##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-Q
   þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    September 30, 2008ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934    Commission file number:
    001-32329
      Copano Energy, L.L.C.
 (Exact Name of Registrant as
    Specified in Its Charter)
   Delaware

51-0411678(State or Other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification No.)    2727
    Allen Parkway, Suite 1200
    Houston, Texas 77019 (Address
    of Principal Executive Offices)
  (713) 621-9547
 (Registrants telephone
    number, including area code)
   þ o
  12b-2
  Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ




---



##### 



TABLE OF
    CONTENTS
   
 PagePART I  FINANCIAL INFORMATIONItem 1.


Financial Statements.


3Unaudited Consolidated Balance Sheets as of
    September 30, 2008 and December 31, 2007


3Unaudited Consolidated Statements of Operations
    for the Three and Nine Months Ended September 30, 2008 and
    2007


4Unaudited Consolidated Statements of Cash Flows
    for the Nine Months Ended September 30, 2008 and 2007


5Unaudited Consolidated Statement of Members
    Capital and Comprehensive Income (Loss) for the Nine Months
    Ended September 30, 2008


6Notes to Unaudited Consolidated Financial
    Statements


7Item 2.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


32Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


49Item 4.


Controls and Procedures


57PART II  OTHER
    INFORMATIONItem 1.


Legal Proceedings


58Item 1A.


Risk Factors


58Item 6.


Exhibits


61EX-31.1EX-31.2EX-32.1EX-32.2   2




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##### Table of Contents



Item 1.
    Financial
    Statements.  COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  UNAUDITED
    CONSOLIDATED BALANCE SHEETS
  September 30,


December 31,2008


2007(In thousands, except unit information)ASSETSCurrent assets:Cash and cash equivalents

$
173,825


$
72,665Accounts receivable, net


121,093



127,534Risk management assets


17,013



3,289Prepayments and other current assets


3,227



3,881Total current assets


315,158



207,369Property, plant and equipment, net


792,347



694,727Intangible assets, net


197,246



200,546Investment in unconsolidated affiliates


645,472



632,725Escrow cash


1,856



Risk management assets


47,104



10,598Other assets, net


31,352



23,118Total assets

$
2,030,535


$
1,769,083LIABILITIES AND MEMBERS CAPITALCurrent liabilities:Accounts payable

$
180,635


$
147,046Accrued interest


12,083



11,319Accrued tax liability


543



3,919Risk management liabilities


18,265



27,710Other current liabilities


15,866



12,931Total current liabilities


227,392



202,925Long-term debt (includes $722 and $773 bond premium as of
    September 30, 2008 and December 31, 2007, respectively)


855,722



630,773Deferred tax provision


1,526



1,231Risk management and other noncurrent liabilities


33,451



40,018Commitments and contingencies (Note 10)Members capital:Common units, no par value, 47,902,390 units and
    47,366,048 units issued and outstanding as of
    September 30, 2008 and December 31, 2007, respectively


676,083



661,585Class C units, no par value, 789,705 units and
    1,184,557 units issued and outstanding as of
    September 30, 2008 and December 31, 2007, respectively


26,995



40,492Class D units, no par value, 3,245,817 units issued
    and outstanding as of September 30, 2008 and
    December 31, 2007


112,454



112,454Class E units, no par value, 5,598,839 units issued
    and outstanding as of September 30, 2008 and
    December 31, 2007


175,634



175,634Paid-in capital


31,418



23,773Accumulated deficit


(38,513
)


(7,867
)Accumulated other comprehensive loss


(71,627
)


(111,935
)912,444



894,136Total liabilities and members capital

$
2,030,535


$
1,769,083    3




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  UNAUDITED
    CONSOLIDATED STATEMENTS OF OPERATIONS
  Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007(In thousands, except unit information)Revenue:Natural gas sales

$
204,187


$
124,091


$
620,074


$
375,420Natural gas liquids sales


174,867



132,835



507,979



336,748Crude oil sales


50,763



25,161



149,128



39,381Transportation, compression and processing fees


13,772



3,880



42,896



12,320Condensate and other


10,044



7,109



36,582



21,917Total revenue


453,633



293,076



1,356,659



785,786Costs and expenses:Cost of natural gas and natural gas
    liquids(1)


332,346



211,824



999,580



604,061Cost of crude oil
    purchases(1)


50,359



24,128



146,222



37,738Transportation(1)


9,151



1,239



15,688



3,342Operations and maintenance


15,394



10,525



40,289



28,700Depreciation and amortization


12,755



10,130



37,092



28,426General and administrative


11,042



8,615



33,828



23,831Taxes other than income


723



1,010



2,193



2,566Equity in earnings from unconsolidated affiliates


(2,170
)


(401
)


(7,354
)


(2,019
)Total costs and expenses


429,600



267,070



1,267,538



726,645Operating income


24,033



26,006



89,121



59,141Other income (expense):Interest and other income


357



706



1,091



2,032Interest and other financing costs


(15,470
)


(6,943
)


(42,939
)


(18,314
)Income before income taxes


8,920



19,769



47,273



42,859Provision for income taxes


(197
)


(102
)


(846
)


(1,182
)Net income

$
8,723


$
19,667


$
46,427


$
41,677Basic net income per common unit:Net income per common unit

$
0.18


$
0.46


$
0.97


$
1.00Weighted average number of common units


47,868



42,330



47,640



41,154Diluted net income per common unit:Net income per common unit

$
0.15


$
0.44


$
0.80


$
0.96Weighted average number of common units


57,939



44,233



57,891



43,606Basic net income per subordinated unit:Net income per subordinated unit

$



$



$



$
0.21Weighted average number of subordinated units














1,134Diluted net income per subordinated unit:Net income per subordinated unit

$



$



$



$
0.21Weighted average number of subordinated units














1,134     (1)
    
    Exclusive of items shown separately below.   4




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  UNAUDITED
    CONSOLIDATED STATEMENTS OF CASH FLOWS
  Nine Months EndedSeptember 30,2008


2007(In thousands)Cash Flows From Operating Activities:Net income

$
46,427


$
41,677Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization


37,092



28,426Amortization of debt issue costs


2,552



921Equity in earnings from unconsolidated affiliates


(7,354
)


(2,019
)Distributions from unconsolidated affiliates


18,387



2,888Equity-based compensation


3,542



2,180Deferred tax provision


294



898Other noncash items


(132
)


(98
)Changes in assets and liabilities, net of acquisitions:Accounts receivable


6,879



(12,135
)Prepayments and other current assets


655



(562
)Risk management assets


(16,466
)


(19,137
)Accounts payable


21,259



13,200Other current liabilities


(11,914
)


12,099Net cash provided by operating activities


101,221



68,338Cash Flows From Investing Activities:Additions to property, plant and equipment


(115,292
)


(57,247
)Additions to intangible assets


(4,710
)


(2,604
)Acquisitions


(83
)


(55,471
)Investment in unconsolidated affiliates


(25,623
)


Distributions from unconsolidated affiliates


1,971



375Escrow cash


(1,856
)


Other


(1,232
)


(990
)Net cash used in investing activities


(146,825
)


(115,937
)Cash Flows From Financing Activities:Proceeds from long-term debt


539,000



104,000Repayment of long-term debt


(314,000
)


Repayment of short-term notes payable






(1,494
)Deferred financing costs


(6,670
)


(608
)Distributions to unitholders


(76,623
)


(53,441
)Capital contributions from Pre-IPO Investors (Note 7)


4,103



7,169Equity offering costs


(47
)


(515
)Proceeds from option exercises


1,001



850Net cash provided by financing activities


146,764



55,961Net increase in cash and cash equivalents


101,160



8,362Cash and cash equivalents, beginning of year


72,665



39,484Cash and cash equivalents, end of period

$
173,825


$
47,846    5




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##### Table of Contents





COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  UNAUDITED
    CONSOLIDATED STATEMENT OF MEMBERS CAPITAL AND
    COMPREHENSIVE INCOME (LOSS)
  AccumulatedCommon


Class C


Class D


Class E





Accumulated


Other





TotalNumber


Common


Number


Class C


Number


Class D


Number


Class E


Paid-in


Earnings


Comprehensive





Comprehensiveof Units


Units


of Units


Units


of Units


Units


of Units


Units


Capital


(Deficit)


Loss


Total


Income (Loss)(In thousands)Balance, December 31, 2007


47,366


$
661,585



1,184


$
40,492



3,246


$
112,454



5,599


$
175,634


$
23,773


$
(7,867
)

$
(111,935
)

$
894,136Capital contributions from Pre-IPO Investors


































4,103











4,103


$
Conversion of Class C units into common units


394



13,497



(394
)


(13,497
)


































Distributions to unitholders






































(77,073
)






(77,073
)


