##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, 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
    March 31, 2007ORo

Transition report pursuant to Section 13 or 15(d) of the
    Securities Exchange Act of 1934   Commission file number:
    001-32329
      Copano Energy, L.L.C.
 (Exact Name of Registrant as
    Specified in Its Charter)
  Delaware

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

(I.R.S. Employer
    Identification No.)2727 Allen Parkway,
    Suite 1200
    Houston, Texas 77019(Address of Principal
    Executive Offices)(713) 621-9547(Registrants
    Telephone Number, Including Area Code)   þ o
  Rule 12b-2
  o þ o
  Rule 12b-2 o þ




---



##### 



TABLE OF
    CONTENTS
  PagePART I 
    FINANCIAL INFORMATIONItem 1.


Financial
    Statements


3Unaudited
    Consolidated Balance Sheets as of March 31, 2007 and
    December 31, 2006


3Unaudited
    Consolidated Statements of Operations for the Three Months Ended
    March 31, 2007 and 2006


4Unaudited
    Consolidated Statements of Cash Flows for the Three Months Ended
    March 31, 2007 and 2006


5Unaudited
    Consolidated Statement of Members Capital and
    Comprehensive Income for the Three Months Ended March 31,
    2007


6Notes to Unaudited
    Consolidated Financial Statements


7Item 2.


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


22Item 3.


Quantitative and
    Qualitative Disclosures About Market Risk


34Item 4.


Controls and
    Procedures


39PART II 
    OTHER INFORMATIONItem 1.


Legal
    Proceedings


40Item 1A.


Risk
    Factors


40Item 6.


Exhibits


41Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906   2




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##### Table of Contents



Item 1.
    Financial
    Statements.  COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
 (Unaudited)
  March 31,


December 31,2007


2006(In thousands, except unit information)ASSETSCurrent assets:Cash and cash equivalents

$
49,825


$
39,484Accounts receivable, net


68,952



66,416Accounts receivable from affiliates


294



679Risk management assets


8,352



13,973Prepayments and other current
    assets


2,171



3,166Total current assets


129,594



123,718Property, plant and equipment, net


579,848



566,927Intangible assets, net


92,314



93,372Investment in unconsolidated
    affiliates


18,382



19,378Risk management assets


20,819



23,826Other assets, net


12,016



11,837Total assets

$
852,973


$
839,058LIABILITIES AND MEMBERS
    CAPITALCurrent liabilities:Accounts payable

$
99,183


$
91,545Accounts payable to affiliates


114



123Notes payable


940



1,495Other current liabilities


10,464



12,559Total current liabilities


110,701



105,722Long-term debt


275,000



255,000Deferred tax liability


841



Risk management and other
    noncurrent liabilities


5,207



5,750Commitments and contingencies
    (Note 8)Members capital:Common units, no par value,
    42,272,538 units and 35,190,590 units issued and
    outstanding as of March 31, 2007 and December 31,
    2006, respectively


491,533



480,797Subordinated units, no par value,
    7,038,252 units issued and outstanding as of
    December 31, 2006






10,379Paid-in capital


12,685



10,585Accumulated (deficit) earnings


(5,403
)


2,918Accumulated other comprehensive
    loss


(37,591
)


(32,093
)461,224



472,586Total liabilities and
    members capital

$
852,973


$
839,058    3




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
 (Unaudited)
  Three Months Ended March 31,2007


2006(In thousands, except unit information)Revenue:Natural gas sales

$
111,252


$
127,464Natural gas sales 
    affiliates


25



516Natural gas liquids sales


87,887



75,326Transportation, compression and
    processing fees


4,240



3,810Transportation, compression and
    processing fees  affiliates


8



10Condensate and other


7,576



6,834Total revenue


210,988



213,960Costs and expenses:Cost of natural gas and natural
    gas liquids


171,233



176,572Cost of natural gas and natural
    gas liquids  affiliates


543



140Transportation


810



679Transportation 
    affiliates


76



90Operations and maintenance


8,498



7,184Depreciation and amortization


8,470



7,625General and administrative


7,516



6,075Taxes other than income


527



444Equity in earnings from
    unconsolidated affiliates


(864
)


(196
)Total costs and expenses


196,809



198,613Operating income


14,179



15,347Interest and other income


620



249Interest and other financing costs


(5,193
)


(8,183
)Income before income taxes


9,606



7,413Provision for income taxes


(904
)


Net income

$
8,702


$
7,413Basic net income per common unit:Net income per common unit

$
0.21


$
0.20Weighted average number of common
    units


38,736



29,315Diluted net income per common unit:Net income per common unit

$
0.20


$
0.20Weighted average number of common
    units


39,365



29,613Basic net income per subordinated
    unit:Net income per subordinated unit

$
0.21


$
0.20Weighted average number of
    subordinated units


3,519



7,038Diluted net income per
    subordinated unit:Net income per subordinated unit

$
0.21


$
0.20Weighted average number of
    subordinated units


3,519



7,038    4




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 (Unaudited)
  Three Months Ended March 31,2007


2006(In thousands)Cash Flows From Operating
    Activities:Net income

$
8,702


$
7,413Adjustments to reconcile net
    income to net cash provided by operating activities:Depreciation and amortization


8,470



7,625Amortization of debt issue costs


309



957Equity in earnings from
    unconsolidated affiliates


(864
)


(196
)Equity-based compensation


641



321Deferred tax liability


841



Other noncash items


(33
)


(2
)Changes in assets and liabilities:Accounts receivable


(2,536
)


23,758Accounts receivable from affiliates


461



(947
)Prepayments and other current
    assets


995



662Risk management activities


2,615



2,338Accounts payable


6,075



(18,031
)Accounts payable to affiliates


(9
)


24Other current liabilities


(1,677
)


(1,067
)Net cash provided by operating
    activities


23,990



22,855Cash Flows From Investing
    Activities:Additions to property, plant and
    equipment


(17,804
)


(9,889
)Additions to intangible assets


(305
)


(130
)Acquisitions


(739
)


(538
)Investment in unconsolidated
    affiliate






(6,811
)Distributions from unconsolidated
    affiliates


1,784



Other


111



(97
)Net cash used in investing
    activities


(16,953
)


