##### 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
    June 30, 2008ORo

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

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

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




---



##### 



TABLE OF
    CONTENTS
   
 PagePART I  FINANCIAL INFORMATIONItem 1.


Financial Statements


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


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


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


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


6Notes to Unaudited Consolidated Financial
    Statements


7Item 2.


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


33Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


49Item 4.


Controls and Procedures


57PART II  OTHER
    INFORMATIONItem 1.


Legal Proceedings


58Item 1A.


Risk Factors


58Item 4.


Submission of Matters to a Vote of Security
    Holders


58Item 6.


Exhibits


59Retirement, Release and Consulting Services AgreementSection 302 Certification of John R. Eckel, Jr.Section 302 Certification of Matthew J. AssiffSEction 906 Certification of John R. Eckel, Jr.Section 906 Certification of Matthew J. Assiff   2




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##### Table of Contents



Item 1.
    Financial
    Statements. COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES



UNAUDITED
    CONSOLIDATED BALANCE SHEETS  June 30,


December 31,2008


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

$
47,741


$
72,665Accounts receivable, net


172,080



127,534Risk management assets


7,308



3,289Prepayments and other current assets


3,128



3,881Total current assets


230,257



207,369Property, plant and equipment, net


761,568



694,727Intangible assets, net


199,116



200,546Investment in unconsolidated affiliates


643,835



632,725Risk management assets


30,968



10,598Other assets, net


34,207



23,118Total assets

$
1,899,951


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

$
220,132


$
147,046Accrued interest


12,942



11,319Accrued tax liability


388



3,919Risk management liabilities


39,856



27,710Other current liabilities


20,068



12,931Total current liabilities


293,386



202,925Long-term debt (includes $739 and $773 bond premium as of
    June 30, 2008 and December 31, 2007, respectively)


680,739



630,773Deferred tax provision


1,484



1,231Risk management and other noncurrent liabilities


56,306



40,018Commitments and contingencies (Note 10)Members capital:Common units, no par value, 47,820,105 units and
    47,366,048 units issued and outstanding as of June 30,
    2008 and December 31, 2007, respectively


675,606



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


26,995



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


112,454



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


175,634



175,634Paid-in capital


29,684



23,773Accumulated deficit


(20,003
)


(7,867
)Accumulated other comprehensive loss


(132,334
)


(111,935
)868,036



894,136Total liabilities and members capital

$
1,899,951


$
1,769,083    3




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES



UNAUDITED
    CONSOLIDATED STATEMENTS OF OPERATIONS  Three Months Ended June 30,


Six Months Ended June 30,2008


2007


2008


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

$
235,000


$
140,052


$
415,887


$
251,329Natural gas liquids sales


179,031



116,025



333,112



203,912Crude oil sales


57,183



14,220



98,365



14,220Transportation, compression and processing fees


16,442



4,192



29,124



8,440Condensate and other


13,622



7,231



26,538



14,807Total revenue


501,278



281,720



903,026



492,708Costs and expenses:Cost of natural gas and natural gas liquids


369,766



220,460



667,234



392,236Cost of crude oil purchases


56,021



13,610



95,863



13,610Transportation


3,416



1,218



6,537



2,104Operations and maintenance


13,065



9,675



24,895



18,173Depreciation and amortization


12,767



9,825



24,337



18,295General and administrative


10,936



7,700



22,786



15,216Taxes other than income


729



1,029



1,470



1,556Equity in earnings from unconsolidated affiliates


(4,788
)


(754
)


(5,184
)


(1,618
)Total costs and expenses


461,912



262,763



837,938



459,572Operating income


39,366



18,957



65,088



33,136Other income (expense):Interest and other income


278



705



734



1,325Interest and other financing costs


(16,077
)


(6,179
)


(27,469
)


(11,372
)Income before income taxes


23,567



13,483



38,353



23,089Provision for income taxes


(365
)


(175
)


(649
)


(1,079
)Net income

$
23,202


$
13,308


$
37,704


$
22,010Basic net income per common unit:Net income per common unit

$
0.49


$
0.31


$
0.79


$
0.53Weighted average number of common units


47,672



42,748



47,524



40,556Diluted net income per common unit:Net income per common unit

$
0.40


$
0.31


$
0.65


$
0.52Weighted average number of common units


58,010



43,475



57,967



41,199Basic net income per subordinated unit:Net income per subordinated unit

$



$



$



$
0.21Weighted average number of subordinated units














1,711Diluted net income per subordinated unit:Net income per subordinated unit

$



$



$



$
0.21Weighted average number of subordinated units














1,711    4




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES



UNAUDITED
    CONSOLIDATED STATEMENTS OF CASH FLOWS  Six Months EndedJune 30,2008


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

$
37,704


$
22,010Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization


24,337



18,295Amortization of debt issue costs


1,619



615Equity in earnings from unconsolidated affiliates


(5,184
)


(1,618
)Distributions from unconsolidated affiliates


11,718



2,111Equity-based compensation


1,808



1,327Deferred tax provision


253



917Other noncash items


(85
)


(20
)Changes in assets and liabilities, net of acquisitions:Accounts receivable


(44,258
)


(16,019
)Prepayments and other current assets


753



1,315Risk management assets


(28,465
)


(18,994
)Accounts payable


62,605



24,115Other current liabilities


15,180



6,837Net cash provided by operating activities


77,985



40,891Cash Flows From Investing Activities:Additions to property, plant and equipment


(76,995
)


(40,627
)Additions to intangible assets


(3,849
)


(1,763
)Acquisitions


(77
)


(55,327
)Investment in unconsolidated affiliates


(18,809
)


Distributions from unconsolidated affiliates


877



381Other


(2,701
)


103Net cash used in investing activities


(101,554
)


(97,233
)Cash Flows From Financing Activities:Proceeds from long-term debt


364,000



Repayment of long-term debt


(314,000
)


94,000Repayment of short-term notes payable






(1,116
)Deferred financing costs


(6,350
)


(608
)Distributions to unitholders


(49,585
)


(34,690
)Capital contributions from Pre-IPO Investors (Note 7)