Option exercises


59



1,001







































1,001



Equity-based compensation


































3,542











3,542



Vested restricted units


70















































Vested phantom units


13















































Net income






































46,427







46,427



46,427Derivative settlements reclassified to income










































34,906



34,906



34,906Unrealized loss-change in fair value of derivatives










































5,402



5,402



5,402Comprehensive income

















































$
86,735Balance, September 30, 2008


47,902


$
676,083



790


$
26,995



3,246


$
112,454



5,599


$
175,634


$
31,418


$
(38,513
)

$
(71,627
)

$
912,444    6




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  Note 1 
    Organization and Basis of Presentation
  Organization
  Unless the context requires otherwise, references to
    Copano, we, our,
    us or like terms refer to Copano Energy, L.L.C. and
    its wholly owned subsidiaries
    Basis
    of Presentation and Principles of Consolidation
  Form 10-Q
     7




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 1 
    Organization and Basis of Presentation (Continued)
  Form 10-K
  Note 2 
    New Accounting Pronouncements
  Business
    Combinations
  Business Combinations.
  Fair
    Value Measurements
  Fair Value Measurements. Accounting for Derivative Instruments and Hedging
    Activities,
  No. SFAS 157-2, Effective Date of FASB Statement No. 157, No. 157-2,
  Fair
    Value Option for Financial Assets and Financial
    Liabilities
  The Fair Value Option for Financial Assets and
    Financial Liabilities,
  Disclosures
    about Derivative Instruments and Hedging Activities 
    an amendment of FASB Statement No. 133
  Disclosures about Derivative Instruments and Hedging
    Activities  an amendment of FASB Statement
    No. 133.
 8




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 2 
    New Accounting Pronouncements (Continued)
    Useful
    Life of Intangible Assets
  No. 142-3, Determination of the Useful Life of Intangible
    Assets, Goodwill and Other
    Intangible Assets. No. 142-3
  Note 3 
    Intangible Assets
  2008  2009  2010  2011  $ 2012
     2013 
    September 30,


December 31,2008


2007Rights-of-way and easements, at cost

$
108,944


$
104,427Less accumulated amortization for rights-of-way and easements


(10,670
)


(8,922
)Contracts


107,916



107,906Less accumulated amortization for contracts


(13,503
)


(7,675
)Customer relationships


5,204



5,204Less accumulated amortization for customer relationships


(645
)


(394
)Intangible assets, net

$
197,246


$
200,546     Note 4 
    Acquisitions
  Acquisition
    of Cantera Natural Gas, LLC
   9




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 4 
    Acquisitions (Continued)
      Acquisition
    of Cimmarron Gathering, LP
      Three Months


Nine MonthsEnded


EndedSeptember 30, 2007


September 30, 2007(In thousands, except per unit information)Pro Forma Earnings Data:Revenue

$
320,143


$
953,042Costs and expenses

$
286,893


$
881,966Equity in earnings from unconsolidated affiliates

$
204


$
2,304Operating income

$
33,250


$
71,076Income before extraordinary items

$
21,610


$
34,557Net income

$
21,610


$
34,557Basic net income per common unit:As reported units outstanding


42,330



41,154Pro forma units outstanding


47,258



45,819As reported net income per unit

$
0.46


$
1.00Pro forma net income per unit

$
0.46


$
0.75Diluted net income per common unit:As reported units outstanding


44,233



43,606Pro forma units outstanding


57,613



57,478As reported net income per unit

$
0.44


$
0.96Pro forma net income per unit

$
0.38


$
0.61 10




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 4 
    Acquisitions (Continued)
  Three Months


Nine MonthsEnded


EndedSeptember 30, 2007


September 30, 2007(In thousands, except per unit information)Basic net income per subordinated unit:As reported units outstanding






1,134Pro forma units outstanding






1,134As reported net income per unit

$



$
0.21Pro forma net income per unit

$



$
0.21Diluted net income per subordinated unit:As reported units outstanding






1,134Pro forma units outstanding






1,134As reported net income per unit

$



$
0.21Pro forma net income per unit

$



$
0.21   Note 5 
    Investment in Unconsolidated Affiliates
      Bighorn


Fort Union


Southern Dome


Webb DuvalOperating revenue

$
25,959


$
37,904


$
26,612


$
2,556Operating expenses


(10,038
)


(3,058
)


(21,936
)


(729
)Depreciation


(3,194
)


(3,983
)


(555
)


(582
)Interest income (expense) and other


72



(4,388
)


5



19Net income


12,799



26,475



4,126



1,264Ownership %


51
%


37.04
%


69.5
%


62.5
%6,527



9,806



2,868



790Priority allocation of earnings and other


407



225







Copanos share of management fees charged


181



26



130



101Amortization of difference between the carried investment and
    the underlying equity in net assets


(8,999
)


(4,817
)


(7
)


16Equity in (loss) earnings from unconsolidated affiliates

$
(1,884
)

$
5,240


$
2,991


$
907Distributions

$
8,247


$
7,334


$
3,579


$
1,125Current assets

$
8,001


$
16,392


$
4,377


$
1,420Noncurrent assets


99,493



216,668



16,520



7,077Current liabilities


(1,702
)


(23,642
)


(5,157
)


(463
)Noncurrent liabilities






(104,540
)






(53
)Net assets

$
105,792


$
104,878


$
15,740


$
7,981  11




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 5 
    Investment in Unconsolidated Affiliates (Continued)
    Southern Dome


Webb DuvalOperating revenue

$
10,063


$
2,882Operating expenses


(8,587
)


(542
)Depreciation


(552
)


(576
)Interest income and other


6



45Net income


930



1,809Ownership %


69.5
%


62.5
%646



1131Copanos share of management fees charged


130



98Amortization of difference between the carried investment and
    the underlying equity in net assets


(7
)


15Equity in earnings from unconsolidated affiliates

$
769


$
1,244Distributions

$
1,112


$
2,151   Note 6 
    Long-Term Debt
    September 30,


December 31,2008


2007Long-term debt:Credit Facility

$
205,000


$
280,000Senior Notes:8.125% senior notes due 2016


350,000



350,000Unamortized bond premium


722



7737.75% senior notes due 2018


300,000



Total Senior Notes


650,722



350,773Total

$
855,722


$
630,773   Credit
    Facility
   12




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 6 
    Long-Term Debt (Continued)
      8.125% Senior
    Notes Due 2016
      7.75% Senior
    Notes Due 2018
       13




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##### Table of Contents






COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  CONDENSED
    CONSOLIDATING BALANCE SHEETS
  September 30, 2008


December 31, 2007Investment in

















Investment inGuarantor


Non-Guarantor














Guarantor


Non-GuarantorParent


Co-Issuer


Subsidiaries


Subsidiaries


Eliminations


Total


Parent


Co-Issuer


Subsidiaries


Subsidiaries


Eliminations


Total(In thousands)ASSETSCurrent assets:Cash and cash equivalents

$
106,487


$



$
67,338


$



$



$
173,825


$
10,018


$



$
62,647


$



$



$
72,665Accounts receivable, net


12







121,081











121,093



476







127,058











127,534Intercompany receivable


88,134







(88,134
)














37,027







(37,027
)










Risk management assets










17,013











17,013











3,289











3,289Prepayments and other current assets


215







3,012











3,227



877







3,004











3,881Total current assets


194,848







120,310











315,158



48,398







158,971











207,369Property, plant and equipment, net


146







792,201











792,347



264







694,463











694,727Intangible assets, net










197,246











197,246











200,546











200,546Investment in unconsolidated affiliates










645,472



645,472



(645,472
)


645,472











632,725



632,725



(632,725
)


632,725Investment in consolidated subsidiaries


1,567,150















(1,567,150
)






1,473,187















(1,473,187
)


Escrow cash










1,856











1,856























Risk management assets










47,104











47,104











10,598











10,598Other assets, net


21,711







9,641











31,352



17,589







5,529











23,118Total assets

$
1,783,855


$



$
1,813,830


$
645,472


$
(2,212,622
)

$
2,030,535


$
1,539,438


$



$
1,702,832


$
632,725


$
(2,105,912
)

$
1,769,083LIABILITIES AND MEMBERS/PARTNERS CAPITALCurrent liabilities:Accounts payable

$
4


$



$
180,631


$



$



$
180,635


$
35


$



$
147,011


$



$



$
147,046Accrued interest


11,798







285











12,083



11,319



















11,319Accrued tax liability


543



















543



483







3,436











3,919Risk management liabilities










18,265











18,265











27,710











27,710Other current liabilities


1,337







14,529











15,866



882







12,049











12,931Total current liabilities


13,682







213,710











227,392



12,719







190,206











202,925Long-term debt


855,722



















855,722



630,773



















630,773Deferred tax provision


1,526



















1,526



1,231



















1,231Risk management and other noncurrent liabilities


481







32,970











33,451



579







39,439











40,018Members/Partners capital:Common units


676,083



















676,083



661,585



















661,585Class C units


26,995



















26,995



40,492



















40,492Class D units


112,454



















112,454



112,454



















112,454Class E units


175,634



















175,634



175,634



















175,634Paid-in capital


31,418



1



1,533,236



633,768



(2,167,005
)


