues of one of our subsidiaries or business      units; |
|--------|--------|--------------------------------------------------------------------------------------|

|   | · | our      unit revenues minus unit variable costs or the unit revenues minus unit      variable costs of one of our subsidiaries or business    units; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our      return on capital, return on equity, return on assets, or return on      invested capital, or the return on capital, return on equity, return on      assets, or return on invested capital of one of our subsidiaries or      business units; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our      cash flow return on assets or cash flows from operating activities, or the      cash flow return on assets or cash flows from operating activities of one      of our subsidiaries or businessunits; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our      capital expenditures or the capital expenditures of one of our      subsidiaries or business units; |
|--------|--------|--------------------------------------------------------------------------------------------------------------|

|   | · | our      operations and maintenance expense or general and administrative expense,      or the operations and maintenance expense or general and administrative      expense of one of our subsidiaries or business units;  or |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our      debt-equity ratios and key profitability ratios, or the debt-equity ratios      and key profitability ratios of one of our subsidiaries or business      units. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Name      and Principal Position                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | Dollar      Value |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|
| Richard      D. Kinder, Chairman and Chief Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $                 | - | 1 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |              |   |   |
| Kimberly      A. Dang, Vice President and Chief Financial Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |              | 1,000,000 | 2 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |              |   |   |
| Steven      J. Kean, Executive Vice President and Chief Operating    Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |              | 1,500,000 | 3 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |              |   |   |
| Scott      E. Parker, Vice President (President, Natural Gas    Pipelines)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |              | 1,500,000 | 3 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |              |   |   |
| C.      Park Shaper, Director and      President                                                                                            |   |              | 1,500,000 | 3 |

----

| Item 11.Executive      Compensation. (continued) | Knight      Form 10-K |
|--------------------------------------------------|-----------------------|

| 2 | Under      the plan, for 2007, if neither of the targets was met, no bonus      opportunities would have been provided; if one of the targets was met,      $500,000 in bonus opportunities would have been available; if both of the      targets had been exceeded by 10%, $1,500,000 in bonus opportunities would      have been available. Our compensation committee may reduce the award      payable by us to any participant for anyreason. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Under      the plan, for 2007, if neither of the targets was met, no bonus      opportunities would have been provided; if one of the targets was met,      $750,000 in bonus opportunities would have been available; if both of the      targets had been exceeded by 10%, $2,000,000 in bonus opportunities would      have been available. Our compensation committee may reduce the award      payable by us to any participant for anyreason. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 11.Executive      Compensation. (continued) | Knight      Form 10-K |
|--------------------------------------------------|-----------------------|

| Pension      Benefits                                                                                                                                                                                         |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Name                                                                                                                                                                                                          |   | Plan      Name |   | CurrentCredited      Yrsof      Service |   | Present      Value ofAccumulatedBenefit1 |   | ContributionsDuring      2007 |
| Richard      D. Kinder                                                                                                                                                                                        |   | Cash      Balance |   |   | 7 |   |   |   | $ | - |   |   | $ | - |   |
| Kimberly      A. Dang                                                                                                                                                                                         |   | Cash      Balance |   |   | 6 |   |   |   |   | 31,408 |   |   |   | 7,294 |   |
| Steven      J.      Kean                                |   | Cash      Balance |   |   | 6 |   |   |   |   | 41,724 |   |   |   | 7,767 |   |
| Scott      E.      Parker                               |   | Cash      Balance |   |   | 9 |   |   |   |   | 71,515 |   |   |   | 9,130 |   |
| C.      Park      Shaper                                |   | Cash      Balance |   |   | 7 |   |   |   |   | 51,079 |   |   |   | 8,194 |   |

| 1 | The      present values in the Pension Benefits table are based on certain      assumptions-including a 5.75% discount rate, RP 2000 mortality      (post-retirement only), 5% cash balance interest crediting rate, and lump      sums calculated using a 5% interest rate and IRS mortality. We assumed      benefits would commence at normal retirement date or unreduced retirement      date, if earlier. No death or turnover was assumed prior to retirement      date. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 11.Executive      Compensation. (continued) | Knight      Form 10-K |
|--------------------------------------------------|-----------------------|

|                                                                                 |   |   |                           |                          |   | (1)                                                                    |   | (2)                                             |      | (3)                                       |   | (4)                                                            |   | (5)                        |      | (6)                                           |   |                                                                                      |
|--------------------------------------------------------------------------------------|--------|--------|--------------------------------|-------------------------------|--------|------------------------------------------------------------------------|--------|-------------------------------------------------|-----------|-------------------------------------------|--------|----------------------------------------------------------------|--------|----------------------------|-----------|-----------------------------------------------|--------|-------------------------------------------------------------------------------------------|
| Name      and    Principal      Position     |   | Year   |   Salary   |   Bonus   |   | StockAwards    by      KMI     |   | OptionAwards  by      KMI   |      | Non-EquityIncentive      PlanCompensation |   | Changein      Pension   Value    |   | All      OtherCompensation |      | Unit      Awardsby      KnightHoldco      LLC |   |        Total        |
| Richard      D. Kinder                                                               |   | 2007   | $                              | 1                             | $      | -                                                                      |   | $                                               | -         |                                      | $      | -                                                              |   | $                          | -         |                                          | $      | -                                                                                         |   | $ | - |   | $ | 385,200 |   | $ | 385,201 |
| Director,      Chairman and                                                          |   | 2006   |                           | 1                             |   | -                                                                      |   |                                            | -         |                                      |   | -                                                              |   |                       | -         |                                          |   | -                                                                                         |   |   | - |   |   | - |   |   | 1 |
| Chief      Executive Officer                                                         |   |   |                           |                          |   |                                                                   |   |                                            |      |                                      |   |                                                           |   |                       |      |                                          |   |                                                                                      |   |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |                           |                          |   |                                                                   |   |                                            |      |                                      |   |                                                           |   |                       |      |                                          |   |                                                                                      |   |   |   |   |   |   |   |   |   |
| Kimberly      A. Dang                                                                |   | 2007   |                           | 200,000                       |   | -                                                                      |   |                                            | 338,095   |                                      |   |  -                                                        |   |                       | 400,000   |                                          |   | 7,294                                                                                     |   |   | 32,253 |   |   | 27,980 |   |   | 1,005,622 |
| Vice      President and                                                              |   | 2006   |                           | 200,000                       |   | -                                                                      |   |                                            | 139,296   |                                      |   | 37,023                                                         |   |                       | 270,000   |                                          |   | 6,968                                                                                     |   |   | 46,253 |   |   | - |   |   | 699,540 |
| Chief      Financial Officer                                                         |   |   |                           |                          |   |                                                                   |   |                                            |      |                                      |   |                                                           |   |                       |      |                                          |   |                                                                                      |   |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |                           |                          |   |                                                                   |   |                                            |      |                                      |   |                                                           |   |                       |      |                                          |   |                                                                                      |   |   |   |   |   |   |   |   |   |
| Steven      J. Kean                                                                  |   | 2007   |                           | 200,000                       |   | -                                                                      |   |                                            | 4,397,080 |                                      |   |  -                                                        |   |                       | 1,100,000 |                                          |   | 7,767                                                                                     |   |   | 147,130 |   |   | 111,820 |   |   | 5,963,797 |
| Executive      Vice President                                                        |   | 2006   |                           | 200,000                       |   | -                                                                      |   |                                            | 1,591,192 |                                      |   | 147,943                                                        |   |                       | -         |                                          |   | 7,422                                                                                     |   |   | 284,919 |   |   | - |   |   | 2,231,476 |
| And                                                                                  |   |   |                           |                          |   |                                                                   |   |                                            |      |                                      |   |                                                           |   |                       |      |                                          |   |                                                                                      |   |   |   |   |   |   |   |   |   |
| Chief      Operating Officer                                                         |   |   |                           |                          |   |                                                                   |   |                                            |      |                                      |   |                                                           |   |                       |      |                                          |   |                                                                                      |   |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |                           |                          |   |                                                                   |   |                                            |      |                                      |   |                                                           |   |                       |      |                                          |   |                                                                                      |   |   |   |   |   |   |   |   |   |
| Scott      E. Parker                                                                 |   | 2007   |                           | 200,000                       |   | -                                                                      |   |                                            | 2,340,080 |                                      |   |  -                                                        |   |                       | 1,100,000 |                                          |   | 9,130                                                                                     |   |   | 307,688 |   |   | - |   |   | 3,956,898 |
| Vice      President (President,                                                      |   | 2006   |                           | 200,000                       |   | 350,000                                                                |   |                                            | 881,317   |                                      |   | 29,490                                                         |   |                       | 500,000   |                                          |   | 8,735                                                                                     |   |   | 164,630 |   |   | - |   |   | 2,134,172 |
| Natural      Gas Pipelines)                                                          |   |   |                           |                          |   |                                                                   |   |                                            |      |                                      |   |                                                           |   |                       |      |                                          |   |                                                                                      |   |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |                           |                          |   |                                                                   |   |                                            |      |                                      |   |                                                           |   |                       |      |                                          |   |                                                                                      |   |   |   |   |   |   |   |   |   |
| C.      Park Shaper                                                                  |   | 2007   |                           | 200,000                       |   | -                                                                      |   |                                            | 1,950,300 |                                      |   |  -                                                        |   |                       | 1,200,000 |                                          |   | 8,194                                                                                     |   |   | 155,953 |   |   | 176,660 |   |   | 3,691,107 |
| Director      and President                                                          |   | 2006   |                           | 200,000                       |   | -                                                                      |   |                                            | 1,134,283 |                                      |   | 24,952                                                         |   |                       | -         |                                          |   | 7,835                                                                                     |   |   | 348,542 |   |   | - |   |   | 1,715,612 |
|                                                                                 |   |   |                           |                          |   |                                                                   |   |                                            |      |                                      |   |                                                           |   |                       |      |                                          |   |                                                                                      |   |   |   |   |   |   |   |   |   |

