UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549



                                    FORM 10-Q


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

     For  the  quarterly  period  ended  March  31,  2005

                                       OR

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

     For  the  transition  period  from______________  to  _______________

                       Commission file number:  000-50394

                         RIO VISTA ENERGY PARTNERS L.P.
             (Exact Name of Registrant as Specified in Its Charter)

              DELAWARE                                    20-0153267
(State  or  Other  Jurisdiction  of                    (I.R.S. Employer
  Incorporation  or Organization)                     Identification  No.)

820  GESSNER  ROAD,  SUITE  1285,  HOUSTON,  TEXAS               77024
(Address  of  Principal  Executive  Offices)                  (Zip  Code)

Registrant's  Telephone  Number,  Including  Area  Code:    (713)  467-8235

     Indicate  by  check  mark whether the registrant: (1) has filed all reports
required  to  be  filed by Section 13 or 15(d) of the Securities Exchange Act of
1934  during  the  preceding  12  months  (or  for  such shorter period that the
registrant  was required to file such reports), and (2) has been subject to such
filing  requirements  for  the  past  90  days.
Yes  X     No
    ---       ---

     Indicate  by  check mark whether the registrant is an accelerated filer (as
defined  in  Rule  12b-2  of  the  Exchange  Act).
Yes       No  X
    ---      ---

     The number of common units outstanding on May 6, 2004 was 1,910,656.


                                        1
<PAGE>
<TABLE>
<CAPTION>
                          RIO VISTA ENERGY PARTNERS L.P.  AND SUBSIDIARIES

                                          TABLE OF CONTENTS


            ITEM                                                                            PAGE NO.
         ----------                                                                         --------
<S>      <C>         <C>                                                                    <C>

Part I       1.      Financial Statements

                     Independent Certified Public Accountants' Review Report                     3

                     Consolidated Balance Sheets as of December 31, 2004 and
                     March 31, 2005 (unaudited)                                                 4-5

                     Unaudited Consolidated Statements of Operations for the three months
                     ended March 31, 2004 and 2005                                               6

                     Unaudited Consolidated Statement of Partners' Capital as of
                     March 31, 2005                                                              7

                     Unaudited Consolidated Statements of Cash Flows for the three months
                     ended March 31, 2004 and 2005                                               8

                     Notes to Consolidated Financial Statements (unaudited)                     9-21

             2.      Management's Discussion and Analysis of Financial Condition
                     and Results of Operations                                                 22-40

             3.      Quantitative and Qualitative Disclosures About Market Risk                  41

             4.      Controls and Procedures                                                     41

Part II      1.      Legal Proceedings                                                           42

             2.      Unregistered Sales of Equity Securities and Use of Proceeds                 42

             3.      Defaults Upon Senior Securities                                             42

             4.      Submission of Matters to a Vote of Security Holders                         42

             5.      Other Information                                                           42

             6.      Exhibits                                                                    42

             Signatures                                                                          43
</TABLE>


                                        2
<PAGE>
PART  I
ITEM  1.

             Independent Certified Public Accountants' Review Report
             -------------------------------------------------------


To  the  Board  of  Managers  of  Rio  Vista  GP  LLC,
  General  Partner  of  Rio  Vista  Energy  Partners  L.P.

We  have  reviewed  the  consolidated balance sheet of Rio Vista Energy Partners
L.P.  and  subsidiaries  (Rio  Vista)  as  of  March  31, 2005, the consolidated
statement of partners' capital for the three months ended March 31, 2005 and the
consolidated  statements of operations and cash flows for the three months ended
March  31,  2004  and  2005.  These  consolidated  financial  statements are the
responsibility  of  Rio  Vista's  management.

We  conducted  our review in accordance with the standards of the Public Company
Accounting  Oversight  Board  (United  States).  A  review  of interim financial
information  consists  principally  of applying analytical procedures and making
inquiries  of  persons  responsible for financial and accounting matters.  It is
substantially  less  in  scope  than  an  audit conducted in accordance with the
standards  of  the  Public  Company Accounting Oversight Board, the objective of
which  is  the expression of an opinion regarding the financial statements taken
as  a  whole.  Accordingly,  we  do  not  express  such  an  opinion.

Based  on our review, we are not aware of any material modifications that should
be  made to the consolidated financial statements referred to above for it to be
in  conformity  with  United  States  generally  accepted accounting principles.

We  have  previously  audited,  in  accordance  with the standards of the Public
Company  Accounting  Oversight  Board  (United States), the consolidated balance
sheet of Rio Vista Energy Partners L.P. and subsidiaries as of December 31, 2004
and  the consolidated statements of operations, partners' capital and cash flows
for  the  year ended December 31, 2004 (not presented herein); and in our report
dated  February  2,  2005,  we  expressed  an  unqualified  opinion  on  those
consolidated  financial statements. In our opinion, the information set forth in
the  accompanying  consolidated balance sheet as of December 31, 2004, is fairly
stated.

Our auditors' report on Rio Vista's financial statements as of December 31, 2004
included  an  explanatory paragraph referring to the matters discussed in Note N
of  those  financial statements which raised substantial doubt about Rio Vista's
ability  to  continue  as  a  going  concern.  As  indicated  in  Note  K to the
accompanying  unaudited  interim  consolidated  financial statements, conditions
continue  to  exist  which  raise substantial doubt about Rio Vista's ability to
continue  as  a  going  concern.

                                  /s/ BURTON McCUMBER & CORTEZ, L.L.P.

Brownsville, Texas
April 25, 2005


                                        3
<PAGE>
<TABLE>
<CAPTION>
                             RIO VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES

                                       CONSOLIDATED BALANCE SHEETS



                                                 ASSETS


                                                                                             March 31,
                                                                             December 31,      2005
                                                                                 2004       (Unaudited)
                                                                             -------------  ------------
<S>                                                                          <C>            <C>
Current Assets
  Cash                                                                       $      13,000  $     26,000
  Restricted cash                                                                3,983,000       922,000
  Trade accounts receivable (less allowance for doubtful accounts of $0 at
  2003 and 2004)                                                                 5,785,000     6,664,000
  Inventories                                                                      198,000       196,000
  Prepaid expenses and other current assets                                          9,000       412,000
                                                                             -------------  ------------
    Total current assets                                                         9,988,000     8,220,000
Property, plant and equipment - net                                             14,244,000    14,046,000
Other non-current assets                                                            12,000        13,000
                                                                             -------------  ------------
      Total assets                                                           $  24,244,000  $ 22,279,000
                                                                             =============  ============
</TABLE>

   The accompanying notes and accountants' report are an integral part of these
                                   statements.


                                        4
<PAGE>
<TABLE>
<CAPTION>
                 RIO VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS


                        LIABILITIES AND PARTNERS' CAPITAL


                                                               March 31,
                                               December 31,       2005
                                                   2004       (Unaudited)
                                               -------------  ------------
<S>                                            <C>            <C>
Current Liabilities
  Due to Penn Octane Corporation, net          $   8,632,000  $  6,479,000
  Accounts payable                                   290,000       372,000
  Mexican taxes payable                               27,000        29,000
  Accrued liabilities                                382,000       379,000
                                               -------------  ------------
    Total current liabilities                      9,331,000     7,259,000
Commitments and contingencies                              -             -
Partners' Capital
  Common units                                    14,615,000    14,720,000
  General partner's equity                           298,000       300,000
                                               -------------  ------------
    Total partners' capital                       14,913,000    15,020,000
                                               -------------  ------------
      Total liabilities and partners' capital  $  24,244,000  $ 22,279,000
                                               =============  ============
</TABLE>

   The accompanying notes and accountants' report are an integral part of these
                                   statements.


                                        5
<PAGE>
<TABLE>
<CAPTION>
                 RIO VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (UNAUDITED)

                                                      Three Months Ended
                                                  -------------------------
                                                   March 31,     March 31,
                                                     2004          2005
                                                  -----------  ------------
<S>                                               <C>          <C>
Revenues                                          $         -  $28,557,000
Cost of goods sold                                          -   27,238,000
                                                  -----------  ------------
  Gross profit                                              -    1,319,000
Selling, general and administrative expenses
    Legal and professional fees                             -      242,000
    Salaries and payroll related expenses                   -      394,000
    Other                                                   -      391,000
                                                  -----------  ------------
                                                            -    1,027,000
                                                  -----------  ------------
      Operating income                                      -      292,000
Other income (expense)
    Interest and LPG financing expense                      -  (   119,000)
                                                  -----------  ------------
       Income before taxes                                  -      173,000
Provision (benefit) for Mexican income taxes                -        1,000
                                                  -----------  ------------
       Net income                                 $         -  $   172,000
                                                  ===========  ============

Net income allocable to the partners              $         -  $   172,000
  Less general partner's interest in net income             -        3,000
                                                  -----------  ------------
Net income allocable to the common units          $         -  $   169,000
                                                  ===========  ============

Net income per common unit                        $         -  $      0.09
                                                  ===========  ============
Net income per common unit assuming dilution      $         -  $      0.08
                                                  ===========  ============
Weighted average common units outstanding                   -    1,910,656
                                                  ===========  ============
</TABLE>

   The accompanying notes and accountants' report are an integral part of these
                                   statements.


                                        6
<PAGE>
<TABLE>
<CAPTION>
                           RIO VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES

                             CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL



                                                  COMMON UNITS
                                           --------------------------
                                                                                           TOTAL
                                                                          GENERAL        PARTNERS'
                                             UNITS        AMOUNT          PARTNER         CAPITAL
                                           ---------  ---------------  -------------  ---------------
<S>                                        <C>        <C>              <C>            <C>

BALANCE AS OF DECEMBER 31, 2004            1,910,656      14,615,000        298,000       14,913,000
Net income                                         -         169,000          3,000          172,000
Cash distribution to partners                      -  (      477,000)  (     10,000)  (      487,000)
Loan discount on Penn Octane
Corporation's debt related to detachable
warrants                                           -         413,000          9,000          422,000
                                           ---------  ---------------  -------------  ---------------

BALANCE AS OF MARCH 31, 2005 (UNAUDITED)   1,910,656  $   14,720,000   $    300,000   $   15,020,000
                                           =========  ===============  =============  ===============
</TABLE>

   The accompanying notes and accountants' report are an integral part of these
                                   statements.


                                        7
<PAGE>
<TABLE>
<CAPTION>

                            RIO VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES

                                 CONSOLIDATED STATEMENTS OF CASH FLOWS

                                              (UNAUDITED)

                                                                              Three Months Ended
                                                                          ----------------------------
                                                                            March 31,      March 31,
                                                                              2004           2005
                                                                          ------------  --------------
<S>                                                                       <C>           <C>
Cash flows from operating activities:
Net income                                                                $         -   $     172,000
Adjustments to reconcile net income  to net cash  provided by  (used in)
operating activities:
  Depreciation                                                                      -         205,000
  Amortization of loan discount related to detachable warrants                                 57,000
Changes in current assets and liabilities:
  Trade accounts receivable                                                         -   (     879,000)
  Inventories                                                                       -           2,000
  Prepaid and other current assets                                                  -   (      38,000)
  Trade accounts payable                                                            -          82,000
  Due to Penn Octane Corporation, net                                               -   (   2,152,000)
  Other accounts payable and accrued liabilities                                    -   (       3,000)
  Mexican taxes payable                                                             -           1,000
                                                                          ------------  --------------
Net cash provided by (used in) operating activities                                 -   (   2,553,000)
Cash flows from investing activities:
  Capital expenditures                                                              -   (       7,000)
  Other non-current assets                                                          -   (       1,000)
                                                                          ------------  --------------
  Net cash used in investing activities                                             -   (       8,000)
Cash flows from financing activities:
  Increase (decrease) in restricted cash                                            -       3,061,000
  Initial capitalization                                                            -               -
  Cash distributions to partners                                                    -   (     487,000)
                                                                          ------------  --------------
  Net cash provided by (used) in financing activities                               -       2,574,000
                                                                          ------------  --------------
    Net increase in cash                                                            -          13,000
Cash at beginning of period                                                     2,000          13,000
                                                                          ------------  --------------
Cash at end of period                                                     $     2,000   $      26,000
                                                                          ============  ==============
Supplemental disclosures of cash flow information:
  Cash paid during the year for:
  Interest and LPG financing expense                                      $         -   $           -
                                                                          ============  ==============
Supplemental disclosures of noncash transactions:
  Units and warrants issued and other                                     $         -   $     422,000
                                                                          ============  ==============
</TABLE>

   The accompanying notes and accountants' report are an integral part of these
                                   statements.


                                        8
<PAGE>
                    RIO VISTA PARTNERS L.P. AND SUBIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

NOTE A - ORGANIZATION

Rio  Vista Energy Partners L.P. (Rio Vista), a Delaware limited partnership, was
formed  by  Penn  Octane  Corporation  (Penn  Octane) on July 10, 2003 and was a
wholly  owned  subsidiary of Penn Octane until September 30, 2004, the date that
Penn  Octane  completed  a  series of transactions involving (i) the transfer of
substantially  all  of  its  owned  pipeline and terminal assets in Brownsville,
Texas  and  Matamoros, Mexico and certain immaterial liabilities (Assets) to Rio
Vista  Operating Partnership L.P. (RVOP) (ii) the transfer of its 99.9% interest
in  RVOP  to  Rio  Vista  and  (iii)  the  distribution  of  all  of its limited
partnership  interests  (Common  Units)  in Rio Vista to its common stockholders
(Spin-Off),  resulting  in  Rio  Vista  becoming a separate public company.  The
Common  Units represented 98% of Rio Vista's outstanding capital and 100% of Rio
Vista's  limited  partnership interests.  The remaining 2%, which is the general
partner interest, is owned and controlled by Rio Vista GP LLC (General Partner),
a  wholly  owned  subsidiary of Penn Octane.  The General Partner is responsible
for  the  management  of  Rio  Vista.  Rio  Vista  Energy  Partners L.P. and its
consolidated  subsidiaries  are  hereinafter  referred  to  as  "Rio  Vista".

As  a  result  of  the  Spin-Off,  Rio  Vista  is  engaged  in  the  purchase,
transportation  and sale of liquefied petroleum gas (LPG).    Rio Vista owns and
operates  LPG  terminal  facilities  in Brownsville, Texas (Brownsville Terminal
Facility) and in Matamoros, Tamaulipas, Mexico (Matamoros Terminal Facility) and
approximately  23  miles  of pipelines (US - Mexico Pipelines) which connect the
Brownsville  Terminal  Facility to the Matamoros Terminal Facility.  The primary
market  for Rio Vista's LPG is the northeastern region of Mexico, which includes
the states of Coahuila, Nuevo Leon and Tamaulipas.  Rio Vista's primary customer
for  LPG  is  P.M.I.  Trading  Limited  (PMI).  PMI is a subsidiary of Petroleos
Mexicanos,  the  state-owned Mexican oil company, which is commonly known by its
trade  name "PEMEX."  PMI is the exclusive importer of LPG into Mexico.  The LPG
purchased  by  PMI  from  Rio  Vista  is sold to PEMEX which distributes the LPG
purchased  from  PMI  into  the  northeastern  region  of  Mexico.

All  of  Rio  Vista's  LPG operations are conducted through, and Rio Vista's LPG
operating assets are owned by, RVOP.  The General Partner is entitled to receive
distributions  on  its  general  partner interest as provided for in Rio Vista's
partnership  agreement (Agreement).  The General Partner has sole responsibility
for  conducting  Rio Vista's business and for managing Rio Vista's operations in
accordance  with  the  Agreement.   Other  than the foregoing distributions, the
General  Partner  does  not  receive  a  management fee or other compensation in
connection  with  its  management of Rio Vista's business, but is entitled to be
reimbursed  for all direct and indirect expenses incurred on Rio Vista's behalf.

Rio Vista purchases LPG from Penn Octane under a long-term supply agreement (LPG
Supply Agreement).  The purchase price of the LPG from Penn Octane is determined
based  on  the cost of LPG under Penn Octane's agreements with its LPG suppliers
for  volumes  sold to Rio Vista for sale to PMI or to other Rio Vista customers,
other direct costs related to PMI and other LPG sales of Rio Vista and a formula
that  takes  into  consideration  operating  costs of Penn Octane and Rio Vista.

Historically,  up  until  the  date  of  the  Spin-Off, Penn Octane has sold LPG
primarily  to  PMI.  Penn  Octane  has  a long-term lease agreement, expiring in
December 2013, for approximately 132 miles of pipeline which connects ExxonMobil
Corporation's  (Exxon)  King  Ranch  Gas Plant in Kleberg County, Texas and Duke
Energy's  La  Gloria  Gas  Plant  in  Jim  Wells  County,  Texas, to Rio Vista's
Brownsville  Terminal  Facility (Leased Pipeline).  In addition, Penn Octane has
access  to  a twelve-inch pipeline which connects Exxon's Viola valve station in
Nueces County, Texas to the inlet of the King Ranch Gas Plant (ECCPL) as well as
existing  and  other potential propane pipeline suppliers which have the ability
to  access  the ECCPL.  In connection with Penn Octane's lease agreement for the
Leased  Pipeline,  Penn  Octane  may  access up to 21,000,000 gallons of storage
located  in Markham, Texas (Markham Storage), as well as other potential propane
pipeline  suppliers,  via  approximately  155  miles of pipeline located between
Markham,  Texas  and  the  Exxon King Ranch Gas Plant.  Penn Octane's  long term
supply  agreement in effect as of March 31, 2005 with Exxon requires Penn Octane
to  purchase  minimum quantities of LPG totaling up to 13,900,000 gallons of LPG
per  month  although  actual quantities supplied under such agreement during the
three  months  ended  March  31,  2005  were approximately 9,295,000 gallons per
month.