31,418



23,773



1



1,507,285



628,375



(2,135,661
)


23,773Accumulated (deficit) earnings


(38,513
)


(1
)


105,541



11,704



(117,244
)


(38,513
)


(7,867
)


(1
)


77,837



4,350



(82,186
)


(7,867
)Accumulated other comprehensive loss


(71,627
)






(71,627
)






71,627



(71,627
)


(111,935
)






(111,935
)






111,935



(111,935
)912,444







1,567,150



645,472



(2,212,622
)


912,444



894,136







1,473,187



632,725



(2,105,912
)


894,136Total liabilities and members/partners capital

$
1,783,855


$



$
1,813,830


$
645,472


$
(2,212,622
)

$
2,030,535


$
1,539,438


$



$
1,702,832


$
632,725


$
(2,105,912
)

$
1,769,083  14




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  CONDENSED
    CONSOLIDATING STATEMENTS OF OPERATIONS
  Three Months Ended September 30,2008


2007Investment in

















Investment inGuarantor


Non-Guarantor














Guarantor


Non-GuarantorParent


Co-Issuer


Subsidiaries


Subsidiaries


Eliminations


Total


Parent


Co-Issuer


Subsidiaries


Subsidiaries


Eliminations


Total(In thousands)Revenue:Natural gas sales

$



$



$
204,187


$



$



$
204,187


$



$



$
124,091


$



$



$
124,091Natural gas liquids sales










174,867











174,867











132,835











132,835Crude oil sales










50,763











50,763











25,161











25,161Transportation, compression and processing fees










13,772











13,772











3,880











3,880Condensate and other










10,044











10,044











7,109











7,109Total revenue










453,633











453,633











293,076










$
293,076Costs and expenses:Cost of natural gas and natural gas liquids










332,346











332,346











211,824











211,824Cost of crude oil










50,359











50,359











24,128











24,128Transportation










9,151











9,151











1,239











1,239Operations and maintenance


(374
)






15,768











15,394



456







10,069











10,525Depreciation and amortization


11







12,744











12,755



11







10,119











10,130General and administrative


6,400







4,642











11,042



2,448







6,167











8,615Taxes other than income










723











723











1,010











1,010Equity in (earnings) loss from unconsolidated affiliates










(2,170
)


(2,170
)


2,170



(2,170
)










(401
)


(401
)


401



(401
)Total costs and expenses


6,037







423,563



(2,170
)


2,170



429,600



2,915







264,155



(401
)


401



267,070Operating (loss) income


(6,037
)






30,070



2,170



(2,170
)


24,033



(2,915
)






28,921



401



(401
)


26,006Interest and other income


16







341











357



28







678











706Interest and other financing costs


(14,354
)






(1,116
)










(15,470
)


(7,011
)






68











(6,943
)(Loss) income before income taxes and equity in earnings from
    consolidated subsidiaries


(20,375
)






29,295



2,170



(2,170
)


8,920



(9,898
)






29,667



401



(401
)


19,769Provision for income taxes


(197
)


















(197
)


(102
)


















(102
)(Loss) income before equity in earnings from consolidated
    subsidiaries


(20,572
)






29,295



2,170



(2,170
)


8,723



(10,000
)






29,667



401



(401
)


19,667Equity in earnings (loss) from consolidated subsidiaries


29,295















(29,295
)






29,667















(29,667
)


Net income (loss)

$
8,723


$



$
29,295


$
2,170


$
(31,465
)

$
8,723


$
19,667


$



$
29,667


$
401


$
(30,068
)

$
19,667  15




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Nine Months Ended September 30,2008


2007Investment in

















Investment inGuarantor


Non-Guarantor














Guarantor


Non-GuarantorParent


Co-Issuer


Subsidiaries


Subsidiaries


Eliminations


Total


Parent


Co-Issuer


Subsidiaries


Subsidiaries


Eliminations


Total(In thousands)Revenue:Natural gas sales

$



$



$
620,074


$



$



$
620,074


$



$



$
375,420


$



$



$
375,420Natural gas liquids sales










507,979











507,979











336,748











336,748Crude oil sales










149,128











149,128











39,381











39,381Transportation, compression and processing fees










42,896











42,896











12,320











12,320Condensate and other










36,582











36,582











21,917











21,917Total revenue










1,356,659











1,356,659











785,786











785,786Costs and expenses:Cost of natural gas and natural gas liquids










999,580











999,580











604,061











604,061Cost of crude oil










146,222











146,222











37,738











37,738Transportation










15,688











15,688











3,342











3,342Operations and maintenance


690







39,599











40,289



1,264







27,436











28,700Depreciation and amortization


34







37,058











37,092



23







28,403











28,426General and administrative


19,823







14,005











33,828



7,576







16,255











23,831Taxes other than income










2,193











2,193











2,566











2,566Equity in earnings from unconsolidated affiliates










(7,354
)


(7,354
)


7,354



(7,354
)










(2,019
)


(2,019
)


2,019



(2,019
)Total costs and expenses


20,547







1,246,991



(7,354
)


7,354



1,267,538



8,863







717,782



(2,019
)


2,019



726,645Operating (loss) income


(20,547
)






109,668



7,354



(7,354
)


89,121



(8,863
)






68,004



2,019



(2,019
)


59,141Interest and other income


40







1,051











1,091



201







1,831











2,032Interest and other financing costs


(37,727
)






(5,212
)










(42,939
)


(18,399
)






85











(18,314
)(Loss) income before income taxes and equity in earnings from
    consolidated subsidiaries


(58,234
)






105,507



7,354



(7,354
)


47,273



(27,061
)






69,920



2,019



(2,019
)


42,859Provision for income taxes


(846
)


















(846
)


(1,182
)


















(1,182
)(Loss) income before equity in earnings from consolidated
    subsidiaries


(59,080
)






105,507



7,354



(7,354
)


46,427



(28,243
)






69,920



2,019



(2,019
)


41,677Equity in earnings (loss) from consolidated subsidiaries


105,507















(105,507
)






69,920















(69,920
)


Net income (loss)

$
46,427


$



$
105,507


$
7,354


$
(112,861
)

$
46,427


$
41,677


$



$
69,920


$
2,019


$
(71,939
)

$
41,677  16




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  CONDENSED
    CONSOLIDATING STATEMENTS OF CASH FLOWS
  Nine Months Ended September 30,2008


2007Investment in

















Investment inGuarantor


Non-Guarantor














Guarantor


Non-GuarantorParent


Co-Issuer


Subsidiaries


Subsidiaries


Eliminations


Total


Parent


Co-Issuer


Subsidiaries


Subsidiaries


Eliminations


Total(In thousands)Cash Flows From Operating Activities:Net cash (used in) provided by operating activities

$
(115,305
)

$



$
216,526


$
18,387


$
(18,387
)

$
101,221


$
(27,099
)

$



$
95,437


$
2,888


$
(2,888
)

$
68,338Cash Flows From Investing Activities:Net cash provided by (used in) investing activities


65,010







(146,825
)


(23,652
)


(41,358
)


(146,825
)


(30,266
)






(115,896
)


375



29,850



(115,937
)Cash Flows From Financing Activities:Net cash provided by (used in) financing activities


146,764







(65,010
)


25,623



39,387



146,764



57,454







28,732







(30,225
)


55,961Net increase (decrease) in cash and cash equivalents


96,469







4,691



20,358



(20,358
)


101,160



89







8,273



3,263



(3,263
)


8,362Cash and cash equivalents, beginning of year


10,018







62,647



4,382



(4,382
)


72,665



1,286







38,198











39,484Cash and cash equivalents, end of period

$
106,487


$



$
67,338


$
24,740


$
(24,740
)

$
173,825


$
1,375


$



$
46,471


$
3,263


$
(3,263
)

$
47,846  17




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 7 
    Members Capital and Distributions
  Pre-IPO
    Investors
    Class C
    Units
    Class D
    Units
    Class E
    Units
   18




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 7 
    Members Capital and Distributions (Continued)
  Distributions
    DistributionQuarter Ending

Per unit

Date Declared

Record Date

Payment Date

AmountDecember 31, 2007

$0.51

January 16, 2008

February 1, 2008

February 14, 2008

$24,336,000March 31, 2008

0.53

April 16, 2008

May 1, 2008

May 15, 2008

25,506,000June 30, 2008

0.56

July 16, 2008

August 1, 2008

August 14, 2008

27,242,000September 30, 2008

0.57

October 15, 2008

November 3, 2008

November 14, 2008

27,969,000   Accounting
    for Equity-Based Compensation
  Share-Based
    Payment, Restricted Common Units, Phantom  Unit Options
    Restricted Common Units.
    WeightedNumber of


AverageRestricted


Grant-DateUnits


Fair ValueOutstanding at beginning of year


241,181


$
22.92Granted






Vested


(70,162
)