(17,465
)Cash Flows From Financing
    Activities:Repayments of long-term debt






(258,000
)Proceeds from long-term debt


20,000



245,000Repayments of short-term notes
    payable


(555
)


(756
)Deferred financing costs


(608
)


(6,239
)Distributions to unitholders


(16,923
)


(10,081
)Proceeds from private placement of
    common units






25,000Capital contributions from Pre-IPO
    Investors


1,459



1,380Proceeds from option exercises


405



58Equity offering costs


(474
)


(584
)Net cash provided by (used in)
    financing activities


3,304



(4,222
)Net increase in cash and cash
    equivalents


10,341



1,168Cash and cash equivalents,
    beginning of year


39,484



25,297Cash and cash equivalents, end of
    period

$
49,825


$
26,465    5




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  CONSOLIDATED STATEMENT OF MEMBERS CAPITAL
    AND COMPREHENSIVE INCOME
 (Unaudited)
  Common


Subordinated








AccumulatedNumber





Number








Accumulated


Other





Totalof


Common


of


Subordinated


Paid-in


Earnings


Comprehensive





ComprehensiveUnits


Units


Units


Units


Capital


(Deficit)


Loss


Total


IncomeBalance, December 31,
    2006


35,191


$
480,797



7,038


$
10,379


$
10,585


$
2,918


$
(32,093
)

$
472,586


$
Capital contributions from Pre-IPO
    Investors


















1,459











1,459



Conversion of subordinated units
    into common units


7,038



10,379



(7,038
)


(10,379
)


















Offering costs






(48
)






















(48
)


Distributions to unitholders






















(17,023
)






(17,023
)


Option exercises


34



405























405



Equity-based compensation


















641











641



Vested restricted units


10































Net income






















8,702







8,702



8,702Derivative settlements reclassified
    to income


























1,774



1,774



1,774Unrealized loss-change in fair
    value of derivatives


























(7,272
)


(7,272
)


(7,271
)Comprehensive income

































$
3,205Balance, March 31,
    2007


42,273


$
491,533






$



$
12,685


$
(5,403
)

$
(37,591
)

$
461,224    6




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES



NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES



NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)  Note 1 
    Organization and Basis of Presentation
  Organization
  Unless the context requires
    otherwise, references to Copano, we,
    our, us or like terms refer to Copano
    Energy, L.L.C. and its subsidiaries.
    Basis
    of Presentation and Principles of Consolidation
    two-for-one two-for-one
  Accounting for Income Taxes,
 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
  Fair
    Value Measurements
  Fair
    Value Measurements. Accounting for Derivative
    Instruments and Hedging Activities,
  Fair
    Value Option for Financial Assets and Financial
    Liabilities
  The Fair Value Option for Financial Assets and
    Financial Liabilities,
  Accounting
    for Uncertainty in Income Taxes-an Interpretation of FASB
    Statement No. 109
  Accounting
    for Uncertainty in Income Taxes-an Interpretation of FASB
    Statement No. 109.
  Note 3 
    Intangible Assets
  rights-of-way, 2007 2008 2009 2010 2011 2012
  8




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 3 
    Intangible Assets  (Continued)
  March 31,


December 31,2007


2006Rights-of-way
    and easements, at cost

$
61,236


$
60,931Less accumulated amortization for
    rights-of-way
    and easements


(7,167
)


(6,520
)Contracts


42,444



42,444Less accumulated amortization for
    contracts


(4,716
)


(4,009
)Customer relationship


725



725Less accumulated amortization for
    customer relationship


(208
)


(199
)Intangible assets, net

$
92,314


$
93,372   rights-of-way rights-of-way
  Note 4 
    Long-Term Debt
    March 31,


December 31,2007


2006Long-term debt:Credit Facility

$
50,000


$
30,000Senior Notes


225,000



225,000Total

$
275,000


$
255,000   Credit
    Facility
     9




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 4 
    Long-Term Debt  (Continued)
     Senior
    Notes
       10




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##### Table of Contents



COPANO ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 4  Long-Term
    Debt  (Continued)
  CONDENSED
    CONSOLIDATING BALANCE SHEET
  March 31, 2007


December 31, 2006Investment 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

$
20,791


$



$
29,034


$



$



$
49,825


$
1,286


$



$
38,198


$



$



$
39,484Accounts receivable, net


18







68,934











68,952



32







66,384











66,416Accounts receivable from affiliates










49,030







(48,736
)


294











53,673







(52,994
)


679Intercompany receivable


32,414







(55,613
)






23,199







24,908







(71,028
)






46,120



Risk management assets










8,352











8,352











13,973











13,973Prepayments and other current assets


57







2,114











2,171



44







3,122











3,166Total current assets


53,280







101,851







(25,537
)


129,594



26,270







104,322







(6,874
)


123,718Property, plant and equipment, net


299







579,549











579,848



299







566,628











566,927Intangible assets, net










92,314











92,314











93,372











93,372Investment in unconsolidated
    affiliates










18,382



18,382



(18,382
)


18,382











19,378



19,378



(19,378
)


19,378Investment in consolidated
    subsidiaries


677,588















(677,588
)






674,105















(674,105
)


Risk management assets










20,819











20,819











23,826











23,826Other assets, net


8,876







3,140











12,016



8,577







3,260











11,837Total assets

$
740,043


$



$
816,055


$
18,382


$
(721,507
)

$
852,973


$
709,251


$



$
810,786


$
19,378


$
(700,357
)

$
839,058LIABILITIES AND
    MEMBERS/PARTNERS CAPITALCurrent liabilities:Accounts payable

$
63


$



$
99,120


$



$



$
99,183


$
434


$



$
91,111


$



$



$
91,545Accounts payable to affiliates










25,287







(25,173
)


114











39,808







(39,685
)


123Intercompany payable


(15
)






379







(364
)






(26,291
)






(6,520
)






32,811



Notes payable










940











940











1,495











1,495Other current liabilities


2,252







8,212











10,464



6,811







5,748











12,559Total current liabilities


2,300







133,938







(25,537
)