                                        9
<PAGE>
                    RIO VISTA PARTNERS L.P. AND SUBIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE A - ORGANIZATION  - CONTINUED

BASIS  OF  PRESENTATION
-----------------------

The  accompanying  consolidated  financial  statements include Rio Vista and its
United  States  subsidiaries including RVOP, Rio Vista Operating GP LLC and Penn
Octane  International,  L.L.C.,  and  its  Mexican  subsidiaries, Penn Octane de
Mexico,  S.  de  R.L.  de  C.V.  (PennMex)  and  Termatsal,  S.  de R.L. de C.V.
(Termatsal) and its consolidated affiliate, Tergas, S. de R.L. de C.V. (Tergas).
All  significant  intercompany  accounts  and  transactions  are  eliminated.

The  unaudited consolidated balance sheet as of March 31, 2005 and the unaudited
consolidated  statements of operations and cash flows for the three months ended
March  31,  2004 and 2005 have been prepared by Rio Vista without audit.  In the
opinion  of  management, the unaudited consolidated financial statements include
all  adjustments  (which include only normal recurring adjustments) necessary to
present  fairly the unaudited consolidated financial position of Rio Vista as of
March 31, 2005, the unaudited consolidated results of operations  and cash flows
for  the  three  months  ended  March 31, 2004 and 2005.  Rio Vista was inactive
until  September  30,  2004,  the  date  of  the Spin-Off and operations did not
commence until October 1, 2004.  Accordingly, there are no results of operations
during  the  three  months  ended  March  31,  2004.

Certain  information  and footnote disclosures normally included in consolidated
financial statements prepared in accordance with accounting principles generally
accepted  in  the  United  States of America have been omitted.  These unaudited
consolidated  financial  statements  should  be read in conjunction with the Rio
Vista's  Fiscal  Year  2004 Annual Report on Form 10-K filed with the Securities
and  Exchange  Commission.


NOTE  B  -  UNIT  BASED  COMPENSATION

     Under  the guidance provided by SFAS 123, Rio Vista has elected to continue
     to  account  for employee unit-based compensation using the intrinsic value
     method  prescribed in Accounting Principles Board (APB) 25, "Accounting for
     Stock  Issued  to  Employees",  and  related  Interpretations.


                                       10
<PAGE>
                    RIO VISTA PARTNERS L.P. AND SUBIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE  B  -  UNIT  BASED  COMPENSATION  -  CONTINUED

     Had  compensation  cost  related  to the warrants granted to employees been
     determined  based on the fair value at the grant dates, consistent with the
     provisions  of  SFAS  123, Rio Vista's pro forma net income (loss), and net
     income  (loss)  per  common  unit  would have been as follows for the three
     months  ended  March  31,:

<TABLE>
<CAPTION>
                                                                 2004              2005
                                                           ----------------  ----------------
<S>                                                        <C>               <C>
Net income (loss) as reported                              $             -   $       172,000

Add:  Unit-based employee compensation expense
included in reported net loss                                            -                 -

Less:  Total unit-based employee compensation
expense determined under fair value based method for
all awards                                                               -    (      285,000)
                                                           ----------------  ----------------
Net income (loss) pro forma                                              -    (      113,000)

Net income (loss) allocable to the common units pro forma                -    (      111,000)

Net income (loss) per common unit, as reported                           -               .09

Net income (loss) per common unit, pro forma                             -    (          .06)
Net income (loss) per common unit assuming dilution,
as reported                                                              -               .08
Net income (loss) per common unit assuming dilution,
pro forma                                                                -    (          .06)
</TABLE>

     The  following assumptions were used for grants of warrants to employees in
     the  three  months  ended  March 31, 2005, to compute the fair value of the
     warrants  using  the  Black-Scholes option-pricing model; dividend yield of
     7.7%;  expected  volatility of 48.4%; risk free interest rate of 3.05%; and
     expected  life  of  3  years.

     During  December  2004,  the  Financial  Accounting  Standards Board (FASB)
     issued  Statement  of  Financial Accounting Standard No. 123 (revised 2004)
     "Share-Based Payment" (SFAS 123R). SFAS 123R replaces SFAS 123, "Accounting
     for  Stock-Based  Compensation", and supercedes APB Opinion 25, "Accounting
     for  Stock  Issued to Employees" (APB 25). SFAS 123R requires that the cost
     of  share-based  payment  transactions  (including those with employees and
     non-employees)  be  recognized  in the financial statements as compensation
     cost.  That  cost  will  be  measured  based on the fair value of equity or
     liability instrument issued. SFAS 123R is effective for Rio Vista beginning
     January  1,  2006.  Rio Vista will apply the modified prospective method as
     provided  for  in  SFAS 123R, and therefore the financial statements of Rio
     Vista  for  interim  and  annual periods prior to the adoption of SFAS 123R
     will  not  reflect  any  restatements.


                                       11
<PAGE>
                    RIO VISTA PARTNERS L.P. AND SUBIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE  C  -  INCOME  (LOSS)  PER  COMMON  UNIT

     The  following tables present reconciliations from income (loss) per common
     unit to income (loss) per common unit assuming dilution (see note G for the
     warrants):

<TABLE>
<CAPTION>
                                                 For the three months ended March 31, 2005
                                                 -----------------------------------------
                                                 Income (Loss)      Shares       Per-Unit
                                                  (Numerator)    (Denominator)    Amount
                                                 --------------  -------------  ----------
<S>                                              <C>             <C>            <C>
Net income (loss) available to the common units  $      169,000

BASIC EPS
Net income (loss) available to the common units         169,000      1,910,656  $     0.09
                                                                                ==========

EFFECT OF DILUTIVE SECURITIES
Warrants                                                      -         85,686
                                                 --------------  -------------

DILUTED EPS
Net income (loss) available to the common units  $      169,000      1,996,342  $     0.08
                                                 ==============  =============  ==========
</TABLE>


NOTE  D  -  PROPERTY,  PLANT  AND  EQUIPMENT

     Property,  plant  and  equipment  consists  of  the  following:

<TABLE>
<CAPTION>
                                                    December 31,    March 31,
                                                        2004           2005
                                                   --------------  ------------
<S>                                                <C>             <C>
Brownsville Terminal Facility
  Building                                         $     173,000   $   173,000
  Terminal facilities                                  3,631,000     3,631,000
  Tank Farm                                              374,000       374,000
  Leasehold improvements                                 319,000       319,000
  Equipment                                              226,000       226,000
  Truck                                                   26,000        26,000
                                                   --------------  ------------
                                                       4,749,000     4,749,000
                                                   --------------  ------------
US - Mexico Pipelines and Matamoros Terminal
Facility:  (a)

U.S. Pipelines and Rights of Way                       6,775,000     6,782,000
Mexico Pipelines and Rights of Way                       993,000       993,000
Matamoros Terminal Facility                            5,876,000     5,876,000
Land                                                     856,000       856,000
                                                   --------------  ------------
                                                      14,500,000    14,507,000
                                                   --------------  ------------
    Total                                             19,249,000    19,256,000
                                                   --------------  ------------


Less:  accumulated depreciation and amortization   (   5,005,000)  ( 5,210,000)
                                                   --------------  ------------

                                                   $  14,244,000   $14,046,000
                                                   ==============  ============
</TABLE>

(a)  Rio  Vista  owns,  leases,  or  is  in the process of obtaining the land or
     rights  of  way  used  related  to  the  US-Mexico  Pipelines.


                                       12
<PAGE>
                    RIO VISTA PARTNERS L.P. AND SUBIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE  D  -  PROPERTY,  PLANT  AND  EQUIPMENT  -  CONTINUED

     Property,  plant  and  equipment, net of accumulated depreciation, includes
     $5,745,000  and $5,644,000 of costs, located in Mexico at December 31, 2004
     and  March  31,  2005,  respectively.


NOTE  E  -  INVENTORIES

     Inventories  are  valued  at  the  lower  of  FIFO cost or market (LCM) and
     consist  of  the  following:

<TABLE>
<CAPTION>
                                   December 31, 2004     March 31, 2005
                                   ------------------  ------------------
                                   Gallons     LCM     Gallons     LCM
                                   -------  ---------  -------  ---------
<S>                                <C>      <C>        <C>      <C>
LPG:
  Brownsville Terminal Facility
  and Matamoros Terminal Facility  239,000  $ 198,000  239,000  $ 196,000
                                   =======  =========  =======  =========
</TABLE>


NOTE  F  -  INCOME  TAXES

     Rio  Vista is taxed as a Partnership under Code Section 701 of the Internal
     Revenue  Code.  All  of  Rio  Vista's income is taxed at the partner level,
     therefore,  Rio  Vista  has  no  U.S.  income tax expense or liability. Rio
     Vista's  Mexican  subsidiaries  incur income tax expense in Mexico on their
     taxable income. Mexican income tax expense for the three months ended March
     31,  2005  was  $1,000. No deferred Mexican income tax expense was recorded
     for  the  three  months  ended  March  31,  2005.

NOTE  G  -  PARTNERS'  CAPITAL

     COMMON  UNITS
     -------------

     In  connection  with  the  Spin-Off on September 30, 2004, Rio Vista issued
     1,910,656  common  units  to  the  holders  of  Penn  Octane  common stock.

     The  common  units  represent  limited  partner interests in Rio Vista. The
     holders  of  common  units  are  entitled  to  participate  in  Rio Vista's
     distributions  and  exercise  the rights or privileges available to limited
     partners under the Agreement. The holders of common units have only limited
     voting  rights on matters affecting Rio Vista. Holders of common units have
     no right to elect the General Partner or its managers on an annual or other
     continuing  basis.  Penn Octane elects the managers of the General Partner.
     Although  the General Partner has a fiduciary duty to manage Rio Vista in a
     manner  beneficial  to  Rio  Vista and its unitholders, the managers of the
     General Partner also have a fiduciary duty to manage the General Partner in
     a  manner  beneficial  to  Penn  Octane  and  its stockholders. The General
     Partner generally may not be removed except upon the vote of the holders of
     at  least 80% of the outstanding common units; provided, however, if at any
     time  any  person  or  group,  other  than  the  General  Partner  and  its
     affiliates,  or a direct or subsequently approved transferee of the General
     Partner or its affiliates, acquires, in the aggregate, beneficial ownership
     of 20% or more of any class of units then outstanding, that person or group
     will  lose voting rights on all of its units and the units may not be voted
     on  any  matter  and  will not be considered to be outstanding when sending
     notices  of  a  meeting  of  unitholders,  calculating  required  votes,
     determining  the  presence  of  a  quorum  or  for  other similar purposes.


                                       13
<PAGE>
                    RIO VISTA PARTNERS L.P. AND SUBIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE  G  -  PARTNERS'  CAPITAL  -  CONTINUED

     In  addition,  the  Agreement  contains  provisions limiting the ability of
     holders  of  common  units to call meetings or to acquire information about
     Rio Vista's operations, as well as other provisions limiting the holders of
     common  units  ability  to influence the manner or direction of management.

     GENERAL PARTNER INTEREST
     --------------------------

     The  General Partner of Rio Vista owns a 2% general partner interest in Rio
     Vista.  The  General  Partner  is currently 100% owned by Penn Octane. Penn
     Octane  has  granted  options to Jerome B. Richter and to Shore Capital LLC
     (Shore Capital), an affiliate of Richard Shore, Jr., to purchase 50% of its
     general  partner  interest. Following the exercise of any of these options,
     Penn Octane will retain voting control of the General Partner pursuant to a
     voting  agreement.

     The  General  Partner generally has unlimited liability for the obligations
     of  Rio  Vista, such as its debts and environmental liabilities, except for
     those  contractual obligations of Rio Vista that are expressly made without
     recourse  to  the  General  Partner.

     OPTIONS AND WARRANTS
     ----------------------

     Rio  Vista has no U.S. employees and is managed by its General Partner. Rio
     Vista  applies APB 25 for warrants granted to employees and managers of the
     General  Partner  and  SFAS  123  for  warrants issued to acquire goods and
     services  from  non-employees.

     COMMON  UNIT  WARRANTS

     In  connection  with  an employment agreement with Mr. Shore, Shore Capital
     received  warrants  to  acquire  97,415  common  units of Rio Vista with an
     exercise  price  of  $8.47  per  common unit. On October 1, 2004, Rio Vista
     recorded  approximately  $344,000  of  compensation  cost  related to these
     warrants.  The  warrants  are  exercisable beginning on October 1, 2004 and
     expire  on  July  10,  2006.

     LOAN  DISCOUNT  ON  PENN  OCTANE  CORPORATION'S  DEBT RELATED TO DETACHABLE
     WARRANTS

     During  January  2004, in connection with $1,805,000 of debt obligations of
     Penn  Octane,  Penn  Octane agreed to issue, in the future, an aggregate of
     110,250  warrants  to purchase Rio Vista common units (Rio Vista Warrants).
     The exercise price of the warrants was to be determined based on the amount
     of  the  first quarterly distribution paid by Rio Vista. As a result of the
     approval  of  the payment of Rio Vista's first cash distribution on January
     14,  2005  (see  below),  Rio  Vista  granted  the  immediately exercisable
     warrants  having  an  exercise  price  of  $5.00 and recorded a discount of
     approximately  $422,000  which  is  reflected  as  interest expense ratably
     amortized from the grant date of January 14, 2005 to December 15, 2005, the
     maturity  date  of the debt obligations. The Rio Vista Warrants will expire
     on  December  15,  2006.


                                       14
<PAGE>
                    RIO VISTA PARTNERS L.P. AND SUBIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE  G  -  PARTNERS'  CAPITAL  -  CONTINUED

     EQUITY  INCENTIVE  PLAN

     On March 9, 2005, the board of managers of the General Partner approved the
     Rio Vista 2005 Equity Incentive Plan (2005 Plan). The 2005 Plan permits the
     grant  of  common unit options, common unit appreciation rights, restricted
     common  unit  and  phantom  common  units  to any person who is an employee
     (including  to  any  executive  officer)  or consultant of Rio Vista or the
     General  Partner  or any affiliate of Rio Vista or the General Partner. The
     2005  Plan  provides that each outside manager of the General Partner shall
     be  granted  a  common  unit option once each fiscal year for not more than
     5,000  common  units,  in  an  equal  amount  as determined by the board of
     managers.  The  aggregate number of common units authorized for issuance as
     awards under the 2005 Plan is 750,000. The 2005 Plan shall remain available
     for  the  grant  of awards until March 9, 2015, or such earlier date as the
     board  of  managers  may  determine.  The  2005 Plan is administered by the
     compensation  committee  of  the  board of managers. Under the terms of the
     Agreement  and  applicable rules of the Nasdaq Stock Market, no approval by
     the  common  unitholders  of  Rio  Vista  was  required.

     On  March  9,  2005,  the  board  of  managers  of  the  General  Partner
     approved  the  grant of options to purchase a total of 108,750 common units
     under  the  2005  Plan. Of the total number of options granted, 93,750 were
     granted  to  executive  officers of the General Partner and Mr. Richter and
     15,000 were issued to outside managers of the General Partner. The exercise
     price  for  the  options is $12.51 per common unit, which is the average of
     the high and low sales prices for Rio Vista common units as reported by the
     Nasdaq  Stock  Market  on  March  9, 2005. The options granted to executive
     officers  (including  Mr.  Richter) were fully vested on the date of grant.
     The  options granted to outside managers vest in equal monthly installments
     over a period of 12 months from the date of grant. All options become fully
     exercisable  upon a change in control event and expire three years from the
     date of grant.

     DISTRIBUTIONS  OF  AVAILABLE  CASH
     ----------------------------------

     All unitholders have the right to receive distributions of "available cash"
     as  defined  in  the  Agreement  from  Rio  Vista in an amount equal to the
     minimum  distribution of $0.25 per quarter per unit, plus any arrearages in
     the  payment  of the minimum quarterly distribution on the units from prior
     quarters.  The General Partner receives a distribution corresponding to its
     2%  General  Partnership Interest. The distributions are to be paid 45 days
     after  the  end  of each calendar quarter. However, Rio Vista is prohibited
     from  making any distributions to unitholders if it would cause an event of
     default,  or  an event of default is existing, under any obligation of Penn
     Octane  which  Rio  Vista  has  guaranteed  (see  note  H).

     Cash  distributions  from Rio Vista are shared by the holders of the common
     units  and the General Partner interest as described in the Agreement based
     on  a  formula  whereby the General Partner will receive disproportionately
     more  distributions per unit than the holders of the common units as annual
     cash  distributions  exceed  certain  milestones.

     On  February  14,  2005,  Rio  Vista  made a cash distribution of $487,000.

     On  April 21, 2005, the board of managers of Rio Vista approved the payment
     of  a  $.025 cash distribution per unit to all Rio Vista common unitholders
     and  a  corresponding  distribution to the General Partner as of the record
     date  of  May  9, 2005. The distribution is to be paid on May 13, 2005 (see
     note  L).


                                       15
<PAGE>
                    RIO VISTA PARTNERS L.P. AND SUBIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE  H  -  COMMITMENTS  AND  CONTINGENCIES

     CREDIT  FACILITY,  LETTERS  OF  CREDIT  AND  OTHER

     Rio  Vista's LPG purchases are financed entirely by Penn Octane through its
     credit  facility  with  RZB  Finance,  LLC  (RZB).