4,103



5,054Equity offering costs


(47
)


(481
)Proceeds from option exercises


524



585Net cash (used in) provided by financing activities


(1,355
)


62,744Net (decrease) increase in cash and cash equivalents


(24,924
)


6,402Cash and cash equivalents, beginning of year


72,665



39,484Cash and cash equivalents, end of period

$
47,741


$
45,886    5




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##### Table of Contents





COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES



UNAUDITED
    CONSOLIDATED STATEMENT OF MEMBERS CAPITAL AND
    COMPREHENSIVE INCOME (LOSS)  AccumulatedCommon


Class C


Class D


Class E





Accumulated


Other





TotalNumber


Common


Number


Class C


Number


Class D


Number


Class E


Paid-in


Earnings


Comprehensive





Comprehensiveof Units


Units


of Units


Units


of Units


Units


of Units


Units


Capital


(Deficit)


Loss


Total


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


47,366


$
661,585



1,184


$
40,492



3,246


$
112,454



5,599


$
175,634


$
23,773


$
(7,867
)

$
(111,935
)

$
894,136Capital contributions from Pre-IPO Investors


































4,103











4,103


$
Conversion of Class C units into common units


394



13,497



(394
)


(13,497
)


































Distributions to unitholders






































(49,840
)






(49,840
)


Option exercises


32



524







































524



Equity-based compensation


































1,808











1,808



Vested restricted units


16















































Vested phantom units


12















































Net income






































37,704







37,704



37,704Derivative settlements reclassified to income










































23,915



23,915



23,915Unrealized loss-change in fair value of derivatives










































(44,314
)


(44,314
)


(44,314
)Comprehensive income

















































$
17,305Balance, June 30, 2008


47,820


$
675,606



790


$
26,995



3,246


$
112,454



5,599


$
175,634


$
29,684


$
(20,003
)

$
(132,334
)

$
868,036    6




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##### Table of Contents



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




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 1 
    Organization and Basis of Presentation (Continued)
  Form 10-K
   Note 2 
    New
    Accounting Pronouncements  Business
    Combinations
  Business Combinations
  Fair
    Value Measurements
  Fair Value Measurements. Accounting for Derivative Instruments and Hedging
    Activities,
  Fair
    Value Option for Financial Assets and Financial
    Liabilities
  The Fair Value Option for Financial Assets and
    Financial Liabilities,
  Non-Controlling
    Interests in Consolidated Financial Statements  an
    Amendment of ARB No. 51
  Non-Controlling Interests in Consolidated Financial
    Statements  an Amendment of ARB No. 51.
  Disclosures
    about Derivative Instruments and Hedging Activities 
    an amendment of FASB Statement No. 133
  Disclosures about Derivative Instruments and Hedging
    Activities  an amendment of FASB Statement
    No. 133
 8




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 2 
    New Accounting Pronouncements (Continued)
     Note 3 
    Intangible
    Assets  2008  2009  2010  2011  $ 2012  2013 
    June 30,


December 31,2008


2007Rights-of-way and easements, at cost

$
107,310


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


(8,640
)


(8,922
)Contracts


107,885



107,885Less accumulated amortization for contracts


(12,082
)


(7,654
)Customer relationship


5,184



5,204Less accumulated amortization for customer relationship


(541
)


(394
)Intangible assets, net

$
199,116


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




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##### Table of Contents



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


Six MonthsEnded


EndedJune 30, 2007


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

$
342,114


$
632,899Costs and expenses

$
318,017


$
594,992Equity in earnings from unconsolidated affiliates

$
996


$
2,100Operating income

$
24,097


$
37,907Income before extraordinary items

$
24,097


$
13,020Net income

$
12,052


$
13,020Basic net income per common unit:As reported units outstanding


42,748



40,556Pro forma units outstanding


47,281



45,089As reported net income per unit

$
0.31


$
0.53Pro forma net income per unit

$
0.25


$
0.28Diluted net income per common unit:As reported units outstanding


43,475



41,199Pro forma units outstanding


58,435



56,156As reported net income per unit

$
0.31


$
0.52Pro forma net income per unit

$
0.21


$
0.23Basic net income per subordinated unit:As reported units outstanding






1,711Pro forma units outstanding






1,711As reported net income per unit

$



$
0.21Pro forma net income per unit

$



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






1,711Pro forma units outstanding






1,711As reported net income per unit

$



$
0.21Pro forma net income per unit

$



$
0.19   10




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##### Table of Contents



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


Fort Union


Southern Dome


Webb DuvalOperating revenue

$
17,303


$
24,023


$
17,959


$
1,759Operating expenses


(6,544
)


(2,133
)


(14,475
)


(300
)Depreciation


(2,056
)


(2,814
)


(367
)


(387
)Interest income (expense) and other


63



(3,174
)


3



17Net income


8,766



15,902



3,120



1,089Ownership %


51
%


37.04
%


69.5
%


62.5
%4,471



5,890



2,168



681Priority allocation of earnings and other


701



225







Copanos share of management fees charged


117



18



88



67Amortization of difference between the carried investment and
    the underlying equity in net assets


(5,995
)


(3,212
)


(5
)


10Equity in (loss) earnings from unconsolidated affiliates

$
(706
)

$
2,921


$
2,251


$
758Distributions

$
5,867


$
3,778


$
2,189


$
688Current assets

$
8,715


$
27,772


$
5,708


$
1,733Noncurrent assets


99,612



190,715



16,699



7,135Current liabilities


(2,202
)


(22,746
)


(5,673
)


(311
)Noncurrent liabilities






(106,532
)






(52
)Net assets

$
106,125


$
89,209


$
16,734


$
8,505  11




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##### Table of Contents



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


Webb DuvalOperating revenue

$
6,520


$
2,181Operating expenses


(5,539
)


(209
)Depreciation


(366
)


(384
)Interest income and other


6



37Net income


621



1,625Ownership %


69.5
%


62.5
%432



1,016Copanos share of management fees charged


87



65Amortization of difference between the carried investment and
    the underlying equity in net assets


(5
)