20.08Forfeited


(685
)


20.95Outstanding at end of period


170,334


$
24.11     Phantom Units.
 19




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 7 
    Members Capital and Distributions (Continued)
      WeightedNumber of


AveragePhantom


Grant-DateUnits


Fair ValueOutstanding at beginning of year


100,795


$
40.81Granted


513,405



33.18Vested


(17,734
)


41.39Forfeited


(4,381
)


38.18Outstanding at end of period


592,085


$
34.20     Unit Options.
    Number of


WeightedUnits


AverageUnderlying


ExerciseOptions


PriceOutstanding at beginning of year


1,442,847


$
22.60Granted


172,500



33.76Exercised


(58,902
)


16.99Forfeited


(139,339
)


26.19Outstanding at end of period


1,417,106


$
23.84     20




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 7 
    Members Capital and Distributions (Continued)
  Nine Months EndedSeptember 30,2008


2007Weighted average exercise price

$
33.76


$
38.17Expected volatility


19.96%-20.72
%


20.57%-21.50
%Distribution yield


6.18%-6.28
%


6.00%-6.05
%Risk-free interest rate


2.71%-3.94
%


4.32%-5.11
%Expected term (in years)


6.5



6.5Weighted average grant-date fair value of options granted

$
3.08


$
4.55Total intrinsic value of options exercised

$
990,000


$
1,315,000       Note 8 
    Net Income Per Unit
  Earnings Per Share, No. 03-6 03-6), Participating Securities and the Two 
    Class Method under Financial Accounting Standards Board
    Statement No. 128. 03-6
   21




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 8 
    Net Income Per Unit (Continued)
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007Net income available  basic

$
8,723


$
19,677


$
46,427


$
41,677Less net income attributable to subordinated unitholders














(553
)Net income  basic


8,723



19,677



46,427



41,124Net income attributable to subordinated unitholders














553Net income available 
    diluted(1)

$
8,723


$
19,677


$
46,427


$
41,677Basic weighted average units


47,868



42,330



47,640



41,154Dilutive weighted average
    units(1)(2)


57,939



44,233



57,891



43,606Basic net income per unit

$
0.18


$
0.46


$
0.97


$
1.00Diluted net income per
    unit(1)(2)

$
0.15


$
0.44


$
0.80


$
0.96     (1)
    
    Our potentially dilutive common equity includes the following:  Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007(In thousands)Employee options


356



611



415



569Restricted units


63



159



62



162Phantom units


18



7



23



Class C units


790



1,125



905



631Class D units


3,246







3,246



Class E units


5,599







5,599



   (2)
    
    The following potentially dilutive common equity was excluded
    from the dilutive net income per unit calculation because to
    include these equity securities would have been anti-dilutive:  Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007(In thousands)Employee options


1,061



764



1,002



806Restricted units


108



111



109



133Phantom units


574



80



568



79   Note 9 
    Related Party Transactions
  Operations
    Services
   22




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 9 
    Related Party Transactions (Continued)
      Natural
    Gas Transactions and Other
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007Affiliates of Mr. Eckel:Natural gas
    sales(1)

$
29


$



$
103


$
25Gathering and compression
    services(2)


3



7



17



24Natural gas
    purchases(3)


304



580



1,018



1,706Webb Duval:Natural gas
    sales(1)


590







590



Natural gas
    purchases(3)


313



390



1,416



505Transportation
    costs(4)


89



94



291



264Southern Dome:Natural gas liquid
    sales(5)






109







147Condensate
    sales(6)






86







107Bighorn:Gathering
    costs(4)


144







460



Fort Union:Gathering
    costs(4)


2,213







6,319



Treating
    costs(3)


276







627



Other:Natural gas
    sales(1)


142







319



Condensate and
    other(6)


27







27



     (1)
    
    Revenues included in natural gas
    sales on our consolidated statements of operations.(2)
    
    Revenues included in
    transportation, compression and processing fees on our
    consolidated statements of operations.(3)
    
    Included in costs of natural gas
    and natural gas liquids on our consolidated statements of
    operations.(4)
    
    Costs included in transportation on
    our consolidated statements of operations.(5)
    
    Revenues included in natural gas
    liquid sales on our consolidated statements of operations.(6)
    
    Revenues included in condensate and
    other on our consolidated statements of operations. 23




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 9 
    Related Party Transactions (Continued)
             Note 10 
    Commitments and Contingencies
  Commitments
     24




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 10 
    Commitments and Contingencies (Continued)
          Regulatory
    Compliance
    Litigation
   25




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 10 
    Commitments and Contingencies (Continued)
        Note 11 
    Supplemental Disclosures to the Statements of Cash
    Flows
  Nine MonthsEnded September 30,2008


2007(In thousands)Cash payments for interest, net of $2,261,000 and $676,000
    capitalized in 2008 and 2007, respectively

$
35,136


$
21,478Cash payments for federal and state income taxes

$
492


$
    26




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 12 
    Financial Instruments
  Commodity
    Risk Hedging Program
               27




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 12 
    Financial Instruments (Continued)
      Interest
    Rate Risk Hedging Program
            Adoption
    of SFAS No. 157
    
    Level 1  Unadjusted quoted prices in active
    markets that are accessible at the measurement date for
    identical, unrestricted assets or liabilities; 28




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 12 
    Financial Instruments (Continued)
   
    Level 2  Quoted prices in markets that are not
    considered to be active or financial instruments for which all
    significant inputs are observable, either directly or
    indirectly; and
    Level 3  Prices or valuations that require
    inputs that are both significant to the fair value measurement
    and unobservable. These inputs may be used with internally
    developed methodologies that result in managements best
    estimate of fair value.      Fair Value Measurements on a Recurring Basis as ofSeptember 30, 2008Level 1


Level 2


Level 3


Total(In thousands)Assets:Commodity derivatives

$



$



$
63,564


$
63,564Other derivatives






553







553Total

$



$
553


$
63,564


$
64,117Liabilities:Commodity derivatives

$



$



$
46,519


$
46,519Other derivatives






3,654







3,654Total

$



$
3,654


$
46,519


$
50,173    29




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 12 
    Financial Instruments (Continued)
    Three Months


Nine MonthsEnded


EndedSeptember 30, 2008


September 30, 2008Balance, beginning of period

$
(53,989
)

$
(48,194
)Total gains or losses:Included in earnings


1,599



(5,414
)Included in accumulated other comprehensive loss


60,352



35,250Purchases, issuances and settlements


9,083



35,403Transfers in and/or out of Level 3






Balance, end of period

$
17,045


$
17,045Change in unrealized losses relating to instruments still held
    as of September 30, 2008

$
978


$
(5,790
)     and/or
  Note 13 
    Segment Information
    
    Oklahoma, which includes natural gas midstream services
    primarily in central and east Oklahoma, including natural gas
    gathering and related services, natural gas processing and a
    crude oil pipeline located in south Oklahoma and north Texas.
    Our Oklahoma segment includes certain assets acquired in the
    Cimmarron Acquisition and our equity investment in Southern Dome.
    Texas, which provides natural gas gathering and transmission and
    related services and natural gas processing, treating,
    conditioning, NGL fractionation and related NGL transportation
    operations in Texas and Louisiana. Our Texas segment includes
    certain assets acquired in the Cimmarron Acquisition, our
    Louisiana processing assets acquired in the Cantera Acquisition
    and our equity investment in Webb Duval.
    Rocky Mountains, which includes natural gas gathering and
    related operations in Wyoming, was acquired through the Cantera
    Acquisition. Our Rocky Mountains segment includes our equity
    investments in Bighorn and Fort Union, two firm gathering
    agreements with Fort Union and three firm transportation
    agreements with Wyoming Interstate Gas Company.   30




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 13 
    Segment Information (Continued)
      Rocky


Total


CorporateOklahoma


Texas


Mountains


Segments


and Other


ConsolidatedThree Months Ended September 30, 2008:Sales to external customers

$
239,072


$
217,492


$
11,476


$
468,040


$
(14,407
)

$
453,633Intersegment sales


(594
)


594















Interest and other financing costs


















15,470



15,470Depreciation and amortization


7,639



4,147



671



12,457



298



12,755Equity in earnings from unconsolidated affiliates


(866
)


(162
)


(1,142
)


(2,170
)






(2,170
)Net income (loss)


18,213



26,143



1,182



45,538



(36,815
)


8,723Three Months Ended September 30, 2007:Sales to external customers

$
153,952


$
145,121


$



$
299,073


$
(5,997
)

$
293,076Intersegment sales


(125
)


125















Interest and other financing costs


















6,943



6,943Depreciation and amortization


6,704



3,216







9,920



210



10,130Equity in earnings from unconsolidated affiliates


(245
)


(156
)






(401
)






(401
)Net income (loss)


15,493



20,027







35,520



(15,853
)


19,667Nine Months Ended September 30, 2008:Sales to external customers

$
725,200


$
645,963


$
35,190


$
1,406,353


$
(49,694
)