     As  of  March  31, 2005, Penn Octane had a $20,000,000 credit facility with
     RZB for demand loans and standby letters of credit (RZB Credit Facility) to
     finance  Penn  Octane's purchases of LPG and gasoline and diesel fuel (Fuel
     Products)  in  connection  with  Penn Octane's fuel sales business. The RZB
     Credit  facility  is  an  uncommitted  facility  under which the letters of
     credit  have an expiration date of no more than 90 days and the facility is
     reviewed annually at March 31. As a result of the financing provided to Rio
     Vista  by  Penn  Octane,  Rio  Vista  has agreed to guarantee Penn Octane's
     obligations with respect to the RZB Credit Facility. In connection with Rio
     Vista's  guaranty, Rio Vista granted RZB a security interest and assignment
     in  any  and  all  of  Rio  Vista's  accounts,  inventory,  real  property,
     buildings,  pipelines,  fixtures and interests therein or relating thereto,
     including,  without  limitation,  the lease with the Brownsville Navigation
     District  of  Cameron  County for the land on which Rio Vista's Brownsville
     Terminal  Facility  is  located,  and  has  entered into leasehold deeds of
     trust,  security  agreements, financing statements and assignments of rent.
     Under  the  RZB  Credit  Facility,  Rio  Vista  may not permit to exist any
     subsequent  lien,  security interest, mortgage, charge or other encumbrance
     of  any  nature on any of its properties or assets, except in favor of RZB,
     without  the  consent  of RZB. In connection with the LPG Supply Agreement,
     Penn  Octane and Rio Vista have agreed to share the financing costs related
     to  Penn  Octane's  purchase  of  LPG  under  the  RZB  Credit  Facility.

     Under  the  RZB  Credit Facility, Penn Octane is required to pay a fee with
     respect  to  each  letter  of  credit  thereunder in an amount equal to the
     greater of (i) $500, (ii) 2.5% of the maximum face amount of such letter of
     credit, or (iii) such higher amount as may be agreed to between Penn Octane
     and  RZB.  Any loan amounts outstanding under the RZB Credit Facility shall
     accrue interest at a rate equal to the rate announced by the JPMorgan Chase
     Bank as its prime rate (5.75% at March 31, 2005) plus 2.5%. Pursuant to the
     RZB  Credit  Facility,  RZB  has  sole  and absolute discretion to limit or
     terminate  its participation in the RZB Credit Facility at any time, and to
     refrain  from making any loans or issuing any letters of credit thereunder.
     RZB also has the right to demand payment of any and all amounts outstanding
     under the RZB Credit Facility at any time. Jerome B. Richter has personally
     guaranteed  all  of  Penn Octane's and Rio Vista's payment obligations with
     respect  to  the  RZB  Credit  Facility.

     Under the terms of the RZB Credit Facility, either Penn Octane or Rio Vista
     is  required  to  maintain  net  worth  of  a  minimum  of  $10,000,000.

     Under  the  terms of the RZB Credit Facility, all cash from Rio Vista's LPG
     sales  is  deposited  directly  into  a  restricted  cash account under the
     direction  of  RZB to pay down all obligations of Penn Octane arising under
     the  RZB Credit Facility. Accordingly, Rio Vista only receives net proceeds
     from the restricted cash account when the amounts of collateral provided by
     Penn  Octane and Rio Vista exceed all liabilities under outstanding letters
     of  credit  issued on behalf of Penn Octane, at the sole discretion of RZB.
     Historically RZB has not unduly withheld net proceeds from Penn Octane, and
     Rio  Vista  does not expect that RZB will unduly withhold net proceeds from
     Rio  Vista.  Upon  the release of Rio Vista's net proceeds from Rio Vista's
     restricted  cash  account,  Rio Vista is then required to pay any remaining
     amounts  due Penn Octane, if any, for the supply of LPG and other allocated
     or  direct  expenses.


                                       16
<PAGE>
                    RIO VISTA PARTNERS L.P. AND SUBIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE  H  -  COMMITMENTS  AND  CONTINGENCIES  -  CONTINUED

     CONCENTRATIONS  OF  CREDIT  RISK

     Financial  instruments  that  potentially  subject Rio Vista to credit risk
     include  cash  balances  at banks which at times exceed the federal deposit
     insurance.

     TAX  OBLIGATIONS  OF  PENN  OCTANE  RESULTING  FROM  THE  SPIN-OFF

     Rio  Vista  has agreed to indemnify Penn Octane for a period of three years
     from  the  fiscal  year  end that includes the date of the Spin-Off for any
     federal  income  tax  liabilities  resulting from the Spin-Off in excess of
     $2,500,000.  Penn  Octane does not believe that it has a federal income tax
     in  connection  with  the  Spin-Off  in  excess of $2,500,000. However, the
     Internal  Revenue Service (IRS) may review Penn Octane's federal income tax
     returns  and  challenge  positions  that  it  may  take with respect to the
     Spin-Off.

     PARTNERSHIP  TAX  TREATMENT

     Rio  Vista  is  not  a taxable entity for U.S. tax purposes (see below) and
     incurs  no  U.S.  federal  income  tax  liability.  Rio  Vista's  Mexican
     subsidiaries  are taxed on their income directly by the Mexican government.
     The  income/loss  of  Rio  Vista's Mexican subsidiaries are included in the
     U.S.  partnership income tax return of Rio Vista. The holders of the common
     units  and General Partner interest will be entitled to their proportionate
     share  of  any  tax  credits  resulting  from  any income taxes paid to the
     Mexican  government.  Each unitholder of Rio Vista is required to take into
     account  that  unitholder's  share  of  items  of  income,  gain,  loss and
     deduction  of  Rio  Vista in computing that unitholder's federal income tax
     liability,  even if no cash distributions are made to the unitholder by Rio
     Vista. Distributions by Rio Vista to a unitholder are generally not taxable
     unless  the  amount  of  cash  distributed is in excess of the unitholder's
     adjusted  tax  basis  in  Rio  Vista.

     Section  7704  of  the  Internal Revenue Code (Code) provides that publicly
     traded  partnerships  shall,  as  a  general rule, be taxed as corporations
     despite the fact that they are not classified as corporations under Section
     7701  of  the  Code. Section 7704 of the Code provides an exception to this
     general  rule for a publicly traded partnership if 90% or more of its gross
     income  for  every taxable year consists of "qualifying income" (Qualifying
     Income  Exception).  For  purposes  of  this exception, "qualifying income"
     includes income and gains derived from the exploration, development, mining
     or  production,  processing, refining, transportation (including pipelines)
     or marketing of any mineral or natural resource. Other types of "qualifying
     income"  include interest (other than from a financial business or interest
     based  on  profits  of the borrower), dividends, real property rents, gains
     from  the  sale  of  real  property,  including  real  property held by one
     considered  to  be  a "dealer" in such property, and gains from the sale or
     other  disposition of capital assets held for the production of income that
     otherwise  constitutes  "qualifying  income".

     No  ruling  has been or will be sought from the IRS and the IRS has made no
     determination as to Rio Vista's classification as a partnership for federal
     income tax purposes or whether Rio Vista's operations generate a minimum of
     90%  of  "qualifying  income"  under  Section  7704  of  the  Code.

     If Rio Vista was classified as a corporation in any taxable year, either as
     a result of a failure to meet the Qualifying Income Exception or otherwise,
     Rio  Vista's  items  of income, gain, loss and deduction would be reflected
     only  on  Rio  Vista's  tax  return rather than being passed through to Rio
     Vista's unitholders, and Rio Vista's net income would be taxed at corporate
     rates.


                                       17
<PAGE>
                    RIO VISTA PARTNERS L.P. AND SUBIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE  H  -  COMMITMENTS  AND  CONTINGENCIES  -  CONTINUED

     PARTNERSHIP  TAX  TREATMENT  -  CONTINUED

     If  Rio Vista was treated as a corporation for federal income tax purposes,
     Rio  Vista would pay tax on income at corporate rates, which is currently a
     maximum of 35%. Distributions to unitholders would generally be taxed again
     as  corporate  distributions,  and  no income, gains, losses, or deductions
     would  flow through to the unitholders. Because a tax would be imposed upon
     Rio  Vista  as  a  corporation,  the  cash  available  for  distribution to
     unitholders  would be substantially reduced and Rio Vista's ability to make
     minimum  quarterly distributions would be impaired. Consequently, treatment
     of  Rio  Vista as a corporation would result in a material reduction in the
     anticipated  cash  flow  and  after-tax return to unitholders and therefore
     would  likely result in a substantial reduction in the value of Rio Vista's
     common  units.

     Current  law  may  change  so  as  to  cause  Rio  Vista to be taxable as a
     corporation  for federal income tax purposes or otherwise subject Rio Vista
     to  entity-level taxation. The Agreement provides that, if a law is enacted
     or  existing  law  is  modified or interpreted in a manner that subject Rio
     Vista  to  taxation  as  a  corporation  or otherwise subjects Rio Vista to
     entity-level taxation for federal, state or local income tax purposes, then
     the  minimum  quarterly  distribution  amount  and  the target distribution
     amount  will  be adjusted downward to reflect the impact of that law on Rio
     Vista.

     OTHER

     Rio  Vista  is  a  newly-created entity and is not currently a party to any
     litigation.  Pursuant  to  the Omnibus Agreement, Penn Octane has agreed to
     indemnify Rio Vista for claims related to the Assets arising from events or
     conditions  occurring  or  existing  before  completion  of  the  Spin-Off.

     LONG-TERM  DEBT

     Long-term  debt of Penn Octane guaranteed by Rio Vista and on which certain
     of  its  assets are pledged totaled $1,805,000 at March 31, 2005. This debt
     is  due  on  December  15, 2005. Interest is payable quarterly at a rate of
     16.5%  per  annum.

     GUARANTEES  AND  ASSETS  PLEDGED  ON  CERTAIN  OF PENN OCTANE'S OBLIGATIONS

     The  dollar amounts of Penn Octane's obligations which Rio Vista guarantees
     and/or  for which Rio Vista's assets are pledged total $18,400,000 at March
     31,  2005  based  on  Penn Octane's most recently filed Quarterly Report on
     Form  10-Q  and  the  unaudited  amounts  were  as  follows:

<TABLE>
<CAPTION>
<S>                                                             <C>
          LPG and fuel products trade accounts payable          $ 7,300,000
          Total debt, net of discount                           $ 1,600,000
          Lines of credit                                       $ 5,800,000
          Letters of credit in excess of LPG and fuel products
             trade accounts payable                             $ 3,700,000
</TABLE>

     Consolidated  current  assets  of Penn Octane, which includes assets of Rio
     Vista,  pledged in favor of Penn Octane's credit facility and certain other
     debt  total $33,700,000 at March 31, 2005 and the unaudited amounts were as
     follows:

<TABLE>
<CAPTION>
<S>                                                             <C>
          Accounts receivable                                   $11,100,000
          Restricted cash                                       $ 4,700,000
          Inventory                                             $ 2,100,000
          Property, plant and equipment, net                    $15,800,000
</TABLE>


                                       18
<PAGE>
                    RIO VISTA PARTNERS L.P. AND SUBIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE  H  -  COMMITMENTS  AND  CONTINGENCIES  -  CONTINUED

     GUARANTEES  AND  ASSETS  PLEDGED  ON CERTAIN OF PENN OCTANE'S OBLIGATIONS -
     CONTINUED

     Rio  Vista's  assets that are included in the above amounts are as follows:

<TABLE>
<CAPTION>
<S>                                                             <C>
          Accounts receivable                                   $ 6,700,000
          Restricted cash                                       $   900,000
          Inventory                                             $   200,000
          Property, plant and equipment, net                    $14,100,000
</TABLE>

NOTE  I  -  CONTRACTS

     LPG  SALES  TO  PMI

     During  December  2004,  Rio  Vista  and  PMI  entered  into  a three month
     agreement  for the period January 1, 2005 to March 31, 2005 for the minimum
     sale  of  11,700,000  gallons of LPG for the months of January and February
     and  11,050,000 gallons of LPG for the month of March (Quarterly Agreement)
     at  reduced  margins  compared  with  those  in  effect during 2004. Actual
     volumes  sold  were  12,700,000  gallons,  9,900,000  gallons and 9,600,000
     gallons  for January, February and March 2005, respectively. In April 2005,
     Rio  Vista  entered  into  a  one month contract with PMI for the sale of a
     minimum  of  10,450,000  gallons at a further reduction in margin (see note
     L).

     The  shortfall  for  the  month  of  February 2005 was attributable to Penn
     Octane  not  having a sufficient supply of LPG to meet the minimum contract
     volume.  The  shortfall for the month of March 2005 was attributable to PMI
     not  purchasing  the  minimum  contract  volume.  In  accordance  with  the
     Quarterly Agreement, PMI paid approximately $104,000 representing the total
     amount  due  associated  with  the  shortfall  volumes  for  March  2005.

     Rio  Vista  continues  to  negotiate a new long-term LPG contract with PMI.

     PMI  has  primarily  used  the  Matamoros  Terminal  Facility  to  load LPG
     purchased  from  Penn  Octane  prior  to  the  Spin-Off and from Rio Vista,
     subsequent  thereto,  for  distribution  by truck in Mexico. Rio Vista will
     continue  to  use  the Brownsville Terminal Facility in connection with LPG
     delivered  by  railcar  to  other  customers, storage and as an alternative
     terminal  in  the  event  the  Matamoros  Terminal Facility cannot be used.

NOTE J - RELATED PARTY TRANSACTIONS

     The  General  Partner  has  a  legal  duty  to manage Rio Vista in a manner
     beneficial  to  Rio  Vista's  unitholders.  This  legal  duty originates in
     statutes  and  judicial  decisions  and  is  commonly  referred  to  as  a
     "fiduciary"  duty.  Because  the General Partner is currently owned by Penn
     Octane,  Penn  Octane's  officers  and managers of the General Partner also
     have  fiduciary  duties  to manage the business of the General Partner in a
     manner  beneficial  to  Penn  Octane  and  its  stockholders.

     The  Agreement limits the liability and reduces the fiduciary duties of the
     General  Partner  to  the  unitholders.  The  Agreement  also restricts the
     remedies  available  to  unitholders  for  actions  that  might  otherwise
     constitute  breaches  of  the  General  Partner's  fiduciary  duty.

     Under  the  terms  of  the LPG Supply Agreement and Omnibus Agreement, Penn
     Octane  charged  Rio Vista $27,280,230 for the three months ended March 31,
     2005.


                                       19
<PAGE>
                    RIO VISTA PARTNERS L.P. AND SUBIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE J - RELATED PARTY TRANSACTIONS - CONTINUED

     INTERCOMPANY  PURCHASE  AGREEMENT  FOR  LPG

     Penn  Octane  entered into the LPG Supply Agreement with Rio Vista pursuant
     to  which  Rio Vista has agreed to purchase all of its LPG requirements for
     sales  which  utilize the assets transferred to Rio Vista by Penn Octane to
     the  extent  Penn  Octane  is able to supply such LPG requirements. The LPG
     Supply  Agreement  further  provides  that  Rio  Vista has no obligation to
     purchase LPG from Penn Octane to the extent the distribution of such LPG to
     Rio  Vista's  customers would not require the use of any of the assets Penn
     Octane  contributed to Rio Vista or Penn Octane ceases to have the right to
     access  the  Leased  Pipeline.

     Under the LPG Supply Agreement, Penn Octane supplies all of Rio Vista's LPG
     requirements  in  connection  with  its  LPG  sales obligations to PMI. The
     purchases  of the LPG are at fluctuating prices and are determined based on
     the  cost  of LPG under Penn Octane's agreements with its LPG suppliers for
     volumes  sold to Rio Vista for sale to PMI or to other Rio Vista customers,
     other  direct  costs  related to PMI and other LPG sales of Rio Vista and a
     formula  that  takes  into consideration operating costs of Penn Octane and
     Rio Vista. Rio Vista expects the aggregate costs per gallon to purchase LPG
     (less  any  applicable  adjustments) to be below the aggregate sales prices
     per  gallon  of  LPG  sold  to  PMI.

     Under  the  terms  of Penn Octane's Exxon Supply Contract, Penn Octane must
     provide letters of credit in amounts equal to the cost of the product to be
     purchased.  In addition, the cost of the product purchased is tied directly
     to overall market conditions. As a result, Penn Octane's existing letter of
     credit  facility  may  not  be  adequate  to  meet  the  letter  of  credit
     requirements  under  the  Exxon Supply Contract or other suppliers if there
     are increases in quantities of LPG purchased and/or to finance future price
     increases  of  LPG.

     The  LPG  Supply  Agreement  terminates  on  the  earlier  to  occur  of:

          -    Penn  Octane  ceases  to  have  the  right  to  access the Leased
               Pipeline  that  connects  to  Rio  Vista's  Brownsville  Terminal
               Facility;  and
          -    Rio  Vista ceases to sell LPG using any of the assets contributed
               by  Penn  Octane  to  Rio  Vista  pursuant  to  the  Spin-Off.

     OMNIBUS  AGREEMENT

     In  connection  with  the  Spin-Off,  Penn  Octane  entered into an Omnibus
     Agreement  with Rio Vista that governs, among other things, indemnification
     obligations among the parties to the agreement, related party transactions,
     the  provision  of  general  administration  and  support  services by Penn
     Octane.

