##### 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,
    2009ORo

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(State or Other Jurisdiction
    of
    Incorporation or Organization)

51-0411678(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
  Regulation S-T o 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, 2009 and December 31, 2008


3Unaudited Consolidated Statements of Operations
    for the Three and Nine Months Ended September 30, 2009 and
    2008


4Unaudited Consolidated Statements of Cash Flows
    for the Nine Months Ended September 30, 2009 and 2008


5Unaudited Consolidated Statement of Members
    Capital and Comprehensive Income (Loss) for the Nine Months
    Ended September 30, 2009 and 2008


6Notes to Unaudited Consolidated Financial
    Statements


7Item 2.


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


40Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


61Item 4.


Controls and Procedures


66PART II  OTHER
    INFORMATIONItem 1.


Legal Proceedings


67Item 1A.


Risk Factors


67Item 6.


Exhibits


67EX-31.1EX-31.2EX-32.1EX-32.2   2




---



##### Table of Contents



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


December 31,2009


2008(In thousands, except unit information)ASSETSCurrent assets:Cash and cash equivalents

$
35,378


$
63,684Accounts receivable, net


81,963



96,028Risk management assets


47,128



76,440Prepayments and other current assets


3,688



4,891Discontinued operations (Note 13)


5,608



5,465Total current assets


173,765



246,508Property, plant and equipment, net


834,756



819,099Intangible assets, net


191,842



198,440Investment in unconsolidated affiliates


627,068



640,598Escrow cash


1,858



1,858Risk management assets


31,346



82,892Other assets, net


21,924



24,270Total assets

$
1,882,559


$
2,013,665LIABILITIES AND MEMBERS CAPITALCurrent liabilities:Accounts payable

$
89,285


$
103,849Accrued interest


9,549



11,904Accrued tax liability


495



784Risk management liabilities


8,019



6,272Other current liabilities


10,222



16,787Discontinued operations (Note 13)


384



Total current liabilities


117,954



139,596Long-term debt (includes $647 and $704 bond premium as of
    September 30, 2009 and December 31, 2008, respectively)


842,837



821,119Deferred tax provision


2,256



1,718Risk management and other noncurrent liabilities


11,966



13,274Commitments and contingencies (Note 9)Members capital:Common units, no par value, 54,601,458 units and
    53,965,288 units issued and outstanding as of
    September 30, 2009 and December 31, 2008, respectively


878,994



865,343Class C units, no par value, 0 units and
    394,853 units issued and outstanding as of
    September 30, 2009 and December 31, 2008, respectively






13,497Class D units, no par value, 3,245,817 units issued
    and outstanding as of September 30, 2009 and
    December 31, 2008


112,454



112,454Paid-in capital


41,168



33,734Accumulated deficit


(133,900
)


(54,696
)Accumulated other comprehensive income


8,830



67,626907,546



1,037,958Total liabilities and members capital

$
1,882,559


$
2,013,665    3




---



##### Table of Contents



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


Nine Months EndedSeptember 30,


September 30,2009


2008


2009


2008(In thousands, except per unit information)Revenue:Natural gas sales

$
66,747


$
204,187


$
226,243


$
620,074Natural gas liquids sales


99,098



174,867



271,392



507,979Transportation, compression and processing fees


13,926



13,772



42,838



42,896Condensate and other


9,760



10,044



30,319



36,582Total revenue


189,531



402,870



570,792



1,207,531Costs and expenses:Cost of natural gas and natural gas
    liquids(1)


129,617



332,346



395,114



999,580Transportation(1)


6,484



9,151



18,211



15,688Operations and maintenance


13,202



15,211



38,764



39,770Depreciation and amortization


14,575



12,700



41,071



36,929General and administrative


9,200



11,042



29,246



33,828Taxes other than income


836



723



2,349



2,193Equity in earnings from unconsolidated affiliates


(2,529
)


(2,170
)


(6,112
)


(7,354
)Total costs and expenses


171,385



379,003



518,643



1,120,634Operating income


18,146



23,867



52,149



86,897Other income (expense):Interest and other income


1,065



357



1,119



1,091Gain on retirement of unsecured debt










3,939



Interest and other financing costs


(15,440
)


(15,470
)


(41,889
)


(42,939
)Income before income taxes and discontinued operations


3,771



8,754



15,318



45,049Provision for income taxes


(304
)


(197
)


(1,039
)


(846
)Income from continuing operations


3,467



8,557



14,279



44,203Discontinued operations, net of tax (Note 13)


262



166



1,393



2,224Net income

$
3,729


$
8,723


$
15,672


$
46,427Basic net income per unit:Income per unit from continuing operations

$
0.06


$
0.18


$
0.26


$
0.93Income per unit from discontinued operations


0.01



0.00



0.03



0.04Net income per unit

$
0.07


$
0.18


$
0.29


$
0.97Weighted average number of units


54,565



47,868



54,313



47,640Diluted net income per common unit:Income per unit from continuing operations

$
0.06


$
0.15


$
0.25


$
0.76Income per unit from discontinued operations


0.00



0.00



0.02



0.04Net income per unit

$
0.06


$
0.15


$
0.27


$
0.80Weighted average number of units


58,036



57,939



57,953



57,891     (1)
    
    Exclusive of operations and maintenance and depreciation and
    amortization shown separately below.   4




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  UNAUDITED
    CONSOLIDATED STATEMENTS OF CASH FLOWS
  Nine Months EndedSeptember 30,2009


2008(In thousands)Cash Flows From Operating Activities:Net income

$
15,672


$
46,427Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization


41,628



37,092Amortization of debt issue costs


3,060



2,552Equity in earnings from unconsolidated affiliates


(6,112
)


(7,354
)Distributions from unconsolidated affiliates


18,333



18,387Gain on retirement of unsecured debt


(3,939
)


Non-cash (gain) loss on risk management activities, net


(1,443
)


9,485Equity-based compensation


6,692



3,542Deferred tax provision


538



294Other non-cash items


202



(132
)Changes in assets and liabilities:Accounts receivable


14,857



6,879Prepayments and other current assets


1,196



655Risk management activities


23,462



(35,397
)Accounts payable


(12,034
)


21,259Other current liabilities


(1,363
)


(2,468
)Net cash provided by operating activities


100,749



101,221Cash Flows From Investing Activities:Additions to property, plant and equipment


(51,540
)


(115,292
)Additions to intangible assets


(1,756
)


(4,710
)Acquisitions


(6,003
)


(83
)Investment in unconsolidated affiliates


(3,240
)


(25,623
)Distributions from unconsolidated affiliates


3,191



1,971Escrow cash






(1,856
)Other


(1,358
)


(1,232
)Net cash used in investing activities


(60,706
)


(146,825
)Cash Flows From Financing Activities:Proceeds from long-term debt


50,000



539,000Repayment of long-term debt


(10,000
)


(314,000
)Retirement of unsecured debt


(14,286
)


Deferred financing costs






(6,670
)Distributions to unitholders


(94,217
)


(76,623
)Capital contributions from pre-IPO investors






4,103Equity offering costs






(47
)Proceeds from option exercises


154



1,001Net cash (used in) provided by financing activities


(68,349
)


146,764Net (decrease) increase in cash and cash equivalents


(28,306
)


101,160Cash and cash equivalents, beginning of year


63,684



72,665Cash and cash equivalents, end of period

$
35,378


$
173,825    5




---



##### 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)


Income (Loss)


Total


Income (Loss)(In thousands)Balance, December 31, 2008


53,965


$
865,343



395


$
13,497



3,246


$
112,454






$



$
33,734


$
(54,696
)

$
67,626


$
1,037,958Conversion of Class C Units into common units


395



13,497



(395
)


(13,497
)

































$
Distributions to unitholders






































(94,876
)






(94,876
)


Option exercises


15



154







































154Equity-based compensation


































5,982











5,982



Vested restricted units


57















































Vested phantom units


27















































Vested unit awards


142































1,452











1,452



Net income






































15,672







15,672



15,672Derivative settlements reclassified to income










































(35,103
)


(35,103
)


(35,103
)Unrealized loss-change in fair value of derivatives










































(23,693
)


(23,693
)


(23,693
)Comprehensive loss

















































$
(43,124
)Balance, September 30, 2009


54,601


$
878,994






$




3,246


$
112,454






$



$
41,168


$
(133,900
)

$
8,830


$
907,546Balance, 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




---



##### 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., its subsidiaries and entities it
    manages or operates
    Basis
    of Presentation and Principles of Consolidation
       7




---



##### 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
  GAAP Codification
  Accounting
    Standards Codification (ASC) and the Hierarchy of
    Generally Accepted Accounting Principles
    (GAAP),
  Subsequent
    Events
  Subsequent Events
  Interim
    Disclosures about Fair Value of Financial
    Instruments
  28-1, Interim Disclosures about Fair Value of Financial
    Instruments 107-1),
  Business
    Combinations
  Business Combinations
 8