| 1 | Consists      of expense calculated in accordance with SFAS No. 123R attributable to      restricted KMI stock awarded in 2003, 2004 and 2005 according to the      provisions of the KMI Stock Plan. No restricted stock was awarded in 2007      or 2006. For grants of restricted stock, we take the value of the award at      time of grant and accrue the expense over the vesting period according to      SFAS No. 123R. For grants made July 16, 2003—KMI closing price was $53.80,      twenty-five percent of the shares in each grant vest on the third      anniversary after the date of grant and the remaining seventy-five percent      of the shares in each grant vest on the fifth anniversary after the date      of grant. For grants made July 20, 2004—KMI closing price was $60.79,      fifty percent of the shares vest on the third anniversary after the date      of grant and the remaining fifty percent of the shares vest on the fifth      anniversary after the date of grant. For grants made July 20, 2005—KMI      closing price was $89.48, twenty-five percent of the shares in each grant      vest on the third anniversary after the date of grant and the remaining      seventy-five percent of the shares in each grant vest on the fifth      anniversary after the date of grant. As a result of the Going Private      transaction, all outstanding restricted shares vested in 2007 and      therefore all remaining compensation expense with respect to restricted      stock was recognized in 2007 in accordance with SFAS No. 123R. We bore all      of the costs associated with thisacceleration. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Consists      of expense calculated in accordance with SFAS No. 123R attributable to      options to purchase KMI shares awarded in 2002 and 2003 according to the      provisions of the KMI Stock Plan. No options were granted in 2007 or 2006.      For options granted in 2002—volatility of 0.3912 using a 6 year term,      4.01% five year risk free interest rate return, and a 0.71% expected      annual dividend rate. For options granted in 2003—volatility of 0.3853      using a 6.25 year term, 3.37% treasury strip quote at time of grant, and a      2.973% expected annual dividend rate. As a result of the Going Private      transaction, all outstanding options vested in 2007 and therefore all      remaining compensation expense with respect to options was recognized in      2007 in accordance with SFAS No. 123R. As a condition to their being      permitted to participate in the Going Private transaction, Messrs. Kean      and Shaper agreed to the cancellation of 10,467 and 22,031 options,      respectively. These cancelled options had weighted average exercise prices      of $39.12 and $24.75 per share, respectively. We bore all of the costs      associated with this acceleration. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Represents      amounts paid according to the provisions of our Annual Incentive Plan. In      the case of Mr. Parker, for the year 2006, an additional $350,000 was paid      outside of the plan, as reflected in the Bonus column. Amounts were earned      in the fiscal year indicated but were paid in the next fiscal year.      Messrs. Kean and Shaper refused to accept a bonus for 2006. The committee      agreed that this was not a reflection of performance on either      person. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Represents      the 2007 and 2006, as applicable, change in the actuarial present value of      accumulated defined pension benefit (including unvested benefits)      according to the provisions of our Cash Balance Retirement      Plan. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5 | Amounts      represent value of contributions to our Savings Plan (a 401(k) plan),      value of group-term life insurance exceeding $50,000, taxable parking      subsidy and dividends paid on unvested restricted stock awards. Amounts      each year include $10,000 representing the value of contributions to our      Savings Plan. Amounts representing the value of dividends paid on unvested      restricted stock awards are as follows: for 2007—Mrs. Dang $21,875; Mr.      Kean $136,500; Mr. Parker $77,000; and Mr. Shaper $144,375; for 2006—Mrs.      Dang $35,875; Mr. Kean $273,000; Mr. Parker $154,000; and Mr. Shaper      $336,875. Mr. Parker’s 2007 amount also includes amounts for imputed      income for company provided cell phone, a $100,000 relocation allowance,      and a $130,000 payment consistent with Mr. Parker’s retention      agreement. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6 | Such      amounts represent the amount of the non-cash compensation expense      calculated in accordance with SFAS No. 123R attributable to the Class A-1      and Class B units of Knight Holdco LLC and allocated to us for financial      reporting purposes but does not include any such expense allocated to any      of its other subsidiaries. None of the named executive officers has      received any payments in connection with such units, and none of us or our      subsidiaries are obligated, nor do we expect,to |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 11.Executive      Compensation. (continued) | Knight      Form 10-K |
|--------------------------------------------------|-----------------------|