     The  Omnibus  Agreement prohibits Rio Vista from entering into any material
     agreement  with  Penn  Octane  without  the prior approval of the conflicts
     committee  of the board of managers of the General Partner. For purposes of
     the  Omnibus  Agreement,  the  term material agreements means any agreement
     between  Rio  Vista and Penn Octane that requires aggregate annual payments
     in  excess  of  $100,000.

     The  Omnibus  Agreement may be amended by written agreement of the parties;
     provided,  however  that  it may not be amended without the approval of the
     conflicts  committee  of  the  General  Partner  if  such  amendment  would
     adversely affect the unitholders of Rio Vista. The Omnibus Agreement has an
     initial  term  of  five  years  that  automatically  renews  for successive
     five-year  terms  and,  other  than  the  indemnification  provisions, will
     terminate  if  Rio  Vista  is  no  longer  an  affiliate  of  Penn  Octane.


                                       20
<PAGE>
                    RIO VISTA PARTNERS L.P. AND SUBIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE  K  -  REALIZATION  OF  ASSETS

     The accompanying consolidated balance sheet has been prepared in conformity
     with  accounting  principles  generally  accepted  in  the United States of
     America,  which  contemplate  continuation of Rio Vista as a going concern.
     Rio  Vista  is  dependent  on  Penn  Octane's  ability  to deliver adequate
     quantities  of  LPG  at  an  acceptable  price for ultimate sale to PMI, to
     provide credit to Rio Vista for such purchases and to provide management of
     its operations. Currently, Rio Vista's only source of revenue is from sales
     of  LPG  to PMI and it operates under short-term sales agreements with PMI.
     Since April 1, 2004, through the date of the Spin-Off, Penn Octane had also
     been  operating  under  short-term  sales  agreements with PMI. The monthly
     volumes  of  LPG  sold  by Penn Octane to PMI since April 1, 2004 up to the
     date  of the Spin-Off were materially less than historical levels (see note
     L). Additionally, the monthly volumes of LPG sold by Rio Vista to PMI since
     October  1,  2004  have  also  been  materially  less  than  Penn  Octane's
     historical  levels  and  margins  have  declined in 2005. As a result, Penn
     Octane's  and Rio Vista's gross profit have been materially reduced and may
     continue  to  decline  and  their  cash  flow  and  available credit may be
     insufficient  to  absorb  such  additional  reductions  in  gross  profit.

     Rio  Vista  has  guaranteed  certain  of  Penn  Octane's  obligations.
     Substantially  all  of  Rio Vista's and Penn Octane's assets are pledged or
     committed  to  be  pledged  as  collateral  on  $1,805,000 of Penn Octane's
     existing  debt  and  the RZB Credit Facility, and therefore, both Rio Vista
     and Penn Octane may be unable to obtain additional financing collateralized
     by  those  assets.  Penn  Octane's  Report  of Independent Certified Public
     Accountants on the consolidated financial statements of Penn Octane at July
     31,  2004  contains an explanatory paragraph which describes an uncertainty
     about  Penn  Octane's  ability  to  continue  as  a  going concern. If Penn
     Octane's  and  Rio  Vista's  cash  flows  are  not  adequate  to  pay their
     obligations,  Penn  Octane  and/or  Rio  Vista  may  be  required  to raise
     additional funds to avoid foreclosure by Penn Octane's creditors. There can
     be  no  assurance  that  such additional funding will be available on terms
     attractive  to  either  Penn  Octane  or  Rio Vista or available at all. If
     additional  amounts  cannot  be  raised  and  cash flow is inadequate, Penn
     Octane and/or Rio Vista would likely be required to seek other alternatives
     which  could  include  the  sale of assets, closure of operations up to and
     including  protection  under  the  U.S.  bankruptcy  laws.

     In  view  of  the  matters  described  in  the  preceding  paragraphs,
     recoverability  of  the  recorded  asset  amounts shown in the accompanying
     unaudited  consolidated balance sheet is dependent upon the ability of Penn
     Octane  to continue as a going concern and continued sales of LPG to PMI at
     acceptable  volumes  and margins to provide sufficient cash flow to pay Rio
     Vista's  expenses and guarantees of Penn Octane's obligations assuming Penn
     Octane's  inability  to  pay  such  obligations. The unaudited consolidated
     balance  sheet  does  not  include  any  adjustments  related  to  the
     recoverability  and classification of recorded asset amounts or amounts and
     classification  of  liabilities that might be necessary should Rio Vista be
     unable  to  continue  in  existence.

     To  provide Rio Vista with the ability it believes necessary to continue in
     existence,  management  is  negotiating  with  PMI to increase LPG sales at
     acceptable  monthly  volumes and margins on a long-term basis. In addition,
     management  is  taking  steps to diversify Rio Vista's operations to reduce
     dependency  on  sales  of  LPG.


NOTE  L  -  SUBSEQUENT  EVENT

     On  May 5, 2005, Rio Vista entered into a contract with PMI for the sale of
     a minimum of 6,000,000 gallons of LPG for the period May 5, 2005 to May 31,
     2005  at  the  reduced margin received in April 2005. For the period May 1,
     2005  to  May  4,  2005,  PMI  did  not  purchase  any  LPG from Rio Vista.

     On  May  13, 2005, Rio Vista made a cash distribution of $487,000 (see note
     G).


                                       21
<PAGE>
ITEM  2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF  OPERATIONS

     The  following  discussion  of  Rio Vista's liquidity and capital resources
should  be  read  in  conjunction  with  the  unaudited  consolidated  financial
statements  of  Rio  Vista and related notes thereto appearing elsewhere herein.
References  to  specific  years preceded by "fiscal" (e.g. fiscal 2004) refer to
Rio  Vista's  fiscal  year  ending  December  31.

FORWARD-LOOKING  STATEMENTS

     The  statements  contained in this Quarterly Report that are not historical
facts  are  forward-looking  statements within the meaning of Section 27A of the
Securities  Act  of 1933 and Section 21E of the Securities Exchange Act of 1934.
These forward-looking statements may be identified by the use of forward-looking
terms such as "believes," "expects," "may," "will", "should" or "anticipates" or
by  discussions  of  strategy  that  inherently involve risks and uncertainties.
From  time  to  time, Rio Vista has made or may make forward-looking statements,
orally  or  in  writing.  These  forward-looking  statements  include statements
regarding  anticipated  future  revenues,  sales,  LPG  supply,  LPG  pricing,
operations,  demand,  potential acquisitions, competition, capital expenditures,
future acquisitions, additional financing, the deregulation of the LPG market in
Mexico,  the  operations  of  the  US  -  Mexico  Pipelines, the Brownsville and
Matamoros Terminal Facilities, other upgrades to Rio Vista's facilities, foreign
ownership  of  LPG  operations,  short-term obligations and credit arrangements,
guarantees, cash distributions, Qualifying Income, Penn Octane, the Spin-Off and
other  statements  regarding  matters that are not historical facts, and involve
predictions  which  are based upon a number of future conditions that ultimately
may  prove  to be inaccurate.  Actual results, performance or achievements could
differ  materially  from  the  results  expressed  in,  or  implied  by,  these
forward-looking  statements.  Factors  that  may  cause  or  contribute  to such
differences  include  those  discussed  in  Rio  Vista's  Form 10 filed with the
Securities  and  Exchange  Commission,  those discussed under "Risk Factors" and
"Management's  Discussion  and  Analysis  of  Financial Condition and Results of
Operations,"  in  Rio  Vista's  fiscal  year 2004 Annual Report as well as those
discussed elsewhere in this Quarterly Report.  These factors may not include all
material  risks  facing  Rio  Vista.

RIO VISTA ENERGY PARTNERS L.P. AND ITS CONSOLIDATED SUBSIDIARIES ARE HEREINAFTER
REFERRED  TO  AS  "RIO  VISTA".

RISK  FACTORS

     Business  Factors.  The  expiration  of the liquefied petroleum gas ("LPG")
sales  contract  between  Penn  Octane  Corporation  ("Penn  Octane') and P.M.I.
Trading  Limited  ("PMI")  effective  March 31, 2004 and the resulting lower LPG
sales  volumes  since  that date between Penn Octane and PMI through the date of
the  Spin-Off  and  Rio Vista and PMI after the Spin-off have adversely affected
Rio  Vista's  results of operations.  Rio Vista has only one customer for LPG in
Mexico,  PMI.  Rio  Vista  cannot be sure that PMI will continue to purchase LPG
from  Rio  Vista or in quantities or at prices that are profitable.  There are a
limited  number  of suppliers of LPG that connect to Rio Vista's pipelines and a
limited  supply  of LPG.  Rio Vista may lose its competitive advantage when Penn
Octane's  Seadrift  pipeline  lease expires in 2013.  Rio Vista may be unable to
successfully  develop  additional  sources  of  revenue  in  order to reduce its
dependence  on  PMI.  Rio  Vista  may  not  have  sufficient  cash  to  meet its
obligations.  All  of  Rio Vista's assets are pledged as collateral for existing
debt  of Penn Octane, and Rio Vista therefore may be unable to obtain additional
financing  collateralized by such assets.  Rio Vista is at risk of economic loss
due  to  fixed  margin contracts.  If Rio Vista does not have sufficient capital
resources  for  acquisitions  or opportunities for expansion, Rio Vista's growth
will be limited.   Future acquisitions and expansions may not be successful, may
substantially  increase Rio Vista's indebtedness and contingent liabilities, and
may  create  integration  difficulties.  Rio Vista's business would be adversely
affected  if  operations  at  its  transportation,  terminal  and  distribution
facilities  were  interrupted.  Rio  Vista's  business  would  also be adversely
affected  if  the  operations  of Rio Vista's customers and suppliers (including
Penn  Octane)  were  interrupted.

     Competitive  Factors.  The energy industry is highly competitive.  There is
competition  within  the  industries and also with other industries in supplying
the  energy  and fuel needs of the industry and individual consumers.  Rio Vista
competes  with  other  companies  in  the sale or purchase of LPG as well as the
transportation of these products in the U.S. and Mexican markets and employs all
methods  of  competition  which are lawful and appropriate for such purposes.  A
key  component  of  Rio  Vista's  competitive  position,  particularly given the
commodity-based  nature  of  many  of its products, is its ability to manage its
expenses  successfully,  which  requires continuous management focus on reducing
unit  costs  and  improving  efficiency  and  its  ability  to  secure  unique
opportunities  for  the  purchase, sale and/or delivery methods of its products.


                                       22
<PAGE>
     International  Factors.  Mexican  economic, political and social conditions
may  change  and  adversely affect Rio Vista's operations.  Rio Vista may not be
able to continue operations in Mexico if Mexico restricts the existing ownership
structure  of  its  Mexican  operations,  requiring  Rio  Vista  to increase its
reliance on Mexican nationals to conduct its business.  The LPG market in Mexico
is  undergoing deregulation, the results of which may hinder Rio Vista's ability
to  negotiate  acceptable  contracts  with  distributors.

     Political  Factors.  The  operations and earnings of Rio Vista  in the U.S.
and  Mexico  have  been, and may in the future be, affected from time to time in
varying  degree by political instability and by other political developments and
laws  and  regulations,  such  as  forced divestiture of assets; restrictions on
production,  imports  and  exports;  war or other international conflicts; civil
unrest  and  local  security  concerns  that  threaten the safe operation of Rio
Vista's  facilities;  price  controls; tax increases and retroactive tax claims;
expropriation  of  property;  cancellation of contract rights; and environmental
regulations.  Both  the  likelihood of such occurrences and their overall effect
upon  Rio  Vista  vary  greatly  and  are  not  predictable.

     Industry  and  Economic  Factors.  The operations and earnings of Rio Vista
throughout the U.S. and Mexico are affected by local, regional and global events
or  conditions  that  affect  supply and demand for Rio Vista's products.  These
events  or  conditions  are  generally  not predictable and include, among other
things, general economic growth rates and the occurrence of economic recessions;
the  development  of  new  supply  sources for its products; supply disruptions;
weather,  including  seasonal  patterns  that  affect  energy  demand and severe
weather  events  that  can disrupt operations; technological advances, including
advances  in  exploration,  production,  refining  and  advances  in  technology
relating  to  energy usage; changes in demographics, including population growth
rates  and  consumer  preferences;  and  the  competitiveness  of  alternative
hydrocarbon  or  other  energy  sources  or  product  substitutes.

     Acquisition  Factors.  In  additional  to  the  factors  cited  above,  the
advancement,  cost  and  results of particular acquisitions sought by Rio Vista,
including  acquisitions  which  do not specifically fall within the areas of Rio
Vista's current lines of businesses will depend on:  the outcome of negotiations
for  such acquisitions; the ability of the Rio Vista's management to manage such
acquisitions;  the  ability  of  Rio  Vista  to  obtain  financing  for  such
acquisitions;  changes  in  operating conditions or costs; and the occurrence of
unforeseen  technical  difficulties.

     Market  Risk  Factors.  See  "Notes  to Consolidated Financial Statements,"
"Management's  Discussion  and  Analysis  of  Financial Condition and Results of
Operations"  and "Quantitative and Qualitative Disclosures About Market Risk" in
this  report  for  discussion of the impact of market risks, inflation and other
uncertainties.

     Internal  Control  Factors.   Pursuant to Section 404 of the Sarbanes Oxley
Act  of  2002,  beginning  with  the  year  ended December 31, 2006, Rio Vista's
management  will  be  required  to complete an annual evaluation of its internal
control  systems.  In addition, Rio Vista's independent auditors are required to
provide  an  opinion  regarding  such evaluation and the adequacy of Rio Vista's
internal  accounting controls.  Rio Vista's internal controls may be found to be
inadequate,  deficiencies  or  weaknesses may be discovered, and remediation may
not  be  successful.  As  Rio Vista grows, Rio Vista will need to strengthen its
internal  control  systems.  If  Rio  Vista  acquires  an existing business, the
internal  control  systems  of  the  acquired business may be inadequate and may
require  additional  strengthening.

     Projections.  Projections,  estimates and descriptions of Rio Vista's plans
and  objectives  included  herein are forward-looking statements.  Actual future
results  could  differ  materially  due  to,  among  other  things,  the factors
discussed  above  and  elsewhere  in  this  report.


                                       23
<PAGE>
OVERVIEW

     Rio  Vista  Energy  Partners  L.P.  ("Rio  Vista"),  a  Delaware  limited
partnership,  was  formed by Penn Octane Corporation ("Penn Octane") on July 10,
2003  and was a wholly owned subsidiary of Penn Octane until September 30, 2004,
the  date  that Penn Octane completed a series of transactions involving (i) the
transfer  of  substantially  all  of  its  owned pipeline and terminal assets in
Brownsville, Texas and Matamoros, Mexico and certain immaterial liabilities (the
"Assets")  to Rio Vista Operating Partnership L.P. ("RVOP") (ii) the transfer of
its 99.9% interest in RVOP to Rio Vista and (iii) the distribution of all of its
limited  partnership  interests  (the "Common Units") in Rio Vista to its common
stockholders (the "Spin-Off"), resulting in Rio Vista becoming a separate public
company.  The  Common  Units  represented 98% of Rio Vista's outstanding capital
and  100% of Rio Vista's limited partnership interests.  The remaining 2%, which
is  the  general  partner  interest, is owned and controlled by Rio Vista GP LLC
(the  "General Partner"), a wholly owned subsidiary of Penn Octane.  The General
Partner  is  responsible  for  the  management  of  Rio Vista.  Rio Vista Energy
Partners  L.P.  and its consolidated subsidiaries are hereinafter referred to as
"Rio  Vista".

     As  a  result  of  the  Spin-Off,  Rio  Vista  is  engaged in the purchase,
transportation  and  sale  of liquefied petroleum gas ("LPG").    Rio Vista owns
and  operates  terminal  facilities  in  Brownsville,  Texas  (the  "Brownsville
Terminal  Facility")  and  in  Matamoros,  Tamaulipas,  Mexico  (the  "Matamoros
Terminal  Facility")  and  approximately 23 miles of pipelines (the "US - Mexico
Pipelines")  which  connect  the  Brownsville Terminal Facility to the Matamoros
Terminal  Facility.  The  primary market for Rio Vista's LPG is the northeastern
region  of  Mexico,  which  includes  the  states  of  Coahuila,  Nuevo Leon and
Tamaulipas.

     Rio  Vista believes it has a competitive advantage in the supply of LPG for
the  northeastern  region of Mexico because of Rio Vista's pipeline and terminal
facilities  and  its long term LPG supply agreement with Penn Octane which allow
Rio  Vista to bring supplies of LPG close to consumers of LPG in major cities in
that  region  at  competitive  prices.  Rio  Vista's primary customer for LPG is
P.M.I. Trading Limited ("PMI").  PMI is a subsidiary of Petroleos Mexicanos, the
state-owned  Mexican  oil  company,  which  is  commonly known by its trade name
"PEMEX."  PMI  is  the exclusive importer of LPG into Mexico.  The LPG purchased
by  PMI from Rio Vista is sold to PEMEX which distributes the LPG purchased from
PMI  into  the  northeastern  region  of  Mexico.

     All  of  Rio  Vista's LPG operations are conducted through, and Rio Vista's
LPG  operating  assets  are  owned by, RVOP.  The General Partner is entitled to
receive  distributions  on  its  general partner interest as provided for in Rio
Vista's  partnership  agreement (the "Agreement").  The General Partner has sole
responsibility  for conducting Rio Vista's business and for managing Rio Vista's
operations  in  accordance  with  the  Agreement.   Other  than  the  foregoing
distributions,  the  General  Partner does not receive a management fee or other
compensation  in  connection with its management of Rio Vista's business, but is
entitled  to  be reimbursed for all direct and indirect expenses incurred on Rio
Vista's  behalf.