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 2  New
    Accounting Pronouncements (Continued)
    Disclosures
    about Derivative Instruments and Hedging Activities 
    an amendment of FASB Statement No. 133
  815-10, Disclosures about Derivative Instruments and Hedging
    Activities  an amendment of FASB Statement
    No. 133 815-10 Accounting for
    Derivative Instruments and Hedging Activities, 815-10 815-10.
  Useful
    Life of Intangible Assets
  350-30, Determination of the Useful Life of Intangible
    Assets No. 142-3), Goodwill and Other Intangible Assets, 350-30
  Variable
    Interest Entities
  810-10 Amending FASB interpretation No. 46(R)
  Note 3  Intangible
    Assets
  rights-of-way, 350-30 No. 142-3),
 9




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 3  Intangible
    Assets (Continued)
  2009  2010  2011 2012 2013 2014 
    September 30,


December 31,2009


2008Rights-of-way
    and easements, at cost

$
114,925


$
113,169Less accumulated amortization for
    rights-of-way
    and easements


(17,075
)


(11,919
)Contracts


107,916



107,916Less accumulated amortization for contracts


(17,874
)


(14,901
)Customer relationships


4,864



4,864Less accumulated amortization for customer relationships


(914
)


(689
)Intangible assets, net

$
191,842


$
198,440   rights-of-way rights-of-way
  Note 4  Investment
    in Unconsolidated Affiliates
   10




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 4  Investment
    in Unconsolidated Affiliates (Continued)
    Bighorn


Fort Union


Southern Dome


Webb DuvalOperating revenue

$
27,885


$
47,100


$
12,961


$
1,597Operating expenses


(11,404
)


(5,525
)


(10,818
)


(1,293
)Depreciation and amortization


(3,939
)


(5,977
)


(643
)


(592
)Interest income (expense) and other


6



(2,965
)


6



Net income (loss)


12,548



32,633



1,506



(288
)Ownership %


51
%


37.04
%


69.5
%


62.5
%6,399



12,087



1,047



(180
)Priority allocation of earnings and other


540



(286
)






Copanos share of management fees charged


495



63



130



103Amortization of difference between the carried investment and
    the underlying equity in net assets


(9,586
)


(4,817
)


(7
)


15Equity in (loss) earnings from unconsolidated affiliates

$
(2,152
)

$
7,047


$
1,170


$
(62
)Distributions

$
8,344


$
10,316


$
2,016


$
767Current assets

$
10,939


$
12,048


$
2,855


$
409Noncurrent assets


98,678



211,859



15,753



6,379Current liabilities


(2,145
)


(19,751
)


(3,901
)


(843
)Noncurrent liabilities






(91,654
)






(57
)Net assets

$
107,472


$
112,502


$
14,707


$
5,888  11




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 4  Investment
    in Unconsolidated Affiliates (Continued)
    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 and amortization


(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


$
1,125   Note 5  Long-Term
    Debt
    September 30,


December 31,2009


2008Long-term debt:Credit Facility

$
260,000


$
220,000Senior Notes:8.125% senior notes due 2016


332,665



332,665Unamortized bond premium-senior notes due 2016


647



7047.75% senior notes due 2018


249,525



267,750Total Senior Notes


582,837



601,119Total

$
842,837


$
821,119  12




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 5  Long-Term
    Debt (Continued)
  Senior
    Secured Revolving Credit Facility
        
    a minimum EBITDA to interest expense ratio (using four
    quarters EBITDA as defined under the Credit Facility) of
    2.5 to 1.0;
    a maximum total debt to EBITDA ratio of 5.0 to 1.0 (with no
    future reductions) with the option to increase the total debt to
    EBITDA ratio to not more than 5.5 to 1.0 for a period of up to
    nine months following an acquisition or a series of acquisitions
    totaling $50 million in a
    12-month
    period (subject to an increased applicable interest rate margin
    and commitment fee rate).      Senior
    Notes
  8.125% Senior Notes Due 2016.
    7.75% Senior Notes Due 2018.
 13




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 5  Long-Term
    Debt (Continued)
    General.
     14




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 5  Long
    Term Debt (Continued)
  CONDENSED
    CONSOLIDATING BALANCE SHEETS
  September 30, 2009


December 31, 2008Investment 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

$
4,460


$



$
30,918


$



$



$
35,378


$
20,417


$



$
43,267


$



$



$
63,684Accounts receivable, net


28







81,935











81,963



1







96,027











96,028Intercompany receivable


47,328



(1
)


(47,327
)














110,551







(110,551
)










Risk management assets










47,128











47,128











76,440











76,440Prepayments and other current assets


1,927







1,761











3,688



911







3,980











4,891Discontinued operations










5,608











5,608











5,465











5,465Total current assets


53,743



(1
)


120,023











173,765



131,880







114,628











246,508Property, plant and equipment, net


106







834,650











834,756



136







818,963











819,099Intangible assets, net










191,842











191,842











198,440











198,440Investment in unconsolidated affiliates










627,068



627,068



(627,068
)


627,068











640,598



640,598



(640,598
)


640,598Investment in consolidated subsidiaries


1,694,001















(1,694,001
)






1,723,814















(1,723,814
)


Escrow cash










1,858











1,858











1,858











1,858Risk management assets










31,346











31,346











82,892











82,892Other assets, net


16,749







5,175











21,924



19,809







4,461











24,270Total assets

$
1,764,599


$
(1
)

$
1,811,962


$
627,068


$
(2,321,069
)

$
1,882,559


$
1,875,639


$



$
1,861,840


$
640,598


$
(2,364,412
)

$
2,013,665LIABILITIES AND MEMBERS/PARTNERS CAPITALCurrent liabilities:Accounts payable

$
21


$



$
89,264


$



$



$
89,285


$
2


$



$
103,847


$



$



$
103,849Accrued interest


8,828







721











9,549



11,878







26











11,904Accrued tax liability


495



















495



784



















784Risk management liabilities










8,019











8,019











6,272











6,272Other current liabilities


2,266







7,956











10,222



1,731







15,056











16,787Discontinued liabilities










384











384























Total current liabilities


11,610







106,344











117,954



14,395







125,201











139,596Long-term debt


842,837



















842,837



821,119



















821,119Deferred tax provision


2,256



















2,256



1,718



















1,718Risk management and other noncurrent liabilities


350







11,616











11,966



449







12,825











13,274Members/Partners capital:Common units


878,994



















878,994



865,343



















865,343Class C units


























13,497



















13,497Class D units


112,454



















112,454



112,454



















112,454Paid-in capital


41,168



1



1,203,367



602,828



(1,806,196
)


41,168



33,734



1



1,544,237



629,359



(2,173,597
)


33,734Accumulated (deficit) earnings


(133,900
)


(2
)


481,805



24,240



(506,043
)


(133,900
)


(54,696
)


(1
)


111,951



11,239



(123,189
)


(54,696
)Accumulated other comprehensive income (loss)


8,830







8,830







(8,830
)


8,830



67,626







67,626







(67,626
)


67,626907,546



(1
)


1,694,002



627,068



(2,321,069
)


907,546



1,037,958







1,723,814



640,598



(2,364,412
)


1,037,958Total liabilities and members/partners capital

$
1,764,599


$
(1
)

$
1,811,962


$
627,068


$
(2,321,069
)

$
1,882,559


$
1,875,639


$



$
1,861,840


$
640,598


$
(2,364,412
)

$
2,013,665  15




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 5  Long
    Term Debt (Continued)
  CONDENSED
    CONSOLIDATING STATEMENTS OF OPERATIONS
  Three Months Ended September 30,2009


2008Investment 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

$



$



$
66,747


$



$



$
66,747


$



$



$
204,187


$



$



$
204,187Natural gas liquids sales










99,098











99,098











174,867











174,867Transportation, compression and processing fees










13,926











13,926











13,772











13,772Condensate and other










9,760











9,760











10,044











10,044Total revenue










189,531











189,531











402,870











402,870Costs and expenses:Cost of natural gas and natural gas liquids










129,617











129,617











332,346











332,346Transportation










6,484











6,484











9,151











9,151Operations and maintenance










13,202











13,202



(374
)






15,585











15,211Depreciation and amortization


10







14,565











14,575



11







12,689











12,700General and administrative


4,250







4,950











9,200



6,400







4,642











11,042Taxes other than income










836











836











723











723Equity in (earnings) loss from unconsolidated affiliates










(2,529
)


(2,529
)


2,529



(2,529
)










(2,170
)


(2,170
)


2,170



(2,170
)Total costs and expenses


4,260







167,125



(2,529
)


2,529



171,385



6,037







372,966



(2,170
)


2,170



379,003Operating (loss) income


(4,260
)






22,406



2,529



(2,529
)


18,146



(6,037
)






29,904



2,170



(2,170
)


23,867Interest and other income










1,065











1,065



16







341











357Interest and other financing costs


(13,364
)






(2,076
)










(15,440
)


(14,354
)






(1,116
)










(15,470
)(Loss) income before income taxes, discontinued operations and
    equity in earnings from consolidated subsidiaries


(17,624
)






21,395



2,529



(2,529
)


3,771



(20,375
)






29,129



2,170



(2,170
)


8,754Provision for income taxes


(304
)


















(304
)


(197
)


















(197
)(Loss) income before discontinued operations and equity in
    earnings from consolidated subsidiaries


(17,928
)






21,395



2,529



(2,529
)