|   | pay      any amounts in respect of such units. See Item 13. “Certain Relationships      and Related Transactions, and Director Independence—Related      Transactions—Going Private Transaction” for further discussion of these      units. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | each      option or other award to purchase shares of KMI common stock granted under      any Kinder Morgan employee or director equity plan, whether vested or      unvested, that was outstanding immediately prior to the effective time of      the buyout, vested as of the effective time of the buyout, and was      cancelled and converted into the right to receive a cash payment equal to      the number of shares of KMI common stock underlying such options      multiplied by the amount (if any) by which the $107.50 per share merger      consideration issued in the Going Private transaction exceeded the option      exercise price, without interest and less any applicable withholding tax;      and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | each      share of restricted stock or restricted stock unit under any Kinder Morgan      stock plan or benefit plan vested as of the effective time of the buyout      and was cancelled and converted into the right to receive a cash payment      equal to the number of outstanding shares of restricted stock or      restricted stock units, multiplied by the $107.50 per share merger      consideration, without interest and less any applicable withholding      tax. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                   |   | Option      Awards |    | Stock      Awards |
|------------------------|--------|--------------------|---------|-------------------|
| Name                   |   | StockOptions       |    | Value Realized1   |   | Shares      ofRestricted      Stock |   | Value Realized2 |
| Richard      D. Kinder |   |               | -       |              |   |   | $ | - |   |   |   | - |   |   | $ | - |
| Kimberly      A. Dang  |   |               | 24,750  |              |   |   |   | 1,443,178 |   |   |   | 8,000 |   |   |   | 860,000 |
| Steven      J. Kean3   |   |               | 25,533  |              |   |   |   | 1,375,772 |   |   |   | 78,000 |   |   |   | 8,385,000 |
| Scott      E. Parker   |   |               | 10,000  |              |   |   |   | 537,000 |   |   |   | 44,000 |   |   |   | 4,730,000 |
| C.      Park Shaper4   |   |               | 197,969 |              |   |   |   | 12,529,810 |   |   |   | 82,500 |   |   |   | 8,868,750 |

| 1 | Calculated      based on the actual exercise prices underlying the related options, as      opposed to the weighted average exercise price per share of      options. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Calculated      as $107.50 multiplied by the number of shares of restricted      stock. |
|---|-----------------------------------------------------------------------------------------|

| 3 | Mr.      Kean, as a condition to his being permitted to participate as an investor      in Knight, agreed to the cancellation of 10,467 of his options shown      above, with a weighted average exercise price of $39.12 per share, prior      to the Going Private transaction. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Mr.      Shaper, as a condition to his being permitted to participate as an      investor in Knight, agreed to the cancellation of 22,031 of his options      shown above, with a weighted average exercise price of $24.75 per share,      prior to the Going Privatetransaction. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 11.Executive      Compensation. (continued) | Knight      Form 10-K |
|--------------------------------------------------|-----------------------|

|                   |   |                  |   | Estimated      Possible Payouts UnderNon-Equity Incentive Plan      Awards1 |     | All      other stock awards2 |   | Grant      date |
|------------------------|--------|-----------------------|--------|-----------------------------------------------------------------------------|----------|------------------------------|--------|-----------------|
| Name                   |   | Grant      date       |   | Threshold                                                                   |     | Target                       |   |  Maximum   |   | Number      of units |   | fair      value ofstock      awards3 |
| Richard      D. Kinder |   | May      30, 2007     |   | $                                                                           | -        |                         | $      | -               |   | $ | - |   | 791,405,452 |   | $ | 9,200,000 |
|                   |   |                  |   |                                                                        |     |                         |   |            |   |   |   |   |   |   |   |   |
| Kimberly      A. Dang  |   | January      17, 2007 |   |                                                                        | $500,000 |                         |   | $1,000,000      |   |   | $1,500,000 |   |   |   |   |   |
|                   |   | May      30, 2007     |   |                                                                        |     |                         |   |            |   |   |   |   | 49,893,032 |   |   | 672,409 |
|                   |   |                  |   |                                                                        |     |                         |   |            |   |   |   |   |   |   |   |   |
| Steven      J. Kean    |   | January      17, 2007 |   |                                                                        | 750,000  |                         |   | 1,500,000       |   |   | 2,000,000 |   |   |   |   |   |
|                   |   | May      30, 2007     |   |                                                                        |     |                         |   |            |   |   |   |   | 162,114,878 |   |   | 2,708,095 |
|                   |   |                  |   |                                                                        |     |                         |   |            |   |   |   |   |   |   |   |   |
| Scott      E. Parker   |   | January      17, 2007 |   |                                                                        | 500,000  |                         |   | 1,500,000       |   |   | 2,000,000 |   |   |   |   |   |
|                   |   |                  |   |                                                                        |     |                         |   |            |   |   |   |   |   |   |   |   |
| C.      Park Shaper    |   | January      17, 2007 |   |                                                                        | 750,000  |                         |   | 1,500,000       |   |   | 2,000,000 |   |   |   |   |   |
|                   |   | May      30, 2007     |   |                                                                        |     |                         |   |            |   |   |   |   | 225,436,274 |   |   | 4,296,125 |

| 1 | Represents      grants under the Knight Annual Incentive Plan for performance in 2007. See      “Elements of Compensation—Possible Annual Cash Bonus (Non-Equity Cash      Incentive)” for a discussion of theseawards. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Represents      the sum of the number of Class A-1 units and the number of Class B units      of Knight Holdco LLC awarded to the named executive officers in connection      with the Going Private transaction. See Item 13. “Certain Relationships      and Related Transactions, and Director Independence—Related      Transactions—Going Private Transaction” for detail regarding these      awards. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Amounts      represent the fair value calculated in accordance with SFAS No. 123R      attributable to Class A-1 and Class B units of Knight Holdco LLC awarded      by Knight Holdco LLC to the named executive officers in connection with      the Going Private transaction. None of the named executive officers has      received any payments in connection with such units, and none of us or our      subsidiaries are obligated, nor do we expect, to pay any amounts in      respect of such units. See Item 13. “Certain Relationships and Related      Transactions, and Director Independence—Related Transactions—Going Private      Transaction” for further discussion of these  units. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                            |   | Stock      awards  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|
| Name                                                                                                                                                                                                                                                            |   | Type      of units |   | Number      of unitsthat      have not vested |   | Market      value ofunits      of stock thathave not vested1 |
| Richard      D.      Kinder                                       |   | Class      B units |   | 791,405,452 |   | N/A |
| Kimberly      A.      Dang                                        |   | Class      B units |   | 49,462,841 |   | N/A |
| Steven      J.      Kean                                          |   | Class      B units |   | 158,281,090 |   | N/A |
| C.      Park      Shaper                                          |   | Class      B units |   | 217,636,499 |   | N/A |

| 1 | Because      the Class B units are equity interests of Knight Holdco LLC, a private      limited liability company, the market value of such interests is not      readily determinable. None of the named executive officers has received      any payments in connection with such units, and none of us or our      subsidiaries are obligated, nor do we expect, to pay any amounts in      respect of such units. See Item 13. “Certain Relationships and Related      Transactions, and Director Independence—Related Transactions—Going Private      Transaction” for further discussion of these  units. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 11.Executive      Compensation. (continued) | Knight      Form 10-K |
|--------------------------------------------------|-----------------------|