$
1,356,659Intersegment sales


(1,639
)


1,639















Interest expense and other financing costs


















42,939



42,939Depreciation and amortization


22,659



11,495



2,011



36,165



927



37,092Equity in earnings from unconsolidated affiliates


(2,991
)


(1,008
)


(3,355
)


(7,354
)






(7,354
)Net income (loss)


73,551



84,498



2,738



160,787



(114,360
)


46,427Segment assets


782,568



413,634



713,002



1,909,204



121,331



2,030,535Nine Months Ended September 30, 2007:Sales to external customers

$
402,617


$
398,026


$



$
800,643


$
(14,857
)

$
785,786Intersegment sales


(180
)


180















Interest expense and other financing costs


















18,314



18,314Depreciation and amortization


18,880



8,946







27,826



600



28,426Equity in earnings from unconsolidated affiliates


(769
)


(1,250
)






(2,019
)






(2,019
)Net income (loss)


40,268



44,058







84,326



(42,649
)


41,677   31




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##### Table of Contents



Item 2.Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  You should read the following discussion of our financial
    condition and results of operations in conjunction with the
    unaudited consolidated financial statements and notes thereto
    included elsewhere in this report.
  As generally used in the energy industry and in this report,
    the following terms have the following meanings:
  Bbls/d:

Barrels per dayBtu:

British thermal unitsMMBtu:

One million British thermal unitsMMBtu/d:

One million British thermal units per dayMcf/d:

One thousand cubic feet per dayMMcf/d:

One million cubic feet per dayNGLs:

Natural gas liquids, which consist primarily of ethane,
    propane, isobutane, normal butane, natural gasoline and
    stabilized condensateResidue gas:

The pipeline quality natural gas remaining after natural gas
    is processedThroughput:

The volume of product transported or passing through a
    pipeline, plant, terminal or other facility   Overview
      
    Our Oklahoma segment provides midstream natural gas services in
    central and east Oklahoma, including gathering and related
    compression, dehydration and nitrogen rejection services and
    natural gas processing. This segment also includes a crude oil
    pipeline located in south Oklahoma and north Texas. For the
    three months ended September 30, 2008 and 2007, this
    segment generated approximately 54% and 52%, respectively, of
    our total segment gross margin, which is defined below under
     How We Evaluate Our Operations. For the
    nine months ended September 30, 2008 and 2007, this segment
    generated approximately 60% and 55%, respectively, of our total
    segment gross margin.
    Our Texas segment provides midstream natural gas services in
    south and north Texas, including gathering and intrastate
    transmission of natural gas, and related services such as
    compression, dehydration and marketing. Our Texas segment also
    provides natural gas processing, conditioning and treating and
    NGL fractionation and transportation through our Houston Central
    plant, Sheridan NGL pipeline and Brenham NGL pipeline. In
    addition, we are constructing a treating and processing plant in
    Montague County, Texas, and our Texas segment owns a processing
    plant located in southwest Louisiana. For the three months ended
    September 30, 2008 and 2007, this segment generated
    approximately 67% and 58%, respectively, of our total segment
    gross margin. For the nine months ended September 30, 2008
    and 2007, this segment generated approximately 63% and 56%,
    respectively, of our total segment gross margin.
    Our Rocky Mountains segment provides midstream natural gas
    services in the Powder River Basin of Wyoming, including
    gathering and treating of natural gas. The Rocky Mountains
    segment was established with our acquisition of Cantera in
    October 2007. This segment generated approximately 2% of our
    total segment gross margin for each of the three and nine months
    ended September 30, 2008. The gross margin generated by
    this segment is derived from the services we provide to our
    Rocky Mountains producers and does not include results
    associated with our interests in Bighorn or Fort Union,
    which are reported as equity in earnings from unconsolidated
    affiliates. 32




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##### Table of Contents



Recent
    Developments
  McMullen Lateral Acquisition. 151-mile, 24-inch
  St. Jo Processing Plant. 50 MMcf/d
  Fort Union Expansion.
  Trends
    and Uncertainties
    Credit and Capital Market
    Disruptions.
  Commodity Prices and Producer Activity.
   33




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##### Table of Contents



How We
    Evaluate Our Operations
    Throughput Volumes.
  service throughput
  
    The volume of natural gas transported or gathered through our
    pipelines, which we call pipeline throughput; and
    The volume of natural gas delivered to our wholly owned
    processing plants by third-party pipelines, excluding any
    volumes already included in our pipeline throughput.   34




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##### Table of Contents



producer services
    throughput
  Segment Gross Margin and Total Segment Gross
    Margin.
        Operations and Maintenance Expenses.
 35




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##### Table of Contents



General and Administrative Expenses.
  EBITDA and Adjusted EBITDA.
    
    the financial performance of our assets without regard to
    financing methods, capital structure or historical cost basis;
    the ability of our assets to generate cash sufficient to pay
    interest costs and support our indebtedness;
    our operating performance and return on capital as compared to
    those of other companies in the midstream energy sector, without
    regard to financing or capital structure; and
    the viability of acquisitions and capital expenditure projects
    and the overall rates of return on alternative investment
    opportunities.    Distributable Cash Flow and Total Distributable Cash
    Flow.
 36




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##### Table of Contents



How We
    Manage Our Operations
    Economic Models and Standardized Processing
    Margin.
    Flow and Transaction Monitoring Systems.
 37




---



##### Table of Contents



Producer Activity Evaluation and Reporting.
  Imbalance Monitoring and Control.
  Our
    Long-Term Growth Strategy
    Acquisition Analysis.
  Capital Expenditure Analysis.
 38




---



##### Table of Contents



Forward-Looking
    Statements
    
    our ability to successfully integrate any acquired assets or
    operations;
    the volatility of prices and market demand for natural gas and
    NGLs;
    our ability to continue to obtain new sources of natural gas
    supply;
    the ability of key producers to continue to drill and
    successfully complete and attach new natural gas supplies;
    our ability to retain our key customers;
    the availability of local, intrastate and interstate
    transportation systems and other facilities for natural gas and
    NGLs;
    our ability to access our Credit Facility and to obtain
    additional financing on acceptable terms;
    the effectiveness of our hedging program;
    general economic conditions;
    the effects of government regulations and policies; and
    other financial, operational and legal risks and uncertainties
    detailed from time to time in our filings with the SEC.  Form 10-K Form 10-Q
 39




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##### Table of Contents



Our
    Results of Operations
  Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007($ in thousands)Total segment gross
    margin(1)

$
61,777


$
55,885


$
195,169


$
140,645Operations and maintenance expenses


15,394



10,525



40,289



28,700Depreciation and amortization


12,755



10,130



37,092



28,426General and administrative expenses


11,042



8,615



33,828



23,831Taxes other than income


723



1,010



2,193



2,566Equity in earnings from unconsolidated affiliates


(2,170
)


(401
)


(7,354
)


(2,019
)Operating income


24,033



26,006



89,121



59,141Interest and other financing costs, net


(15,113
)


(6,237
)


(41,848
)


(16,282
)Provision for income taxes


(197
)


(102
)


(846
)


(1,182
)Net income

$
8,723


$
19,667


$
46,427


$
41,677Segment gross margin:Oklahoma

$
33,536


$
29,260


$
117,958


$
77,443Texas


41,392



32,622



123,467



78,059Rocky Mountains


1,257







3,438



Segment gross margin


76,185



61,882



244,863



155,502Corporate and
    other(2)


(14,408
)


(5,997
)


(49,694
)


(14,857
)Total segment gross
    margin(1)

$
61,777


$
55,885


$
195,169


$
140,645Segment gross margin per unit:Oklahoma:Service throughput
    ($/MMBtu)(3)

$
1.50


$
1.53


$
1.86


$
1.44Texas:Service throughput ($/MMBtu):

$
0.67


$
0.57


$
0.65


$
0.45Rocky Mountains:Producer services throughput
    ($/MMBtu)(4)

$
0.06


$



$
0.05


$
Volumes:Oklahoma:(3)(5)Service throughput (MMBtu/d)


243,000



207,518



231,358



197,127Plant inlet volumes (MMBtu/d)


158,047



148,001



154,708



141,350NGLs produced (Bbls/d)


15,238



14,476



15,083



13,616Crude oil service volumes (Bbls/d)


4,663



3,558



4,790



3,495Texas:(6)(7)Service throughput (MMBtu/d)


666,686



620,354



688,694



643,203Pipeline throughput (MMBtu/d)


301,279



296,664



314,740



296,114Plant inlet volumes (MMBtu/d)


596,225



538,516



610,470



568,711NGLs produced (Bbls/d)


16,957



17,975



17,584



17,849Rocky Mountains:Producer services throughput
    (MMBtu/d)(4)