10Equity in earnings from unconsolidated affiliates

$
514


$
1,091Distributions

$
904


$
1,589    Note 6 
    Long-Term
    Debt    June 30,


December 31,2008


2007Long-term debt:Credit Facility

$
30,000


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


350,000



350,000Unamortized bond premium


739



7737.75% senior notes due 2018


300,000



Total Senior Notes


650,739



350,773Total

$
680,739


$
630,773   Credit
    Facility
   12




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##### Table of Contents



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




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 6 
    Long-Term Debt (Continued)
        14




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##### Table of Contents





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


December 31, 2007Investment in

















Investment inGuarantor


Non-Guarantor














Guarantor


Non-GuarantorParent


Co-Issuer


Subsidiaries


Subsidiaries


Eliminations


Total


Parent


Co-Issuer


Subsidiaries


Subsidiaries


Eliminations


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

$
1,395


$



$
46,346


$



$



$
47,741


$
10,018


$



$
62,647


$



$



$
72,665Accounts receivable, net


2







172,078











172,080



476







127,058











127,534Intercompany receivable


37,338







(37,338
)














37,027







(37,027
)










Risk management assets










7,308











7,308











3,289











3,289Prepayments and other current assets


699







2,429











3,128



877







3,004











3,881Total current assets


39,434







190,823











230,257



48,398







158,971











207,369Property, plant and equipment, net


241







761,327











761,568



264







694,463











694,727Intangible assets, net










199,116











199,116











200,546











200,546Investment in unconsolidated affiliates










643,835



643,835



(643,835
)


643,835











632,725



632,725



(632,725
)


632,725Investment in consolidated subsidiaries


1,503,295















(1,503,295
)






1,473,187















(1,473,187
)


Risk management assets










30,968











30,968











10,598











10,598Other assets, net


22,632







11,575











34,207



17,589







5,529











23,118Total assets

$
1,565,602


$



$
1,837,644


$
643,835


$
(2,147,130
)

$
1,899,951


$
1,539,438


$



$
1,702,832


$
632,725


$
(2,105,912
)

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

$
312


$



$
219,820


$



$



$
220,132


$
35


$



$
147,011


$



$



$
147,046Accrued interest


12,662







280











12,942



11,319



















11,319Accrued tax liability


388



















388



483







3,436











3,919Risk management liabilities










39,856











39,856











27,710











27,710Other current liabilities


1,467







18,601











20,068



882







12,049











12,931Total current liabilities


14,829







278,557











293,386



12,719







190,206











202,925Long-term debt


680,739



















680,739



630,773



















630,773Deferred tax provision


1,484



















1,484



1,231



















1,231Risk management and other noncurrent liabilities


514







55,792











56,306



579







39,439











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


675,606



















675,606



661,585



















661,585Class C units


26,995



















26,995



40,492



















40,492Class D units


112,454



















112,454



112,454



















112,454Class E units


175,634



















175,634



175,634



















175,634Paid-in capital


29,684



1



1,531,385



634,302



(2,165,688
)


29,684



23,773



1



1,507,285



628,375



(2,135,661
)


23,773Accumulated (deficit) earnings


(20,003
)


(1
)


104,244



9,533



(113,776
)


(20,003
)


(7,867
)


(1
)


77,837



4,350



(82,186
)


(7,867
)Accumulated other comprehensive loss


(132,334
)






(132,334
)






132,334



(132,334
)


(111,935
)






(111,935
)






111,935



(111,935
)868,036







1,503,295



643,835



(2,147,130
)


868,036



894,136







1,473,187



632,725



(2,105,912
)


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

$
1,565,602


$



$
1,837,644


$
643,835


$
(2,147,130
)

$
1,899,951


$
1,539,438


$



$
1,702,832


$
632,725


$
(2,105,912
)

$
1,769,083  15




---



##### Table of Contents







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


2007Investment in

















Investment inGuarantor


Non-Guarantor














Guarantor


Non-GuarantorParent


Co-Issuer


Subsidiaries


Subsidiaries


Eliminations


Total


Parent


Co-Issuer


Subsidiaries


Subsidiaries


Eliminations


Total(In thousands)Revenue:Natural gas sales

$



$



$
235,000


$



$



$
235,000


$



$



$
140,052


$



$



$
140,052Natural gas liquids sales










179,031











179,031











116,025











116,025Crude oil sales










57,183











57,183











14,220











14,220Transportation, compression and processing fees










16,442











16,442











4,192











4,192Condensate and other










13,622











13,622











7,231











7,231Total revenue










501,278











501,278











281,720










$
281,720Costs and expenses:Cost of natural gas and natural gas liquids










369,766











369,766











220,460











220,460Cost of crude oil










56,021











56,021











13,610











13,610Transportation










3,416











3,416











1,218











1,218Operations and maintenance


553







12,512











13,065



410







9,265











9,675Depreciation and amortization


11







12,756











12,767



11







9,814











9,825General and administrative


5,961







4,975











10,936



2,395







5,305











7,700Taxes other than income










729











729











1,029











1,029Equity in (earnings) loss from unconsolidated affiliates










(4,788
)


(4,788
)


4,788



(4,788
)










(754
)


(754
)


754



(754
)Total costs and expenses


6,525







455,387



(4,788
)


4,788



461,912



2,816







259,947



(754
)


754



262,763Operating (loss) income


(6,525
)






45,891



4,788



(4,788
)


39,366



(2,816
)






21,773



754



(754
)


18,957Interest and other income


3







275











278



161







544











705Interest and other financing costs


(12,200
)






(3,877
)










(16,077
)


(6,248
)






69











(6,179
)(Loss) income before income taxes and equity in earnings from
    consolidated subsidiaries


(18,722
)






42,289



4,788



(4,788
)


23,567



(8,903
)






22,386



754



(754
)


13,483Provision for income taxes


(365
)


















(365
)


(175
)


















(175
)(Loss) income before equity in earnings from consolidated
    subsidiaries


(19,087
)






42,289



4,788



(4,788
)


23,202



(9,078
)






22,386



754



(754
)


13,308Equity in earnings (loss) from consolidated subsidiaries


42,289















(42,289
)