3,467



(20,572
)






29,129



2,170



(2,170
)


8,557Discontinued operations, net of tax










262











262











166











166Loss) income before equity in earnings from consolidated
    subsidiaries


(17,928
)






21,657



2,529



(2,529
)


3,729



(20,572
)






29,295



2,170



(2,170
)


8,723Equity in earnings (loss) from consolidated subsidiaries


21,657















(21,657
)






29,295















(29,295
)


Net income (loss)

$
3,729


$



$
21,657


$
2,529


$
(24,186
)

$
3,729


$
8,723


$



$
29,295


$
2,170


$
(31,465
)

$
8,723  16




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 5  Long
    Term Debt (Continued)
  Nine Months Ended September 30,2009


2008Investment 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

$



$



$
226,243


$



$



$
226,243


$



$



$
620,074


$



$



$
620,074Natural gas liquids sales










271,392











271,392











507,979











507,979Transportation, compression and processing fees










42,838











42,838











42,896











42,896Condensate and other










30,319











30,319











36,582











36,582Total revenue










570,792











570,792











1,207,531











1,207,531Costs and expenses:Cost of natural gas and natural gas liquids










395,114











395,114











999,580











999,580Transportation










18,211











18,211











15,688











15,688Operations and maintenance










38,764











38,764



690







39,080











39,770Depreciation and amortization


30







41,041











41,071



34







36,895











36,929General and administrative


14,169







15,077











29,246



19,823







14,005











33,828Taxes other than income










2,349











2,349











2,193











2,193Equity in (earnings) loss from unconsolidated affiliates










(6,112
)


(6,112
)


6,112



(6,112
)










(7,354
)


(7,354
)


7,354



(7,354
)Total costs and expenses


14,199







504,444



(6,112
)


6,112



518,643



20,547







1,100,087



(7,354
)


7,354



1,120,634Operating (loss) income


(14,199
)






66,348



6,112



(6,112
)


52,149



(20,547
)






107,444



7,354



(7,354
)


86,897Interest and other income










1,119











1,119



40







1,051











1,091Gain on retirement of unsecured debt


3,939



















3,939























Interest and other financing costs


(39,583
)






(2,306
)










(41,889
)


(37,727
)






(5,212
)










(42,939
)(Loss) income before income taxes, discontinued operations and
    equity in earnings from consolidated subsidiaries


(49,843
)






65,161



6,112



(6,112
)


15,318



(58,234
)






103,283



7,354



(7,354
)


45,049Provision for income taxes


(1,039
)


















(1,039
)


(846
)


















(846
)(Loss) income before discontinued operations and equity in
    earnings from consolidated subsidiaries


(50,882
)






65,161



6,112



(6,112
)


14,279



(59,080
)






103,283



7,354



(7,354
)


44,203Discontinued operations, net of tax










1,393











1,393











2,224











2,224Loss) income before equity in earnings from consolidated
    subsidiaries


(50,882
)






66,554



6,112



(6,112
)


15,672



(59,080
)






105,507



7,354



(7,354
)


46,427Equity in earnings (loss) from consolidated subsidiaries


66,554















(66,554
)






105,507















(105,507
)


Net income (loss)

$
15,672


$



$
66,554


$
6,112


$
(72,666
)

$
15,672


$
46,427


$



$
105,507


$
7,354


$
(112,861
)

$
46,427  17




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 5  Long
    Term Debt (Continued)
  CONDENSED
    CONSOLIDATING STATEMENTS OF CASH FLOWS
  Nine Months Ended September 30,2009


2008Investment 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 provided by (used in) operating activities

$
14,822


$



$
85,927


$
18,333


$
(18,333
)

$
100,749


$
(115,305
)

$



$
216,526


$
18,387


$
(18,387
)

$
101,221Cash Flows From Investing Activities:Net cash provided by (used in) investing activities


37,570







(60,706
)


(49
)


(37,521
)


(60,706
)


65,010







(146,825
)


(23,652
)


(41,358
)


(146,825
)Cash Flows From Financing Activities:Net cash provided by (used in) financing activities


(68,349
)






(37,570
)


3,240



34,330



(68,349
)


146,764







(65,010
)


25,623



39,387



146,764Net (decrease) increase in cash and cash equivalents


(15,957
)






(12,349
)


21,524



(21,524
)


(28,306
)


96,469







4,691



20,358



(20,358
)


101,160Cash and cash equivalents, beginning of year


20,417







43,267



30,212



(30,212
)


63,684



10,018







62,647



4,382



(4,382
)


72,665Cash and cash equivalents, end of period

$
4,460


$



$
30,918


$
51,736


$
(51,736
)

$
35,378


$
106,487


$



$
67,338


$
24,740


$
(24,740
)

$
173,825  18




---



##### Table of Contents








COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 6  Members
    Capital and Distributions
  Class C
    Units
    Class D
    Units
  one-for-one
  Distributions
    DistributionQuarter Ending

Per Unit

Date Declared

Record Date

Payment Date

AmountDecember 31, 2008

$0.5750

January 14, 2009

February 2, 2009

February 13, 2009

$31,466,000March 31, 2009

$0.5750

April 15, 2009

May 1, 2009

May 15, 2009

$31,748,000June 30, 2009

$0.5750

July 15, 2009

August 3, 2009

August 13, 2009

$31,871,000September 30, 2009

$0.5750

October 14, 2009

November 2, 2009

November 12, 2009

$31,860,000   Accounting
    for Equity-Based Compensation
    Restricted Common Units.
    WeightedNumber of


AverageRestricted


Grant-DateUnits


Fair ValueOutstanding at beginning of year


169,769


$
22.35Vested


(56,922
)


20.83Forfeited


(5,326
)


27.80Outstanding at end of period


107,521


$
22.88    19




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 6  Members
    Capital and Distributions (Continued)
  Phantom Units.
    WeightedNumber of


AveragePhantom


Grant-DateUnits


Fair ValueOutstanding at beginning of year


588,910


$
34.18Granted


212,700



15.09Vested


(39,749
)


38.56Forfeited


(70,659
)


28.80Outstanding at end of period


691,202


$
28.61     Unit Options.
    Number ofUnits


WeightedUnderlying


AverageOptions


Exercise PriceOutstanding at beginning of year


1,411,006


$
23.78Granted


33,000



14.89Exercised


(14,788
)


10.41Cancelled


(14,264
)


7.69Forfeited


(48,124
)


28.19Outstanding at end of period


1,366,830


$
23.51     20




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 6  Members
    Capital and Distributions (Continued)
  Nine MonthsEnded September 30,2009


2008Weighted average exercise price


$14.89



$33.76Expected volatility


29.76%-32.25
%


19.96%-20.72
%Distribution yield


6.68%-6.69
%


6.18%-6.28
%Risk-free interest rate


1.71%-3.28
%


2.71%-3.94
%Expected term (in years)


6.5



6.5Weighted average grant-date fair value of options granted


$2.07



$3.08Total intrinsic value of options exercised


$91,000



$990,000     Unit Appreciation Rights.
    Number ofUnits


WeightedUnderlying


AverageUARs


Exercise PriceOutstanding at beginning of year





$
Granted


298,000



15.09Forfeited


(15,100
)


15.09Outstanding at end of period


282,900


$
15.09     Nine Months EndedSeptember 30, 2009Weighted average exercise price


$15.09Expected volatility


30.85%-64.76
%Distribution yield


6.76%-8.47
%Risk-free interest rate


0.90%-2.99
%Expected term (in years)


1.8-5.8Weighted average grant-date fair value of appreciation rights
    granted


$3.04Total intrinsic value of appreciation rights exercised


$     Unit Awards.
 21




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 6  Members
    Capital and Distributions (Continued)
    Accounting
    for Certain Financial Instruments With Characteristics of Both
    Liabilities and Equity,
    Note 7  Net
    Income Per Unit
  Earnings Per Share
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2009


2008


2009


2008Net income available  basic and diluted

$
3,729


$
8,723


$
15,672


$
46,427Basic weighted average units


54,565



47,868



54,313



47,640Dilutive weighted average
    units(1)(2)


58,036



57,939



57,953



57,891Basic net income per unit:Income per unit from continuing operations

$
0.06


$
0.18


$
0.26


$
0.93Income per unit from discontinued operations


0.01



0.00



0.03



0.04Net income per unit

$
0.07


$
0.18


$
0.29


$
0.97Diluted net income per unit:Income per unit from continuing
    operations(1)(2)

$
0.06


$
0.15


$
0.25


$
0.76Income per unit from discontinued
    operations(1)(2)


0.00



0.00



0.02



0.04Net income per unit

$
0.06


$
0.15


$
0.27


$
0.80  22




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 7  Net
    Income Per Unit (Continued)
    (1)
    
    Our potentially dilutive common equity includes the following:  Three Months Ended