110,701



(19,046
)






131,642







(6,874
)


105,722Long-term debt


275,000



















275,000



255,000



















255,000Deferred tax liability


841



















841Risk management and other
    noncurrent liabilities


678







4,529











5,207



711







5,039











5,750Members/Partners
    capital:














































Common units


491,533



















491,533



480,797



















480,797Subordinated units


























10,379



















10,379Paid-in capital


12,685



1



516,054



16,882



(532,937
)


12,685



10,585



1



524,940



17,445



(542,386
)


10,585Accumulated (deficit) earnings


(5,403
)


(1
)


199,125



1,500



(200,624
)


(5,403
)


2,918



(1
)


181,258



1,933



(183,190
)


2,918Accumulated other comprehensive loss


(37,591
)






(37,591
)






37,591



(37,591
)


(32,093
)






(32,093
)






32,093



(32,093
)461,224







677,588



18,382



(695,970
)


461,224



472,586







674,105



19,378



(693,483
)


472,586Total liabilities and
    members/partners capital

$
740,043


$



$
816,055


$
18,382


$
(721,507
)

$
852,973


$
709,251


$



$
810,786


$
19,378


$
(700,357
)

$
839,058  11




---



##### Table of Contents



COPANO ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 4  Long-Term
    Debt  (Continued)
  CONDENSED
    CONSOLIDATING STATEMENT OF OPERATIONS
  Three Months Ended March 31,2007


2006Investment 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

$



$



$
111,277


$



$



$
111,277


$



$



$
127,980


$



$



$
127,980Natural gas liquids sales










87,887











87,887











75,326











75,326Transportation, compression and
    processing fees










4,248











4,248











3,820











3,820Other










7,576











7,576











6,834











6,834Total revenue










210,988











210,988











213,960











213,960Costs and expenses:Cost of natural gas and natural gas
    liquids










171,776











171,776











176,712











176,712Transportation










886











886











769











769Operations and maintenance


398







8,100











8,498











7,184











7,184Depreciation and amortization










8,470











8,470



17







7,608











7,625General and administrative


2,734







4,782











7,516



318







5,757











6,075Taxes other than income










527











527











444











444Equity in earnings from
    unconsolidated affiliates










(864
)


(864
)


864



(864
)










(196
)


(196
)


196



(196
)Total costs and expenses


3,132







193,677



(864
)


864



196,809



335







198,278



(196
)


196



198,613Operating (loss) income


(3,132
)






17,311



864



(864
)


14,179



(335
)






15,682



196



(196
)


15,347Interest and other income


12







608











620











249











249Interest and other financing costs


(5,141
)






(52
)










(5,193
)


(8,145
)






(38
)










(8,183
)(Loss) income before income taxes
    and equity in earnings from consolidated subsidiaries


(8,261
)






17,867



864



(864
)


9,606



(8,480
)






15,893



196



(196
)


7,413Provision for income taxes


(904
)


















(904
)






















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


(9,165
)






17,867



864



(864
)


8,702



(8,480
)






15,893



196



(196
)


7,413Equity in earnings from
    consolidated subsidiaries


17,867















(17,867
)






15,893















(15,893
)


Net income (loss)

$
8,702


$



$
17,867


$
864


$
(18,731
)

$
8,702


$
7,413


$



$
15,893


$
196


$
(16,089
)

$
7,413  12




---



##### Table of Contents



COPANO ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 4  Long-Term
    Debt  (Continued)
  CONDENSED
    CONSOLIDATING STATEMENT OF CASH FLOWS
  Three Months Ended March 31,2007


2006Investment in

















Investment inGuarantor


Non-Guarantor














Guarantor


Non-GuarantorParent


Co-Issuer


Subsidiaries


Subsidiaries


Eliminations


Total


Parent


Co-Issuer


Subsidiaries


Subsidiaries


Eliminations


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

$
6,760


$



$
17,230


$



$



$
23,990


$
(7,117
)

$



$
29,972


$



$



$
22,855Cash Flows From Investing
    Activities:Additions to property, plant and
    equipment










(17,804
)










(17,804
)


(1
)






(9,888
)










(9,889
)Additions to intangible assets










(305
)










(305
)










(130
)










(130
)Acquisitions










(739
)










(739
)










(538
)










(538
)Investment in unconsolidated
    affiliate


































(6,811
)










(6,811
)Distributions from unconsolidated
    affiliates










1,784



1,784



(1,784
)


1,784























Investment in consolidated
    subsidiaries


(5
)














5



























Distributions from consolidated
    subsidiaries


8,891















(8,891
)






11,500















(11,500
)


Other










111











111











(97
)










(97
)Net cash provided by (used in)
    investing activities


8,886







(16,953
)


1,784



(10,670
)


(16,953
)


11,499







(17,464
)






(11,500
)


(17,465
)Cash Flows From Financing
    Activities:Repayments of long-term debt


























(258,000
)


















(258,000
)Proceeds from long-term debt


20,000



















20,000



245,000



















245,000Deferred financing costs


(608
)


















(608
)


(6,239
)


















(6,239
)Repayment of short-term notes
    payable










(555
)










(555
)










(756
)










(756
)Distributions to unitholders


(16,923
)


















(16,923
)


(10,081
)


















(10,081
)Proceeds from private placement of
    common units


























25,000



















25,000Capital contributions from Pre-IPO
    Investors


1,459



















1,459



1,380



















1,380Equity offering costs


(474
)


















(474
)


(584
)


















(584
)Proceeds from option exercises


405



















405



58



















58Contributions from parent










5







(5
)






















Distributions to parent










(8,891
)






8,891















(11,500
)






11,500



Net cash (used in) provided by
    financing activities


3,859







(9,441
)






8,886



3,304



(3,466
)






(12,256
)






11,500



(4,222
)Net increase (decrease) in cash and
    cash equivalents


19,505







(9,164
)


1,784



(1,784
)


10,341



916







252











1,168Cash and cash equivalents,
    beginning of year


1,286







38,198











39,484



1,167



1



24,129











25,297Cash and cash equivalents, end of
    period

$
20,791


$



$
29,034


$
1,784


$
(1,784
)