22,386















(22,386
)


Net income (loss)

$
23,202


$



$
42,289


$
4,788


$
(47,077
)

$
23,202


$
13,308


$



$
22,386


$
754


$
(23,140
)

$
13,308  16




---



##### Table of Contents







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


2007Investment in

















Investment inGuarantor


Non-Guarantor














Guarantor


Non-GuarantorParent


Co-Issuer


Subsidiaries


Subsidiaries


Eliminations


Total


Parent


Co-Issuer


Subsidiaries


Subsidiaries


Eliminations


Total(In thousands)Revenue:Natural gas sales

$



$



$
415,887


$



$



$
415,887


$



$



$
251,329


$



$



$
251,329Natural gas liquids sales










333,112











333,112











203,912











203,912Crude oil sales










98,365











98,365











14,220











14,220Transportation, compression and processing fees










29,124











29,124











8,440











8,440Condensate and other










26,538











26,538











14,807











14,807Total revenue










903,026











903,026











492,708











492,708Costs and expenses:Cost of natural gas and natural gas liquids










667,234











667,234











392,236











392,236Cost of crude oil










95,863











95,863











13,610











13,610Transportation










6,537











6,537











2,104











2,104Operations and maintenance


1,064







23,831











24,895



808







17,365











18,173Depreciation and amortization


23







24,314











24,337



11







18,284











18,295General and administrative


13,423







9,363











22,786



5,128







10,088











15,216Taxes other than income










1,470











1,470











1,556











1,556Equity in earnings from unconsolidated affiliates










(5,184
)


(5,184
)


5,184



(5,184
)










(1,618
)


(1,618
)


1,618



(1,618
)Total costs and expenses


14,510







823,428



(5,184
)


5,184



837,938



5,947







453,625



(1,618
)


1,618



459,572Operating (loss) income


(14,510
)






79,598



5,184



(5,184
)


65,088



(5,947
)






39,083



1,618



(1,618
)


33,136Interest and other income


25







709











734



172







1,153











1,325Interest and other financing costs


(23,373
)






(4,096
)










(27,469
)


(11,389
)






17











(11,372
)(Loss) income before income taxes and equity in earnings from
    consolidated subsidiaries


(37,858
)






76,211



5,184



(5,184
)


38,353



(17,164
)






40,253



1,618



(1,618
)


23,089Provision for income taxes


(649
)


















(649
)


(1,079
)


















(1,079
)(Loss) income before equity in earnings from consolidated
    subsidiaries


(38,507
)






76,211



5,184



(5,184
)


37,704



(18,243
)






40,253



1,618



(1,618
)


22,010Equity in earnings (loss) from consolidated subsidiaries


76,211















(76,211
)






40,253















(40,253
)


Net income (loss)

$
37,704


$



$
76,211


$
5,184


$
(81,395
)

$
37,704


$
22,010


$



$
40,253


$
1,618


$
(41,871
)

$
22,010  17




---



##### Table of Contents







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


2007Investment in

















Investment inGuarantor


Non-Guarantor














Guarantor


Non-GuarantorParent


Co-Issuer


Subsidiaries


Subsidiaries


Eliminations


Total


Parent


Co-Issuer


Subsidiaries


Subsidiaries


Eliminations


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

$
(46,127
)

$



$
124,112


$
11,718


$
(11,718
)

$
77,985


$
(22,249
)

$



$
63,140


$
2,111


$
(2,111
)

$
40,891Cash Flows From Investing Activities:Net cash provided by (used in) investing activities


38,859







(101,554
)


(17,932
)


(20,927
)


(101,554
)


(40,726
)






(97,233
)


381



40,435



(97,233
)Cash Flows From Financing Activities:Net cash (used in) provided by financing activities


(1,355
)






(38,859
)


18,809



20,050



(1,355
)


63,860







39,610







(40,726
)


62,744Net (decrease) increase in cash and cash equivalents


(8,623
)






(16,301
)


12,595



(12,595
)


(24,924
)


885







5,517



2,492



(2,492
)


6,402Cash and cash equivalents, beginning of year


10,018







62,647



4,382



(4,382
)


72,665



1,286







38,198











39,484Cash and cash equivalents, end of period

$
1,395


$



$
46,346


$
16,977


$
(16,977
)

$
47,741


$
2,171


$



$
43,715


$
2,492


$
(2,492
)

$
45,886


18




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 7 
    Members
    Capital and Distributions  Pre-IPO
    Investors
    Class C
    Units
    Class D
    Units
    Class E
    Units
   19




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 7 
    Members
    Capital and Distributions (Continued)  Distributions
        Accounting
    for Equity-Based Compensation
  Share-Based
    Payment, Restricted Common Units, Phantom
    Units Unit Options
  Restricted Common Units.
    WeightedNumber of


AverageRestricted


Grant-DateUnits


Fair ValueOutstanding at beginning of year


241,181


$
22.92Granted






Vested


(15,971
)


15.41Forfeited


(395
)


20.86Outstanding at end of period


224,815


$
23.46     Phantom Units.
 20




---



##### Table of Contents



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


AveragePhantom


Grant-DateUnits


Fair ValueOutstanding at beginning of year


100,795


$
40.81Granted


149,555



32.00Vested


(16,809
)


41.45Forfeited


(2,375
)


37.95Outstanding at end of period


231,166


$
35.10     Unit Options.
    Number of


WeightedUnits


AverageUnderlying


ExerciseOptions


PriceOutstanding at beginning of year


1,442,847


$
22.60Granted


124,500



35.17Exercised


(31,464
)


16.67Forfeited


(92,407
)


30.83Outstanding at end of period


1,443,476


$
23.28    21




---



##### Table of Contents



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


2007Weighted average exercise price

$
35.17


$
37.34Expected volatility


20.1%-20.7
%


20.6%-21.5
%Distribution yield


6.18%-6.24
%


6.00%-6.05
%Risk-free interest rate


2.7%-3.9
%


4.46%-4.8
%Expected term (in years)