Nine Months EndedSeptember 30,

September 30,2009

2008

2009

2008(In thousands)Employee options


114



356



93



415Unit appreciation rights














Restricted units


15



63



5



62Phantom units


33



18



58



23Contingent incentive plan unit awards


63







63



Class C units






790



175



905Class D units


3,246



3,246



3,246



3,246Class 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 30,2009

2008

2009

2008(In thousands)Employee options


1,253



1,061



1,273



1,002Unit appreciation rights


283







283



Restricted units


93



108



102



109Phantom units


658



574



633



568   Note 8  Related
    Party Transactions
  Operations
    Services
   23




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 8  Related
    Party Transactions (Continued)
    Natural
    Gas and Related Transactions
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2009


2008


2009


2008Affiliates of Mr. Eckel:Natural gas
    sales(1)

$



$
29


$
1


$
103Gathering and compression
    services(2)


5



3



16



17Natural gas
    purchases(3)


183



304



748



1,018Payable by us as of September 30,
    2009(4)










47Webb Duval:Natural gas
    sales(1)


209



590



804



590Natural gas
    purchases(3)


87



313



320



1,416Transportation
    costs(5)


77



89



260



291Management
    fees(6)


56



55



166



162Reimbursable
    costs(6)


158



171



458



494Payable to us as of September 30,
    2009(7)










667Payable by us as of September 30,
    2009(4)










6Southern Dome:Management
    fees(6)


63



63



188



188Reimbursable
    costs(6)


107



157



262



346Payable to us as of September 30,
    2009(7)










484Bighorn:Gathering
    costs(5)


65



144



286



460Compressor rental
    fees(8)


399







564



Management
    fees(6)


135



68



406



205Reimbursable
    costs(6)


597



779



1,760



1,454Payable to us as of September 30,
    2009(7)










1,173Payable by us as of September 30,
    2009(4)










46Fort Union:Gathering
    costs(5)


2,054



2,213



6,093



6,319Treating
    costs(3)


127



276



461



627Management
    fees(6)


57



24



170



71Reimbursable
    costs(6)


40







207



Payable to us as of September 30,
    2009(7)










59Payable by us as of September 30,
    2009(4)










40Other:Natural gas
    sales(1)


70



142



167



319Condensate and other






27







27Payable to us as of September 30,
    2009(7)










67  24




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 8  Related
    Party Transactions (Continued)
    (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)
    
    Included in accounts payable on the
    consolidated balance sheets.(5)
    
    Costs included in transportation on
    our consolidated statements of operations.(6)
    
    Management fees and reimbursable
    costs received from our unconsolidated affiliates comprise the
    total compensation paid to us by our unconsolidated affiliates
    and is included in general and administrative expenses on our
    consolidated statements of operations.(7)
    
    Included in accounts receivable on
    the consolidated balance sheets.(8)
    
    Revenues included in condensate and
    other on our consolidated statements of operations.    Other
    Transactions
    Note 9  Commitments
    and Contingencies
  Commitments
     25




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 9  Commitments
    and Contingencies (Continued)
      sub-contracted
  Regulatory
    Compliance
    Litigation
     26




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 9  Commitments
    and Contingencies (Continued)
      Definitive
    Purchase Agreement
  151-mile, 24-inch 09-38-000).
  Note 10  Supplemental
    Disclosures to the Statements of Cash Flows
  Nine Months EndedSeptember 30,2009

2008(In thousands)Cash payments for interest, net of $2,982,000 and $2,261,000
    capitalized in 2009 and 2008, respectively

$
41,820


$
35,136Cash payments for federal and state income taxes

$
790


$
492     Note 11  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 11  Financial
    Instruments (Continued)
        mark-to-market mark-to-market
    Purchased
    CenterPoint East Natural Gas Puts
  PutPut Strike

Put Volumes(Per MMBtu)

(MMBtu/d)2009

$
6.9500



5,000   Purchased
    Houston Ship Channel Index Natural Gas Options
  Call Spread

CallCall Strike(Per MMBtu)

Call Volumes

Strike

VolumeBought

Sold

(MMBtu/d)

(Per MMBtu)

(MMBtu/d)2009

$
7.7500


$
10.0000



8,000


$
10.0000



10,0002010

$
7.3500


$
10.0000



7,100


$
10.0000



10,0002011

$
6.9500


$
10.0000



7,100


$
10.0000



10,000  28




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 11  Financial
    Instruments (Continued)
  Purchased
    Mt. Belvieu Purity Ethane Puts and Entered into Swaps
  Put

SwapStrike

Volumes

Price

Volumes(Per gallon)

(Bbls/d)

(Per gallon)

(Bbls/d)2009

$
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
  Put SpreadStrike

Volumes(Per gallon)

(Bbls/d)Bought

Sold2009

$
0.8300


$
0.5900



1,1002009

$
0.7900


$
0.5900



1,100   Purchased
    Mt. Belvieu TET Propane Puts and Entered into Swaps
  Put

SwapStrike

Volumes

Price

Volumes(Per gallon)

(Bbls/d)

(Per gallon)

(Bbls/d)2009

$
0.8725



2,200







2009

$
0.9650



1,000
(1)

$
1.0275



2502010

$
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







     (1)
    
    Includes 423 Bbls/d that are not designated as a cash flow
    hedge under hedge accounting.  Purchased
    Mt. Belvieu TET Propane Put Spread Options
  Put SpreadStrike

Volumes(Per gallon)

(Bbls/d)Bought

Sold2009

$
1.3300


$
0.8725



1,6002009

$
1.3300


$
0.8725



6002009

$
1.3300


$
0.9650



1002010

$
1.4900


$
0.8500



1,1002010

$
1.4900


$
0.9460



700  29




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 11  Financial
    Instruments (Continued)
  Purchased
    Mt. Belvieu Non-TET Isobutane Puts and Entered into
    Swaps
  Put

SwapStrike

Volumes

Price

Volumes(Per gallon)

(Bbls/d)

(Per gallon)

(Bbls/d)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







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

Volumes(Per gallon)

(Bbls/d)Bought

Sold2009

$
1.6200


$
1.0600



1752009

$
1.5700


$
1.0600



2752009

$
1.6200


$
1.1600



1002010

$
1.8900


$
1.1145



1002010

$
1.8900


$
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)2009

$
1.0525



700







2009

$
1.1400



255


$
1.2275



400
(2)2009









$
(1.7025
)


(320
)(3)2010

$
1.0300



300







2010

$
1.1000



200


$
1.1850



2002011

$
1.0205



300







2011

$
1.0850



200


$
1.1700



2002011

$
1.7100



350







     (2)
    
    Includes 395 Bbls/d that are not designated as a cash flow
    hedge under hedge accounting.(3)
    
    Instrument is not designated as a cash flow hedge under hedge
    accounting. 30




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 11  Financial
    Instruments (Continued)
   Purchased
    Mt. Belvieu Non-TET Normal Butane Put Spread Options
  Put SpreadStrike

Volumes(Per gallon)

(Bbls/d)Bought

Sold2009

$
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   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)2009

$
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)2009

$
55.00



1,000
(4)2009

$
60.00



5002010

$
55.00



1,0002010

$
60.00



4002011

$
55.00



1,0002011

$
60.00



4002011

$
77.00



7002011

$
79.00



400
(5)2012

$
79.00



300     (4)
    
    Instrument is not designated as a cash flow hedge under hedge
    accounting.(5)
    
    Purchased in October 2009. 31




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 11  Financial
    Instruments (Continued)
   Purchased
    WTI Crude Oil Put Spread Options
  Put SpreadStrike

Volumes(Per barrel)

(Bbls/d)Bought

Sold2009

$
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   Interest
    Rate Risk Hedging Program
    mark-to-market mark-to-market
  FASB
    ASC 820 Fair Value Measurement (SFAS No. 157) and
    FASB ASC 815 Disclosures about Derivative Instruments and
    Hedging Activities (SFAS No. 161)
    
    Level 1  Unadjusted quoted prices in active
    markets that are accessible at the measurement date for
    identical, unrestricted assets or liabilities;
    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.   32




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 11  Financial
    Instruments (Continued)
    Fair Value Measurements on Hedging
    Instruments(a)September 30, 2009


December 31, 2008Level 1


Level 2


Level 3


Total


Level 1


Level 2


Level 3


Total(In thousands)


(In thousands)AssetsCommodity derivatives:Short-term 
    Designated(b)

$



$



$
47,128


$
47,128


$



$



$
76,440


$
76,440Short-term  Not
    designated(b)






























Long-term 
    Designated(c)










29,985



29,985











81,192



81,192Long-term  Not
    designated(c)










1,361



1,361











1,700



1,700Total

$



$



$
78,474


$
78,474


$



$



$
159,332


$
159,332LiabilitiesCommodity derivatives:Short-term 
    Designated(d)

$



$



$
2,010


$
2,010


$



$



$



$
Short-term  Not
    designated(d)










587



587











2,308



2,308Long-term 
    Designated(e)










5,656



5,656











4,347



4,347Interest rate derivatives:Short-term 
    Designated(d)






















302







302Short-term  Not
    designated(d)






5,423







5,423







3,662







3,662Long-term 
    Designated(e)






















854







854Long-term  Not
    designated(e)






4,043







4,043







6,288







6,288Total

$



$
9,466


$
8,253


$
17,719


$



$
11,106


$
6,655


$
17,761Total designated

$



$



$
69,447


$
69,447


$



$
(1,156
)