230,859







229,038



Capital Expenditures:Maintenance capital expenditures

$
2,675


$
2,735


$
8,828


$
7,198Expansion capital expenditures


45,928



15,806



128,593



163,976Total capital expenditures

$
48,603


$
18,541


$
137,421


$
171,174Operations and maintenance expenses:Oklahoma

$
6,353


$
5,465


$
18,379


$
14,688Texas


9,041



5,060



21,910



14,012Total operations and maintenance expenses

$
15,394


$
10,525


$
40,289


$
28,700  40




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##### Table of Contents



(1)
    
    Total segment gross margin is a non-GAAP financial measure. For
    a reconciliation of total segment gross margin to its most
    directly comparable GAAP measure, please read
    Non-GAAP Financial Measures.(2)
    
    Corporate and other includes results attributable to
    Copanos commodity risk management activities.(3)
    
    Excludes volumes associated with our interest in Southern Dome.
    For the three months ended September 30, 2008, plant inlet
    volumes for Southern Dome averaged 11,557 MMBtu/d and NGLs
    produced averaged 389 Bbls/d. For the three months ended
    September 30, 2007, plant inlet volumes for Southern Dome
    averaged 5,286 MMBtu/d and NGLs produced averaged
    206 Bbls/d. For the nine months ended September 30,
    2008, plant inlet volumes for Southern Dome averaged
    10,503 MMBtu/d and NGLs produced averaged 387 Bbls/d.
    For the nine months ended September 30, 2007, plant inlet
    volumes for Southern Dome averaged 5,180 MMBtu/d and NGLs
    produced averaged 204 Bbls/d.(4)
    
    Producer services throughput represents volumes purchased for
    resale, volumes gathered utilizing firm capacity gathering
    agreements with Fort Union and firm capacity volumes
    transported under our transportation agreements with WIC or
    using additional capacity that we obtain on WIC. Excludes
    results and volumes associated with our interests in Bighorn and
    Fort Union. Volumes gathered by Bighorn and Fort Union
    were 211,353 MMBtu/d and 735,131 MMBtu/d,
    respectively, for the three months ended September 30,
    2008. Volumes gathered by Bighorn and Fort Union were
    215,568 MMBtu/d and 712,791 MMBtu/d, respectively, for
    the nine months ended September 30, 2008. Our Rocky
    Mountains segment was established with our acquisition of
    Cantera in October 2007.(5)
    
    Plant inlet volumes and NGLs produced represent total volumes
    processed and produced by the Oklahoma segment at all plants,
    including plants owned by the Oklahoma segment and plants owned
    by third parties. Plant inlet volumes averaged
    119,332 MMBtu/d and NGLs produced averaged
    12,042 Bbls/d for the three months ended September 30,
    2008 for plants owned by the Oklahoma segment. Plant inlet
    volumes averaged 97,013 MMBtu/d and NGLs produced averaged
    10,110 Bbls/d for the three months ended September 30,
    2007 for plants owned by the Oklahoma segment. Plant inlet
    volumes averaged 111,137 MMBtu/d and NGLs produced averaged
    11,343 Bbls/d for the nine months ended September 30,
    2008 for plants owned by the Oklahoma segment. Plant inlet
    volumes averaged 90,476 MMBtu/d and NGLs produced averaged
    9,210 Bbls/d for the nine months ended September 30,
    2007 for plants owned by the Oklahoma segment.(6)
    
    Excludes volumes associated with Copanos interest in Webb
    Duval. Gross volumes transported by Webb Duval were
    97,906 MMBtu/d and 86,881 MMBtu/d, net of intercompany
    volumes, for the three months ended September 30, 2008 and
    2007, respectively. Gross volumes transported by Webb Duval were
    91,047 MMBtu/d and 99,212 MMBtu/d, net of intercompany
    volumes, for the nine months ended September 30, 2008 and
    2007, respectively.(7)
    
    Plant inlet volumes and NGLs produced represent total volumes
    processed and produced by the Texas segment at all plants,
    including plants owned by the Texas segment and plants owned by
    third parties. Plant inlet volumes averaged 586,243 MMBtu/d
    and NGLs produced averaged 16,177 Bbls/d for the three
    months ended September 30, 2008 for plants owned by the
    Texas segment. Plant inlet throughput averaged
    520,341 MMBtu/d and NGLs produced averaged
    16,402 Bbls/d for the three months ended September 30,
    2007 for plants owned by the Texas segment. Plant inlet volumes
    averaged 601,831 MMBtu/d and NGLs produced averaged
    16,423 Bbls/d for the nine months ended September 30,
    2008 for plants owned by the Texas segment. Plant inlet
    throughput averaged 551,260 MMBtu/d and NGLs produced
    averaged 16,364 Bbls/d for the nine months ended
    September 30, 2007 for plants owned by the Texas segment.  Three
    Months Ended September 30, 2008 Compared with Three Months
    Ended September 30, 2007
   41




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##### Table of Contents



Oklahoma Segment Gross Margin.
  Texas Segment Gross Margin.
  Rocky Mountains Segment Gross Margin.
  Corporate and Other.
  Operations and Maintenance
    Expenses.
 42




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##### Table of Contents



Depreciation and Amortization.
  General and Administrative Expenses.
  Interest and Other Financing Costs.
  Nine
    Months Ended September 30, 2008 Compared with Nine Months
    Ended September 30, 2007
  Oklahoma Segment Gross Margin.
  Texas Segment Gross Margin.
 43




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##### Table of Contents



Rocky Mountains Segment Gross Margin.
  Corporate and Other.
  Operations and Maintenance
    Expenses.
  Depreciation and Amortization.
  General and Administrative Expenses.
  Interest and Other Financing Costs.
 44




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##### Table of Contents



Cash
    Flows
    Operating Cash Flows.
  
    Cash distributions from Bighorn, Fort Union, Webb Duval and
    Southern Dome, our unconsolidated affiliates, increased by
    $15.5 million;
    Net cash flows from our operating activities increased
    $31.5 million due to increases in operating income for 2008
    adjusted for the timing of related cash receipts and
    disbursements; and
    Additional cash paid for interest under our Credit Facility and
    Senior Notes and taxes as compared to the nine months ended
    September 30, 2007 reduced cash provided by operating
    activities by $14.1 million.  Investing Cash Flows.
  Financing Cash Flows.
  Cash Distributions and Reserves.
 45




---



##### Table of Contents



Distribution


Date

Record

PaymentQuarter Ending

Per unit


Declared

Date

Date

AmountDecember 31, 2007

$
0.51


January 16, 2008

February 1, 2008

February 14, 2008

$
24,336,000March 31, 2008


0.53


April 16, 2008

May 1, 2008

May 15, 2008


25,506,000June 30, 2008


0.56


July 16, 2008

August 1, 2008

August 14, 2008


27,242,000September 30, 2008


0.57


October 15, 2008

November 3, 2008

November 14, 2008


27,969,000     Liquidity
    and Capital Resources
       46




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##### Table of Contents



Capital Expenditures.
  
    maintenance capital expenditures, which are capital expenditures
    employed to replace partially or fully depreciated assets to
    maintain the existing operating capacity of our assets and to
    extend their useful lives, or other capital expenditures that
    are incurred in maintaining existing system volumes and related
    cash flows; and
    expansion capital expenditures such as those to acquire
    additional assets to grow our business, to expand and upgrade
    gathering systems, transmission capacity or processing plants
    and to construct new pipelines or processing plants.        Contractual Cash Obligations.
  Our
    Indebtedness
    Credit Ratings.
  Credit Facility.
 47




---



##### Table of Contents



2016 Notes.
    2018 Notes.
    Off-Balance
    Sheet Arrangements
    Recent
    Accounting Pronouncements
    Critical
    Accounting Policies
  Form 10-K
 48




---



##### Table of Contents



Non-GAAP Financial
    Measure
    Three Months


Nine MonthsEnded September 30,


Ended September 30,2008


2007


2008


2007(in thousands)Reconciliation of total segment gross margin to operating income:Operating income

$
24,033


$
26,006


$
89,121


$
59,141Add: Operations and maintenance expenses


15,394



10,525



40,289



28,700Depreciation and amortization


12,755



10,130



37,092



28,426General and administrative expenses


11,042



8,615



33,828



23,831Taxes other than income


723



1,010



2,193



2,566Equity in earnings from unconsolidated affiliates


(2,170
)


(401
)


(7,354
)


(2,019
)Total segment gross margin

$
61,777


$
55,885


$
195,169


$
140,645   Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk.    Commodity Price Risk.
  agreed-upon
     49




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##### Table of Contents



Commodity Price Hedging Activities.
  