6.5



6.5Weighted average grant-date fair value of options granted

$
3.22


$
4.45Total intrinsic value of options exercised

$
613,000


$
885,000       Note 8 
    Net
    Income Per Unit  Earnings Per Share, No. 03-6 03-6), Participating Securities and the Two  Class
    Method under Financial Accounting Standards Board Statement
    No. 128. 03-6
   22




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 8 
    Net
    Income Per Unit (Continued)    Three Months Ended June 30,


Six Months Ended June 30,2008


2007


2008


2007Net income available  basic

$
23,202


$
13,308


$
37,704


$
22,010Less net income attributable to subordinated unitholders














(237
)Net income  basic


23,202



13,308



37,704



21,773Net income attributable to subordinated unitholders














237Net income available 
    diluted(1)

$
23,202


$
13,308


$
37,704


$
22,010Basic weighted average units


47,672



42,748



47,524



40,556Dilutive weighted average
    units(1)


58,010



43,475



57,967



41,199Basic net income per unit

$
0.49


$
0.31


$
0.79


$
0.53Diluted net income per
    unit(1)

$
0.40


$
0.31


$
0.65


$
0.52     (1)
    
    Our potentially dilutive common equity includes the following:  Three Months Ended

Six Months EndedJune 30,

June 30,2008

2007

2008

2007(In thousands)Employee options


492



626



512



561Restricted units


126



101



122



81Phantom units














Class C units


876







963



Class D units


3,246







3,246



Class E units


5,599







5,599



   Note 9 
    Related
    Party Transactions  Operations
    Services
   23




---



##### Table of Contents



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


Six Months EndedJune 30,


June 30,2008


2007


2008


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

$
51


$



$
74


$
25Gathering and compression
    services(2)


7



9



14



16Natural gas
    purchases(3)


322



784



714



1,126Webb Duval:Natural gas
    purchases(3)


555



(87
)


1,103



115Transportation
    costs(4)


101



94



202



170Southern Dome:Natural gas liquid
    sales(5)






38







38Condensate
    sales(6)






21







21Bighorn:Gathering
    costs(4)


142







316



Fort Union:














Gathering
    costs(4)


2,230







4,106



Treating
    costs(3)


298







351



Other:Natural gas
    sales(1)


118







177



     (1)
    
    Revenues included in natural gas sales on our consolidated
    statements of operations.(2)
    
    Revenues included in transportation, compression and processing
    fees on our consolidated statements of operations.(3)
    
    Included in costs of natural gas and natural gas liquids on our
    consolidated statements of operations.(4)
    
    Costs included in transportation on our consolidated statements
    of operations.(5)
    
    Revenues included in natural gas liquid sales on our
    consolidated statements of operations.(6)
    
    Revenues included in condensate and other on our consolidated
    statements of operations.     24




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 9 
    Related
    Party Transactions (Continued)          Note 10 
    Commitments
    and Contingencies  Commitments
       25




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 10 
    Commitments
    and Contingencies (Continued)        Guarantees
  Guarantors Accounting and Disclosure
    Requirements for Guarantees, Including Indirect Guarantees of
    Indebtedness of Others,
  Regulatory
    Compliance
    Litigation
   26




---



##### Table of Contents



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

2007(In thousands)Cash payments for interest, net of $1,423,000 and $547,000
    capitalized in 2008 and 2007, respectively

$
20,503


$
10,193Cash payments for federal and state income taxes

$



$
     Note 12 
    Financial
    Instruments  Commodity
    Risk Hedging Program
   27




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 12 
    Financial
    Instruments (Continued)                Interest
    Rate Risk Hedging Program
     28




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 12 
    Financial
    Instruments (Continued)          Adoption
    of SFAS No. 157
    
    Level 1  Unadjusted quoted prices in active
    markets that are accessible at the measurement date for
    identical, unrestricted assets or liabilities;
    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;
    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.   29




---



##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 12 
    Financial
    Instruments (Continued)    Fair Value Measurements on a Recurring Basis as of
    June 30, 2008Level 1


Level 2


Level 3


Total(In thousands)Assets:Commodity derivatives

$



$



$
37,422


$
37,422Other derivatives






854







854Total

$



$
854


$
37,422


$
38,276Liabilities:Commodity derivatives

$



$



$
(91,411
)

$
(91,411
)Other derivatives






(3,222
)






(3,222
)Total

$



$
(3,222
)

$
(91,411
)

$
(94,633
)       Three Months


Six MonthsEnded


EndedJune 30, 2008


June 30, 2008Balance, beginning of period

$
(35,204
)

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


(2,488
)


(7,014
)Included in accumulated other comprehensive loss


(24,443
)


(25,101
)Purchases, issuances and settlements


8,146



26,320Transfers in and/or out of Level 3






Balance, end of period

$
(53,989
)

$
(53,989
)Change in unrealized losses relating to instruments still held
    as of June 30, 2008

$
(2,283
)

$
(6,768
)     and/or
 30




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##### Table of Contents



COPANO
    ENERGY, L.L.C. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 12 
    Financial
    Instruments (Continued)    Note 13 
    Segment
    Information    
    Oklahoma, which includes natural gas midstream services
    primarily in central and east Oklahoma, including natural gas
    gathering and related compression and dehydration services and
    natural gas processing and a crude oil pipeline located in south
    Oklahoma and north Texas. Our Oklahoma segment includes certain
    assets acquired in the Cimmarron Acquisition and our equity
    investment in Southern Dome.  
    Texas, which provides natural gas gathering and transmission and
    related operations and natural gas processing, treating,
    conditioning and related NGL transportation operations in Texas
    and Louisiana. Our Texas segment includes certain assets
    acquired in the Cimmarron Acquisition, our Louisiana processing
    assets acquired in the Cantera Acquisition and our equity
    investment in Webb Duval.
    Rocky Mountains, which includes natural gas gathering and
    related operations in Wyoming, was acquired through the Cantera
    Acquisition. Our Rocky Mountains segment includes our equity
    investments in Bighorn and Fort Union, two firm gathering
    agreements with Fort Union and two firm capacity
    transportation agreements with Wyoming Interstate Gas Company.     31