$
153,285


$
152,129Total not designated

$



$
(9,466
)

$
774


$
(8,691
)

$



$
(9,950
)

$
(608
)

$
(10,558
)     (a)
    
    Instruments re-measured on a
    recurring basis.(b)
    
    Included on the consolidated
    balance sheets as a current asset under the heading of
    Risk management assets.(c)
    
    Included on the consolidated
    balance sheets as a noncurrent asset under the heading of
    Risk management assets.(d)
    
    Included on the consolidated
    balance sheets as a current liability under the heading of
    Risk management liabilities.(e)
    
    Included on the consolidated
    balance sheets as a noncurrent liability under the heading of
    Risk management and other noncurrent liabilities.   33




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 11  Financial
    Instruments (Continued)
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2009


2008


2009


2008Asset (liability) balance, beginning of period

$
72,040


$
(53,989
)

$
152,677


$
(48,407
)Total gains (losses):Non-cash amortization of option premium


(9,236
)


(8,425
)


(27,715
)


(24,482
)Other amounts included in earnings


16,728



(6,051
)


62,060



(25,280
)Included in accumulated other comprehensive loss


2,736



60,980



(58,873
)


35,632Purchases


4,397



17,570



4,397



60,160Settlements


(16,444
)


6,960



(62,325
)


19,422Transfers in and/or out of Level 3














Asset (liability) balance, end of period

$
70,221


$
17,045


$
70,221


$
17,045Change in unrealized losses (income) included in earnings
    relating to instruments still held as of end of period

$
395


$
1,538


$
38


$
(5,476
)     and/or
   34




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 11  Financial
    Instruments (Continued)
    The
    Effect of Derivative Instruments on the Statements of
    Operations
    (In thousands)
  Amount of Gain or(Loss) Recognizedin Income onDerivativeAmount of Gain or


Amount of Gain or


(Ineffective(Loss) Recognized


(Loss) Reclassified


Portion and AmountDerivatives in FASB ASC

in OCI on


from Accumulated


Excluded from815 (SFAS 133) Cash Flow

Derivatives


OCI into Income


Effectiveness


Statement of OperationsHedging Relationships

(Effective Portion)


(Effective Portion)


Testing)


LocationThree Months Ended September 30, 2009Natural gas

$
(38
)

$
(98
)

$
9


Natural gas salesNatural gas liquids


5,216



3,081



(52
)

Natural gas liquids salesCrude oil


1,640



1,098



33


Condensate and otherInterest rate swaps


257



128






Interest and other financing costsTotal

$
7,075


$
4,209


$
(10
)Nine Months Ended September 30, 2009Natural gas

$
(2,160
)

$
(2,577
)

$
77


Natural gas salesNatural gas liquids


(13,954
)


26,470



(89
)

Natural gas liquids salesCrude oil


(7,830
)


11,036



(189
)

Condensate and otherInterest rate swaps


252



174






Interest and other financing costsTotal

$
23,692


$
35,103


$
(201
)     The
    Effect of Derivative Instruments on the Statements of
    Operations
    (In thousands)
  Derivatives Not Designated as

Amount of Gain orHedging Instruments

(Loss) Recognized in


Statement of OperationsUnder Statement 133

Income on Derivative


LocationThree months ended September 30, 2009Natural gas liquids

$
438


Natural gas liquids salesInterest rate


(621
)

Interest and other financing costsTotal

$
(183
)Nine months ended September 30, 2009Natural gas liquids

$
81


Natural gas liquids salesInterest rate


1,563


Interest and other financing costsTotal

$
1,644   35




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 12  Fair
    Value of Financial Instruments
    September 30, 2009Carrying


EstimatedValue


Fair Value(In thousands)Cash and cash equivalents

$
35,378


$
35,378Credit Facility


260,000



249,8822016 Notes


332,665



326,8432018 Notes


249,525



238,920   Note 13  Discontinued
    Operations
        September 30,


December 31,2009


2008Prepayment and other current assets

$
120


$
113Property, plant and equipment, net


4,785



4,475Intangibles, net


128



534Other assets, net


575



3435,608



5,465Other current liabilities


(384
)


Net assets

$
5,224


$
5,465   Three Months Ended


Nine Months EndedSeptember 30,


September 30,2009


2008


2009


2008Crude oil sales

$
25,971


$
50,763


$
64,039


$
149,128Cost of crude oil purchases


24,964



50,359



60,733



146,222Income from discontinued operations before taxes

$
262


$
166


$
1,393


$
2,224Income tax expense














Net income from discontinued operations

$
262


$
166


$
1,393


$
2,224   36




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 14 
    Segment Information
    
    Oklahoma, which includes midstream natural gas services in
    central and east Oklahoma, including gathering and transmission
    of natural gas and related services such as compression,
    dehydration, treating, processing and nitrogen rejection. This
    segment includes our equity investment in Southern Dome and,
    through September 30, 2009, a crude oil pipeline located in
    south Oklahoma and north Texas.
    Texas, which includes midstream natural gas services in south
    and north Texas, including gathering and intrastate transmission
    of natural gas, and related services such as compression,
    dehydration, treating, conditioning or processing and marketing.
    Our Texas segment also provides NGL fractionation and
    transportation. Our Texas segment includes our Louisiana
    processing assets and our equity investment in Webb Duval.
    Rocky Mountains, which includes natural gas gathering and
    treating services in Wyoming. Our Rocky Mountains segment
    includes our equity investments in Bighorn and Fort Union,
    two firm gathering agreements with Fort Union and two firm
    transportation agreements with WIC.     37




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 14 
    Segment Information (Continued)
    Rocky


Total


CorporateOklahoma(a)


Texas


Mountains


Segments


and Other


ConsolidatedThree Months Ended September 30, 2009:Total segment gross margin

$
18,284


$
26,875


$
634


$
45,793


$
7,637


$
53,430Operations and maintenance expenses


6,111



7,089



2



13,202







13,202Depreciation and amortization


8,183



5,222



763



14,168



407



14,575General and administrative expenses


2,028



2,376



549



4,953



4,247



9,200Taxes other than income


442



378



16



836







836Equity in earnings from unconsolidated affiliates


(383
)


(75
)


(2,071
)


(2,529
)






(2,529
)Operating income

$
1,903


$
11,885


$
1,375


$
15,163


$
2,983


$
18,146Sales to external customers

$
86,714


$
89,233


$
5,947


$
181,894


$
7,637


$
189,531Intersegment sales


(310
)


310















Interest and other financing costs


















15,440



15,440Net income (loss)


2,155



11,888



2,447



16,490



(12,761
)


3,729Three Months Ended September 30, 2008:Total segment gross margin

$
33,132


$
41,392


$
1,257


$
75,781


$
(14,408
)

$
61,373Operations and maintenance expenses


6,170



9,041







15,211







15,211Depreciation and amortization


7,584



4,147



671



12,402



298



12,700General and administrative expenses


1,978



2,018



576



4,572



6,470



11,042Taxes other than income


399



324







723







723Equity in earnings from unconsolidated affiliates


(866
)


(162
)


(1,142
)


(2,170
)






(2,170
)Operating income (loss)

$
17,867


$
26,024


$
1,152


$
45,043


$
(21,176
)

$
23,867Sales to external customers

$
188,310


$
217,492


$
11,476


$
417,278


$
(14,408
)

$
402,870Intersegment sales


(594
)


594















Interest and other financing costs


















15,470



15,470Net income (loss)


18,213



26,143



1,182



45,538



(36,815
)


8,723     (a)
    
    All information excludes the
    results of discontinued operations for the sale of the crude oil
    pipeline and related assets (Note 13) except for the
    information related to intersegment sales, interest and other
    financing costs and net income (loss).  38




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 14 
    Segment Information (Continued)
  Rocky


Total


CorporateOklahoma(a)


Texas


Mountains


Segments


and Other


ConsolidatedNine Months Ended September 30, 2009:Total segment gross margin

$
50,058


$
70,775


$
2,144


$
122,977


$
34,490


$
157,467Operations and maintenance expenses


17,335



21,423



6



38,764







38,764Depreciation and amortization


23,848



13,988



2,155



39,991



1,080



41,071General and administrative expenses


6,093



6,910



1,900



14,903



14,343



29,246Taxes other than income


1,198



1,133



18



2,349







2,349Equity in earnings from unconsolidated affiliates


(1,170
)


(47
)


(4,895
)


(6,112
)






(6,112
)Operating income (loss)

$
2,754


$
27,368


$
2,960


$
33,082


$
19,067


$
52,149Sales to external customers

$
248,950


$
266,264


$
21,088


$
536,302


$
34,490


$
570,792Intersegment sales


(966
)


966















Interest and other financing costs


















41,889



41,889Net income (loss)


4,174



27,389



4,032



35,595



(19,923
)


15,672Segment assets


713,007



409,994



696,213



1,819,214



63,345



1,882,559Nine Months Ended September 30, 2008:Total segment gross margin

$
115,052


$
123,467


$
3,438


$
241,957


$
(49,694
)