$
49,825


$
2,083


$
1


$
24,381


$



$



$
26,465  13




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##### Table of Contents



COPANO ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 5 
    Members Capital and Distributions
  Common
    Units and Subordinated Units
  one-for-one
  two-for-one
        Distributions
      Accounting
    for Equity-Based Compensation
  Share-Based
    Payment, Restricted Common Units Unit Options below.
  Restricted Common Units.
 14




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 5 
    Members Capital and
    Distributions  (Continued)
        Weighted AverageNumber of


Grant-Date FairRestricted Units


ValueOutstanding at beginning of period


315,936


$
20.84Granted


3,000



32.35Vested


(10,296
)


14.62Forfeited


(1,140
)


21.04Outstanding at end of period


307,500


$
21.16     Unit Options.
      15




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 5 
    Members Capital and
    Distributions  (Continued)
  Three Months EndedMarch 31,2007


2006Weighted average exercise price

$
31.92


$
20.58Expected volatility


20.9-21.5
%


27.24
%Distribution yield


6.03-6.05
%


6.52
%Risk-free interest rate


4.46-4.80
%


4.33%-4.61
%Expected term (in years)


6.5



6.5Weighted average grant-date fair
    value of options granted

$
3.81


$
3.05Total intrinsic value of options
    exercised

$
650,000


$
53,000     Note 6 
    Net Income Per Unit
  Earnings Per Share, No. 03-6 03-6), Participating Securities and the Two 
    Class Method under Financial Accounting Standards Board
    Statement No. 128  03-6
      Three Months Ended March 31,2007


2006Net income available 
    basic

$
8,702


$
7,413Less net income attributable to
    subordinated unitholders


(725
)


(1,435
)Net income  basic


7,977



5,978Net income attributable to
    subordinated unitholders


725



1,435Net income available 
    diluted(1)

$
8,702


$
7,413Basic weighted average units


38,736



29,315Dilutive weighted average units(1)


39,365



29,613Basic net income per unit

$
0.21


$
0.20Diluted net income per unit(1)

$
0.20


$
0.20     (1)
    
    Potentially dilutive restricted units and employee unit options
    totaled 144,255 and 485,184, respectively, during the three
    months ended March 31, 2007. Potentially dilutive
    restricted units and employee unit options totaled 108,022 and
    190,876, respectively, during the three months ended
    March 31, 2006. 16




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 7 
    Related Party Transactions
  Operations
    Services
      Natural
    Gas Transactions
          Note 8 
    Commitments and Contingencies
  Commitments
   17




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 8 
    Commitments and
    Contingencies  (Continued)
  index-related
  Guarantees
  Guarantors Accounting and Disclosure
    Requirements for Guarantees, Including Indirect Guarantees of
    Indebtedness of Others,
  Regulatory
    Compliance
    Litigation
    Note 9 
    Supplemental Disclosures to the Statements of Cash
    Flows
  Three MonthsEnded March 31,2007


2006(In thousands)Cash payments for interest, net of
    $361,000 and $156,000 capitalized in 2007 and 2006 respectively

$
9,620


$
7,625Cash payments for federal and
    state income taxes






  18




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 9 
    Supplemental Disclosures to the Statements of Cash
    Flows  (Continued)
    Note 10 
    Financial Instruments
  Commodity
    Risk Hedging Program
    Interest
    Rate Risk Hedging Program
    mark-to-market
  Note 11 
    Segment Information
   19




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 11 
    Segment Information  (Continued)
     Texas


TexasMid-Continent


Gulf Coast


Gulf CoastOperations


Pipelines


Processing


Corporate


Eliminations


TotalThree Months Ended
    March 31, 2007:Sales to external customers

$
106,537


$
50,790


$
56,393


$
(2,732
)(a)

$



$
210,988Intersegment sales






37,703



1,660







(39,363
)


Interest expense and other
    financing costs














5,193







5,193Depreciation and amortization


5,901



1,678



708



183







8,470Equity in earnings from
    unconsolidated affiliates


(214
)


(650
)














(864
)Segment profit (loss)(b)


10,286



3,821



6,314



(11,719
)






8,702Segment assets


588,902



155,187



92,686



41,736



(25,538
)


852,973Capital expenditures


10,262



6,412



2,432



1,218







20,324Three Months Ended
    March 31, 2006:Sales to external customers

$
99,698


$
68,665


$
45,350


$
247
(a)

$



$
213,960Intersegment sales






49,543



14,812







(64,355
)


Interest expense and other
    financing costs






2







8,181







8,183Depreciation and amortization


5,594



1,347



600



84







7,625Equity in loss (earnings) from
    unconsolidated affiliates


28



(224
)














(196
)Segment profit (loss)(b)


9,540



3,896



4,057



(10,080
)






7,413Capital expenditures


3,717



3,439



1,479



278







8,913     (a)
    
    Represents the results of our risk management activities. See
    Note 10.(b)
    
    We define segment profit (loss) as the sum of the segments
    (a) revenue, (b) equity in earnings from
    unconsolidated affiliates and (c) interest income less the
    sum of the segments (i) cost of sales,
    (ii) operating and maintenance expenses,
    (iii) depreciation and amortization, (iv) general and
    administrative expenses, (v) taxes other than income,
    (vi) equity in losses from unconsolidated affiliates and
    (vii) interest and other financing costs. We allocate
    general and administrative costs directly associated with our
    operations to the respective segment. We do not generally
    allocate interest and financing costs related to our credit
    facilities and term loans to the operating segments.  Note 12 
    Subsequent Events
  Acquisition
    of Cimmarron Gathering, L.P.
     20




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 12 
    Subsequent Events  (Continued)
   Class C
    Units
  12-month, 18-month 24-month
   21




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##### Table of Contents



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

Barrels per dayBtu:

British thermal unitsMMBtu:

One million British thermal
    unitsMMBtu/d:

One million British thermal
    units per dayMcf/d:

One thousand cubic feet per
    dayMMcf/d:

One million cubic feet per
    dayNGLs:

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

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

The volume of product
    transported or passing through a pipeline, plant, terminal or
    other facility   Overview
      