     Rio Vista purchases LPG from Penn Octane under a long-term supply agreement
(the "LPG Supply Agreement").  The purchase price of the LPG from Penn Octane is
determined  based on the cost of LPG under Penn Octane's agreements with its LPG
suppliers  for  volumes  sold to Rio Vista for sale to PMI or to other Rio Vista
customers,  other  direct  costs related to PMI and other LPG sales of Rio Vista
and  a  formula that takes into consideration operating costs of Penn Octane and
Rio  Vista.

     Rio  Vista  provides  products  and  services  through  a  combination  of
fixed-margin  and  fixed-price contracts.  Costs included in cost of goods sold,
other  than  the  purchase  price  of LPG, may affect actual profits from sales,
including  costs  relating  to  transportation, storage, leases and maintenance.


                                       24
<PAGE>
     Historically,  up  until the date of the Spin-Off, Penn Octane has sold LPG
primarily  to  PMI.  Penn  Octane  has  a long-term lease agreement, expiring in
December 2013, for approximately 132 miles of pipeline which connects ExxonMobil
Corporation's  ("Exxon")  King Ranch Gas Plant in Kleberg County, Texas and Duke
Energy's  La  Gloria  Gas  Plant  in  Jim  Wells  County,  Texas, to Rio Vista's
Brownsville Terminal Facility (the "Leased Pipeline").  In addition, Penn Octane
has  access to a twelve-inch pipeline which connects Exxon's Viola valve station
in  Nueces County, Texas to the inlet of the King Ranch Gas Plant (the "ECCPL"),
as  well  as  existing and other potential propane pipeline suppliers which have
the  ability  to  access  the  ECCPL.  In  connection  with  Penn Octane's lease
agreement  for  the  Leased  Pipeline, Penn Octane may access up to 21.0 million
gallons of storage located in Markham, Texas (the "Markham Storage"), as well as
other  potential  propane  pipeline  suppliers,  via  approximately 155 miles of
pipeline  located  between  Markham,  Texas  and the Exxon King Ranch Gas Plant.
Penn  Octane's  long  term supply agreements in effect as of March 31, 2005 with
Exxon  requires Penn Octane to purchase minimum quantities of LPG totaling up to
13.9  million gallons of LPG per month although actual quantities supplied under
such  agreements during the three months ended March 31, 2005 were approximately
9.2  million  gallons  per  month.


LPG  SALES

     The following table shows Rio Vista's actual volumes sold to PMI in gallons
and  average  sales  price  for the three months ended March 31, 2005 and actual
sales  to  PMI  by  Penn Octane in gallons and average sales price for the three
months  ended  March  31,  2004.

<TABLE>
<CAPTION>
                                       2004     2005
                                     -------  -------
<S>                                  <C>      <C>
Volume Sold

    LPG (millions of gallons) - PMI     57.4     32.3

Average sales price

    LPG (per gallon) - PMI           $  0.76  $  0.88
</TABLE>


                                       25
<PAGE>
     RECENT  TRENDS.  Since  April 2004, PMI had contracted with Penn Octane and
Rio  Vista  (subsequent  to  the  Spin-Off) for volumes which were significantly
lower  than  amounts purchased by PMI from Penn Octane in similar periods during
previous  years.  See Liquidity and Capital Resources - Sales to PMI below.  Rio
Vista  believes  that the reduction of volume commitments is based on additional
LPG  production by PEMEX being generated from the Burgos Basin field in Reynosa,
Mexico,  an area within the proximity of Rio Vista's Matamoros Terminal Facility
and  increased  competition from U.S. suppliers (see below).  Although Rio Vista
is  not  aware  of the total amount of LPG actually being produced by PEMEX from
the  Burgos  Basin,  it is aware that PEMEX has constructed and is operating two
new  cryogenic  facilities  at  the  Burgos  Basin  which it believes may have a
capacity of producing up to 12 million gallons of LPG per month.  Rio Vista also
believes that PEMEX intends to install two additional cryogenic facilities, with
similar  capacity,  to  be operational in early 2006.  Rio Vista is not aware of
the  capacity  at  which  the  current  cryogenic facilities are being operated.
Furthermore,  Rio  Vista  is  not aware of the actual gas reserves of the Burgos
Basin  or  the  gas  quality,  each  of  which  could  significantly  impact LPG
production  amounts.  Rio  Vista  still  believes  that  its  LPG  supplies  are
competitive  with  the  necessary  U.S. imports of LPG by PEMEX and that the LPG
volumes  which  are  actually produced from the Burgos Basin would not eliminate
the  need  for  U.S. LPG imports by PEMEX and that LPG volumes produced from the
Burgos  Basin  would  be  more  economically  suited  for distribution to points
further  south  in  Mexico  rather  than  Rio  Vista's  strategic  zone.

     During  June 2004, Valero L.P., a U.S. limited partnership ("Valero") began
operation  of  a newly constructed LPG terminal facility in Nuevo Laredo, Mexico
and  a  newly  constructed  pipeline  connecting  the terminal facility in Nuevo
Laredo,  Mexico  to  existing  pipelines which connect directly to Valero Energy
Corporation's  Corpus Christi, Texas and Three Rivers, Texas refineries.  Valero
has contracted with PMI under a five year agreement to deliver approximately 6.3
million gallons (of which 3.2 million gallons were previously delivered by truck
from  Three  Rivers, Texas) of LPG per month.  Valero has also indicated that it
intends  to  increase  capacity  of  its  Nuevo  Laredo terminal to 10.1 million
gallons  per  month.  Rio  Vista  believes  that  if  Valero intends to maximize
capacity of these facilities, then Valero would be required to obtain additional
LPG  supplies  from  major  LPG hubs located in Corpus Christi and Mont Belvieu,
Texas.  Accordingly,  Rio  Vista  believes  that  any  additional  supplies over
amounts  currently available to the Mexican market through Valero's system could
be  more  expensive  than  Rio Vista's currently available supplies and delivery
systems.

     During  2004, a pipeline operated by El Paso Energy between Corpus Christi,
Texas  and  Hidalgo County, Texas was closed.  Historically these facilities had
supplied  approximately  5.0  million  gallons  of  LPG per month to Rio Vista's
strategic  zone.  Rio  Vista  is  not  aware  of  any  future  plans  for  these
facilities.

     During  2003,  PMI  constructed  and began operations of a refined products
cross  border  pipeline  connecting  a  pipeline  running from PEMEX's Cadereyta
Refinery  in  Monterey, Mexico to terminal facilities operated by Transmontagne,
Inc.,  in  Brownsville,  Texas.   Transmontagne  is  a  U.S.  corporation.  The
pipeline crosses the U.S.-Mexico border near the proximity of Rio Vista's U.S. -
Mexico  Pipelines.  In  connection  with  the  construction of the pipeline, PMI
utilizes an easement from Rio Vista for an approximate 21.67 acre portion of the
pipeline.  Under  the  terms of the easement, PMI has warranted that it will not
transport  LPG  through  October  15,  2017.


                                       26
<PAGE>
RESULTS  OF  OPERATIONS

     THREE  MONTHS ENDED MARCH 31, 2005 COMPARED WITH PENN OCTANE'S SALES TO PMI
FOR  THE  THREE  MONTHS  ENDED  MARCH  31,  2004.

     Revenues.  Revenues  for  the three months ended March 31, 2005, were $28.6
million compared with $43.4 million for the comparative period one year earlier,
a  decrease  of  $14.8  million  or  34.2%.  Of this decrease, $22.0 million was
attributable  to  decreased  volumes  of LPG sold to PMI during the three months
ended March 31, 2005, partially offset by $7.0 million attributable to increases
in  average  sales prices of LPG sold to PMI during the three months ended March
31,  2005.

     Cost  of  goods  sold.  Cost of goods sold for the three months ended March
31,  2005 was $27.2 million.  The cost of goods sold for LPG purchased from Penn
Octane  was  determined  in  accordance with the LPG Supply Agreement.  Costs of
goods  sold  also  included  other  direct  costs  related  to  Rio  Vista's LPG
operations,  including  costs  associated  with  operating  the  Brownsville and
Matamoros  terminal  facilities.

     Selling,  general  and  administrative  expenses.  Selling,  general  and
administrative  expenses  were $1.0 million for the three months ended March 31,
2005.  These  costs were comprised of indirect selling general expenses directly
incurred  by  Rio  Vista  or allocated by Penn Octane to Rio Vista in accordance
with  the Omnibus Agreement.  Salary related costs allocated by Penn Octane were
based  on  the  percentage of time spent by those employees (including executive
officers) in performing Rio Vista related matters compared with the overall time
spent  working  by  those  employees.

     Other  income  (expense).  Other  income  (expense)  was $(119,000) for the
three months ended March 31, 2005 and is comprised of interest expense allocated
to  Rio  Vista  by  Penn  Octane  in connection with the RZB Credit Facility and
amortization  of  loan  discount  related  to  detachable  warrants.

     Mexican  Income  tax.   Rio  Vista  incurred  $1,000  of Mexican income tax
expense  related  to  its  Mexican  subsidiaries.

LIQUIDITY  AND  CAPITAL  RESOURCES

     General.  Rio  Vista  commenced  operations on October 1, 2004 and only had
nominal  cash  at  the  time  of the Spin-Off.  Rio Vista pays all of its direct
costs  and  expenses, and Rio Vista reimburses Penn Octane for cost and expenses
paid by Penn Octane on behalf of Rio Vista.  As discussed below, Rio Vista sells
LPG  to  PMI  and  purchases  the  LPG from Penn Octane.  Rio Vista's LPG Supply
Agreement  with  Penn Octane provides that it pays Penn Octane for LPG purchased
upon receipt of the proceeds from sales to PMI.  Rio Vista intends to distribute
any  "available  cash"  as  defined  in  the  Agreement  to its unitholders on a
quarterly  basis.

     Dependency on Penn Octane.  Rio Vista is dependent on Penn Octane's ability
to  deliver  adequate quantities of LPG at an acceptable price for ultimate sale
to  PMI,  to  provide  credit  to  Rio  Vista  for such purchases and to provide
management of its operations.  In addition, substantially all of Rio Vista's and
Penn  Octane's  assets  are  pledged or committed to be pledged as collateral on
$1.8  million  of  Penn  Octane's  existing debt and the RZB Credit Facility and
therefore,  both  Rio  Vista  and  Penn Octane maybe unable to obtain additional
financing  collateralized  by  those  assets.


                                       27
<PAGE>
     Guarantees and Assets Pledged on Certain of Penn Octane's Obligations.  Rio
Vista  has agreed to guarantee certain of Penn Octane's obligations to creditors
and all of Rio Vista's assets are pledged as collateral for those obligations of
Penn  Octane  to such creditors.  In addition, Rio Vista has agreed to indemnify
Penn  Octane  for a period of three years from the fiscal year end that includes
the  date  of the Spin-Off for any federal income tax liabilities resulting from
the  Spin-Off  in excess of $2.5 million.  Consequently, Rio Vista may be unable
to  obtain  financing  using  these pledged assets as collateral and Rio Vista's
inability  to borrow on these assets may adversely affect Rio Vista's results of
operations  and ability to make distributions to its unitholders.  Rio Vista may
also  be  prohibited  from  making  any distributions to unitholders if it would
cause  an  event  of  default, or if an event of default is existing, under Penn
Octane's  revolving  credit  facilities,  or  any other covenant which may exist
under  any other credit arrangement or other regulatory requirement at the time.

     The  following  table  reflects cash flows for the three months ended March
31,  2004  and  2005.  All  information  is  in  thousands.

<TABLE>
<CAPTION>
                                                 2004          2005
                                             ------------  ------------
<S>                                          <C>           <C>
Net cash provided by (used in) operating
activities                                   $         -   $(    2,553)

Net cash used in investing activities                  -    (        8)

Net cash provided by (used in) in financing
activities                                             -         2,574
                                             ------------  ------------

Net increase in cash                         $         -   $        13
                                             ============  ============
</TABLE>

     The  following  is  a  discussion  of  the  guaranteed  obligations:

   RZB  OBLIGATION

     Rio  Vista's LPG purchases are financed entirely by Penn Octane through its
credit  facility  with  RZB  Finance,  LLC  ("RZB").  As of March 31, 2005, Penn
Octane had a $20.0 million credit facility with RZB for demand loans and standby
letters of credit (the "RZB Credit Facility") to finance Penn Octane's purchases
of  LPG  and  gasoline and diesel fuel ("Fuel Products") in connection with Penn
Octane's  fuel  sales  business.  The  RZB  Credit  facility  is  an uncommitted
facility  under  which  the letters of credit have an expiration date of no more
than 90 days and the facility is reviewed annually at March 31.   As a result of
the  financing  provided  to  Rio  Vista by Penn Octane, Rio Vista has agreed to
guarantee Penn Octane's obligations with respect to the RZB Credit Facility.  In
connection  with Rio Vista's guaranty, Rio Vista granted RZB a security interest
and assignment in any and all of Rio Vista's accounts, inventory, real property,
buildings,  pipelines,  fixtures  and  interests  therein  or  relating thereto,
including,  without  limitation,  the  lease  with  the  Brownsville  Navigation
District  of  Cameron  County  for  the  land  on  which Rio Vista's Brownsville
Terminal  Facility  is  located,  and has entered into leasehold deeds of trust,
security  agreements,  financing  statements and assignments of rent.  Under the
RZB  Credit  Facility,  Rio  Vista  may not permit to exist any subsequent lien,
security interest, mortgage, charge or other encumbrance of any nature on any of
its  properties  or  assets, except in favor of RZB, without the consent of RZB.
In  connection  with  the  LPG  Supply Agreement, Penn Octane and Rio Vista have
agreed  to  share  the  financing costs related to Penn Octane's purchase of LPG
under  the  RZB  Credit  Facility.


                                       28
<PAGE>
     Under  the  RZB  Credit Facility, Penn Octane is required to pay a fee with
respect to each letter of credit thereunder in an amount equal to the greater of
(i)  $500,  (ii)  2.5%  of  the maximum face amount of such letter of credit, or
(iii)  such  higher amount as may be agreed to between Penn Octane and RZB.  Any
loan  amounts outstanding under the RZB Credit Facility shall accrue interest at
a  rate equal to the rate announced by the JPMorgan Chase Bank as its prime rate
(5.75%  at  March 31, 2005) plus 2.5%.  Pursuant to the RZB Credit Facility, RZB
has  sole and absolute discretion to limit or terminate its participation in the
RZB Credit Facility at any time, and to refrain from making any loans or issuing
any  letters  of credit thereunder.  RZB also has the right to demand payment of
any  and  all  amounts  outstanding  under  the RZB Credit Facility at any time.
Jerome B. Richter has personally guaranteed all of Penn Octane's and Rio Vista's
payment  obligations  with  respect  to  the  RZB  Credit  Facility.

     Under the terms of the RZB Credit Facility, either Penn Octane or Rio Vista
is  required  to  maintain  net  worth  of  a  minimum  of  $10.0  million.

     Under  the  terms of the RZB Credit Facility, all cash from Rio Vista's LPG
sales  is  deposited directly into a restricted cash account under the direction
of  RZB  to pay down all obligations of Penn Octane arising under the RZB Credit
Facility.  Accordingly, Rio Vista only receives net proceeds from the restricted
cash  account  when  the  amounts  of collateral provided by Penn Octane and Rio
Vista  exceed  all  liabilities  under  outstanding  letters of credit issued on
behalf  of Penn Octane, at the sole discretion of RZB.  Historically RZB has not
unduly  withheld  net  proceeds  from Penn Octane, and Rio Vista does not expect
that  RZB will unduly withhold net proceeds from Rio Vista.  Upon the release of
Rio  Vista's net proceeds from Rio Vista's restricted cash account, Rio Vista is
then  required  to  pay  any  remaining amounts due Penn Octane, if any, for the
supply  of  LPG  and  other  allocated  or  direct  expenses.

     LPG  financing  expense  allocated to Rio Vista from Penn Octane associated
with  the  RZB Credit Facility totaled $61,242  for the three months ended March
31,  2005.

     Penn  Octane  may  need  to  increase  its credit facility for increases in
quantities  of  LPG  and  Fuel Products purchased and/or to finance future price
increases  of  LPG and Fuel Products.  Rio Vista relies on Penn Octane's ability
to  allocate  credit limits under the RZB Credit Facility to purchase quantities
of  LPG.  However there can be no assurance that Penn Octane will have available
and/or  continue  to  provide  sufficient credit limits for Rio Vista's required
purchases  of  LPG.

   LONG-TERM  DEBT

     Long-term  debt of Penn Octane guaranteed by Rio Vista and on which certain
of  its assets are pledged totaled $1.8 million at March 31, 2005.  This debt is
due  on December 15, 2005.  Interest is payable quarterly at a rate of 16.5% per
annum.