$
192,263Operations and maintenance expenses


17,860



21,910







39,770







39,770Depreciation and amortization


22,496



11,495



2,011



36,002



927



36,929General and administrative expenses


5,658



6,002



2,138



13,798



20,030



33,828Taxes other than income


1,213



980







2,193







2,193Equity in earnings from unconsolidated affiliates


(2,991
)


(1,008
)


(3,355
)


(7,354
)






(7,354
)Operating income (loss)

$
70,816


$
84,088


$
2,644


$
157,548


$
(70,651
)

$
86,897Sales to external customers

$
576,072


$
645,963


$
35,190


$
1,257,225


$
(49,694
)

$
1,207,531Intersegment sales


(1,639
)


1,639















Interest and other financing costs


















42,939



42,939Net income (loss)


73,551



84,498



2,738



160,787



(114,360
)


46,427     (a)
    
    All information excludes the
    results of discontinued operations for the sale of the crude oil
    pipeline and related assets (Note 13) except for the
    information related to intersegment sales, interest and other
    financing costs and net income (loss). 39




---



##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.      /d:

Per dayBcf:

One billion cubic feetBtu:

One British thermal unitLean Gas:

Natural gas that is low in NGL contentMMBtu:

One million British thermal unitsMcf:

One thousand cubic feetMMcf:

One million cubic feetNGLs:

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 processedRich gas:

Natural gas that is high in NGL contentThroughput:

The volume of natural gas or NGLs 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 transmission
    of natural gas and related services such as compression,
    dehydration, treating, processing and nitrogen rejection. This
    segment includes our equity investment in Southern Dome, and
    through September 2009, included a crude oil pipeline located in
    south Oklahoma and north Texas.
    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, treating, conditioning or processing
    and marketing. Our Texas segment also provides NGL fractionation
    and transportation through our Houston Central plant and our NGL
    pipelines. In addition, our Texas segment includes a processing
    plant located in southwest Louisiana and our equity investment
    in Webb Duval.
    Our Rocky Mountains segment provides midstream natural gas
    services in the Powder River Basin of Wyoming, including
    gathering and treating of natural gas. This segment also
    includes our equity investments in Bighorn and Fort Union.    Trends
    and Uncertainties
    Commodity
    Prices and Producer Activity
   40




---



##### Table of Contents



Pricing Trends in Texas. first-of-the-month month-to-date
  Texas
    Average Prices for Natural Gas and
    NGLs(1)
  
   (1)
    
    NGL prices for November are
    month-to-date
    through November 2, 2009. Average monthly NGL prices are
    calculated based on our weighted-average product production mix
    at Mt. Belvieu for the period indicated. Average monthly NGL
    prices for October and November are based on our
    third-quarter-weighted average production mix.  41




---



##### Table of Contents



Quarterly Data for Texas:Q1 2008

Q2 2008

Q3 2008

Q4 2008


Q1 2009

Q2 2009

Q3 2009Houston Ship Channel ($/MMBtu)

$
7.73


$
10.58


$
9.98


$
6.37



$
4.21


$
3.44


$
3.32Mt. Belvieu ($/barrel)

$
58.94


$
68.89


$
69.12


$
35.70



$
25.81


$
30.12


$
35.09Texas Service Throughput (MMBtu/d)


696,658



700,545



666,686



679,142




644,752



630,674



613,234Texas Plant Inlet (MMBtu/d)


601,736



629,334



596,225



600,719




558,115



559,597



543,994Texas Segment Gross Margin (in thousands)

$
41,576


$
40,499


$
41,392


$
19,256



$
20,580


$
23,320


$
26,875   Oklahoma Prices. month-to-date
  Oklahoma
    Average Prices for Natural Gas and
    NGLs(1)
  
   (1)
    
    NGL prices for November are
    month-to-date
    through November 2, 2009. Average monthly NGL prices are
    calculated based on our weighted-average product production mix
    at Conway for the period indicated. Average monthly NGL prices
    for October and November are based on our third quarter
    weighted-average production mix. Segment gross margin results
    exclude activities attributable to our crude oil pipeline and
    related assets. See Item 1, Note 13 to our unaudited
    consolidated financial statements entitled Discontinued
    Operations.  Quarterly Data for Oklahoma:Q1 2008

Q2 2008

Q3 2008

Q4 2008


Q1 2009

Q2 2009

Q3 2009CenterPoint East ($/MMBtu)

$
7.20


$
9.26


$
8.41


$
3.58



$
3.37


$
2.70


$
2.98Conway ($/barrel)

$
56.33


$
62.27


$
59.42


$
27.36



$
24.13


$
25.57


$
27.62Oklahoma Service Throughput (MMBtu/d)


222,006



228,941



243,000



261,107




271,222



267,576



260,296Oklahoma Plant Inlet (MMBtu/d)


150,060



155,430



158,047



160,074




160,181



166,846



166,884Oklahoma Segment Gross Margin (in thousands)

$
35,637


$
46,284


$
33,132


$
18,122



$
14,300


$
17,472


$
18,284   NGL Basis Trends.
 42




---



##### Table of Contents



Trends in Drilling and Production
    Activity.
      Other Industry Trends.
  Credit and Capital Market Disruptions.
    Factors
    Affecting Operating Results and Financial Condition
   43




---



##### 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.    producer services
    throughput
 44




---



##### Table of Contents



Segment Gross Margin and Total Segment Gross
    Margin.
    mark-to-market
      Operations and Maintenance Expenses.
 45




---



##### 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.    Total Distributable Cash Flow. mark-to-market
   46




---



##### Table of Contents



Non-GAAP Financial Measures.
  Three Months Ended


Nine Months EndedSeptember 30,


September 30,2009


2008


2009


2008(In thousands)Reconciliation of total segment gross margin to operating income:Operating income

$
18,146


$
23,867


$
52,149


$
86,897Add: Operations and maintenance expenses


13,202



15,211



38,764



39,770Depreciation and amortization


14,575



12,700



41,071



36,929General and administrative expenses


9,200



11,042



29,246



33,828Taxes other than income


836



723



2,349



2,193Equity in earnings from unconsolidated affiliates


(2,529
)


(2,170
)


(6,112
)


(7,354
)Total segment gross margin

$
53,430


$
61,373


$
157,467


$
192,263Reconciliation of EBITDA and adjusted EBITDA to net income:Net income

$
3,729


$
8,723


$
15,672


$
46,427Add: Depreciation and
    amortization(1)


14,628



12,755



41,628



37,092Interest and other financing costs


15,440



15,470



41,889



42,939Provision for income taxes


304



197



1,039



846EBITDA


34,101



37,145



100,228



127,304Add: Amortization of difference between the carried investment
    and the underlying equity in net assets of equity investments


4,792



4,607



14,395



13,808Copanos share of depreciation and amortization included in
    equity in earnings from unconsolidated affiliates


1,707



1,266



5,040



3,854Copanos share of interest and other financing costs
    incurred by our equity method investments


615



471



1,093



1,697Adjusted EBITDA

$
41,215


$
43,489


$
120,756


$
146,663 47




---



##### Table of Contents



Three Months Ended


Nine Months EndedSeptember 30,


September 30,2009


2008


2009


2008(In thousands)Reconciliation of EBITDA and adjusted EBITDA to cash flows from
    operating activities:Cash flow provided by operating activities

$
21,121


$
23,236


$
100,749


$
101,221Add: Cash paid for interest and other financing costs


14,545



14,537



38,829



40,387Equity in earnings from unconsolidated affiliates


2,529



2,170



6,112



7,354Distributions from unconsolidated affiliates


(6,894
)


(6,669
)


(18,333
)


(18,387
)Risk management activities


(4,983
)


(11,999
)


(23,462
)


16,466Increase (decrease) in working capital and other


7,783



15,870



(3,667
)


(19,737
)EBITDA


34,101



37,145



100,228



127,304Add: Amortization of difference between the carried investment
    and the underlying equity in net assets of equity investments


4,792



4,607



14,395



13,808Copanos share of depreciation and amortization included in
    equity in earnings from unconsolidated affiliates


1,707



1,266



5,040



3,854Copanos share of interest and other financing costs
    incurred by our equity method investments


615



471



1,093



1,697Adjusted EBITDA

$
41,215


$
43,489


$
120,756


$
146,663Reconciliation of net income to total distributable cash flow:Net income

$
3,729


$
8,723


$
15,672


$
46,427Add: Depreciation and
    amortization(1)


14,628



12,755



41,628



37,092Amortization of commodity derivative options


9,236



8,425



27,715



24,482Amortization of debt issue costs


895



933



3,060



2,552Equity-based compensation


2,345



3,285



6,600



5,277Distributions from unconsolidated affiliates


7,297



7,763



21,524



20,358Unrealized (gain) loss associated with line fill contributions
    and gas imbalances


(556
)


2,117



(29
)


(490
)Unrealized loss (gain) on derivative activity


194



(516
)


(1,442
)


9,485Deferred taxes and other


68



(6
)


740



161Less: Equity in earnings from unconsolidated affiliates


(2,529
)


(2,170
)


(6,112
)


(7,354
)Maintenance capital expenditures


(1,886
)


(2,675
)


(7,932
)


(8,828
)Total distributable cash flow

$
33,421


$
38,634


$
101,424


$
129,162     (1)
    