    Mid-Continent Operationsis a provider of natural gas
    midstream services in Oklahoma and in north Texas, including
    natural gas gathering and related compression and dehydration
    services and natural gas processing. For each of the three
    months ended March 31, 2007 and 2006, this segment
    generated approximately 56% of our total segment gross margin.
    Texas Gulf Coast Pipelinesowns networks of natural gas
    gathering and intrastate pipelines in the Texas Gulf Coast
    region and is engaged in the gathering and intrastate
    transmission of natural gas in areas we sometimes refer to as
    the South Texas, Coastal Waters, Central Gulf Coast and Upper
    Gulf Coast regions. Within this segment, we also provide certain
    related services including compression, dehydration and
    marketing of natural gas. For the three months ended
    March 31, 2007 and 2006, this segment generated
    approximately 25% and 24%, respectively, of our total segment
    gross margin.
    Texas Gulf Coast Processingis engaged in natural gas
    processing, conditioning and treating and NGL fractionation and
    transportation through our Houston Central Processing Plant,
    Sheridan NGL Pipeline and, beginning in 2007, our Brenham NGL
    Pipeline. Our natural gas processing plant is the second largest
    in the Texas Gulf Coast region and the third largest in Texas in
    terms of throughput capacity. Our plant is located approximately
    100 miles southwest of Houston, Texas. For the three months
    ended March 31, 2007 and 2006, this segment generated
    approximately 26% and 19%, respectively, of our total segment
    gross margin.
    Corporateengages in risk management and other corporate
    activities. For the three months ended March 31, 2007 and
    2006, this segment generated approximately (7)% and 1%,
    respectively, of our total segment gross margin.     22




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##### Table of Contents



How We
    Evaluate Our Operations
    Throughput Volumes.
  Segment Gross Margin.
   23




---



##### Table of Contents



Operations and Maintenance
    Expenses.
  General and Administrative Expenses.
    General andAdministrative ExpenseYear

Limitations1


$1.50 million per quarter2


$1.65 million per quarter3


$1.80 million per quarter     one-for-one
 24




---



##### Table of Contents



EBITDA.
  
    the financial performance of our assets without regard to
    financing methods, capital structure or historical cost basis;
    the ability of our assets to generate cash sufficient to pay
    interest costs and support our indebtedness;
    our operating performance and return on capital as compared to
    those of other companies in the midstream energy sector, without
    regard to financing or capital structure; and
    the viability of acquisitions and capital expenditure projects
    and the overall rates of return on alternative investment
    opportunities.    Distributable Cash Flow. plus:
  How We
    Manage Our Operations
    Our Economic Models. percentage-of-index percentage-of-proceeds
 25




---



##### Table of Contents



Flow and Transaction Monitoring Systems.
  Producer Activity Evaluation and Reporting.
  Imbalance Monitoring and Control. month-to-month
  Our
    Long-Term Growth Strategy
    Acquisition Analysis.
  Capital Expenditure Analysis.
 26




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##### Table of Contents



Forward-Looking
    Statements
    
    our ability to successfully integrate any acquired assets or
    operations;
    the volatility of prices and market demand for natural gas and
    NGLs;
    our ability to continue to obtain new sources of natural gas
    supply;
    the ability of key producers to continue to drill and
    successfully complete and attach new natural gas supplies;
    our ability to retain our key customers;
    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
 27




---



##### Table of Contents



Our
    Results of Operations
  Three Months Ended March 31,2007


2006($ in thousands)Total gross margin(1)

$
38,326


$
36,479Operations and maintenance expenses


8,498



7,184Depreciation and amortization


8,470



7,625General and administrative expenses


7,516



6,075Taxes other than income


527



444Equity in earnings from
    unconsolidated affiliates


(864
)


(196
)Operating income


14,179



15,347Interest and other financing
    costs, net


(4,573
)


(7,934
)Provision for income taxes


(904
)


Net income

$
8,702


$
7,413Segment gross margin:Mid-Continent Operations

$
21,401


$
20,435Texas Gulf Coast Pipelines(3)


9,564



8,650Texas Gulf Coast Processing


10,093



7,147Corporate


(2,732
)


247Total gross margin(1)

$
38,326


$
36,479Segment gross margin per unit:Mid-Continent Operations:(2)Pipeline throughput ($/MMBtu)(2)

$
1.28


$
1.38Plant Inlet throughput ($/MMBtu)(2)

$
1.79


$
2.02NGLs produced ($/Bbl)(2)

$
19.35


$
22.87Texas Gulf Coast Pipelines
    ($/MMBtu)(3)

$
0.38


$
0.42Texas Gulf Coast Processing:Inlet throughput ($/MMBtu)(4)

$
0.20


$
0.15NGLs produced ($/Bbl)(4)

$
7.03


$
5.84Volumes:Mid-Continent Operations(2)Pipeline throughput (MMBtu/d)(2)


185,345



164,502Plant Inlet throughput (MMBtu/d)(2)


132,789



112,193NGLs produced (Bbls/d)(2)


12,286



9,926Texas Gulf Coast
    Pipelines  throughput (MMBtu/d)(3)


280,068



230,996Texas Gulf Coast Processing:Inlet throughput (MMBtu/d)


572,659



513,083NGLs produced (Bbls/d)


15,960



13,601Capital Expenditures:Maintenance capital expenditures

$
1,371


$
1,850Expansion capital expenditures


18,953



7,063Total capital expenditures

$
20,324


$
8,913Operations and maintenance
    expenses:Mid-Continent Operations

$
4,370


$
3,868Texas Gulf Coast Pipelines


2,033



1,628Texas Gulf Coast Processing


2,095



1,688Total operations and maintenance
    expenses

$
8,498


$
7,184     (1)
    
    Total gross margin is a non-GAAP financial measure. For a
    reconciliation of total gross margin to its most directly
    comparable GAAP measure, please read
     Non-GAAP Financial Measures. 28




---



##### Table of Contents



(2)
    