|                        |   |                                 |   | (1)               |   | (1)                |   |                        |   |   |
|-----------------------------|--------|--------------------------------------|--------|-------------------|--------|--------------------|--------|-----------------------------|--------|--------|
| Name                        |   | Fees      Earned orPaid      in Cash |   | Stock      Awards |   | Option      Awards |   | All      Other Compensation |   | Total  |
| Edward      H. Austin       |   |                                 | $      | 82,506            |   |               |   | -                           |   |   |   | - |   |   |   | $ | - |   |   | $ | 82,506 |
| Charles      W. Battey      |   |                                 |   | 82,506            |   |               |   | -                           |   |   |   | - |   |   |   |   | - |   |   |   | 82,506 |
| Stewart      A. Bliss       |   |                                 |   | 95,010            |   |               |   | -                           |   |   |   | - |   |   |   |   | - |   |   |   | 95,010 |
| Ted      A. Gardner         |   |                                 |   | 85,008            |   |               |   | -                           |   |   |   | - |   |   |   |   | - |   |   |   | 85,008 |
| William      J. Hybl        |   |                                 |   | 80,004            |   |               |   | -                           |   |   |   | - |   |   |   |   | - |   |   |   | 80,004 |
| Michael      C. Morgan      |   |                                 |   | 80,004            |   |               |   | -                           |   |   |   | - |   |   |   |   | - |   |   |   | 80,004 |
| Kenneth      A. Pontarelli  |   |                                 |   | –           |   |               |   | -                           |   |   |   | - |   |   |   |   | - |   |   |   | - |
| Edward      Randall, III    |   |                                 |   | 80,004            |   |               |   | -                           |   |   |   | - |   |   |   |   | - |   |   |   | 80,004 |
| James      M. Stanford      |   |                                 |   | 80,004            |   |               |   | -                           |   |   |   | - |   |   |   |   | - |   |   |   | 80,004 |
| Fayez      Sarofim          |   |                                 |   | 80,004            |   |               |   | -                           |   |   |   | - |   |   |   |   | - |   |   |   | 80,004 |
| H.      A. True, III        |   |                                 |   | 80,004            |   |               |   | -                           |   |   |   | - |   |   |   |   | - |   |   |   | 80,004 |
| Douglas      W.G. Whitehead |   |                                 |   | 82,506            |   |               |   | -                           |   |   |   | - |   |   |   |   | - |   |   |   | 82,506 |

| 1 | Prior      to 2007 all stock and option awards to the directors had vested;      consequently, we incurred no expense calculated in accordance with SFAS      No. 123R in 2007 in respect of any such stock and/or option awards,      including as a result of the closing of the Going Private      transaction. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Knight      Form 10-K |
|--------|-----------------------|

Item 12.  Security Ownership of CertainBeneficial Owners and Management and Related StockholderMatters.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Kinder      Morgan Energy PartnersCommon      Units |   | Kinder      MorganManagement      Shares |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------|--------|------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Numberof Units2                                     |   | Percentof      Class                     |   | Number      of Shares |   | Percentof      Class |
| Richard      D. Kinder4                                                                                    | 315,979                                             |   | *                                        |   | 84,663 |   | * |
| C.      Park      Shaper                                                                                   | 4,000                                               |   | *                                        |   | 23,793 |   | * |
| Kenneth      A.      Pontarelli                                                                            | -                                                   |   | -                                        |   | - |   | - |
| Steven      J.      Kean                                                                                   | -                                                   |   | -                                        |   | - |   | - |
| Scott      E.      Parker                                                                                  | -                                                   |   | -                                        |   | - |   | - |
| Kimberly      A.      Dang                                                                                 | 121                                                 |   | *                                        |   | 440 |   | * |
| Directors      and Executive Officers as a group (9 persons)5                                                                                                                                                                                                                                                                                                                                                                                                                                     | 336,484                                             |   | *                                        |   | 128,335 |   | * |

| 1 | Except      as noted otherwise, each individual has sole voting power and sole      disposition power over the units and shares  listed. |
|---|------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | As      of January 31, 2008, Kinder Morgan Energy Partners had 170,224,734 common      units issued and outstanding. |
|---|----------------------------------------------------------------------------------------------------------------------|

| 3 | As      of January 31, 2008, Kinder Morgan Management had 72,432,482 issued and      outstanding shares representing limited liability company interests,      including two voting shares owned by Kinder Morgan G.P.,    Inc. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Includes      7,879 common units owned by Mr. Kinder’s spouse. Mr. Kinder disclaims any      and all beneficial or pecuniary interest in these  units. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5 | Includes      9,090 common units owned by spouses of our executives and includes 671      Kinder Morgan Management shares purchased by one of our executives for his      children. The executives disclaim any beneficial ownership in such common      units and shares. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Item 13. CertainRelationships and Related Transactions, and DirectorIndependence.

----

| Item 13.Certain      Relationships and Related Transactions, and Director Independence.      (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------------------------------------------|-----------------------|

|   | · | he      retires, dies or becomes unable to serve due to  disability, |
|--------|--------|----------------------------------------------------------------------|

|   | · | such      time as he is removed by the members of Knight Holdco LLC for cause or for      the failure to meet performance targets for Knight Holdco LLC set forth in      the business plan, or |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | such      time as he ceases to own at least 2.5% of the Class A units of Knight      Holdco LLC. |
|--------|--------|-------------------------------------------------------------------------------------------------------|

|   | · | he      retires, dies or becomes unable to serve as a result of      disability, |
|--------|--------|----------------------------------------------------------------------------------|

|   | · | he      is removed for cause, |
|--------|--------|-------------------------------|

|   | · | Knight      Holdco LLC fails to meet performance targets set forth in the business      plan, and the members of Knight Holdco LLC either decide to remove him or      to strip him of the powers of chiefmanager, |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Mr. Kinder      or his heirs or representatives has approved the board of managers’      decision to remove him, |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------|

|   | · | Mr. Kinder      ceases to own at least 2.5% of the Class A units of Knight Holdco      LLC, or |
|--------|--------|----------------------------------------------------------------------------------------------------------|

|   | · | upon      the occurrence of other circumstances relating to the reasons for      Mr. Kinder ceasing to be chief manager and/or Knight Holdco LLC’s      performance. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 13.Certain      Relationships and Related Transactions, and Director Independence.      (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------------------------------------------|-----------------------|

|                                                              |   | Class      A Units |   | % of Class      A Units1 |   | Class      A-1 Units |   | % of Class      A-1 Units2 |   | Class      B Units |   | % of Class      B Units3 |
|-------------------------------------------------------------------|--------|--------------------|--------|-------------------------------|--------|----------------------|--------|---------------------------------|--------|--------------------|--------|-------------------------------|
| Current      Directors and Executive Officers:                    |   |               |   |                          |   |                 |   |                            |   |               |   |                          |
| Richard      D. Kinder4                                           |   | 2,424,000,000      |   | 30.6                          |   | –              |   | –                         |   | 791,405,452        |   | 40.0                          |
| C.      Park Shaper5                                              |   | 13,598,785         |   | *                             |   | 7,799,775            |   | 28.3                            |   | 217,636,499        |   | 11.0                          |
| Steven      J. Kean6                                              |   | 6,684,149          |   | *                             |   | 3,833,788            |   | 13.9                            |   | 158,281,090        |   | 8.0                           |
| Kimberly      A. Dang7                                            |   | 750,032            |   | *                             |   | 430,191              |   | 1.6                             |   | 49,462,841         |   | 2.5                           |
| David      D. Kinder8                                             |   | 1,075,981          |   | *                             |   | 617,144              |   | 2.2                             |   | 55,398,382         |   | 2.8                           |
| Joseph      Listengart9                                           |   | 6,059,449          |   | *                             |   | 3,475,483            |   | 12.6                            |   | 79,140,545         |   | 4.0                           |
| Scott      E. Parker                                              |   | –            |   | –                       |   | –              |   | –                         |   | –            |   | –                       |
| James      E. Street10                                            |   | 3,813,005          |   | *                             |   | 2,187,003            |   | 7.9                             |   | 49,462,841         |   | 2.5                           |
| Kenneth      A. Pontarelli11                                      |   | 957,082,454        |   | 12.1                          |   | –              |   | –                         |   | –            |   | –                       |
| Executive      officers and directors as a group (9 persons) |   | 3,413,063,855      |   | 43.1                          |   | 18,343,384           |   | 66.5                            |   | 1,400,787,650      |   | 70.8                          |
| Former      Directors:                                            |   |               |   |                          |   |                 |   |                            |   |               |   |                          |
| Fayez      Sarofim12                                              |   | 349,018,612        |   | 4.4                           |   | -                    |   | -                               |   | -                  |   | -                             |
| Michael      C. Morgan13                                          |   | 64,500,000         |   | *                             |   | -                    |   | -                               |   | -                  |   | -                             |