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##### Table of Contents



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


Total


CorporateOklahoma


Texas


Mountains


Segments


and Other


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

$
269,163


$
237,113


$
12,496


$
518,772


$
(17,494
)

$
501,278Intersegment sales


(527
)


527















Interest and other financing costs


















16,077



16,077Depreciation and amortization


7,911



3,783



670



12,364



403



12,767Equity in earnings from unconsolidated affiliates


(1,023
)


(555
)


(3,210
)


(4,788
)






(4,788
)Net income (loss)


32,598



27,964



2,990



63,552



(40,350
)


23,202Three Months Ended June 30, 2007:Sales to external customers

$
142,128


$
145,722


$



$
287,850


$
(6,130
)

$
281,720Intersegment sales


(55
)


55















Interest and other financing costs


















6,179



6,179Depreciation and amortization


6,275



3,344







9,619



206



9,825Equity in earnings from unconsolidated affiliates


(266
)


(488
)






(754
)






(754
)Net income (loss)


14,489



13,895







28,384



(15,076
)


13,308Rocky


Total


CorporateOklahoma


Texas


Mountains


Segments


and Other


ConsolidatedSix Months Ended June 30, 2008:Sales to external customers

$
486,128


$
428,471


$
23,714


$
938,313


$
(35,287
)

$
903,026Intersegment sales


(1,045
)


1,045















Interest expense and other financing costs


















27,469



27,469Depreciation and amortization


15,020



7,348



1,340



23,708



629



24,337Equity in earnings from unconsolidated affiliates


(2,124
)


(846
)


(2,214
)


(5,184
)






(5,184
)Net income (loss)


55,338



58,355



1,556



115,249



(77,545
)


37,704Segment assets


813,783



405,945



711,629



1,931,357



(31,406
)


1,899,951Six Months Ended June 30, 2007:Sales to external customers

$
248,664


$
252,906


$



$
501,570


$
(8,862
)

$
492,708Intersegment sales


(55
)


55















Interest expense and other financing costs


















11,372



11,372Depreciation and amortization


12,176



5,729







17,905



390



18,295Equity in earnings from unconsolidated affiliates


(524
)


(1,094
)






(1,618
)






(1,618
)Net income (loss)


24,775



24,031







48,806



(26,796
)


22,010   32




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##### Table of Contents



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

Barrels per dayBtu:

British thermal unitsMMBtu:

One million British thermal unitsMMBtu/d:

One million British thermal units per dayMcf/d:

One thousand cubic feet per dayMMcf/d:

One million cubic feet per dayNGLs:

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

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

The volume of product transported or passing through a
    pipeline, plant, terminal or other facility   Overview
      
    Our Oklahoma segment provides midstream natural gas services in
    central and east Oklahoma, including gathering and related
    compression and dehydration services and natural gas processing.
    This segment also includes a crude oil pipeline located in south
    Oklahoma and north Texas. For the three months ended
    June 30, 2008 and 2007, this segment generated
    approximately 66% and 58%, respectively, of our total segment
    gross margin. For the six months ended June 30, 2008 and
    2007, this segment generated approximately 63% and 57%,
    respectively, of our total segment gross margin.
    Our Texas segment provides midstream natural gas services in
    south and north Texas, including gathering and intrastate
    transmission of natural gas, and related services such as
    compression, dehydration and marketing. Our Texas segment also
    provides natural gas processing, conditioning and treating and
    NGL fractionation and transportation through our Houston Central
    plant, Sheridan NGL pipeline and Brenham NGL pipeline. To
    address increased drilling activity in north Texas, we are
    constructing a treating and processing plant in Montague County,
    Texas, which we refer to as our St. Jo processing plant. During
    the construction period, we are operating a leased refrigeration
    processing plant and amine treating facility, which were placed
    in service in May 2008. We anticipate that our permanent
    cryogenic processing plant, which will initially be configured
    for
    50 MMcf/d
    inlet capacity and will include a 1,200 GPM amine treating
    facility, will be in service in mid-2009. In addition, our Texas
    segment owns a processing plant located in southwest Louisiana.
    For each of the three months ended June 30, 2008 and 2007,
    this segment generated approximately 56% of our total segment
    gross margin. For the six months ended June 30, 2008 and
    2007, this segment generated approximately 62% and 54%,
    respectively, of our total segment gross margin.
    Our Rocky Mountains segment provides midstream natural gas
    services in the Powder River Basin of Wyoming, including
    gathering and treating of natural gas. The Rocky Mountains
    segment was established as a result of our acquisition of
    Cantera in October 2007. For each of the three and six months
    ended June 30, 2008, this segment generated approximately
    2% of our total segment gross margin. The gross margin generated
    by this segment represents margins derived from the services we
    provide to our Rocky Mountains 33




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##### Table of Contents



producers and does not include results associated with our
    interests in Bighorn or Fort Union, which are reported as
    equity in earnings (loss) from unconsolidated affiliates.          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 34




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##### Table of Contents




    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
  Segment Gross Margin.
    Operations and Maintenance Expenses.
  General and Administrative Expenses.
 35




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##### Table of Contents



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




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##### Table of Contents



How We
    Manage Our Operations
    Our Economic Models.
  Flow and Transaction Monitoring Systems.
  Producer Activity Evaluation and Reporting.
  Imbalance Monitoring and Control.
  Our
    Long-Term Growth Strategy
   37




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##### Table of Contents



Acquisition Analysis.
  Capital Expenditure Analysis.
  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. 38




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##### Table of Contents



Form 10-K Form 10-Q
 39




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##### Table of Contents



Our
    Results of Operations
  Three Months Ended


Six Months EndedJune 30,


June 30,2008


2007


2008


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

$
72,075


$
46,432


$
133,392


$
84,758Operations and maintenance expenses


13,065



9,675



24,895



18,173Depreciation and amortization


12,767



9,825



24,337



18,295General and administrative expenses


10,936



7,700



22,786



15,216Taxes other than income


729



1,029



1,470



1,556Equity in earnings from unconsolidated affiliates


(4,788
)


(754
)


(5,184
)