   OBLIGATIONS  AND  ASSETS  PLEDGED

     The  dollar  amounts  of Penn Octane obligations which Rio Vista guarantees
and/or for which Rio Vista's assets are pledged total $18.4 million at March 31,
2005, based on Penn Octane's most recently filed Quarterly Report on  Form 10-Q,
and  the  unaudited  amounts  were  as  follows  (in  millions):

<TABLE>
<CAPTION>
<S>                                                             <C>
          LPG and fuel products trade payables                  $ 7.3
          Total debt, net of discount                           $ 1.6
          Lines of credit                                       $ 5.8
          Letters of credit in excess of LPG and fuel products
            trade payables                                      $ 3.7
</TABLE>

     Consolidated  current  assets  of Penn Octane, which includes assets of Rio
Vista,  pledged in favor of Penn Octane's credit facility and certain other debt
total  $33.7 million at March 31, 2005 and the unaudited amounts were as follows
(in  millions):

<TABLE>
<CAPTION>
<S>                                                             <C>
          Accounts receivable                                   $11.1
          Restricted cash                                       $ 4.7
          Inventory                                             $ 2.1
          Property, plant and equipment, net                    $15.8
</TABLE>


                                       29
<PAGE>
     Rio  Vista's  assets  that are included in the above amounts are as follows
     (in  millions):

<TABLE>
<CAPTION>
<S>                                                             <C>
          Accounts receivable                                   $ 6.7
          Restricted cash                                       $  .9
          Inventory                                             $  .2
          Property, plant and equipment, net                    $14.1
</TABLE>

     The  following  is  a  summary of Rio Vista's estimated minimum contractual
     obligations  as  of  March  31,  2005.

<TABLE>
<CAPTION>
                                                       PAYMENTS DUE BY PERIOD
                                                       (AMOUNTS IN MILLIONS)
                                        ---------------------------------------------------
                                                Less than     1 - 3      4 - 5      After
Contractual Obligations                 Total     1 Year      Years      Years     5 Years
--------------------------------------  ------  ----------  ---------  ---------  ---------
<S>                                     <C>     <C>         <C>        <C>        <C>
Long-Term Debt Obligations              $    -  $        -  $       -  $       -  $       -
Operating Leases                            .2          .1         .1          -          -
LPG Purchase Obligations                     -           -          -          -          -
Other Long-Term Obligations                  -           -          -          -          -
                                        ------  ----------  ---------  ---------  ---------
    Total Contractual Cash Obligations  $   .2  $       .1  $      .1  $       -  $       -
                                        ======  ==========  =========  =========  =========
</TABLE>

The  following  is  a  summary  of  Rio  Vista's  estimated  minimum  commercial
obligations  as  of  March  31, 2005, based on Penn Octane's most recently filed
Quarterly  Report  on  Form  10-Q  as  of  March  31,  2005.

<TABLE>
<CAPTION>
                                                 AMOUNT OF COMMITMENT EXPIRATION
                                                            PER PERIOD
                                                       (AMOUNTS IN MILLIONS)
                                  ---------------------------------------------------------------
Commercial                        Total Amounts   Less than     1 - 3       4 - 5        Over
  Commitments                       Committed       1 Year      Years       Years       5 Years
--------------------------------  --------------  ----------  ----------  ----------  -----------
<S>                               <C>             <C>         <C>         <C>         <C>
Lines of Credit                   $            -  $        -  $        -  $        -  $         -
Standby Letters of Credit                      -           -           -           -            -
Guarantees                                  18.4        18.3          .1           -            -
Standby Repurchase Obligations               N/A         N/A         N/A         N/A          N/A
Other Commercial Commitments                 N/A         N/A         N/A         N/A          N/A
                                  --------------  ----------  ----------  ----------  -----------
    Total Commercial Commitments  $         18.4  $     18.3  $       .1  $        -  $         -
                                  ==============  ==========  ==========  ==========  ===========
</TABLE>

     If  Penn Octane's cash flow from operations is not adequate to satisfy such
payment  of  liabilities and obligations and/or tax liabilities when due and Rio
Vista  is unable to satisfy its guarantees and/or tax indemnification agreement,
Penn  Octane  and/or  Rio Vista may be required to pursue additional debt and/or
equity  financing.  In  such  event,  Penn  Octane's  management and the General
Partner do not believe that Penn Octane and/or Rio Vista would be able to obtain
such  financing  from traditional commercial lenders.  In addition, there can be
no  assurance  that  such  additional  financing  will  be  available  on  terms
attractive  to  Penn Octane and/or Rio Vista or at all.  If additional financing
is  available through the sale of Penn Octane's and/or Rio Vista's equity and/or
other  securities  convertible  into equity securities through public or private
financings, substantial and immediate dilution may occur.  There is no assurance
that  Rio  Vista  would  be  able to raise any additional capital if needed.  If
additional  financing  cannot be accomplished and Rio Vista is unable to pay its
liabilities  and obligations when due or to restructure certain of Penn Octane's
liabilities  and obligations, Rio Vista may suffer material adverse consequences
to  its  business, financial condition and results of operations and Penn Octane
and/or  Rio  Vista  would  likely  be  required to seek other alternatives which
include the sale of assets, closure of operations up to and including protection
under  the  U.S.  bankruptcy  laws.


                                       30
<PAGE>
     Income  Taxes.   Rio Vista has agreed to indemnify Penn Octane for a period
of  three  years from the fiscal year end that includes the date of the Spin-Off
for  any federal income tax liabilities resulting from the Spin-Off in excess of
$2.5 million.   Penn Octane does not believe that it has a federal income tax in
connection  with  the Spin-Off in excess of $2.5 million.  However, the Internal
Revenue  Service (the "IRS") may review Penn Octane's federal income tax returns
and  challenge  positions  that  it  may  take  with  respect  to  the Spin-Off.

     Partnership  Tax Treatment.  Rio Vista is not a taxable entity for U.S. tax
purposes  (see  below)  and  incurs  no  U.S. federal income tax liability.  Rio
Vista's  Mexican  subsidiaries are taxed on their income directly by the Mexican
government.   The  income/loss  of Rio Vista's Mexican subsidiaries are included
in  the  U.S.  partnership  income  tax return of Rio Vista.  The holders of the
common  units  and  General  Partner  interest  will  be  entitled  to  their
proportionate  share  of any tax credits resulting from any income taxes paid to
the  Mexican government.   Each unitholder of Rio Vista is required to take into
account  that unitholder's share of items of income, gain, loss and deduction of
Rio  Vista  in computing that unitholder's federal income tax liability, even if
no  cash  distributions are made to the unitholder by Rio Vista.   Distributions
by Rio Vista to a unitholder are generally not taxable unless the amount of cash
distributed  is  in  excess of the unitholder's adjusted tax basis in Rio Vista.

     Section  7704  of  the  Internal Revenue Code (Code) provides that publicly
traded  partnerships  shall, as a general rule, be taxed as corporations despite
the  fact that they are not classified as corporations under Section 7701 of the
Code.  Section 7704 of the Code provides an exception to this general rule for a
publicly traded partnership if 90% or more of its gross income for every taxable
year  consists  of "qualifying income" (the "Qualifying Income Exception").  For
purposes  of  this  exception,  "qualifying  income"  includes  income and gains
derived  from  the  exploration,  development, mining or production, processing,
refining,  transportation  (including  pipelines) or marketing of any mineral or
natural  resource.  Other  types  of "qualifying income" include interest (other
than  from  a  financial business or interest based on profits of the borrower),
dividends,  real property rents, gains from the sale of real property, including
real  property  held  by  one  considered to be a "dealer" in such property, and
gains  from  the  sale  or  other  disposition  of  capital  assets held for the
production  of  income  that  otherwise  constitutes  "qualifying  income".

     No  ruling  has been or will be sought from the IRS and the IRS has made no
determination  as  to  Rio  Vista's  classification as a partnership for federal
income  tax purposes or whether Rio Vista's operations generate a minimum of 90%
of  "qualifying  income"  under  Section  7704  of  the  Code.

     If Rio Vista was classified as a corporation in any taxable year, either as
a  result of a failure to meet the Qualifying Income Exception or otherwise, Rio
Vista's items of income, gain, loss and deduction would be reflected only on Rio
Vista's  tax return rather than being passed through to Rio Vista's unitholders,
and  Rio  Vista's  net  income  would  be  taxed  at  corporate  rates.

     If  Rio Vista was treated as a corporation for federal income tax purposes,
Rio  Vista  would  pay  tax  on  income at corporate rates, which is currently a
maximum  of 35%.  Distributions to unitholders would generally be taxed again as
corporate  distributions, and no income, gains, losses, or deductions would flow
through  to the unitholders.  Because a tax would be imposed upon Rio Vista as a
corporation,  the  cash  available  for  distribution  to  unitholders  would be
substantially  reduced  and  Rio  Vista's  ability  to  make  minimum  quarterly
distributions  would  be  impaired.  Consequently,  treatment  of Rio Vista as a
corporation  would  result  in a material reduction in the anticipated cash flow
and  after-tax  return  to  unitholders  and  therefore would likely result in a
substantial  reduction  in  the  value  of  Rio  Vista's  common  units.

     Current  law  may  change  so  as  to  cause  Rio  Vista to be taxable as a
corporation  for  federal  income tax purposes or otherwise subject Rio Vista to
entity-level  taxation.  The  Agreement  provides  that,  if a law is enacted or
existing  law  is modified or interpreted in a manner that subjects Rio Vista to
taxation  as  a  corporation  or  otherwise  subjects  Rio Vista to entity-level
taxation  for  federal,  state  or  local  income tax purposes, then the minimum
quarterly  distribution  amount  and  the  target  distribution  amount  will be
adjusted  downward  to  reflect  the  impact  of  that  law  on  Rio  Vista.


                                       31
<PAGE>
     Distributions of Available Cash.  All unitholders have the right to receive
distributions  of "available cash" as defined in the Agreement from Rio Vista in
an  amount equal to the minimum distribution of $0.25 per quarter per unit, plus
any arrearages in the payment of the minimum quarterly distribution on the units
from prior quarters.   The General Partner receives a distribution corresponding
to  its  2%  General  Partnership Interest.  The distributions are to be paid 45
days  after  the end of each calendar quarter.  However, Rio Vista is prohibited
from  making  any  distributions  to  unitholders  if it would cause an event of
default, or an event of default is existing, under any obligation of Penn Octane
which  Rio  Vista  has  guaranteed  (see  note  J  to the consolidated financial
statements).

     Cash  distributions  from Rio Vista are shared by the holders of the common
units  and the General Partner interest as described in the Agreement based on a
formula  whereby  the  General  Partner  will  receive  disproportionately  more
distributions  per  unit  than  the  holders  of the common units as annual cash
distributions  exceed  certain  milestones.

     On  February  14,  2005,  Rio  Vista  made a cash distribution of $487,000.

     On  April 21, 2005, the board of managers of Rio Vista approved the payment
of  a $0.25 cash distribution per unit to all Rio Vista common unitholders and a
corresponding  distribution  to the General Partner as of the record date of May
9,  2005.  The  distribution of $487,000 was paid on May 13, 2005 (see note L to
the  unaudited  consolidated  financial  statements).

     Rio  Vista's  ability to make distributions may be impacted by sales to PMI
at  acceptable  volumes  and  margins,  payments  on  its  guarantees, costs and
expenses and the inability to obtain additional financing on its pledged assets.
Although  Penn  Octane  is not required to do so, to the extent that Penn Octane
has  sufficient  cash  to do so, it intends to lend amounts to Rio Vista to meet
the  minimum  distributions.  If  Rio  Vista's  revenues  and  other  sources of
liquidity  after  its  quarterly  distributions are not adequate to satisfy such
payment  obligations  of  Penn  Octane  and/or  Penn  Octane  does  not have the
necessary  cash  to  loan  to  Rio Vista, Rio Vista may be required to reduce or
eliminate  the  quarterly distributions to unitholders and/or Penn Octane and/or
Rio Vista may be required to raise additional funds to avoid foreclosure against
its  assets.  However,  there  can  be no assurance that such additional funding
will  be  available  on  terms  attractive to either Penn Octane or Rio Vista or
available  at  all.

     The  following is a reconciliation of net income to distributable cash flow
for  the  three  months  ended  December  31,  2004  and  March  31,  2005.

<TABLE>
<CAPTION>
                                                                       Three Months Ended
                                                         --------------------------------------------
                                                             December 31,
                                                                  2004              March 31, 2005
                                                         ----------------------  --------------------
<S>                                                      <C>                     <C>
Net income (loss)                                        $(             63,000)  $           172,000
  Plus interest and other expense, net                                 101,000               119,000
  Plus depreciation and amortization                                   178,000               205,000
  Plus other non-cash expenses                                         344,000                     -
                                                         ----------------------  --------------------
EBITDA                                                                 560,000               496,000
Less cash interest, net                                   (            101,000)   (           61,000)
                                                         ----------------------  --------------------
Distributable cash flow                                                459,000               435,000
Distributable cash flow applicable to general partner                   (9,000)   (            9,000)
                                                         ----------------------  --------------------
Distributable cash flow applicable to limited partners   $             450,000   $           426,000
                                                         ======================  ====================
</TABLE>

     Rio  Vista  utilizes  two financial measures, EBITDA and distributable cash
flow,  which  are not defined in GAAP.  Management uses these financial measures
because  they  are  widely  accepted  financial  indicators used by investors to
compare  partnership  performance.  In  addition, management believes that these
measures  provide investors an enhanced perspective of the operating performance
of  Rio  Vista's  assets  and the cash flow the business is generating.  Neither
EBITDA  nor distributable cash flow are intended to represent cash flows for the
period, nor are they presented as an alternative to net income.  They should not
be  considered  in  isolation  or  as  substitutes  for a measure of performance
prepared  in  accordance  with  GAAP.

     Increased  expenses.  As a result of the Spin-Off, Rio Vista estimates that
operating expenses will increase by approximately $450,000 on an annual basis as
a  result  of additional public company and income tax preparation costs related
to  Rio  Vista.


                                       32
<PAGE>
     Sales  to  PMI.  Prior  to  the  Spin-Off,  during the period April 1, 2004
through  September 30, 2004, Penn Octane entered into monthly agreements for the
sale  of  LPG.   On  March 31, 2004, Penn Octane's sales agreement with PMI (the
"Contract")  expired.   During the months of October 2004 through December 2004,
Rio Vista and PMI entered into monthly agreements for the sale of LPG  ("Monthly
2004  Contracts").

     During  December  2004,  Rio  Vista  and  PMI  entered  into  a three month
agreement  for  the  period  January  1,  2005  to  March  31,  2005 ("Quarterly
Agreement")  at margins lower than those in effect during 2004.  For April 2005,
Rio  Vista  entered  into  a  one  month  agreement  with PMI at further reduced
margins.  On  May  5,  2005,  Rio Vista entered into a contract with PMI for the
sale of a minimum of 6,000,000 gallons of LPG  for the period May 5, 2005 to May
31,  2005  at  the reduced margin received in April 2005.  For the period May 1,
2005  to  May  4,  2005,  PMI  did  not  purchase  any  LPG  from  Rio  Vista.

     The  following  table  describes  the  minimum monthly volumes of LPG to be
purchased  by  PMI and the actual monthly volumes purchased by PMI under monthly
contracts  from April 1, 2004 through December 31, 2004, the Quarterly Agreement
and  contracts  for  April  and  May  2005:

<TABLE>
<CAPTION>
                      MINIMUM         ACTUAL
                      CONTRACT       VOLUMES
                      VOLUMES          SOLD
                   (IN MILLIONS   (IN MILLIONS
MONTH (*)   YEAR    OF GALLONS)    OF GALLONS)
----------  ----  --------------  -------------
<S>         <C>   <C>             <C>
April       2004            13.0           13.1
May         2004            13.0           13.4
June        2004            13.0           13.8
July        2004            11.7           12.3
August      2004            11.7           12.4
September   2004            11.7           11.8
October     2004            11.1           10.9
November    2004            11.1           12.4
December    2004            11.7           13.9
January     2005            11.7           12.7
February    2005            11.7            9.9
March       2005            11.1            9.6
April       2005            10.5           10.8
May         2005             6.0              *
</TABLE>

   * Not yet available


     The  shortfall  for  the  month  of  February 2005 was attributable to Penn
Octane,  not  having a sufficient supply of LPG to meet minimum contract volume.
The shortfall for the month of March 2005 was attributable to PMI not purchasing
the  minimum  contract  volume.   In  accordance  with  the Quarterly Agreement,
PMI  paid  approximately  $104,000  representing the total amount due associated
with  the  shortfall  volumes  for  March  2005.

     If  the  actual  volume  sold in May 2005 approximates the minimum contract
volume,  cash  flows for May 2005 will be less than expected  cash operating and
other  expenses  by  approximately  $150,000.  Rio Vista intends to take certain
measures  to reduce cash operating and other expenses immediately.  There can be
no  assurance  that  costs  and expenses can be reduced sufficiently to mitigate
negative  cash  flows  at  such  reduced  volumes  at  current or lower margins.

     Rio  Vista  continues  to  negotiate a new long-term LPG contract with PMI.
There  is no assurance that a LPG contract with PMI will be obtained, and if so,
that the terms will be more or less favorable than prior agreements.   Until the
terms  of  a new long-term contract are reached, Rio Vista expects to enter into
additional  monthly  agreements  similar  to  the  Quarterly  Agreement.