| * | Less      than 1%. |
|---|--------------------|

| 1 | As      of January 31, 2008, Knight Holdco LLC had 7,914,367,913 Class A Units      issued and outstanding. |
|---|-------------------------------------------------------------------------------------------------------------|

| 2 | As      of January 31, 2008, Knight Holdco LLC had 27,225,694 Class A-1 Units      issued and outstanding and 345,042 phantom Class A-1 Units issued and      outstanding. The phantom Class A-1 Units were issued to Canadian      management employees. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | As      of January 31, 2008, Knight Holdco LLC had 1,922,620,621 Class B Units      issued and outstanding and 55,893,008 phantom Class B Units issued and      outstanding. The phantom Class B Units were issued to Canadian management      employees. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Includes      522,372 Class A units owned by Mr. Kinder’s wife. Mr. Kinder disclaims any      and all beneficial or pecuniary interest in the Class A units held by his      wife. Also includes 263,801,817 Class B Units that Mr. Kinder transferred      to a limited partnership. Mr. Kinder may be deemed to be the beneficial      owner of these transferred Class B Units, because Mr. Kinder controls the      voting and disposition power of these Class B Units, but he disclaims      ninety-nine percent of any beneficial and pecuniary interest in them. Mr.      Kinder contributed 23,994,827 shares of KMI common stock and his wife      contributed 5,173 shares of KMI common stock to Knight Holdco LLC that      were valued for purposes of KnightHoldco |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 13.Certain      Relationships and Related Transactions, and Director Independence.      (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------------------------------------------|-----------------------|

|   | LLC’s      limited liability agreement at $2,423,477,628 and $522,372, respectively,      in exchange for their respective Class A units. The Class B units received      by Mr. Kinder had a grant date fair value as calculated in accordance with      SFAS No. 123R of $9,200,000. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5 | Includes      217,636,499 Class B Units that Mr. Shaper transferred to a limited      partnership. Mr. Shaper may be deemed to be the beneficial owner of these      transferred Class B Units, because Mr. Shaper controls the voting and      disposition power of these Class B Units, but he disclaims approximately      twenty-two percent of any beneficial and pecuniary interest in them. Mr.      Shaper made a cash investment of $13,598,785 of his after-tax proceeds      from the conversion in the Going Private transaction of 82,500 shares of      KMI restricted stock and options to acquire 197,969 shares of KMI common      stock in exchange for his Class A units. The Class A-1 units and Class B      units received by Mr. Shaper had an aggregate grant date fair value as      calculated in accordance with SFAS No. 123R of  $4,296,125. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6 | Mr.      Kean made a cash investment of $6,684,149 of his after-tax proceeds from      the conversion in the Going Private transaction of 78,000 shares of KMI      restricted stock and options to acquire 25,533 shares of KMI common stock      in exchange for his Class A units. The Class A-1 units and Class B units      received by Mr. Kean had an aggregate grant date fair value as calculated      in accordance with SFAS No. 123R of$2,708,095. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7 | Includes      49,462,841 Class B Units that Ms. Dang transferred to a limited      partnership. Ms. Dang may be deemed to be the beneficial owner of these      transferred Class B Units, because Ms. Dang has voting and disposition      power of these Class B Units, but she disclaims ten percent of any      beneficial and pecuniary interest in them. Ms. Dang made a cash investment      of $750,032 of her after-tax proceeds from the conversion in the Going      Private transaction of 8,000 shares of KMI restricted stock and options to      acquire 24,750 shares of KMI common stock in exchange for her Class A      units. The Class A-1 units and Class B units received by Ms. Dang had an      aggregate grant date fair value as calculated in accordance with SFAS No.      123R of $672,409. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8 | Includes      55,398,382 Class B Units that Mr. Kinder transferred to a limited      partnership. Mr. Kinder may be deemed to be the beneficial owner of these      transferred Class B Units, because Mr. Kinder controls the voting and      disposition power of these Class B Units, but he disclaims eight percent      of any beneficial and pecuniary interest in them. Mr. Kinder made a cash      investment of $1,075,981 of his after-tax proceeds from the conversion in      the Going Private transaction of 15,750 shares of KMI restricted stock in      exchange for his Class A units. The Class A-1 units and Class B units      received by Mr. Kinder had an aggregate grant date fair value as      calculated in accordance with SFAS No. 123R of  $783,742. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9 | Mr.      Listengart made a cash investment of $6,059,449 of his after-tax proceeds      from the conversion in the Going Private transaction of 52,500 shares of      KMI restricted stock and options to acquire 48,459 shares of KMI common      stock in exchange for his Class A units. The Class A-1 units and Class B      units received by Mr. Listengart had an aggregate grant date fair value as      calculated in accordance with SFAS No. 123R of  $1,706,963. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10 | Includes      49,462,841 Class B units Mr. Street transferred to a limited partnership.      Mr. Street may be deemed to be the beneficial owner of these transferred      Class B units, because Mr. Street has voting and disposition power of      these Class B units, but he disclaims twenty-five percent of any      beneficial or pecuniary interest in them. Mr. Street made a cash      investment of $3,813,005 of his after-tax proceeds from the conversion in      the Going Private transaction of 30,000 shares of KMI restricted stock and      options to acquire 34,588 shares of KMI common stock in exchange for his      Class A units. The Class A-1 units and Class B units received by Mr.      Street had an aggregate grant date fair value as calculated in accordance      with SFAS No. 123R of $1,070,209. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11 | Consists      of 240,454,180 units owned by GS Capital Partners V Fund, L.P.; a Delaware      limited partnership; 124,208,587 units owned by GS Capital Partners V      Offshore Fund, L.P., a Cayman Islands exempted limited partnership;      82,455,031 units owned by GS Capital Partners V Institutional, L.P., a      Delaware limited partnership; 9,533,193 units owned by GS Capital Partners      V GmbH & Co. KG, a German limited partnership; 233,596,750 units owned      by GS Capital Partners VI Fund, L.P., a Delaware limited partnership;      194,297,556 units owned by GS Capital Partners VI Offshore Fund, L.P., a      Cayman Islands exempted limited partnership; 64,235,126 units owned by GS      Capital Partners VI Parallel, L.P., a Delaware limited partnership; and      8,302,031 units owned by GS Capital Partners VI GmbH & Co. KG, a      German limited partnership (collectively the “GS Entities”). The GS      Entities, of which affiliates of The Goldman Sachs Group, Inc. (“GSG”) are      the general partner, managing general partner or investment manager, share      voting and investment power with certain of its respective affiliates. Mr.      Pontarelli is a managing director of Goldman, Sachs & Co. (“GS”),      which is a direct and indirect wholly owned subsidiary of GSG. Each of GS,      GSG and Mr. Pontarelli disclaims beneficial ownership of the equity      interests and the units held directly or indirectly by the GS Entities      except to the extent of their pecuniary interest therein, if any. GS, an      NASD member, is an investment banking firm that regularly performs      services such as acting as a financial advisor and serving as principal or      agent in the purchase and sale of securities. In the future, GS may be      called upon to provide similar or other services for us or our affiliates.      Each of Mr. Pontarelli, GS and GSG has a mailing address of ℅ Goldman,      Sachs & Co., 85 Broad Street, 10th Floor, New York, NY 10004. GSG’s      affiliates that are registered broker-dealers (including specialists and      market makers) may from time to time engage in brokerage and trading      activities with respect to our securities or those of our      affiliates. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 12 | An      aggregate of 1,711,801 shares of KMI common stock and $165,000,000 of cash      were contributed by Mr. Sarofim, either individually or by trusts and      other entities in which Mr. Sarofim has or shares voting and investment      power, to Knight Holdco LLC that were valued for purposes of Knight Holdco      LLC’s limited liability agreement at $349,018,612 in exchange for their      Class A units. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13 | Portcullis      Partners, LP, a private investment partnership, contributed 600,000 shares      of KMI common stock to Knight |
|----|-------------------------------------------------------------------------------------------------------------------------------|