(1,618
)Operating income


39,366



18,957



65,088



33,136Interest and other financing costs, net


(15,799
)


(5,474
)


(26,735
)


(10,047
)Provision for income taxes


(365
)


(175
)


(649
)


(1,079
)Net income

$
23,202


$
13,308


$
37,704


$
22,010Segment gross margin:Oklahoma

$
47,852


$
26,781


$
84,422


$
48,182Texas


40,499



25,779



82,075



45,438Rocky Mountains


1,218







2,181



Segment gross margin


89,569



52,560



168,678



93,620Corporate and
    other(2)


(17,494
)


(6,128
)


(35,286
)


(8,861
)Total segment gross
    margin(1)

$
72,075


$
46,432


$
133,392


$
84,759Segment gross margin per unit:Oklahoma:Service throughput
    ($/MMBtu)(3)

$
2.30


$
1.48


$
2.06


$
1.39Texas:Service throughput ($/MMBtu):

$
0.64


$
0.44


$
0.65


$
0.39Rocky Mountains:Producer services throughput
    ($/MMBtu)(4)

$
0.06


$



$
0.05


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


228,941



199,563



225,474



194,437Plant inlet volumes (MMBtu/d)


155,430



144,323



153,020



140,444NGLs produced (Bbls/d)


15,465



14,149



15,004



13,354Crude oil service volumes (Bbls/d)


5,074



3,400



4,854



3,400Texas:(6)(7)Service throughput (MMBtu/d)


700,545



650,798



697,844



653,875Pipeline throughput (MMBtu/d)


313,523



292,518



320,761



294,892Plant inlet volumes (MMBtu/d)


629,334



577,715



617,034



583,336NGLs produced (Bbls/d)


17,721



18,078



17,902



17,698Rocky Mountains:Producer services throughput
    (MMBtu/d)(4)


229,513







228,117



Capital Expenditures:Maintenance capital expenditures

$
3,094


$
3,092


$
6,153


$
4,463Expansion capital expenditures


52,044



129,216



82,665



148,169Total capital expenditures

$
55,138


$
132,308


$
88,818


$
152,632Operations and maintenance expenses:Oklahoma

$
6,100


$
4,853


$
12,026


$
9,223Texas


7,017



4,823



12,869



8,951Rocky Mountains


(52
)










Total operations and maintenance expenses

$
13,065


$
9,676


$
24,895


$
18,174     (1)
    
    Total segment gross margin is a non-GAAP financial measure. For
    a reconciliation of total segment gross margin to its most
    directly comparable GAAP measure, please read
    Non-GAAP Financial Measures. 40




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##### Table of Contents



(2)
    
    Corporate and other includes results attributable to
    Copanos commodity risk management activities.(3)
    
    Excludes volumes associated with our interest in Southern Dome.
    For the three months ended June 30, 2008, plant inlet
    volumes for Southern Dome averaged 9,116 MMBtu/d and NGLs
    produced averaged 325 Bbls/d. For the three months ended
    June 30, 2007, plant inlet volumes for Southern Dome
    averaged 4,664 MMBtu/d and NGLs produced averaged
    200 Bbls/d. For the six months ended June 30, 2008,
    plant inlet volumes for Southern Dome averaged
    9,970 MMBtu/d and NGLs produced averaged 386 Bbls/d.
    For the six months ended June 30, 2007, plant inlet volumes
    for Southern Dome averaged 5,126 MMBtu/d and NGLs produced
    averaged 202 Bbls/d.(4)
    
    Producer services throughput represents volumes purchased for
    resale, volumes gathered utilizing firm capacity gathering
    agreements with Fort Union and firm capacity volumes
    transported under our transportation agreements with WIC or
    using additional capacity that we obtain on WIC. Excludes
    results and volumes associated with our interests in Bighorn and
    Fort Union. Volumes transported by Bighorn and
    Fort Union were 217,373 MMBtu/d and
    727,688 MMBtu/d, respectively, for the three months ended
    June 30, 2008. Volumes transported by Bighorn and
    Fort Union were 217,699 MMBtu/d and
    701,498 MMBtu/d, respectively, for the six months ended
    June 30, 2008.(5)
    
    Plant inlet volumes and NGLs produced represent total volumes
    processed and produced by the Oklahoma segment at all plants,
    including plants owned by the Oklahoma segment and plants owned
    by third parties. Plant inlet volumes averaged
    114,720 MMBtu/d and NGLs produced averaged
    11,986 Bbls/d for the three months ended June 30, 2008
    for plants owned by the Oklahoma segment. Plant inlet volumes
    averaged 88,730 MMBtu/d and NGLs produced averaged
    9,109 Bbls/d for the three months ended June 30, 2007
    for plants owned by the Oklahoma segment. Plant inlet volumes
    averaged 106,995 MMBtu/d and NGLs produced averaged
    10,990 Bbls/d for the six months ended June 30, 2008
    for plants owned by the Oklahoma segment. Plant inlet volumes
    averaged 87,153 MMBtu/d and NGLs produced averaged
    8,753 Bbls/d for the six months ended June 30, 2007
    for plants owned by the Oklahoma segment.(6)
    
    Excludes volumes associated with Copanos interest in Webb
    Duval. Gross volumes transported by Webb Duval were
    94,022 MMBtu/d and 107,565 MMBtu/d, net of
    intercompany volumes, for the three months ended June 30,
    2008 and 2007, respectively. Gross volumes transported by Webb
    Duval were 87,580 MMBtu/d and 105,479 MMBtu/d, net of
    intercompany volumes, for the six months ended June 30,
    2008 and 2007, respectively.(7)
    