                                       33
<PAGE>
     Rio  Vista's management believes that PMI's reduction of volume commitments
for  April  2004 through May 2005 is based on additional LPG production by PEMEX
being  generated  from the Burgos Basin field in Reynosa, Mexico, an area within
the  proximity  of  Rio  Vista's  Matamoros  Terminal  Facility  and  increased
competition  from  U.S.  suppliers  (see Recent Trends above).  In the event the
volume  of LPG purchased by PMI under future agreements decline below an average
of  approximately  11  million  gallons  per  month  and/or  margins are further
reduced,  Rio  Vista  may  suffer material adverse consequences to its business,
financial condition and results of operations. If Penn Octane is unsuccessful in
lowering  its  LPG  costs and  to offset a decline in volume and/or Rio Vista is
forced  to  accept  similar  or  lower  margins for sales to PMI, the results of
operations  of  Rio  Vista  may  be adversely affected.   Rio Vista may not have
sufficient  cash  flow  or  available  credit to absorb such reductions in gross
profit.

     PMI  has  primarily  used  the  Matamoros  Terminal  Facility  to  load LPG
purchased  from Penn Octane prior to the Spin-Off and from Rio Vista, subsequent
thereto,  for  distribution  by truck in Mexico.  Rio Vista will continue to use
the Brownsville Terminal Facility in connection with LPG delivered by railcar to
other  customers,  storage  and  as  an  alternative  terminal  in the event the
Matamoros  Terminal  Facility  cannot  be  used.

     Seasonality.  Rio Vista's gross profit will be dependent on sales volume of
LPG  to  PMI, which fluctuates in part based on the seasons.  The demand for LPG
is  strongest  during  the  winter  season.

     LPG  Supply Agreement.    Penn Octane entered into the LPG Supply Agreement
with Rio Vista pursuant to which Rio Vista has agreed to purchase all of its LPG
requirements for sales which utilize the assets transferred to Rio Vista by Penn
Octane  to  the extent Penn Octane is able to supply such LPG requirements.  The
LPG  Supply  Agreement  further  provides  that  Rio  Vista has no obligation to
purchase  LPG from Penn Octane to the extent the distribution of such LPG to Rio
Vista's  customers  would  not  require the use of any of the assets Penn Octane
contributed  to  Rio Vista or Penn Octane ceases to have the right to access the
Leased  Pipeline.

     Under the LPG Supply Agreement, Penn Octane supplies all of Rio Vista's LPG
requirements in connection with its LPG sales obligations to PMI.  The purchases
of the LPG are at fluctuating prices and are determined based on the cost of LPG
under  Penn  Octane's  agreements with its LPG suppliers for volumes sold to Rio
Vista  for  sale  to  PMI  or  to  other Rio Vista customers, other direct costs
related  to  PMI  and other LPG sales of Rio Vista and a formula that takes into
consideration  operating  costs  of Penn Octane and Rio Vista. Rio Vista expects
the aggregate costs per gallon to purchase LPG (less any applicable adjustments)
to be below the aggregate sales prices per gallon of LPG sold to PMI.  Rio Vista
believes  that  its  LPG  Supply  Agreement with Penn Octane provides it with an
advantage  over  competitors  in the supply of LPG to PMI based on Penn Octane's
adequate  volumes  and  price  provided  for  in  its  agreements  with  its LPG
suppliers, and Penn Octane's Leased Pipeline which takes the LPG directly to Rio
Vista's  Brownsville  Terminal  Facility  from  those  suppliers.   The  Leased
Pipeline's  capacity  is  estimated  to be between 25.0 million and 30.0 million
gallons  per  month.

     Under  the  terms  of  the  Exxon Supply Contract, Penn Octane must provide
letters  of  credit in amounts equal to the cost of the product to be purchased.
In  addition,  the  cost  of  the  product purchased is tied directly to overall
market  conditions.  As  a  result,  Penn  Octane's  existing  letter  of credit
facility may not be adequate to meet the letter of credit requirements under the
Exxon Supply Contract or other suppliers if there are increases in quantities of
LPG  purchased  and/or  to  finance  future  price  increases  of  LPG.

     The  LPG  Supply  Agreement  terminates  on  the  earlier  to  occur  of:

          -    Penn  Octane  ceases  to  have  the  right  to  access the Leased
               Pipeline  that  connects  to  Rio  Vista's  Brownsville  Terminal
               Facility;  and
          -    Rio  Vista ceases to sell LPG using any of the assets contributed
               by  Penn  Octane  to  Rio  Vista  pursuant  to  the  Spin-Off.


                                       34
<PAGE>
     Mexican  Operations.  Under  current  Mexican  law,  foreign  ownership  of
Mexican  entities  involved  in  the  distribution  of  LPG  or the operation of
receiving,  conveying,  storing and delivering LPG to final users is prohibited.
Foreign  ownership  is  permitted  in  the  transportation  and  storage of LPG.
Mexican  law  also provides that an entity with a permit to transport LPG is not
permitted  to  obtain  permits  for the other defined LPG activities (storage or
distribution).  PennMex  has a transportation permit and Termatsal owns, leases,
or  is  in  the  process  of  obtaining  the  land  or rights of way used in the
construction  of  the  Mexican  portion of the US-Mexico Pipelines, and owns the
Mexican  portion  of  the  assets  comprising  the  US-Mexico  Pipelines and the
Matamoros  Terminal  Facility.  Rio  Vista's  consolidated  Mexican  affiliate,
Tergas,  S.  de  R.L. de C.V. ("Tergas"), has been granted the permit to operate
the  Matamoros  Terminal  Facility  and  Rio  Vista  relies on Tergas' permit to
continue its delivery of LPG at the Matamoros Terminal Facility.  Rio Vista pays
Tergas  its  actual  cost  for  distribution  services at the Matamoros Terminal
Facility  plus  a  small  profit.

     Through  Rio Vista's operations in Mexico and the operations of the Mexican
subsidiaries  and  Tergas, Rio Vista is subject to the tax laws of Mexico which,
among  other  things, require that Rio Vista comply with transfer pricing rules,
the  payment  of  income,  asset  and  ad  valorem  taxes, and possibly taxes on
distributions  in  excess  of  earnings.  In  addition, distributions to foreign
entities,  including  dividends  and interest payments may be subject to Mexican
withholding  taxes.

     During  July 2003, Penn Octane acquired an option to purchase Tergas, which
is  95%  owned by Vicente Soriano, an employee of Penn Octane, and the remaining
balance  owned  by  Abelardo  Mier,  a consultant of  Penn Octane, for a nominal
price  of  approximately  $5,000.   The  option  was transferred to Rio Vista on
September  30,  2004.

     Deregulation of the LPG Industry in Mexico.  The Mexican petroleum industry
is  governed by the Ley Reglarmentaria del Articulo 27 Constitutional en el Ramo
del  Petroleo  (the  Regulatory Law to Article 27 of the Constitution of Mexico
concerning  Petroleum Affairs (the "Regulatory Law")), Reglamento de Gas Licuado
de  Petroleo  (Regulation  of  LPG)  and  Ley Org nica del Petr leos Mexicanos y
Organismos  Subsidiarios  (the Organic Law of Petroleos Mexicanos and Subsidiary
Entities (the "Organic Law")).  Under Mexican law and related regulations, PEMEX
is  entrusted with the central planning and the strategic management of Mexico's
petroleum  industry, including importation, sales and transportation of LPG.  In
carrying  out  this  role,  PEMEX  controls  pricing and distribution of various
petrochemical  products,  including  LPG.

     Beginning  in  1995,  as  part  of  a  national  privatization program, the
Regulatory  Law  was  amended to permit private entities to transport, store and
distribute  natural gas with the approval of the Ministry of Energy.  As part of
this  national  privatization  program,  the  Mexican  Government is expected to
deregulate the LPG market ("Deregulation").  In June 1999, the Regulation of LPG
was  enacted to permit foreign entities to participate without limitation in the
defined  LPG activities related to transportation and storage.  However, foreign
entities are prohibited from participating in the distribution of LPG in Mexico.
Upon  Deregulation,  Mexican  entities  will  be able to import LPG into Mexico.
Under  Mexican law, an entity with a permit to transport LPG is not permitted to
obtain  permits for the other defined LPG activities (storage and distribution).
Rio  Vista  expects  to sell LPG directly to independent Mexican distributors as
well  as  PMI  upon  Deregulation.  Rio  Vista  anticipates that the independent
Mexican  distributors  will be required to obtain authorization from the Mexican
government  for  the importation of LPG upon Deregulation prior to entering into
contracts  with  Rio  Vista.

     During  July  2001, the Mexican government announced that it would begin to
accept  applications  from  Mexican  companies  for  permits  to  allow  for the
importation  of  LPG  pursuant to provisions already provided for under existing
Mexican  law.

     In  connection  with  the above, in August 2001, Tergas received a one year
permit  from  the  Mexican government to import LPG.  During September 2001, the
Mexican government decided to delay the implementation of Deregulation and asked
Tergas  to defer use of the permit and as a result, Penn Octane did not sell LPG
to  distributors  other  than  PMI.  In March 2002, the Mexican government again
announced its intention to issue permits for free importation of LPG into Mexico
by  distributors  and others beginning August 2002, which was again delayed.  To
date  the  Mexican  government  has  continued  to  delay  implementation  of
Deregulation.  Tergas'  permit to import LPG expired during August 2002.  Tergas
intends  to  obtain  a  new  permit  when the Mexican government again begins to
accept  applications.  As a result of the foregoing, it is uncertain as to when,
if  ever,  Deregulation will actually occur and the effect, if any, it will have
on  Rio  Vista.  However, should Deregulation occur, it is Rio Vista's intention
to  sell  LPG  directly  to  distributors  in  Mexico  as  well  as  to  PMI.


                                       35
<PAGE>
     The  point  of sale for LPG which flows through the US-Mexico Pipelines for
delivery  to the Matamoros Terminal Facility is the United States-Mexico border.
For  LPG  delivered  into  Mexico,  PMI  is  the  importer  of  record.

     Partners'  Capital.  Rio  Vista's beginning capital was contributed by Penn
Octane  to  Rio  Vista's  operating partnership in the form of assets consisting
primarily  of  terminal  assets  located  in  Brownsville, Texas, and Matamoros,
Mexico,  as  well  as  the  pipelines connecting these terminal facilities.  The
contribution  to Rio Vista was recorded at Penn Octane's historical cost of such
assets  on  the  date  of  the  Spin-Off  ($14.6  million).

     COMMON  UNITS

     In  connection  with  the  Spin-Off on September 30, 2004, Rio Vista issued
1,910,656  common  units  to  the  holders  of  Penn  Octane  common  stock.

     The  common  units  represent  limited partner interests in Rio Vista.  The
holders of common units are entitled to participate in Rio Vista's distributions
and  exercise  the  rights or privileges available to limited partners under the
Agreement.  The  holders  of  common  units  have  only limited voting rights on
matters affecting Rio Vista.  Holders of common units have no right to elect the
General  Partner  or  its managers on an annual or other continuing basis.  Penn
Octane elects the managers of the General Partner.  Although the General Partner
has a fiduciary duty to manage Rio Vista in a manner beneficial to Rio Vista and
its  unitholders, the managers of the General Partner also have a fiduciary duty
to  manage  the  General  Partner  in a manner beneficial to Penn Octane and its
stockholders.  The  General Partner generally may not be removed except upon the
vote  of  the holders of at least 80% of the outstanding common units; provided,
however,  if at any time any person or group, other than the General Partner and
its  affiliates,  or a direct or subsequently approved transferee of the General
Partner  or  its affiliates, acquires, in the aggregate, beneficial ownership of
20%  or  more  of any class of units then outstanding, that person or group will
lose  voting  rights  on  all of its units and the units may not be voted on any
matter  and  will  not be considered to be outstanding when sending notices of a
meeting  of unitholders, calculating required votes, determining the presence of
a  quorum  or  for  other  similar  purposes.

     In  addition,  the  Agreement  contains  provisions limiting the ability of
holders  of  common  units  to call meetings or to acquire information about Rio
Vista's  operations,  as well as other provisions limiting the holders of common
units  ability  to  influence  the  manner  or  direction  of  management.

     GENERAL  PARTNER  INTEREST

     The  General Partner of Rio Vista owns a 2% general partner interest in Rio
Vista.  The General Partner is currently 100% owned by Penn Octane.  Penn Octane
has  granted  options  to  Jerome  B.  Richter  and to Shore Capital LLC ("Shore
Capital"),  an  affiliate  of Richard Shore, Jr., to purchase 50% of its general
partner  interest.  Following  the exercise of any of these options, Penn Octane
will  retain  voting  control  of  the  General  Partner  pursuant  to  a voting
agreement.

     The  General  Partner generally has unlimited liability for the obligations
of  Rio Vista, such as its debts and environmental liabilities, except for those
contractual obligations of Rio Vista that are expressly made without recourse to
the  General  Partner.

     OPTIONS  AND  WARRANTS

     Rio Vista has no U.S. employees and is managed by its General Partner.  Rio
Vista  applies  APB  25  for  warrants  granted to employees and managers of the
General  Partner  and SFAS 123 for warrants issued to acquire goods and services
from  non-employees.

     COMMON UNIT WARRANTS.  In connection with an employment agreement with Penn
Octane's  President,  Richard Shore, Jr., Shore Capital LLC, an affiliate of Mr.
Shore,  received  warrants  to  acquire 97,415 common units of Rio Vista with an
exercise price of $8.47 per common unit.  On October 1, 2004, Rio Vista recorded
approximately  $344,000  of  compensation  cost  related to these warrants.  The
warrants  are  exercisable  beginning  on October 1, 2004 and expire on July 10,
2006.


                                       36
<PAGE>
     On March 9, 2005, the board of managers of the General Partner approved the
Rio  Vista  2005 Equity Incentive Plan (the "2005 Plan").  The 2005 Plan permits
the  grant  of  common unit options, common unit appreciation rights, restricted
common unit and phantom common units to any person who is an employee (including
to  any  executive officer) or consultant of Rio Vista or the General Partner or
any  affiliate  of Rio Vista or the General Partner. The 2005 Plan provides that
each  outside  manager  of  the  General  Partner shall be granted a common unit
option  once  each fiscal year for not more than 5,000 common units, in an equal
amount  as  determined by the board of managers.  The aggregate number of common
units authorized for issuance as awards under the 2005 Plan is 750,000. The 2005
Plan shall remain available for the grant of awards until March 9, 2015, or such
earlier  date  as  the  board  of  managers  may  determine.  The  2005  Plan is
administered  by the compensation committee of the board of managers.  Under the
terms  of  the  Agreement  and  applicable  rules of the Nasdaq Stock Market, no
approval  by  the  common  unitholders  of  Rio  Vista  was  required.

     On March 9, 2005, the board of managers of the General Partner approved the
grant  of  options  to  purchase  a total of 108,750 common units under the 2005
Plan.  Of  the total number of options granted, 93,750 were granted to executive
officers  of  the  General  Partner  and  Mr.  Richter and 15,000 were issued to
outside  managers  of the General Partner. The exercise price for the options is
$12.51  per  common  unit, which is the average of the high and low sales prices
for  Rio  Vista  common units as reported by the Nasdaq Stock Market on March 9,
2005.  The  options  granted  to executive officers (including Mr. Richter) were
fully  vested on the date of grant. The options granted to outside managers vest
in equal monthly installments over a period of 12 months from the date of grant.
All  options  become fully exercisable upon a change in control event and expire
three years from the date of grant.

     LOAN DISCOUNT ON PENN OCTANE'S DEBT RELATED TO DETACHABLE WARRANTS.  During
January  2004,  in  connection  with  $1.8  million  of debt obligations of Penn
Octane,  Penn  Octane  agreed  to  issue, in the future, an aggregate of 110,250
warrants  to  purchase  Rio  Vista  common  units ("Rio Vista Warrants").    The
exercise  price  of the warrants was to be determined based on the amount of the
first  quarterly distribution paid by Rio Vista.  As a result of the approval of
the  payment  of  Rio  Vista's  first cash distribution on January 14, 2005 (see
below),  Rio  Vista  granted  the  immediately  exercisable  warrants  having an
exercise  price of $5.00 and recorded a discount of approximately $422,000 which
is  reflected  as  interest  expense  ratably  amortized  from the grant date of
January  14,  2005  to  December  15,  2005,  the  maturity  date  of  the  debt
obligations.   The  Rio  Vista  Warrants  will  expire  on  December  15,  2006.

     The  Spin-Off.  During September 2003, Penn Octane's board of directors and
the  independent committee of its board of directors formally approved the terms
of  the  Spin-Off  and Rio Vista filed a Form 10 registration statement with the
Securities and Exchange Commission.  On September 30, 2004, all of Penn Octane's
limited  partnership  interest  in  Rio  Vista  was distributed to Penn Octane's
stockholders.  Each  stockholder  of Penn Octane on September 30, 2004, received
one common unit of the limited partnership interest of Rio Vista for every eight
shares  of  Penn  Octane's  common  stock  owned.

     As  a  result  of  the  Spin-Off,  Rio  Vista  owns  and  operates the LPG,
distribution, transportation and marketing business previously conducted by Penn
Octane.  All  of  the  assets  transferred  to  Rio Vista in connection with the
Spin-Off  have  been  transferred  at  historical  costs and related accumulated
depreciation  of  Penn  Octane  at  the  date  of the Spin-Off.  Rio Vista began
selling  LPG  to  PMI  upon the completion of the Spin-Off and at that time also
began  purchasing  LPG  from  Penn  Octane  under  the  LPG  Supply  Agreement.

     The  General  Partner  is  responsible  for  managing  the  operations  and
activities  of  Rio  Vista.  Common  unitholders  do  not  participate  in  the
management  of  Rio  Vista.  Penn  Octane  controls  Rio  Vista by virtue of its
current  ownership,  management  and  voting  control  of  the  General Partner.
Therefore,  Rio  Vista  is  accounted  for  as a consolidated subsidiary of Penn
Octane  for  financial  accounting  purposes.