    Includes activity related to the discontinued operations of the
    crude oil pipeline and related assets discussed in Item 1,
    Note 13 to our unaudited consolidated financial statements.  How We
    Manage Our Operations
   48




---



##### Table of Contents



Economic Models and Standardized Processing
    Margin.
  processing margin
  
    NGLs we extract in processing; and
    the thermal equivalent of natural gas attributable to those NGLs
    plus the natural gas consumed as fuel in extracting those NGLs.    Flow and Transaction Monitoring Systems.
  Producer Activity Evaluation and Reporting.
  Imbalance Monitoring and Control.
 49




---



##### Table of Contents



month-to-month
  Our
    Long-Term Growth Strategy
  per-unit
    Forward-Looking
    Statements
    
    our ability to successfully integrate any acquired asset 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;
    our ability to access NGL fractionation capacity;
    the ability of key producers to continue to drill and
    successfully complete and attach new natural gas supplies;
    our ability to retain key customers; 50




---



##### Table of Contents




    the availability of local, intrastate and interstate
    transportation systems and other facilities for natural gas and
    NGLs;
    our ability to access our revolving 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
 51




---



##### Table of Contents



Our
    Results of Operations
  Three Months Ended


Nine Months EndedSeptember 30,


September 30,2009


2008


2009


2008($ in thousands)Total segment gross
    margin(1)(2)

$
53,430


$
61,373


$
157,467


$
192,263Operations and maintenance
    expenses(2)


13,202



15,211



38,764



39,770Depreciation and
    amortization(2)


14,575



12,700



41,071



36,929General and administrative expenses


9,200



11,042



29,246



33,828Taxes other than income


836



723



2,349



2,193Equity in earnings from unconsolidated affiliates


(2,529
)


(2,170
)


(6,112
)


(7,354
)Operating
    income(2)


18,146



23,867



52,149



86,897Gain on retirement of unsecured debt










3,939



Interest and other financing costs, net


(14,375
)


(15,113
)


(40,770
)


(41,848
)Provision for income taxes


(304
)


(197
)


(1,039
)


(846
)Discontinued operations, net of tax


262



166



1,393



2,224Net income

$
3,729


$
8,723


$
15,672


$
46,427Segment gross margin:Oklahoma(2)

$
18,284


$
33,132


$
50,058


$
115,052Texas


26,875



41,392



70,775



123,467Rocky Mountains


634



1,257



2,144



3,438Segment gross
    margin(2)


45,793



75,781



122,977



241,957Corporate and
    other(3)


7,637



(14,408
)


34,490



(49,694
)Total segment gross
    margin(1)(2)

$
53,430


$
61,373


$
157,467


$
192,263Segment gross margin per unit:Oklahoma:Service throughput ($/MMBtu)
    (2)(4)

$
0.76


$
1.48


$
0.69


$
1.81Texas:Service throughput
    ($/MMBtu)(5)

$
0.48


$
0.67


$
0.41


$
0.65Rocky Mountains:Producer services throughput
    ($/MMBtu)(6)

$
0.03


$
0.06


$
0.04


$
0.05Volumes:Oklahoma:(4)(7)Service throughput (MMBtu/d)


260,296



243,000



266,306



231,358Plant inlet volumes (MMBtu/d)


166,884



158,047



164,741



154,708NGLs produced (Bbls/d)


16,474



15,238



15,928



15,083Texas:(5)(8)Service throughput (MMBtu/d)


613,234



666,686



629,367



688,694Pipeline throughput (MMBtu/d)


296,003



301,279



296,621



314,740Plant inlet volumes (MMBtu/d)


543,994



596,225



553,876



610,470NGLs produced (Bbls/d)


18,197



16,957



17,846



17,584Rocky Mountains:Producer services throughput
    (MMBtu/d)(6)


157,362



230,859



168,168



229,038Capital Expenditures:Maintenance capital expenditures

$
1,886


$
2,675


$
7,932


$
8,828Expansion capital expenditures


17,283



45,928



42,119



128,593Total capital expenditures

$
19,169


$
48,603


$
50,051


$
137,421Operations and maintenance expenses:Oklahoma(2)

$
6,111


$
6,170


$
17,335


$
17,860Texas


7,089



9,041



21,423



21,910Rocky Mountains


2







6



Total operations and maintenance
    expenses(2)

$
13,202


$
15,211


$
38,764


$
39,770  52




---



##### Table of Contents



(1)
    
    Total segment gross margin is a
    non-GAAP financial measure. See  How We
    Evaluate Our Operations for a reconciliation of total
    segment gross margin to its most directly comparable GAAP
    measure of operating income.(2)
    
    Excludes results attributable to
    our crude oil pipeline and related assets. See Item 1,
    Note 13 to our unaudited consolidated financial statements
    entitled Discontinued Operations.(3)
    
    Corporate and other includes
    results attributable to Copanos commodity risk management
    activities.(4)
    
    Excludes volumes associated with
    our interest in Southern Dome. For the three months ended
    September 30, 2009, plant inlet volumes for Southern Dome
    averaged 13,857 MMBtu/d and NGLs produced averaged
    523 Bbls/d. 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 nine months ended September 30, 2009, plant inlet
    volumes for Southern Dome averaged 13,304 MMBtu/d and NGLs
    produced averaged 490 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.(5)
    
    Excludes results and volumes
    associated with our interest in Webb Duval. Volumes transported
    by Webb Duval, net of intercompany volumes, were
    72,985 MMBtu/d and 97,906 MMBtu/d for the three months
    ended September 30, 2009 and 2008, respectively. Volumes
    transported by Webb Duval, net of intercompany volumes, were
    82,001 MMBtu/d and 91,047 MMBtu/d for the nine months
    ended September 30, 2009 and 2008, respectively.(6)
    
    Producer services throughput
    consists of volumes we purchased for resale, volumes gathered
    under our firm capacity gathering agreements with
    Fort Union and volumes transported using our firm capacity
    agreements with WIC. Excludes results and volumes associated
    with our interests in Bighorn and Fort Union. Volumes
    transported by Bighorn were 190,229 MMBtu/d and
    211,353 MMBtu/d for the three months ended
    September 30, 2009 and 2008, respectively. Volumes
    transported by Fort Union were 761,897 MMBtu/d and
    735,131 MMBtu/d for the three months ended
    September 30, 2009 and 2008, respectively. Volumes
    transported by Bighorn were 192,500 MMBtu/d and
    215,568 MMBtu/d for the nine months ended
    September 30, 2009 and 2008, respectively. Volumes
    transported by Fort Union were 786,908 MMBtu/d and
    712,791 MMBtu/d for the nine months ended
    September 30, 2009 and 2008, respectively.(7)
    
    Plant inlet volumes and NGLs
    produced represent total volumes processed and produced by the
    Oklahoma segment at all plants, including our owned plants and
    plants owned by third parties. For the three months ended
    September 30, 2009, plant inlet volumes averaged
    129,832 MMBtu/d and NGLs produced averaged
    13,410 Bbls/d for plants owned by the Oklahoma segment. For
    the three months ended September 30, 2008, plant inlet
    volumes averaged 119,332 MMBtu/d and NGLs produced averaged
    12,042 Bbls/d for plants owned by the Oklahoma segment. For
    the nine months ended September 30, 2009, plant inlet
    volumes averaged 127,067 MMBtu/d and NGLs produced averaged
    12,970 Bbls/d for plants owned by the Oklahoma segment. For
    the nine months ended September 30, 2008, plant inlet
    volumes averaged 111,137 MMBtu/d and NGLs produced averaged
    11,343 Bbls/d for plants owned by the Oklahoma segment.(8)
    
    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 537,099 MMBtu/d and NGLs produced averaged
    17,653 Bbls/d for the three months ended September 30,
    2009 for plants owned by the Texas segment. 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 volumes
    averaged 537,382 MMBtu/d and NGLs produced averaged
    16,504 Bbls/d for the nine months ended September 30,
    2009 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.  Three
    Months Ended September 30, 2009 Compared with Three Months
    Ended September 30, 2008
    
    a decrease in total segment gross margin of $7.9 million
    consisting of a $29.9 million decrease in operating segment
    gross margins primarily reflecting average NGL price declines of
    54% in the Conway index and 49% in the Mt. Belvieu index and
    lower overall service throughput volumes, offset by an increase
    of $22 million from our commodity risk management
    activities; and
    an increase in depreciation and amortization expenses of
    $1.9 million primarily related to our expanded operations
    in north Texas;    
    a decrease in operations and maintenance expenses of
    $2.0 million and general and administrative expenses of
    $1.8 million primarily related to our successful cost
    reduction efforts, including reduced employee compensation
    expense and third-party service provider fees;
    an increase of $0.4 million in equity in earnings of our
    unconsolidated affiliates; and
    an increase in interest and other income of $0.7 million. 53




---



##### Table of Contents



Oklahoma Segment Gross Margin.
  Texas Segment Gross Margin.
  Rocky Mountains Segment Gross Margin.
  Corporate and Other. mark-to-market mark-to-market
  Operations and Maintenance
    Expenses.
  Depreciation and Amortization.
 54