----

| Item 13.Certain      Relationships and Related Transactions, and Director Independence.      (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------------------------------------------|-----------------------|

|   | Holdco      LLC that were valued for purposes of Knight Holdco LLC’s limited liability      agreement at $64,500,000 in exchange for its Class A units. Mr. Morgan is      President of Portcullis Partners, LP and therefore may be deemed to have      beneficial ownership of the units owned by Portcullis Partners,      LP. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | If      the director was an employee, or had an immediate family member who was an      executive officer of Kinder Morgan Management, Kinder Morgan Energy      Partners or us or any of their or our affiliates, but the employment      relationship ended more than three years prior to the date of      determination (or, in the case of employment of a director as an interim      chairman, interim chief executive officer or interim executive officer,      such employment relationship ended by the date of      determination); |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | If      during any twelve month period within the three years prior to the      determination the director received no more than, and has no immediate      family member that received more than, $100,000 in direct compensation      from us or our affiliates, other than (i) director and committee fees      and pension or other forms of deferred compensation for prior service      (provided such compensation is not contingent in any way on continued      service), (ii) compensation received by a director for former service      as an interim chairman, interim chief executive officer or interim      executive officer, and (iii) compensation received by an immediate      family member for service as an employee (other than an executive      officer); |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | If      the director is a current employee, or has an immediate family member that      is a current executive officer, of another company that has made payments      to, or received payments from, us and our affiliates for property or      services in an amount which, in each of the three fiscal years prior to      the date of determination, was less than the greater of $1.0 million      or 2% of such other company’s annual consolidated gross      revenues. Contributions to tax-exempt organizations are not      considered payments for purposes of this  determination; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | If      the director is also a director, but is not an employee or executive      officer, of Kinder Morgan G.P., Inc. or another affiliate of Kinder Morgan      Management or us, so long as such director is otherwise independent;      and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | If      the director beneficially owns less than 10% of each class of voting      securities of Kinder Morgan G.P., Inc., Kinder Morgan Management or      us. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 13.Certain      Relationships and Related Transactions, and Director Independence.      (continued) | Knight      Form 10-K |
|----------------------------------------------------------------------------------------------------------|-----------------------|

Item 14. PrincipalAccounting Fees and Services

|             | Year      Ended December 31, |
|------------------|------------------------------|
|             | 2007                         |   | 2006 |
| Audit      fees1 | $                            | 5,689,710 |   | $ | 4,126,700 |
| Tax      fees2   |                         | 2,974,126 |   |   | 1,994,650 |
| Total            | $                            | 8,663,836 |   | $ | 6,121,350 |

|   | _____________ |
|--------|---------------|

| 1 | Includes      fees for integrated audit of annual financial statements and internal      control over financial reporting, reviews of the related quarterly      financial statements, and reviews of documents filed with the Securities      and Exchange Commission. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Includes      fees for professional services rendered for tax return review services and      for federal, state, local and foreign income tax compliance and consulting      services. For 2007 and 2006, amounts include fees of $2,352,533 and      $1,356,399, respectively, billed to Kinder Morgan Energy Partners for      professional services rendered for tax processing and preparation of Forms      K-1 for its unitholders. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Knight      Form 10-K |
|--------|-----------------------|

PART IV

Item 15. Exhibits,Financial Statement Schedules.

| (a) | (1) | Financial      Statements |
|-----|-----|---------------------------|

|   | (2) | Financial      Statement Schedules |
|--------|-----|------------------------------------|

|   | (3) | Exhibits |
|--------|-----|----------|

|   | 2.1 | Agreement      and Plan of Merger dated August 28, 2006, among Kinder Morgan, Inc.,      Knight Holdco LLC and Knight Acquisition Co. (filed as Exhibit 2.1 to      Knight Inc.’s Current Report on Form 8-K filed on August 28, 2006 and      incorporated herein by reference) |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.1 | Amended      and Restated Articles of Incorporation of Knight Inc. and amendments      thereto (filed as Exhibit 3.1 to Knight Inc.’s Quarterly Report on Form      10-Q for the quarter ended June 30, 2007 and incorporated herein by      reference) |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.2 | Bylaws      of Kinder Morgan, Inc. (filed as Exhibit 3.2 to Knight Inc.’s Current      Report on Form 8-K filed on June 5, 2007 and incorporated herein by      reference) |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.1 | Indenture      dated as of September 1, 1988, between K N Energy, Inc. and Continental      Illinois National Bank and Trust Company of Chicago (filed as Exhibit 4(a)      to Knight Inc.’s Annual Report on Form 10-K/A, Amendment No. 1 filed on      May 22, 2000 and incorporated herein by  reference) |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.2 | First      supplemental indenture dated as of January 15, 1992, between      K N Energy, Inc. and Continental Illinois National Bank and      Trust Company of Chicago (filed as Exhibit 4.2 to the Registration      Statement on Form S-3 (File No. 33-45091) of K N Energy, Inc. filed on      January 17, 1992 and incorporated herein by  reference) |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.3 | Second      supplemental indenture dated as of December 15, 1992, between      K N Energy, Inc. and Continental Bank, National Association      (filed as Exhibit 4(c) to Knight Inc.’s Annual Report on Form 10-K/A,      Amendment No. 1 filed on May 22, 2000 and incorporated herein by      reference) |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.4 | Indenture      dated as of November 20, 1993, between K N Energy, Inc. and Continental      Bank, National Association (filed as Exhibit 4.1 to the Registration      Statement on Form S-3 (File No. 33-51115) of K N Energy, Inc. filed on      November 19, 1993 and incorporated herein by  reference) |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.5 | Registration      Rights Agreement among Kinder Morgan Management, LLC, Kinder Morgan Energy      Partners, L.P. and Kinder Morgan, Inc. dated May 18, 2001 (filed as      Exhibit 4.7 to Knight Inc.’s Annual Report on Form 10-K for the year ended      December 31, 2002 and incorporated herein by  reference) |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.6 | Rights      Agreement between K N Energy, Inc. and the Bank of New York, as Rights      Agent, dated as of August 21, 1995 (filed as Exhibit 1 on Form 8-A dated      August 21, 1995 (File No. 1-6446) and incorporated herein by      reference) |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 15.Exhibits,      Financial Statement Schedules. (continued) | Knight      Form 10-K |
|-------------------------------------------------------------------|-----------------------|