    purchase put options or put spreads (purchase of a
    put and a sale of a put at a lower strike price) on WTI crude
    oil to hedge natural gas liquids produced or condensate
    collected by us or an entity or asset to be acquired by us if a
    binding purchase and sale agreement has been executed (a
    Pending Acquisition);
    purchase put or call options, enter into collars (purchase of a
    put together with the sale of a call) or call or put
    spreads ((i) purchase of a call and a sale of a call at a
    higher strike price or (ii) purchase of a put and a sale of
    a put at a lower strike price)
    and/or sell
    fixed for floating swaps on natural gas at Henry Hub, HSC or
    other highly liquid points relevant to our operations or a
    Pending Acquisition;
    purchase put options, enter into collars or put
    spreads (purchase of a put and a sale of a put at a lower
    strike price)
    and/or sell
    fixed for floating swaps on NGLs to which we, or a Pending
    Acquisition, has direct price exposure, priced at Mt. Belvieu or
    Conway; and
    purchase put options and collars
    and/or sell
    fixed for floating swaps on the fractionation spread
    or the processing margin spread for any processing
    plant relevant to our operations or a Pending Acquisition.    
    Maturities with respect to the purchase of any crude oil,
    natural gas, NGLs, fractionation spread or processing margin
    spread hedge instruments must be limited to five years from the
    date of the transaction; 50




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##### Table of Contents




    Except as provided in the policy amendment described below, we
    may not (i) purchase crude oil or natural gas liquids put
    options, (ii) purchase natural gas put or call options,
    (iii) purchase fractionation spread or processing margin
    spread put options or (iv) enter into any crude oil,
    natural gas or natural gas liquids spread options permitted by
    the policy if, as a result of the proposed transaction, net
    notional hedged volumes with respect to the underlying hedged
    commodity would be an amount in excess of 80% of the projected
    requirements or output, as applicable, for the hedged period (a
    calendar year or any remaining portion thereof). Notwithstanding
    this limitation, we are not required to divest outstanding hedge
    positions except to the extent net notional hedged volumes with
    respect to an underlying hedged commodity exceed 100% of the
    projected requirements or output, as applicable, for the hedged
    period; and
    The aggregate volumetric exposure associated with swaps, collars
    and written calls relating to any product must not exceed the
    lesser of 50% of the aggregate hedged position or 35% of the
    projected requirements or output with respect to such product.          Oklahoma Segment.
  Texas Segment.
 51




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##### Table of Contents



Rocky Mountains Segment.
  Our
    Commodity Hedge Portfolio
    Purchased
    CenterPoint East Natural Gas Puts
  Strike


Volumes(Per MMBtu)


(MMBtu/d)2008

$
7.75



1,4252009

$
6.95



5,000   Purchased
    HSC Index Natural Gas Options
  Call Spread


CallStrike


Volumes


Strike


Volumes(Per MMBtu)


(MMBtu/d)


(Per MMBtu)


(MMBtu/d)Bought


Sold2008

$
8.15


$
10.00



9,400







2009

$
7.75


$
10.00



8,000


$
10.00



10,0002010

$
7.35


$
10.00



7,100


$
10.00



10,0002011

$
6.95


$
10.00



7,100


$
10.00



10,000   Purchased
    Mt. Belvieu Purity Ethane Puts and Entered into Swaps
  Put


SwapStrike


Volumes


Price


Volumes(Per gallon)


(Bbls/d)


(Per gallon)


(Bbls/d)2008

$
0.5700



607


$
0.5650



6072008

$
0.6250



2,900


$
0.6525



1,3002009

$
0.5900



2,200


$
0.6025



1,1002010

$
0.5550



1,600


$
0.5700



5002011

$
0.5300



1,700


$
0.5450



500   Purchased
    Mt. Belvieu Purity Ethane Put Spread Options
  Strike


Volumes(Per gallon)


(Bbls/d)Bought


Sold2008

$
0.93


$
0.625



1,1002008

$
0.93


$
0.570



607October  December 2008

$
0.85


$
0.625



1,7002009

$
0.83


$
0.590



1,1002009

$
0.79


$
0.590



1,100  52




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##### Table of Contents



Purchased
    Mt. Belvieu TET Propane Puts and Entered into Swaps
  Put


SwapStrike


Volumes


Price


Volumes(Per gallon)


(Bbls/d)


(Per gallon)


(Bbls/d)2008

$
0.8360



2,594


$
0.8700



7452008

$
0.8975



1,100







2008

$
1.0500



396







2009

$
0.8725



2,200







2009

$
0.9650



1,000


$
1.0275



1,0002010

$
0.8500



1,100







2010

$
0.9460



700


$
0.9925



7002011

$
0.8265



1,100







2011

$
0.9340



700


$
0.9750



7002011

$
1.3300



900







   Purchased
    Mt. Belvieu TET Propane Put Spread Options
  Put SpreadStrike


Volumes(Per gallon)


(Bbls/d)Bought


Sold2008

$
1.44


$
0.8360



2,000October  December 2008

$
1.38


$
0.8360



594October  December 2008

$
1.38


$
0.8975



3702009

$
1.33


$
0.8725



1,6002009

$
1.33


$
0.8725



6002009

$
1.33


$
0.9650



1002010

$
1.49


$
0.8500



1,1002010

$
1.49


$
0.9460



700   Purchased
    Mt. Belvieu Non-TET Isobutane Puts and Entered into
    Swaps
  Put


SwapStrike


Volumes


Price


Volumes(Per gallon)


(Bbls/d)


(Per gallon)


(Bbls/d)2008

$
0.9900



622


$
1.0450



922008

$
1.0900



250







2009

$
1.0600



450







2009

$
1.1600



100


$
1.2425



1002010

$
1.0350



300







2010

$
1.1145



100


$
1.2025



1002011

$
1.0205



300







2011

$
1.1100



100


$
1.1800



1002011

$
1.7100



200







  53




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##### Table of Contents



Purchased
    Mt. Belvieu Non-TET Isobutane Put Spread Options
  Put SpreadStrike


Volumes(Per barrel)


(Bbls/d)Bought


Sold2008

$
1.67


$
0.9900



400October  December 2008

$
1.71


$
0.9900



2222009

$
1.62


$
1.0600



1752009

$
1.57


$
1.0600



2752009

$
1.62


$
1.1600



1002010

$
1.89


$
1.1145



1002010

$
1.89


$
1.0350



300   Purchased
    Mt. Belvieu Non-TET Normal Butane Puts and Entered into
    Swaps
  Put


SwapStrike


Volumes


Price


Volumes(Per gallon)


(Bbls/d)


(Per gallon)


(Bbls/d)2008

$
0.9875



810


$
1.0400



2712008

$
1.0800



300







2009

$
1.0525



700







2009

$
1.1400



400


$
1.2275



4002009









$
(1.7025
)


(320
)2010

$
1.0300



300







2010

$
1.1000



200


$
1.1850



2002011

$
1.0205



300







2011

$
1.0850



200


$
1.1700



2002011

$
1.7100



350







   Purchased
    Mt. Belvieu Non-TET Normal Butane Put Spread Options
  Put SpreadStrike


Volumes(Per gallon)


(Bbls/d)Bought


Sold2008

$
1.66


$
0.9875



500October  December 2008

$
1.65


$
0.9875



3002009

$
1.58


$
1.0525



1502009

$
1.54


$
1.0525



5502009

$
1.58


$
1.1400



2002010

$
1.88


$
1.1000



2002010

$
1.88


$
1.0300



300  54




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##### Table of Contents



Purchased
    Mt. Belvieu Non-TET Natural Gasoline Puts and Entered into
    Swaps
  Put


SwapStrike


Volumes


Price


Volumes(Per gallon)


(Bbls/d)


(Per gallon)


(Bbls/d)2008

$
1.485



300


$
1.585



3002009

$
1.440



200


$
1.540



2002010

$
1.408



300







2011

$
1.410



300







   Purchased
    Mt. Belvieu Non-TET Natural Gasoline Put Spread
    Options
  Put SpreadStrike


Volumes(Per gallon)


(Bbls/d)Bought


Sold2009

$
1.98


$
1.440



1202010

$
2.54


$
1.408



300   Purchased
    WTI Crude Oil Puts
  PutStrike


Volumes(Per barrel)


(Bbls/d)2008

$
55.00



1,0002008

$
60.00



7002009

$
55.00



1,0002009

$
60.00



5002010

$
55.00



1,0002010

$
60.00



4002011

$
55.00



1,0002011

$
60.00



400   Purchased
    WTI Crude Oil Put Spread Options
  Put SpreadStrike


Volumes(Per barrel)


(Bbls/d)Bought


Sold2008

$
91.50


$
55.00



850October  December 2008

$
97.00


$
55.00



150October  December 2008

$
97.00


$
60.00



6102009

$
86.50


$
55.00



7502009

$
92.00


$
55.00



2502009

$
92.00


$
60.00



5002010

$
118.00


$
55.00



1,0002010

$
118.00


$
60.00



400    55




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##### Table of Contents



Interest Rates.
              Risk Management Oversight.
  Counterparty Risk.
 56




---



##### Table of Contents



Item 4.
    Controls
    and Procedures.   57




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##### Table of Contents



PART II-OTHER
    INFORMATION  Item 1.
    Legal
    Proceedings.    Item 1A.
    Risk
    Factors  Form 10-K
  We may
    not have sufficient cash after establishment of cash reserves to
    pay cash distributions at the current level.
    