     INTERCOMPANY  PURCHASE  AGREEMENT  FOR  LPG

     Penn  Octane  entered into the LPG Supply Agreement with Rio Vista pursuant
to  which Rio Vista has agreed to purchase all of its LPG requirements for sales
which  utilize  the assets transferred to Rio Vista by Penn Octane to the extent
Penn  Octane  is  able to supply such LPG requirements (see LPG Supply Agreement
above).


                                       37
<PAGE>
     OMNIBUS  AGREEMENT

     In  connection  with  the  Spin-Off,  Penn  Octane  entered into an Omnibus
Agreement  with  Rio  Vista  that  governs,  among other things, indemnification
obligations  among the parties to the agreement, related party transactions, the
provision  of  general  administration  and  support  services  by  Penn Octane.

     The  Omnibus  Agreement prohibits Rio Vista from entering into any material
agreement with Penn Octane without the prior approval of the conflicts committee
of  the  board  of managers of the General Partner.  For purposes of the Omnibus
Agreement,  the  term  material agreements means any agreement between Rio Vista
and  Penn  Octane that requires aggregate annual payments in excess of $100,000.

     The  Omnibus  Agreement may be amended by written agreement of the parties;
provided,  however  that  it  may  not  be  amended  without the approval of the
conflicts  committee  of  the  General Partner if such amendment would adversely
affect  the unitholders of Rio Vista.  The Omnibus Agreement has an initial term
of  five  years  that  automatically  renews for successive five-year terms and,
other  than  the  indemnification  provisions, will terminate if Rio Vista is no
longer  an  affiliate  of  Penn  Octane.

     Realization  of  Assets.   Rio Vista's unaudited consolidated balance sheet
included  elsewhere  herein  has  been  prepared  in  conformity with accounting
principles generally accepted in the United States of America, which contemplate
continuation  of  Rio  Vista as a going concern.  Rio Vista is dependent on Penn
Octane's  ability  to  deliver adequate quantities of LPG at an acceptable price
for  ultimate sale to PMI, to provide credit to Rio Vista for such purchases and
to  provide management of its operations.  Currently, Rio Vista's only source of
revenue  is  from  sales  of  LPG  to PMI and it operates under short-term sales
agreements  with  PMI.  Since  April  1, 2004, through the date of the Spin-Off,
Penn  Octane had also been operating under short-term sales agreements with PMI.
The  monthly volumes of LPG sold by Penn Octane to PMI since April 1, 2004 up to
the  date  of  the  Spin-Off  were  materially  less  than  historical  levels.
Additionally  the  monthly volumes of LPG sold by Rio Vista to PMI since October
1,  2004 have also been materially less than Penn Octane's historical levels and
margins have declined in 2005.  As a result, Penn Octane's and Rio Vista's gross
profit  have  been materially reduced and may continue to decline and their cash
flow  and  available  credit  may  be  insufficient  to  absorb  such additional
reductions  in  gross  profit.

     Rio  Vista  has  guaranteed  certain  of  Penn  Octane's  obligations.
Substantially  all  of  Rio  Vista's  and  Penn  Octane's  assets are pledged or
committed  to be pledged as collateral on $1.8 million of Penn Octane's existing
debt  and the RZB Credit Facility, and therefore, both Rio Vista and Penn Octane
may  be  unable  to  obtain additional financing collateralized by those assets.
Penn  Octane's  Report  of  Independent  Certified  Public  Accountants  on  the
consolidated  financial  statements  of Penn Octane at July 31, 2004 contains an
explanatory paragraph which describes an uncertainty about Penn Octane's ability
to continue as a going concern.  If Penn Octane's and Rio Vista's cash flows are
not  adequate  to  pay  their  obligations,  Penn Octane and/or Rio Vista may be
required  to  raise  additional  funds  to  avoid  foreclosure  by Penn Octane's
creditors.   There  can  be  no  assurance  that such additional funding will be
available on terms attractive to either Penn Octane or Rio Vista or available at
all.  If  additional  amounts cannot be raised and cash flow is inadequate, Penn
Octane  and/or  Rio  Vista  would  likely be required to seek other alternatives
which  include  the  sale  of  assets, closure of operations up to and including
protection  under  the  U.S.  bankruptcy  laws.

     In  view  of  the  matters  described  in  the  preceding  paragraphs,
recoverability  of  the  recorded  asset  amounts shown in Rio Vista's unaudited
consolidated  balance  sheet  including  elsewhere herein, is dependent upon the
ability of Penn Octane to continue as a going concern and continued sales of LPG
to  PMI at acceptable volumes and margins to provide sufficient cash flow to pay
Rio  Vista's  expenses and guarantees of Penn Octane's obligations assuming Penn
Octane's  inability to pay such obligations.  The unaudited consolidated balance
sheet included elsewhere herein, does not include any adjustments related to the
recoverability  and  classification  of  recorded  asset  amounts or amounts and
classification of liabilities that might be necessary should Rio Vista be unable
to  continue  in  existence.

     To  provide Rio Vista with the ability it believes necessary to continue in
existence,  management  is  negotiating  with  PMI  to  increase  LPG  sales  at
acceptable  monthly  volumes  and  margins  on  a long-term basis.  In addition,
management  is  taking  steps  to  diversify  Rio  Vista's  operations to reduce
dependency  on  sales  of  LPG.


                                       38
<PAGE>
IMPACT OF INFLATION

     Inflation in the United States and Mexico has been relatively low in recent
years  and  did  not  have  a  material  impact  on  the  consolidated financial
statements  of  Rio  Vista.  However,  inflation  remains a factor in the United
States  and  Mexico  economies and could increase Rio Vista's cost to acquire or
replace  property,  plant  and  equipment as well as our labor and supply costs.

     Rio Vista may be adversely impacted as a result of increases in LPG prices,
which  are  related  to  oil  and  natural gas prices, because of limits on Penn
Octane's  credit  facility.

ENVIRONMENTAL MATTERS

     Rio  Vista's  operations  are subject to environmental laws and regulations
adopted  by various governmental authorities in the jurisdictions in which these
operations  are  conducted.  Under  the  Omnibus  Agreement,  Penn  Octane  will
indemnify  Rio Vista for five years after the completion of the Spin-Off against
certain  potential  environmental  liabilities  associated  with  the  assets it
contributed  to  Rio  Vista relating to events or conditions that existed before
the  completion  of  the  Spin-Off.

RECENTLY  ISSUED  FINANCIAL  ACCOUNTING  STANDARDS

     During  2004,  Rio  Vista  adopted  Financial  Accounting  Standards  Board
Interpretation  No.  46,  "Consolidation of Variable Entities" ("FIN 46"), which
was amended by FIN 46R.  This interpretation of Accounting Research Bulletin No.
51,  "Consolidated  Financial  Statements",  addresses consolidation by business
enterprises  of  variable  interest entities ("VIE") that do not have sufficient
equity investment at risk to permit the entity to finance its activities without
additional  subordinated financial support.  FIN 46R requires the beneficiary of
a  VIE  to  consolidate  in its financial statements the assets, liabilities and
results  of  operations of the VIE.  Tergas, an affiliate of Rio Vista, is a VIE
and  therefore,  its  assets,  liabilities  and  results of operations have been
included  in  the  accompanying  consolidated financial statements of Rio Vista.

     In  November  2004,  the  FASB  issued  Statement  of  Financial Accounting
Standard  No.  151,  "Inventory  Costs  -  An Amendment of ARB No. 43 Chapter 4"
("SFAS  151")  which  clarifies  that abnormal amounts of idle facility expense,
freight,  handling  costs  and  spoilage  should be expensed as incurred and not
included  in  overhead.  Further,  SFAS  151  requires  that allocation of fixed
production  overheads  to conversion costs should be based on normal capacity of
the  production  facilities.  The  provisions  in  SFAS  151  are  effective for
inventory costs incurred during fiscal years beginning after June 15, 2005.  Rio
Vista  has  determined  that  SFAS  151 will not have a material impact on their
consolidated  results  of  operations,  financial  position  or  cash  flows.

     During  December  2004,  the  Financial Accounting Standards Board ("FASB")
issued  Statement  of  Financial  Accounting  Standard  No.  123  (revised 2004)
"Share-Based  Payment"  ("SFAS 123R").  SFAS 123R replaces SFAS 123, "Accounting
for  Stock-Based  Compensation",  and supercedes APB Opinion 25, "Accounting for
Stock  Issued  to  Employees"  ("APB  25").  SFAS 123R requires that the cost of
share-based  payment  transactions  (including  those  with  employees  and
non-employees)  be  recognized in the financial statements as compensation cost.
That  cost  will  be  measured  based  on  the fair value of equity or liability
instrument  issued.    SFAS 123R is effective for Rio Vista beginning January 1,
2006.  Rio  Vista  will apply the modified prospective method as provided for in
SFAS  123R,  and therefore the financial statements of Rio Vista for interim and
annual  periods  prior  to  the  adoption  of  SFAS  123R  will  not reflect any
restatements.

     In  December  2004,  the  FASB  issued  Statement  of  Financial Accounting
Standard  No.  153, "Exchanges of Nonmonetary Assets-An Amendment of APB Opinion
No.  29"  ("SFAS  153").  The  amendments  made  by  SFAS  153  are based on the
principle  that  exchanges on nonmonetary assets should be measured based on the
fair  value  of  the assets exchanged.  The provisions in SFAS 153 are effective
for nonmonetary asset exchanges occurring in fiscal periods beginning after June
15,  2005.  Early application is permitted and companies must apply the standard
prospectively.  Rio  Vista has determined that SFAS 153 will not have a material
impact  on  their consolidated results of operations, financial position or cash
flows.


                                       39
<PAGE>
CRITICAL  ACCOUNTING  POLICIES

     The  consolidated  financial  statements of Rio Vista reflect the selection
and  application  of  accounting  policies  which  require  management  to  make
significant  estimates  and  judgments.  See note B to Rio Vista's  consolidated
financial  statements  included in its Annual Report on Form 10-K for the fiscal
year ended December 31, 2004, "Summary of Significant Accounting Policies".  Rio
Vista  believes that the following reflect the more critical accounting policies
that  affect  the  financial  position  and  results  of  operations.

     Revenue  recognition  - Rio Vista expects in the future to enter into sales
     agreements to sell LPG for future delivery. Rio Vista will not record sales
     until  the  LPG  is  delivered  to  the  customer.

     Impairment  of  long-lived assets - The determination of whether impairment
     has  occurred  is  based  on  an  estimate  of  undiscounted  cash  flows
     attributable  to  assets in future periods. If impairment has occurred, the
     amount  of  the impairment loss recognized will be determined by estimating
     the fair value of the assets and recording a loss if the fair value is less
     than  the  carrying  value.  Assessments  of  impairment  are  subject  to
     management's  judgments  and based on estimates that management is required
     to  make.

     Depreciation  and amortization expenses - Property, plant and equipment are
     carried  at  cost  less  accumulated  depreciation  and  amortization.
     Depreciation  and  amortization rates are based on management's estimate of
     the  future  utilization  and  useful  lives  of  the  assets.

     Unit-based  compensation  -  Rio Vista accounts for unit-based compensation
     using the provisions of APB 25 (intrinsic value method), which is permitted
     by  SFAS  123.  The difference in net income, if any, between the intrinsic
     value method and the method provided for by SFAS 123 (fair value method) is
     required  to  be  disclosed  in  the  financial statements on an annual and
     interim  basis  as  a  result  of  the  issuance  of  SFAS  148.

     Allowance  for  doubtful  accounts  -  The carrying value of trade accounts
     receivable  is  based  on  estimated  fair value. The determination of fair
     value  is  subject to management's judgments and is based on estimates that
     management  is  required  to  make.


STATEMENT  BY MANAGEMENT CONCERNING REVIEW OF INTERIM INFORMATION BY INDEPENDENT
CERTIFIED  PUBLIC  ACCOUNTANTS.

     The  unaudited consolidated financial statements included in this filing on
Form  10-Q  have  been reviewed by Burton McCumber & Cortez, L.L.P., independent
certified  public  accountants,  in  accordance  with  established  professional
standards  and  procedures  for  such  review.  The  report of Burton McCumber &
Cortez,  L.L.P.  commenting  on  their  review,  accompanies  the  unaudited
consolidated  financial  statements  included  in  Item  1  of  Part  I.


                                       40
<PAGE>
ITEM  3.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK.

     To  the  extent  that  Rio  Vista  maintains quantities of LPG inventory in
excess  of  commitments for quantities of undelivered LPG and/or has commitments
for  undelivered  LPG  in  excess of inventory balances, Rio Vista is exposed to
market risk related to the volatility of LPG prices. In the event that inventory
balances  exceed  commitments for undelivered LPG, during periods of falling LPG
prices,  Rio  Vista may sell excess inventory to customers to reduce the risk of
these  price  fluctuations.  In  the  event that commitments for undelivered LPG
exceed  inventory  balances,  Rio  Vista may purchase contracts which protect it
against  future  price  increases  of  LPG.

     Rio  Vista  does  not  maintain  quantities  of  LPG inventory in excess of
quantities  actually  ordered  by  PMI.  Therefore,  Rio Vista has not currently
entered into and does not currently expect to enter into any arrangements in the
future  to  mitigate  the  impact  of  commodity  price  risk.

     Rio  Vista  does not have any debt.  Trade accounts receivable from PMI and
Rio  Vista's  trade  and  other accounts payable generally do not bear interest.
Penn  Octane's  credit  facility with RZB for which Rio Vista is responsible for
some  of  the  costs does not bear interest since generally no cash advances are
made to Rio Vista or Penn Octane by RZB.  Fees paid to RZB for letters of credit
are  based  on a fixed schedule as provided in Penn Octane's agreement with RZB.
Therefore,  Rio  Vista  currently  has  limited,  if  any,  interest  rate risk.

     Rio  Vista  routinely  converts  U.S.  dollars  into  Mexican  pesos to pay
terminal  operating  costs and income taxes.  Such costs are expected to be less
than  $1  million  per year and Rio Vista expects such costs will remain at less
than  $1  million  in  any  year.  Rio Vista does not maintain Mexican peso bank
accounts with other than nominal balances.  Therefore, Rio Vista has limited, if
any,  risk  related  to  foreign  currency  exchange  rates.


ITEM  4.  CONTROLS  AND  PROCEDURES.

     The General Partner's management, including the principal executive officer
and  principal  financial  officer,  conducted  an  evaluation  of  Rio  Vista's
disclosure controls and procedures, as such term is defined under Rule 13a-14(c)
promulgated under the Securities Exchange Act of 1934, as amended, as of the end
of  the  period.  Based  on  their  evaluation,  the General Partner's principal
executive  officer  and  principal accounting officer concluded that Rio Vista's
disclosure  controls  and  procedures  are  effective.

     There  have  been no significant changes (including corrective actions with
regard  to  significant  deficiencies  or  material  weaknesses)  in Rio Vista's
internal  controls  or  in  other  factors that could significantly affect these
controls subsequent to the date of the evaluation referenced in paragraph above.


                                       41
<PAGE>
PART  II

ITEM 1.   LEGAL PROCEEDINGS

          None.

ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

          See  note  G  to  the  accompanying  unaudited  consolidated financial
          statements,  for  information  concerning certain sales of securities.

          The  above  transactions  were  exempt  from  registration  under  the
          Securities  Act  of  1933 pursuant to Section 4(2) thereof because the
          issuance  did  not  involve  any  public  offering  of  securities.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

          None.

ITEM  4.  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

          None.

ITEM  5.  OTHER INFORMATION

          None.

ITEM  6.  EXHIBITS

     THE  FOLLOWING  EXHIBITS  ARE INCORPORATED BY REFERENCE TO PREVIOUSLY FILED
     REPORTS,  AS  NOTED.

          Exhibit  No.
          ------------

          10.1* Rio  Vista  Energy  Partners  L.P.  2005  Equity Incentive Plan
                (incorporated  by  reference to Rio Vista's Annual Report on
                Form 10-K  for  the  year  ended  December 31, 2004 filed on
                April 12, 2005,  SEC  File  No.  000-50394)

          *    indicates  management  contract  or  compensatory  plan  or
               arrangement.

     THE  FOLLOWING  EXHIBITS  ARE  FILED  AS  PART  OF  THIS  REPORT:

          Exhibit  No.
          ------------

          31.1           Certification  Pursuant to Rule 13a-14(a) / 15d - 14(a)
                         of  the  Exchange  Act

          31.2           Certification  Pursuant to Rule 13a-14(a) / 15d - 14(a)
                         of  the  Exchange  Act

          32             Certification  Pursuant  to  18  U.S.C. Section 1350 as
                         Adopted Pursuant to Section 906 of the Sarbanes - Oxley
                         Act  of  2002


                                       42
<PAGE>
                                   SIGNATURES

     Pursuant  to  the requirements of the Securities Exchange Act of 1934, this
report  has been signed by the following persons on behalf of the registrant and
in  the  capacities  and  on  the  dates  indicated.


                                       RIO  VISTA  ENERGY  PARTNERS  L.P.



May 20, 2005                           By:  /s/Ian T. Bothwell
                                            ------------------------------------
                                            Ian  T.  Bothwell
                                            Treasurer (principal accounting and
                                            financial officer) of Rio Vista GP
                                            LLC, general partner of Rio Vista
                                            Energy Partners L.P.


                                       43