    Segment gross margin per unit amounts for the Mid-Continent
    Operations are calculated as the segment gross margin divided by
    the pipeline throughput, inlet throughput or NGLs produced, as
    appropriate. Plant inlet throughput and NGLs produced represents
    total volumes processed and produced by the Mid-Continent
    Operations segment at all plants, including plants owned by the
    Mid-Continent Operations segment and plants owned by third
    parties. For the three months ended March 31, 2007, plant
    inlet throughput averaged 85,558 MMBtu/d and NGLs produced
    averaged 8,394 barrels per day for plants owned by the
    Mid-Continent Operations segment. For the three months ended
    March 31, 2006, plant inlet throughput averaged
    72,049 MMBtu/d and NGLs produced averaged
    6,566 barrels per day for plants owned by the Mid-Continent
    Operations segment.(3)
    
    Excludes results and volumes associated with our interest in
    Webb Duval. Gross volumes transported by Webb Duval were
    103,370 MMBtu/d and 119,356 MMBtu/d, net of
    intercompany volumes, for the three months ended March 31,
    2007 and 2006, respectively.(4)
    
    Represents the total processing segment gross margin divided by
    the total inlet throughput or NGLs produced, as appropriate.  Three
    Months Ended March 31, 2007 Compared with Three Months
    Ended March 31, 2006
  Mid-Continent Operations Segment Gross
    Margin.
  Texas Gulf Coast Pipelines Segment Gross
    Margin.
  Texas Gulf Coast Processing Segment Gross
    Margin.
  Corporate Segment Gross Margin.
 29




---



##### Table of Contents



Operations and Maintenance
    Expenses. Mid-Continent
  Depreciation and Amortization.
  General and Administrative Expenses.
  Interest Expense.
  Liquidity
    and Capital Resources
    Off-Balance Sheet Arrangements.
  Capital Requirements.
  
    maintenance capital expenditures, which are capital expenditures
    employed to replace partially or fully depreciated assets to
    maintain the existing operating capacity of our assets and to
    extend their useful lives, or other capital expenditures that
    are incurred in maintaining existing system volumes and related
    cash flows; and
    expansion capital expenditures such as those to acquire
    additional assets to grow our business, to expand and upgrade
    gathering systems, transmission capacity, processing plants and
    to construct or acquire new pipelines or processing plants. 30




---



##### Table of Contents



Operating
    Cash Flows.
  Three Months Ended March 31,2007


2006(In thousands)Net income

$
8,702


$
7,413Depreciation and amortization


8,779



8,582Equity in earnings from
    unconsolidated affiliates


(864
)


(196
)Equity-based compensation and other


1,449



319Cash provided by working capital


5,924



6,737Net cash provided by operating
    activities

$
23,990


$
22,855       Investing Cash Flows.
 31




---



##### Table of Contents



Financing Cash Flows.
  Cash Distributions and Reserves:
          Our
    Indebtedness
    Credit Ratings.
  Senior Secured Revolving Credit Facility.
 32




---



##### Table of Contents



Senior Notes.
    Recent
    Accounting Pronouncements
    Critical
    Accounting Policies
  Form 10-K
 33




---



##### Table of Contents



Non-GAAP Financial
    Measures
    Three MonthsEnded March 31,2007


2006Reconciliation of total gross
    margin to operating income:Operating income

$
14,179


$
15,347Add: Operations and maintenance
    expenses


8,498



7,184Depreciation and amortization


8,470



7,625General and administrative expenses


7,516



6,075Taxes other than income


527



444Equity in earnings from
    unconsolidated affiliates


(864
)


(196
)Total gross margin

$
38,326


$
36,479Reconciliation of EBITDA to net
    income:Net income

$
8,702


$
7,413Add: Depreciation and amortization


8,470



7,625Interest expense and other
    financing costs


5,193



8,183Provision for income taxes


904



EBITDA

$
23,269


$
23,221Reconciliation of EBITDA to cash
    flows from operating activities:Cash flow provided by operating
    activities

$
23,990


$
22,855Add: Cash paid for interest and
    other financing costs


4,883



7,226Equity in earnings of
    unconsolidated affiliates


864



196Risk management activities


(2,615
)


(2,338
)Increase in working capital and
    other


(3,853
)


(4,718
)EBITDA

$
23,269


$
23,221   Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk.    Commodity
    Prices
  Commodity Price Risk.
  percentage-of-proceeds agreed-upon
 34




---



##### Table of Contents



fee-for-service percentage-of-index
  process condition processing spread processing
    margin. processing margin conditioning mode
    Commodity Price Hedging Activities.
  
    purchase put options or put spreads (purchase of a
    put and a sale of a put at a lower strike price) on WTI crude
    oil;
    purchase put or call options, enter into collars (purchase of a
    put together with the sale of a call) or call or put
    spreads ((i) purchase of a call and a sale of a call at a
    higher strike price or (ii) purchase of a put and a sale of
    a put at a lower strike price)
    and/or sell
    fixed for floating swaps on natural gas at Henry Hub, HSC or
    other highly liquid points relevant to our operations or to the
    operations of an entity to be acquired by us;
    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 an entity to be
    acquired by us, has direct price exposure, priced at Mt. Belvieu
    or Conway; and 35




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##### 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 to the operations of an
    entity to be acquired by us.    
    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;
    notional volume must not exceed 80% of the projected
    requirements or output, as applicable, for the hedged period
    with respect to (i) the purchase of crude oil or NGLs put
    options, (ii) the purchase of natural gas put or call
    options, (iii) the purchase of fractionation spread or
    processing margin spread put options or (iv) the entry into
    any crude oil, natural gas or NGLs spread options; and
    the aggregate volumetric exposure associated with swaps, collars
    and written calls relating to any product must not exceed 50% of
    the aggregate hedged position with respect to such product.    over-the-counter
    Mid-Continent Operations Segment.
  Texas Gulf Coast Pipelines and Processing
    Segments.
    Purchased
    CenterPoint East Natural Gas Puts
  Put Strike


Put Volumes(Per MMBtu)


(MMBtu/d)


Fair Value2007

$
8.75



9,750


$
4,227,0002008

$
7.75



5,000


$
1,928,0002009

$
6.95



5,000


$
1,519,000  36




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##### Table of Contents



Purchased
    HSC Index Natural Gas Call Spreads
  Call Strike(Per MMBtu)