    the amount of natural gas gathered and transported on our
    pipelines;
    the amount and NGL content of the natural gas we process;
    the fees we charge and the margins we realize for our services:
    the prices of natural gas, NGLs and crude oil;
    the relationship between natural gas and NGL prices;
    the level of our operating costs and the impact of inflation on
    those costs; and
    the weather in our operating areas.    
    the level of capital expenditures we make;
    the cost of acquisitions, if any;
    the effectiveness of our hedging program;
    our debt service requirements;
    fluctuations in our working capital needs;
    restrictions on distributions contained in our Credit Facility
    and the indentures governing our Senior Notes;
    prevailing economic conditions; and
    the amount of cash reserves established by our Board of
    Directors for the proper conduct of our business. 58




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##### Table of Contents



A
    decrease in our cash flow will reduce the amount of cash we have
    available for distribution to our unitholders.
    Due to
    current economic conditions, our ability to obtain funding under
    our Credit Facility could be impaired.
      
    one or more of our lenders may be unable or otherwise fail to
    meet its funding obligations;
    each time we draw on our Credit Facility, if any of the
    representations or warranties or certain covenants included in
    the agreement are false in any material respect, the lenders may
    refuse to provide funding; and
    if any lender refuses to fund its commitment for any reason,
    whether or not valid, the other lenders are not required to
    provide additional funding to make up for the unfunded portion.    Because
    of the recent deterioration of the credit and capital markets,
    we may be unable to obtain financing from sources other than our
    Credit Facility on acceptable terms or at all.
        Our cash
    flow and profitability depend upon prices and market demand for
    natural gas and NGLs, which are beyond our control and have been
    volatile.
   59




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##### Table of Contents




    the impact of weather on the demand for oil and natural gas;
    the level of domestic oil and natural gas production;
    the availability of imported oil, natural gas, LNG and NGLs;
    international demand for LNG, oil and NGLs;
    actions taken by foreign oil and gas producing nations;
    the availability of local, intrastate and interstate
    transportation systems for natural gas and NGLs;
    the availability of downstream NGL fractionation facilities;
    the availability and marketing of competitive fuels;
    the impact of energy conservation efforts; and
    the extent of governmental regulation and taxation.    Our
    hedging activities do not eliminate our exposure to fluctuations
    in commodity prices and interest rates and may reduce our cash
    flow and subject our earnings to increased volatility.
      
    hedging can be expensive, particularly during periods of
    volatile prices; 60




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##### Table of Contents




    our counterparty in the hedging transaction may default on its
    obligation to pay; and
    available hedges may not correspond directly with the risks
    against which we seek protection. For example:  
    the duration of a hedge may not match the duration of the risk
    against which we seek protection;
    variations in the index we use to price a commodity hedge may
    not adequately correlate with variations in the index we use to
    sell the physical commodity (known as basis risk); and
    we may not produce or process sufficient volumes to cover swap
    arrangements we enter into for a given period. If our actual
    volumes are lower than the volumes we estimated when entering
    into a swap for the period, we might be forced to satisfy all or
    a portion of our derivative obligation without the benefit of
    cash flow from our sale or purchase of the underlying physical
    commodity, which could adversely affect our liquidity.    We are
    exposed to the credit risk of our customers and other
    counterparties, and a general increase in the nonpayment and
    nonperformance by counterparties could have an adverse impact on
    our cash flows, results of operations and financial
    condition.
    Increases
    in interest rates could adversely affect our unit
    price.
    Item 6.
    Exhibits.    Number

Description2
.1

Purchase Agreement dated as of August 31, 2007 among Copano
    Energy, L.L.C., Copano Energy/Rocky Mountains, L.L.C., and
    Cantera Resources Holdings LLC (incorporated by reference to
    Exhibit 2.1 to Current Report on Form 8-K filed October 25,
    2007).2
.2

Contribution Agreement dated as of April 5, 2007 by and among
    Cimmarron Gathering GP, LLC, Taos Gathering, LP and Cimmarron
    Transportation, L.L.C. and Copano Energy, L.L.C. (incorporated
    by reference to Exhibit 2.1 to Current Report on Form 8-K filed
    April 11, 2007). 61




---



##### Table of Contents



Number

Description3
.1

Certificate of Formation of Copano Energy Holdings, L.L.C. (now
    Copano Energy, L.L.C.) (incorporated by reference to Exhibit 3.1
    to Registration Statement on Form S-1 filed July 30, 2004).3
.2

Certificate of Amendment to Certificate of Formation of Copano
    Energy Holdings, L.L.C. (now Copano Energy, L.L.C.)
    (incorporated by reference to Exhibit 3.2 to Registration
    Statement on Form S-1 filed July 30, 2004).3
.3

Third Amended and Restated Limited Liability Company Agreement
    of Copano Energy, L.L.C. (incorporated by reference to Exhibit
    3.1 to Current Report on Form 8-K filed April 30, 2007).3
.4

Amendment No. 1 to Third Amended and Restated Limited Liability
    Company Agreement of Copano Energy, L.L.C. (incorporated by
    reference to Exhibit 3.1 to Current Report on Form 8-K filed May
    4, 2007).3
.5

Amendment No. 2 to Third Amended and Restated Limited Liability
    Company Agreement of Copano Energy, L.L.C., dated October 19,
    2007 (incorporated by reference to Exhibit 3.1 to Current Report
    on Form 8-K filed October 25, 2007).3
.6

Amendment No. 3 to Third Amended and Restated Limited Liability
    Company Agreement of Copano Energy, L.L.C., dated October 19,
    2007 (incorporated by reference to Exhibit 3.2 to Current Report
    on Form 8-K filed October 25, 2007).4
.1

Indenture dated as of February 7, 2006, among Copano Energy,
    L.L.C., Copano Energy Finance Corporation, the Guarantors
    parties thereto and U.S. Bank National Association, as trustee
    (incorporated by reference to Exhibit 4.1 to Current Report on
    Form 8-K filed February 8, 2006).4
.2

Rule 144A Global Note representing $224,500,000 principal amount
    of 8.125% Senior Notes due 2016 (incorporated by reference
    to Exhibit 4.2 to Current Report on Form 8-K filed February 8,
    2006).4
.3

Regulation S Global Note representing $500,000 principal amount
    of 8.125% Senior Notes due 2016 (incorporated by reference
    to Exhibit 4.3 to Current Report on Form 8-K filed February 8,
    2006).4
.4

Registration Rights Agreement dated as of May 1, 2007, by and
    among Copano Energy, L.L.C. and Cimmarron Gathering GP, LLC,
    Taos Gathering, LP and Cimmarron Transportation, LLC
    (incorporated by reference to Exhibit 4.1 to Current Report on
    Form 8-K filed May 4, 2007).4
.5

Registration Rights Agreement by and between Copano Energy,
    L.L.C. and Cantera Resources Holdings LLC, dated October 19,
    2007 (incorporated by reference to Exhibit 4.1 to Current Report
    on Form 8-K filed October 25, 2007).4
.6

Registration Rights Agreement by and among Copano Energy, L.L.C.
    and the Purchasers, dated October 19,2007  (incorporated by
    reference to Exhibit 4.2 to Current Report on Form 8-K filed
    October 25, 2007).4
.7

Indenture, dated May 16, 2008, among Copano Energy, L.L.C.,
    Copano Energy Finance Corporation, the Subsidiary Guarantors
    named therein and U.S. Bank National Association, as trustee
    (incorporated by reference to Exhibit 4.1 to Current Report on
    Form 8-K filed May 19, 2008).4
.8

Form of Global Note representing 7.75% Senior Notes due
    2018 (included in 144A/Regulation S Appendix to Exhibit 4.7
    above).4
.9

Registration Rights Agreement, dated May 16, 2008, among Copano
    Energy, L.L.C., Copano Energy Finance Corporation, the
    Subsidiary Guarantors named therein and the Initial Purchasers
    named therein (incorporated by reference to Exhibit 4.2 to
    Current Report on Form 8-K filed May 19, 2008).31
.1*

Sarbanes-Oxley Section 302 certification of John R. Eckel, Jr.
    (Chief Executive Officer) for Copano Energy, L.L.C.31
.2*

Sarbanes-Oxley Section 302 certification of Matthew J. Assiff
    (Chief Financial Officer) for Copano Energy, L.L.C.32
.1*

Sarbanes-Oxley Section 906 certification of John R. Eckel, Jr.
    (Chief Executive Officer) for Copano Energy, L.L.C.32
.2*

Sarbanes-Oxley Section 906 certification of Matthew J. Assiff
    (Chief Financial Officer) for Copano Energy, L.L.C.     *
    
    Filed herewith. 62




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##### Table of Contents



SIGNATURES
      By:
    /s/  John
    R. Eckel, Jr.     By:
    /s/  Matthew
    J. Assiff    63