|   | 4.7 | Amendment      No. 1 to Rights Agreement between K N Energy, Inc. and the Bank of New      York, as Rights Agent, dated as of September 8, 1998 (filed as Exhibit      10(cc) to K N Energy, Inc.’s Annual Report on Form 10-K for the      year ended December 31, 1998 (File No. 1-6446) and incorporated herein by      reference) |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.8 | Amendment      No. 2 to Rights Agreement of Kinder Morgan, Inc. dated July 8, 1999,      between Kinder Morgan, Inc. and First Chicago Trust Company of New York,      as successor-in-interest to the Bank of New York, as Rights Agent (filed      as Exhibit 4.1 to Knight Inc.’s Quarterly Report on Form 10-Q for the      quarter ended September 30, 1999 and incorporated herein by      reference) |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.9 | Form      of Amendment No. 3 to Rights Agreement of Kinder Morgan, Inc. dated      September 1, 2001, between Kinder Morgan, Inc. and First Chicago Trust      Company of New York, as Rights Agent (filed as Exhibit 4(m) to Knight      Inc.’s Annual Report on Form 10-K for the year ended December 31, 2001 and      incorporated herein by reference) |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.10 | Form      of Indenture dated as of August 27, 2002 between Kinder Morgan, Inc. and      Wachovia Bank, National Association, as Trustee (filed as Exhibit 4.1 to      Knight Inc.’s Registration Statement on Form S-4 (File No. 333-100338)      filed on October 4, 2002 and incorporated herein by    reference) |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.11 | Form      of First Supplemental Indenture dated as of December 6, 2002 between      Kinder Morgan, Inc. and Wachovia Bank, National Association, as Trustee      (filed as Exhibit 4.2 to Knight Inc.’s Registration Statement on Form S-4      (File No. 333-102873) filed on January 31, 2003 and incorporated herein by      reference) |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.12 | Form      of 6.50% Note (filed as contained in the Indenture incorporated by      reference to Exhibit 4.12 hereto and incorporated herein by      reference) |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.13 | Form      of Senior Indenture between Kinder Morgan, Inc. and Wachovia Bank,      National Association, as Trustee (filed as Exhibit 4.2 to Knight Inc.’s      Registration Statement on Form S-3 (File No. 333-102963) filed on February      4, 2003 and incorporated herein byreference) |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.14 | Form      of Senior Note of Kinder Morgan, Inc. (included in the Form of Senior      Indenture filed as Exhibit 4.13hereto) |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------|

|   | 4.15 | Form      of Subordinated Indenture between Kinder Morgan, Inc. and Wachovia Bank,      National Association, as Trustee (filed as Exhibit 4.4 to Knight Inc.’s      Registration Statement on Form S-3 (File No. 333-102963) filed on February      4, 2003 and incorporated herein byreference) |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.16 | Form      of Subordinated Note of Kinder Morgan, Inc. (included in the Form of      Subordinated Indenture filed as Exhibit 4.15  hereto) |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.17 | Indenture      dated as of December 9, 2005, among Kinder Morgan Finance Company, ULC,      Kinder Morgan, Inc. and Wachovia Bank, National Association, as Trustee      (filed as Exhibit 4.1 to Knight Inc.’s Current Report on Form 8-K filed on      December 15, 2005 and incorporated herein by  reference) |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.18 | Forms      of Kinder Morgan Finance Company, ULC notes (included in the Indenture      filed as Exhibit 4.17 hereto) |
|--------|------|----------------------------------------------------------------------------------------------------------------------|

|   | 4.20 | Certificate      of the President and the Vice President and Chief Financial Officer of      Kinder Morgan Management, LLC and Kinder Morgan G.P., Inc., on behalf of      Kinder Morgan Energy Partners, L.P., establishing the terms of the 6.00%      senior notes due 2017 and 6.50% senior notes due 2037 (filed as Exhibit      1.01 to Kinder Morgan Energy Partners, L.P.’s Quarterly Report on Form      10-Q for the quarter ended March 31, 2007 and incorporated herein by      reference) |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.21 | Certificate      of the Vice President and Treasurer and the Vice President and Chief      Financial Officer of Kinder Morgan Management, LLC and Kinder Morgan G.P.,      Inc., on behalf of Kinder Morgan Energy Partners, L.P., establishing the      terms of the 5.85% senior notes due 2012 (filed as Exhibit 4.2 to Kinder      Morgan Energy Partners, L.P.’s Quarterly Report on Form 10-Q for the      quarter ended September 30, 2007 and incorporated herein by      reference) |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 15.Exhibits,      Financial Statement Schedules. (continued) | Knight      Form 10-K |
|-------------------------------------------------------------------|-----------------------|

|   | 4.22 | Indenture      dated as of December 21, 2007, between NGPL PipeCo LLC and U.S. Bank      National Association, as Trustee (filed as Exhibit 4.1 to Knight Inc.’s      Current Report on Form 8-K filed on December 21, 2007 and incorporated      herein by reference) |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.23 | Forms      of notes of NGPL PipeCo LLC (included in the Indenture filed as Exhibit      4.22 hereto) |
|--------|------|------------------------------------------------------------------------------------------------------|

|   | 4.24 | Certain      instruments with respect to the long-term debt of Knight Inc. and its      consolidated subsidiaries that relate to debt that does not exceed 10% of      the total assets of Knight Inc. and its consolidated subsidiaries are      omitted pursuant to Item 601(b) (4) (iii) (A) of Regulation S-K, 17 C.F.R.      sec.229.601. Knight Inc. hereby agrees to furnish supplementally to the      Securities and Exchange Commission a copy of each such instrument upon      request. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.1 | 1994      Amended and Restated Knight Inc. Long-term Incentive Plan (filed as      Appendix A to Knight Inc.’s 2000 Proxy Statement on Schedule 14A and      incorporated herein by reference) |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.2 | Knight      Inc. Amended and Restated 1999 Stock Plan (filed as Appendix B to Knight      Inc.’s 2004 Proxy Statement on Schedule 14A and incorporated herein by      reference) |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.3 | Knight      Inc. Amended and Restated 1992 Stock Option Plan for Nonemployee Directors      (filed as Appendix A to Knight Inc.’s 2001 Proxy Statement on Schedule 14A      and incorporated herein byreference) |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.4 | 2000      Annual Incentive Plan of Knight Inc. (filed as Appendix D to Knight Inc.’s      2000 Proxy Statement on Schedule 14A and incorporated herein by      reference) |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.5 | Knight      Inc. Employees Stock Purchase Plan (filed as Appendix E to Knight Inc.’s      2000 Proxy Statement on Schedule 14A and incorporated herein by      reference) |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.6 | Form      of Nonqualified Stock Option Agreement (filed as Exhibit 10(f) to Knight      Inc.’s Annual Report on Form 10-K for the year ended December 31, 2000 and      incorporated herein by reference) |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.7 | Form      of Restricted Stock Agreement (filed as Exhibit 10(g) to Knight Inc.’s      Annual Report on Form 10-K for the year ended December 31, 2000 and      incorporated herein by reference) |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.8 | Directors      and Executives Deferred Compensation Plan effective January 1, 1998 for      executive officers and directors of K N Energy, Inc. (filed as Exhibit      10(aa) to K N Energy, Inc.’s Annual Report on Form 10-K for the year ended      December 31, 1998 (File No. 1-6446) and incorporated herein by      reference) |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.9 | Employment      Agreement dated October 7, 1999, between the Company and Richard D. Kinder      (filed as Exhibit 99.D of the Schedule 13D filed by Mr. Kinder on November      16, 1999 and incorporated herein byreference) |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.10 | Form      of Purchase Provisions between Kinder Morgan Management, LLC and Knight      Inc. (included as Annex B to the Second Amended and Restated Limited      Liability Company Agreement of Kinder Morgan Management, LLC filed as      Exhibit 4.2 to Kinder Morgan Management, LLC’s Registration Statement on      Form 8-A/A filed on July 24, 2002 and incorporated herein by      reference) |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.11 | Resignation      and Non-Compete Agreement, dated as of July 21, 2004, between KMGP      Services, Inc. and Michael C. Morgan (filed as Exhibit 10.12 to Knight      Inc.’s Form 10-Q for the quarter ended June 30, 2004 and incorporated      herein by reference) |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.12 | Credit      Agreement, dated as of August 5, 2005, by and among Knight Inc., the      lenders party thereto, Citibank, N.A., as Administrative Agent and      Swingline Lender, Wachovia Bank, National Association and JPMorgan Chase      Bank, N.A., as Co-Syndication Agents and The Bank of Tokyo-Mitsubishi,      Ltd. and Suntrust Bank, as Co-Documentation Agents (filed as Exhibit 10.1      to Knight Inc.’s Current Report on Form 8-K, filed on August 11, 2005 and      incorporated herein by reference) |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 15.Exhibits,      Financial Statement Schedules. (continued) | Knight      Form 10-K |
|-------------------------------------------------------------------|-----------------------|