---



##### Table of Contents



General and Administrative Expenses.
  Interest and Other Financing Costs. mark-to-market
  Nine
    Months Ended September 30, 2009 Compared with Nine Months
    Ended September 30, 2008
    
    a decrease in total segment gross margin of $34.8 million
    consisting of a $119.0 million decrease in operating
    segment gross margins, primarily reflecting average NGL price
    declines of 57% in the Conway index and 54% in the Mt. Belvieu
    index and lower overall service throughput volumes, offset by an
    increase of $84.2 million from our commodity risk
    management activities;
    an increase in depreciation and amortization expenses of
    $4.1 million primarily related to our expanded operations
    in north Texas;
    a decrease of $1.3 million in equity in earnings of our
    unconsolidated affiliates; and
    a decrease in discontinued operations and income taxes of
    $1.0 million;    
    a gain of $3.9 million related to the repurchase and
    retirement of $18.2 million aggregate principal amount of
    our 7.75% senior unsecured notes due 2018 at market prices
    averaging 78% of the face amount of the notes;
    a decrease in general and administrative expenses of
    $4.6 million and operations and maintenance expenses of
    $1.0 million primarily related to our successful cost
    reduction efforts, including reduced employee compensation
    expense and third-party service provider fees; and
    a decrease of $1.0 million in interest expense as a result
    of (i) a decrease of non-cash
    mark-to-market
    charges on our interest rate swaps of $5.2 million offset
    by (ii) an increase in interest expense of
    $4.2 million due to increased average outstanding
    borrowings and slightly offset by lower average interest rates
    between the periods. 55




---



##### Table of Contents



Oklahoma Segment Gross Margin.
  Texas Segment Gross Margin.
  Rocky Mountains Segment Gross Margin.
  Corporate and Other. mark-to-market mark-to-market
  Operations and Maintenance
    Expenses.
  Depreciation and Amortization.
 56




---



##### Table of Contents



General and Administrative Expenses.
  Interest and Other Financing Costs. mark-to-market
  Gain on Unsecured Debt Retirement.
  Cash
    Flows
    Nine Months Ended September 30,2009

2008(In thousands)Net cash provided by operating activities

$
100,749


$
101,221Net cash used in investing activities


(60,706
)


(146,825
)Net cash (used in) provided by financing activities


(68,349
)


146,764    57




---



##### Table of Contents



Operating Cash Flows.
  
    risk management activities provided an additional
    $58.9 million of cash flow for the nine months ended
    September 30, 2009 as compared to the same period in 2008,
    primarily because we purchased $4.4 million of commodity
    derivative instruments during the nine months ended
    September 30, 2009, whereas in the nine months ended
    September 30, 2008, we used $60.2 million to purchase
    commodity derivative instruments;    
    a $55.7 million reduction in operating income (adjusted for
    the timing of related cash receipts and disbursements) for the
    nine months ended September 30, 2009 compared with the same
    period in 2008; and
    a $3.6 million increase in interest payments for the nine
    months ended September 30, 2009 compared to the same period
    in 2008.  Investing Cash Flows.
  Financing Cash Flows.
  Liquidity
    and Capital Resources
  Sources of Liquidity.
  Effects of Recent Economic Changes;
    Outlook.
 58




---



##### 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, which are capital expenditures
    made to expand or increase the efficiency of the existing
    operating capacity of our assets. Expansion capital expenditures
    include expenditures that facilitate an increase in volumes
    within our operations, whether through construction or
    acquisition. Expenditures that reduce our operating costs will
    be considered expansion capital expenditures only if the
    reduction in operating expenses exceeds cost reductions
    typically resulting from routine maintenance.      Cash Distributions.
  One Quarter


Four QuartersCommon
    units(1)

$
31,860


$
127,438     (1)
    
    Includes distributions on
    restricted common units and phantom units issued under our LTIP.
    Distributions made on restricted units and phantom units issued
    to date are subject to the same vesting provisions as the
    restricted units and phantom units. As of November 2, 2009,
    we had 107,521 outstanding restricted units and 686,475
    outstanding phantom units. 59




---



##### Table of Contents



Our
    Indebtedness
    Credit Ratings.
  Revolving Credit Facility.
      Senior Notes.
      Off-Balance
    Sheet Arrangements
   60




---



##### Table of Contents



Recent
    Accounting Pronouncements
    Critical
    Accounting Policies
  Impairment of Long-Lived Assets. Accounting for the Impairment or
    Disposal of Long-Lived Assets,
    
    changes in general economic conditions in which our assets are
    located;
    the availability and prices of natural gas supply;
    improvements in exploration and production technology;
    the finding and development cost for producers to exploit
    reserves in a particular area;
    our ability to negotiate favorable agreements with producers and
    customers;
    our dependence on certain significant customers, producers,
    gatherers and transporters of natural gas; and
    competition from other midstream service providers, including
    major energy companies.    Form 10-K
  Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk.   61




---



##### Table of Contents



Commodity
    Price Risk
    Oklahoma. percentage-of-proceeds agreed-upon percentage-of-index
  Texas. fee-for-service percentage-of-index
    Rocky Mountains.
  Other Commodity Price Risks.
   62




---



##### Table of Contents



Sensitivity.
  Risk
    Management Oversight
        Commodity
    Price Hedging Activities
  Permitted Derivative Instruments.
  
    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 NGLs 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),fixed-for-floating swaps, or
    floating-for-floating
    swaps (basis swaps) on natural gas at Henry Hub, Houston Ship
    Channel 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 63




---



##### Table of Contents




    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.  Limitations.
  
    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;
    Except as provided below under Exception to Volume
    Limitations, we may not (i) purchase crude oil or
    NGLs 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 NGLs 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
    exceed 80% of the projected requirements or output, as
    applicable, for the hedged period . We are required to divest
    outstanding hedge positions only 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;
    The aggregate volumetric exposure associated with swaps (other
    than basis 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; and
    We may not enter into a basis swap if, as a result of the
    proposed transaction, net notional hedged volumes with respect
    to the underlying hedged basis would exceed 80% of the projected
    requirements or output, as applicable, for the hedged period. We
    are required to divest outstanding basis swaps only to the
    extent net notional hedged volumes with respect to an underlying
    hedged basis exceed 100% of the projected requirements or
    output, as applicable, for the hedged period.    Exception to Volume Limitations. out-of-the-money out-of-the-money. in-the-money,
  Approved Markets. over-the-counter
    Oklahoma Segment.
 64




---



##### Table of Contents



Texas Segment.
  Rocky Mountains Segment.
  Our Commodity Hedge Portfolio.
  Interest Rates.
      Counterparty Risk.
   65




---



##### Table of Contents



Form 10-K
  Item 4.
    Controls
    and Procedures.     66




---



##### Table of Contents



PART II-OTHER
    INFORMATION Item 1.
    Legal
    Proceedings.    Item 1A.
    Risk
    Factors.  Form 10-K Form 10-Q
  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).3
.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). 67




---



##### Table of Contents



Number

Description4
.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).10
.1

Form of Unit Appreciation Right Award Agreement (incorporated by
    reference to Exhibit 99.1 to Current Report on
    Form 8-K
    filed May 18, 2009).10
.2

Amendment to Amended and Restated Copano Energy, L.L.C.
    Long-Term Incentive Plan (incorporated by reference to
    Exhibit 99.2 to Current Report on
    Form 8-K
    filed May 18, 2009).10
.3

Form of Unit Appreciation Right Award Agreement (incorporated by
    reference to Exhibit 99.1 to Current Report on
    Form 8-K
    filed August 18, 2009).31
.1*

Sarbanes-Oxley Section 302 certification of Principal
    Executive Officer.31
.2*

Sarbanes-Oxley Section 302 certification of Principal
    Financial Officer.32
.1*

Sarbanes-Oxley Section 906 certification of Principal
    Executive Officer.32
.2*

Sarbanes-Oxley Section 906 certification of Principal
    Financial Officer.     *
    
    Filed herewith. 68




---



##### Table of Contents



SIGNATURES
      By:
    /s/  R.
    Bruce Northcutt      By:
    /s/  Carl
    A. Luna    69




---



##### Table of Contents



INDEX TO
    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).3
.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).10
.1

Form of Unit Appreciation Right Award Agreement (incorporated by
    reference to Exhibit 99.1 to Current Report on
    Form 8-K
    filed May 18, 2009).10
.2

Amendment to Amended and Restated Copano Energy, L.L.C.
    Long-Term Incentive Plan (incorporated by reference to
    Exhibit 99.2 to Current Report on
    Form 8-K
    filed May 18, 2009).




---



##### Table of Contents



Number

Description10
.3

Form of Unit Appreciation Right Award Agreement (incorporated by
    reference to Exhibit 99.1 to Current Report on
    Form 8-K
    filed August 18, 2009).31
.1*

Sarbanes-Oxley Section 302 certification of Principal
    Executive Officer.31
.2*

Sarbanes-Oxley Section 302 certification of Principal
    Financial Officer.32
.1*

Sarbanes-Oxley Section 906 certification of Principal
    Executive Officer.32
.2*

Sarbanes-Oxley Section 906 certification of Principal
    Financial Officer.     *
    
    Filed herewith.