Call VolumesBought


Sold


(MMBtu/d)


Fair Value2007

$
8.00


$
10.00



11,400


$
1,452,0002008

$
8.15


$
10.00



9,400


$
2,051,0002009

$
7.75


$
10.00



8,000


$
1,950,0002010

$
7.35


$
10.00



7,100


$
1,860,0002011

$
6.95


$
10.00



7,100


$
2,016,000   Purchased
    Purity Ethane Puts and Entered into Swaps
  Put


SwapStrike


Volumes





Price


Volumes(Per Gallon)


(Bbls/d)


Fair Value


(Per Gallon)


(Bbls/d)


Fair Value2007

$
0.6365



599


$
86,000


$
0.6525



599


$
(421,000
)2008

$
0.5700



607


$
87,000


$
0.5650



607


$
(1,558,000
)   Purchased
    TET Propane Puts and Entered into Swaps
  Put


SwapStrike


Volumes





Price


Volumes(Per Gallon)


(Bbls/d)


Fair Value


(Per Gallon)


(Bbls/d)


Fair Value2007

$
0.8930



2,575


$
436,000


$
0.9375



726


$
(1,056,000
)2007

$
0.9000



1,100


$
202,0002008

$
0.8360



2,594


$
906,000


$
0.8700



745


$
(2,335,000
)2008

$
0.8975



1,100


$
625,0002009

$
0.8725



2,200


$
1,566,0002010

$
0.8500



1,100


$
883,0002011

$
0.8265



1,100


$
926,000   Purchased
    Non-TET Isobutane Puts and Entered into Swaps
  Put


SwapStrike


Volumes





Price


Volumes(Per Gallon)


(Bbls/d)


Fair Value


(Per Gallon)


(Bbls/d)


Fair Value2007

$
1.0675



620


$
67,000


$
1.1250



90


$
(198,000
)2007

$
1.0750



200


$
24,0002008

$
0.9900



622


$
129,000


$
1.0450



92


$
(381,000
)2008

$
1.0900



250


$
117,0002009

$
1.0600



450


$
261,0002010

$
1.0350



300


$
197,0002011

$
1.0205



300


$
221,000  37




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##### Table of Contents



Purchased
    Non-TET Normal-Butane Puts and Entered into Swaps
  Put


SwapStrike


Volumes





Price


Volumes(Per Gallon)


(Bbls/d)


Fair Value


(Per Gallon)


(Bbls/d)


Fair Value2007

$
1.0650



803


$
91,000


$
1.1200



264


$
(404,000
)2007

$
1.0675



150


$
17,0002008

$
0.9875



810


$
136,000


$
1.0400



271


$
(928,000
)2008

$
1.0800



300


$
121,0002009

$
1.0525



700


$
326,0002010

$
1.0300



300


$
152,0002011

$
1.0205



300


$
171,000   Purchased
    WTI Crude Oil Puts
  Put Strike


Put Volumes(Per Barrel)


(Bbls/d)


Fair Value2007

$
48.00



2,000


$
51,0002007

$
55.00



250


$
33,0002008

$
55.00



1,000


$
578,0002009

$
55.00



1,000


$
919,0002010

$
55.00



1,000


$
1,211,0002011

$
55.00



1,000


$
1,431,000   Interest Rates.
    mark-to-market
  Risk Management Oversight.
  Credit Risk.
 38




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##### Table of Contents



Item 4.
    Controls
    and Procedures.    Rule 13(a)-15(f)
 39




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##### Table of Contents



PART II-OTHER
    INFORMATION  Item 1.
    Legal
    Proceedings.    Item 1A.
    Risk
    Factors  Form 10-K Form 10-K and/or Form 10-K
  Our
    acquisitions could expose us to potential significant
    liabilities.
    Certain
    of our investors may sell units in the public market, which
    could reduce the market price of our outstanding common
    units.
  one-for-one Form S-3, Form S-3, Form S-3, 12-month, 18-month 24-month
 40




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##### Table of Contents



Item 6.
    Exhibits.    Number

Description3
.1

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

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

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

Amendment No. 1 to Third
    Amended and Restated Limited Liability Company Agreement of
    Copano Energy, L.L.C. (incorporated by reference to
    Exhibit 3.1 to Current Report on
    Form 8-K
    filed May 4, 2007).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 February 7, 2006, among Copano Energy, L.L.C.,
    Copano Energy Finance Corporation, the Guarantors parties
    thereto and the Initial Purchasers named therein (incorporated
    by reference to Exhibit 4.4 to Current Report on
    Form 8-K
    filed February 8, 2006).4
.5

Class B Unit and Common Unit
    Purchase Agreement dated as of June 17, 2005 by and among
    Copano Energy, L.L.C. and Kayne Anderson MLP Investment Company,
    RCH Energy MLP Fund LP, RCH Energy MLP Fund-A LP, Tortoise
    Energy Infrastructure Corporation, Tortoise Energy Capital
    Corporation, Goldman, Sachs & Co., Energy Income and
    Growth Fund, Fiduciary/Claymore MLP Opportunity Fund, Alerian
    Opportunity Partners LP, Alerian Capital Partners LP, Strome
    HedgeCap, LP, Strome Alpha, LP and Strome Family Foundation
    (incorporated by reference to Exhibit 10.27 to Quarterly
    Report on
    Form 10-Q
    filed August 15, 2005).4
.6

Registration Rights Agreement made
    and entered into as of August 1, 2005, by and among Copano
    Energy, L.L.C. and Kayne Anderson MLP Investment Company, RCH
    Energy MLP Fund LP, RCH Energy MLP Fund-A LP, Tortoise
    Energy Infrastructure Corporation, Tortoise Energy Capital
    Corporation, Goldman, Sachs & Co., Energy Income and
    Growth Fund, Fiduciary/Claymore MLP Opportunity Fund, Alerian
    Opportunity Partners LP, Alerian Capital Partners LP, Strome MLP
    Fund, L.P., Strome Alpha, LP and Strome Family Foundation
    (incorporated by reference to Exhibit 10.28 to Quarterly
    Report on
    Form 10-Q
    filed August 15, 2005).4
.7