|   | 10.13 | Amendment      Number 1 to Credit Agreement, dated as of August 5, 2005, by and among      Knight Inc., the lenders party thereto, Citibank, N.A., as Administrative      Agent and Swingline Lender, Wachovia Bank, National Association and      JPMorgan Chase Bank, N.A., as Co-Syndication Agents and The Bank of      Tokyo-Mitsubishi, Ltd. and Suntrust Bank, as Co-Documentation Agents      (filed as Exhibit 10.2 to Knight Inc.’s Quarterly Report on Form 10-Q for      the quarter ended September 30, 2005 and incorporated herein by      reference) |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.14 | Knight      Inc. Non-Employee Directors Stock Awards Plan (filed as Exhibit 10.1 to      Knight Inc.’s Current Report on Form 8-K filed on May 13, 2005 and      incorporated herein by reference) |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.15 | Form      of Restricted Stock Agreement (filed as Exhibit 10.2 to Knight Inc.’s      Current Report on Form 8-K filed on May 13,  2005) |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.16 | Form      of Nonqualified Stock Option Agreement (filed as Exhibit 10.3 to Knight      Inc.’s Current Report on Form 8-K filed on May 13, 2005 and incorporated      herein by reference) |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.17 | 364-Day      Credit Agreement dated as of November 23, 2005, by and among 1197774      Alberta ULC, as Borrower, Knight Inc., as Guarantor, the lenders party      thereto, and Citibank, N.A., Canadian Branch, as Administrative Agent      (filed as Exhibit 10.1 to Knight Inc.’s Current Report on Form 8-K filed      on November 30, 2005 and incorporated herein by  reference) |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.18 | Form      of 2005 Credit Agreement dated as of January 13, 2006 among Terasen Gas      (Vancouver Island) Inc., the lenders party thereto and RBC Capital Markets      as Lead Arranger and Book Runner (filed as Exhibit 10.2 to Knight Inc.’s      Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 and      incorporated herein by reference) |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.19 | Knight      Inc. Amended and Restated 1999 Stock Plan (filed as Appendix A to Knight      Inc.’s 2006 Proxy Statement on Schedule 14A filed on April 3, 2006 and      incorporated herein by reference) |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.20 | Knight      Inc. Foreign Subsidiary Employees Stock Purchase Plan (filed as Appendix B      to Knight Inc.’s 2006 Proxy Statement on Schedule 14A filed on April 3,      2006 and incorporated herein byreference) |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.21 | First      Amendment to the Knight Inc. Employees Stock Purchase Plan (filed as      Appendix C to Knight Inc.’s 2006 Proxy Statement on Schedule 14A filed on      April 3, 2006 and incorporated herein by  reference) |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.22 | Form      of Credit Agreement, dated as of May 5, 2006, by and among Terasen Inc.,      the lenders party thereto and The Toronto-Dominion Bank, as Administrative      Agent (filed as Exhibit 10.1 to Knight Inc.’s Current Report on Form 8-K      filed on May 15, 2006 and incorporated herein by  reference) |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.23 | Form      of Indemnification Agreement between Knight Inc. and each member of the      Special Committee of the Board of Directors (filed as Exhibit 10.1 to      Knight Inc.’s Current Report on Form 8-K filed on June 16, 2006 and      incorporated herein by reference) |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.24 | Form      of Credit Agreement, dated as of June 21, 2006, by and among Terasen Gas      Inc.; Canadian Imperial Bank of Commerce, as Administrative Agent, Lead      Arranger and Sole Bookrunner; The Bank of Nova Scotia, as Syndication      Agent; and the other lenders identified in the Credit Agreement (filed as      Exhibit 10.1 to Knight Inc.’s Current Report on Form 8-K filed on June 27,      2006 and incorporated herein byreference) |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.25 | Acquisition      Agreement dated as of February 26, 2007, by and among Kinder Morgan, Inc.,      3211953 Nova Scotia Company and Fortis Inc. (filed as Exhibit 1.01 to      Kinder Morgan, Inc.’s Current Report on Form 8-K filed on March 1, 2007      and incorporated herein byreference) |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.26 | Retention      Agreement, dated as of March 5, 2007, between Kinder Morgan, Inc. and      Scott E. Parker (filed as Exhibit 10.2 to Kinder Morgan, Inc.’s Quarterly      Report on Form 10-Q for the quarter ended March 31, 2007 and incorporated      herein by reference) |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 15.Exhibits,      Financial Statement Schedules. (continued) | Knight      Form 10-K |
|-------------------------------------------------------------------|-----------------------|

|   | 10.27 | Purchase      Agreement, dated as of December 10, 2007, between Knight Inc. and Myria      Acquisition Inc. (filed as Exhibit 10.1 to Knight Inc.’s Current Report on      Form 8-K filed on December 11, 2007 and incorporated herein by      reference) |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 21.1* | Subsidiaries      of the Registrant |
|--------|-------|-------------------------------------|

|   | 23.1* | Consent      of PricewaterhouseCoopers LLP |
|--------|-------|--------------------------------------------|

|   | 23.2* | Consent      of Netherland, Sewell & Associates,Inc. |
|--------|-------|----------------------------------------------------------|

|   | 31.1* | Certification      of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the      Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002 |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 31.2* | Certification      of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the      Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002 |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 32.1* | Certification      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted      pursuant to Section 906 of the Sarbanes-Oxley Act of  2002 |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 32.2* | Certification      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted      pursuant to Section 906 of the Sarbanes-Oxley Act of  2002 |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 99.1 | The      financial statements of Kinder Morgan Energy Partners, L.P. and      subsidiaries (incorporated by reference to pages 114 through 210 of the      Annual Report on Form 10-K of Kinder Morgan Energy Partners, L.P. for the      year ended December 31, 2007) |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Knight      Form 10-K |
|-----------------------|

SIGNATURES

|                 | KNIGHT      INC.(Registrant) |
|---------------------------|------------------------------|
|                      | By                           | /s/      Kimberly A. Dang |   |
|                      |                    | Kimberly      A. DangVice      President and Chief Financial Officer |
| Date:      March 31, 2008 |                    |

|                      |   |                                                       |
|--------------------------------|--------|------------------------------------------------------------|
| /s/      Kimberly A. Dang      |   | Vice      President and Chief Financial Officer (Principal |
| Kimberly      A. Dang          |   | Financial      Officer and Principal Accounting Officer)   |
|                      |   |                                                       |
| /s/      Richard D. Kinder     |   | Director,      Chairman and Chief Executive Officer        |
| Richard      D. Kinder         |   | (Principal      Executive Officer)                         |
|                      |   |                                                       |
| /s/      Kenneth A. Pontarelli |   | Director                                                   |
| Kenneth      A. Pontarelli     |   |                                                       |
|                      |   |                                                       |
| /s/      C. Park Shaper        |   | Director                                                   |
| C.      Park Shaper            |   |                                                       |
|                      |   |                                                       |

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