Common Unit Purchase Agreement
    dated as of December 29, 2005, by and among Copano Energy,
    L.L.C. and ZLP Fund, L.P., Structured Finance Americas, LLC and
    Royal Bank of Canada (incorporated by reference to
    Exhibit 4.7 to Annual Report on
    Form 10-K
    filed March 16, 2006).4
.8

Registration Rights Agreement
    dated as of December 29, 2005, by and among Copano Energy,
    L.L.C. and ZLP Fund, L.P., Structured Finance Americas, LLC and
    Royal Bank of Canada (incorporated by reference to
    Exhibit 4.8 to Annual Report on
    Form 10-K
    filed March 16, 2006).4
.9

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).10
.1

Amended and Restated Loan
    Agreement dated as of January 12, 2007, among Copano
    Energy, L.L.C., as the Borrower, Bank of America, N.A., as
    Administrative Agent and L/C Issuer, JPMorgan Chase Bank, N.A.
    and Wachovia Bank, National Association, as Co-Syndication
    Agents and The Other Lenders Party thereto and Banc of America
    Securities LLC, as Sole Lead Arranger and Sole Book Manager
    (incorporated by reference to Exhibit 10.1 to Current
    Report on
    Form 8-K
    filed January 19, 2007). 41




---



##### Table of Contents



Number

Description10
.2

2007 Administrative Guidelines for
    the Copano Energy, L.L.C. Management Incentive Compensation Plan
    (incorporated by reference to Exhibit 10.1 to Current
    Report on
    Form 8-K
    filed February 20, 2007).10
.3

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).31
.1*

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

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

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

Sarbanes-Oxley Section 906
    certification of Matthew J. Assiff (Chief Financial Officer) for
    Copano Energy, L.L.C.     *
    
    Filed herewith.
    
    Portions of this exhibit have been omitted pursuant to a request
    for confidential treatment. 42




---



##### Table of Contents



SIGNATURES
      By:
    /s/  John
    R. Eckel, Jr.     By:
    /s/  Matthew
    J. Assiff    43




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##### Table of Contents



INDEX TO
    EXHIBITS
  Number

Description3
.1

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

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

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

Amendment No. 1 to Third
    Amended and Restated Limited Liability Company Agreement of
    Copano Energy, L.L.C. (incorporated by reference to
    Exhibit 3.1 to Current Report on
    Form 8-K
    filed May 4, 2007).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 February 7, 2006, among Copano Energy, L.L.C.,
    Copano Energy Finance Corporation, the Guarantors parties
    thereto and the Initial Purchasers named therein (incorporated
    by reference to Exhibit 4.4 to Current Report on
    Form 8-K
    filed February 8, 2006).4
.5

Class B Unit and Common Unit
    Purchase Agreement dated as of June 17, 2005 by and among
    Copano Energy, L.L.C. and Kayne Anderson MLP Investment Company,
    RCH Energy MLP Fund LP, RCH Energy MLP Fund-A LP, Tortoise
    Energy Infrastructure Corporation, Tortoise Energy Capital
    Corporation, Goldman, Sachs & Co., Energy Income and
    Growth Fund, Fiduciary/Claymore MLP Opportunity Fund, Alerian
    Opportunity Partners LP, Alerian Capital Partners LP, Strome
    HedgeCap, LP, Strome Alpha, LP and Strome Family Foundation
    (incorporated by reference to Exhibit 10.27 to Quarterly
    Report on
    Form 10-Q
    filed August 15, 2005).4
.6

Registration Rights Agreement made
    and entered into as of August 1, 2005, by and among Copano
    Energy, L.L.C. and Kayne Anderson MLP Investment Company, RCH
    Energy MLP Fund LP, RCH Energy MLP Fund-A LP, Tortoise
    Energy Infrastructure Corporation, Tortoise Energy Capital
    Corporation, Goldman, Sachs & Co., Energy Income and
    Growth Fund, Fiduciary/Claymore MLP Opportunity Fund, Alerian
    Opportunity Partners LP, Alerian Capital Partners LP, Strome MLP
    Fund, L.P., Strome Alpha, LP and Strome Family Foundation
    (incorporated by reference to Exhibit 10.28 to Quarterly
    Report on
    Form 10-Q
    filed August 15, 2005).4
.7

Common Unit Purchase Agreement
    dated as of December 29, 2005, by and among Copano Energy,
    L.L.C. and ZLP Fund, L.P., Structured Finance Americas, LLC and
    Royal Bank of Canada (incorporated by reference to
    Exhibit 4.7 to Annual Report on
    Form 10-K
    filed March 16, 2006).4
.8

Registration Rights Agreement
    dated as of December 29, 2005, by and among Copano Energy,
    L.L.C. and ZLP Fund, L.P., Structured Finance Americas, LLC and
    Royal Bank of Canada (incorporated by reference to
    Exhibit 4.8 to Annual Report on
    Form 10-K
    filed March 16, 2006)4
.9

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).10
.1

Amended and Restated Loan
    Agreement dated as of January 12, 2007, among Copano
    Energy, L.L.C., as the Borrower, Bank of America, N.A., as
    Administrative Agent and L/C Issuer, JPMorgan Chase Bank, N.A.
    and Wachovia Bank, National Association, as Co-Syndication
    Agents and The Other Lenders Party thereto and Banc of America
    Securities LLC, as Sole Lead Arranger and Sole Book Manager
    (incorporated by reference to Exhibit 10.1 to Current
    Report on
    Form 8-K
    filed January 19, 2007).10
.2

2007 Administrative Guidelines for
    the Copano Energy, L.L.C. Management Incentive Compensation Plan
    (incorporated by reference to Exhibit 10.1 to Current
    Report on
    Form 8-K
    filed February 20, 2007).10
.3

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).




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##### Table of Contents



Number

Description31
.1*

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

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

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

Sarbanes-Oxley Section 906
    certification of Matthew J. Assiff (Chief Financial Officer) for
    Copano Energy, L.L.C.     *
    
    Filed herewith.
    
    Portions of this exhibit have been omitted pursuant to a request
    for confidential treatment.