    Plant inlet volumes and NGLs produced represent total volumes
    processed and produced by the Texas segment at all plants,
    including plants owned by the Texas segment and plants owned by
    third parties. Plant inlet volumes averaged 607,339 MMBtu/d
    and NGLs produced averaged 15,961 Bbls/d for the three
    months ended June 30, 2008 for plants owned by the Texas
    segment. Plant inlet throughput averaged 561,354 MMBtu/d
    and NGLs produced averaged 16,724 Bbls/d for the three
    months ended June 30, 2007 for plants owned by the Texas
    segment. Plant inlet volumes averaged 594,195 MMBtu/d and
    NGLs produced averaged 16,168 Bbls/d for the six months
    ended June 30, 2008 for plants owned by the Texas segment.
    Plant inlet throughput averaged 566,975 MMBtu/d and NGLs
    produced averaged 16,344 Bbls/d for the six months ended
    June 30, 2007 for plants owned by the Texas segment.  Three
    Months Ended June 30, 2008 Compared with Three Months Ended
    June 30, 2007
  Oklahoma Segment Gross Margin.
 41




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##### Table of Contents



Texas Segment Gross Margin.
  Rocky Mountains Segment Gross Margin.
  Corporate and Other.
  Operations and Maintenance
    Expenses.
  Depreciation and Amortization.
  General and Administrative Expenses.
 42




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##### Table of Contents



Interest and Other Financing Costs.
  Six
    Months Ended June 30, 2008 Compared with Six Months Ended
    June 30, 2007
  Oklahoma Segment Gross Margin.
  Texas Segment Gross Margin.
  Rocky Mountains Segment Gross Margin.
  Corporate and Other.
 43




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##### Table of Contents



Operations and Maintenance
    Expenses.
  Depreciation and Amortization.
  General and Administrative Expenses.
  Interest and Other Financing Costs.
  Liquidity
    and Capital Resources
    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 44




---



##### Table of Contents



other capital expenditures that are incurred in maintaining
    existing system volumes and related cash flows; and  
    expansion capital expenditures such as those to acquire
    additional assets to grow our business, to expand and upgrade
    gathering systems, transmission capacity or processing plants
    and to construct new pipelines or processing plants.    50 MMcf/d
  Contractual Cash Obligations.
   45




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##### Table of Contents



Operating
    Cash Flows
  Six Months Ended June 30,2008


2007(In thousands)Net income

$
37,704


$
22,010Depreciation and amortization


25,956



18,910Equity in earnings from unconsolidated affiliates


(5,184
)


(1,618
)Distributions from unconsolidated affiliates


11,718



2,111Equity-based compensation and other


1,976



2,224Cash provided by (used in) working capital


5,815



(2,746
)Net cash provided by operating activities

$
77,985


$
40,891     Investing Cash Flows.
  Financing Cash Flows.
  Cash Distributions and Reserves:
   46




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##### Table of Contents



Our
    Indebtedness
    Credit Ratings.
  Credit Facility.
       47




---



##### Table of Contents



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




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##### Table of Contents



Non-GAAP Financial
    Measures
    Three Months Ended


Six Months EndedJune 30,


June 30,2008


2007


2008


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

$
39,366


$
18,957


$
65,088


$
33,136Add: Operations and maintenance expenses


13,065



9,675



24,895



18,173Depreciation and amortization


12,767



9,825



24,337



18,295General and administrative expenses


10,936



7,700



22,786



15,216Taxes other than income


729



1,029



1,470



1,556Equity in earnings from unconsolidated affiliates


(4,788
)


(754
)


(5,184
)


(1,618
)Total segment gross margin

$
72,075


$
46,432


$
133,392


$
84,758Reconciliation of EBITDA and Adjusted EBITDA to net income:Net income

$
23,202


$
13,308


$
37,704


$
22,010Add: Depreciation and amortization


12,767



9,825



24,337



18,295Interest and other financing costs


16,077



6,179



27,469



11,372Provision for income taxes


365



175



649



1,079EBITDA


52,411



29,487



90,159



52,756Add: Amortization of difference between the carried investment
    and the underlying equity in net assets of equity investments


4,602



(3
)


9,201



(6
)Add: Copanos share of depreciation and amortization
    included in equity in earnings from unconsolidated affiliates


1,319



247



2,588



494Add:% of equity method investment interest and other financing
    costs


(333
)






1,837



Adjusted EBITDA

$
57,999


$
29,731


$
103,785


$
53,244Reconciliation of EBITDA and Adjusted EBITDA to cash flows from
    operating activities:Cash flow provided by operating activities

$
58,807


$
16,901


$
77,985


$
40,891Add: Cash paid for interest and other financing costs


15,226



5,873



25,850



10,756Equity in earnings from unconsolidated affiliates


4,788



754



5,184



1,618Distributions from unconsolidated affiliates


(7,442
)


(2,111
)


(11,718
)


(2,111
)Risk management activities


11,225



21,609



28,465



18,994Increase in working capital and other


(30,193
)


(13,539
)


(35,607
)


(17,392
)EBITDA


52,411



29,487



90,159



52,756Add: Amortization of difference between the carried investment
    and the underlying equity in net assets of equity investments


4,602



(3
)


9,201



(6
)Add: Copanos share of depreciation and amortization
    included in equity in earnings from unconsolidated affiliates


1,319



247



2,588



494Add:% of equity method investment interest and other financing
    costs


(333
)






1,837



Adjusted EBITDA

$
57,999


$
29,731


$
103,785


$
53,244   Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk.   49




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##### Table of Contents



Commodity Price Risk.
  agreed-upon
           50




---



##### Table of Contents



Commodity Price Hedging Activities.
  
    purchase put options or put spreads (purchase of a
    put and a sale of a put at a lower strike price) on WTI crude
    oil to hedge natural gas liquids produced or condensate
    collected by us or an entity or asset to be acquired by us if a
    binding purchase and sale agreement has been executed (a
    Pending Acquisition);
    purchase put or call options, enter into collars (purchase of a
    put together with the sale of a call) or call or put
    spreads ((i) purchase of a call and a sale of a call at a
    higher strike price or (ii) purchase of a put and a sale of
    a put at a lower strike price)
    and/or sell
    fixed for floating swaps on natural gas at Henry Hub, HSC or
    other highly liquid points relevant to our operations or a
    Pending Acquisition;
    purchase put options, enter into collars or put
    spreads (purchase of a put and a sale of a put at a lower
    strike price)
    and/or sell
    fixed for floating swaps on NGLs to which we, or a Pending
    Acquisition, has direct price exposure, priced at Mt. Belvieu or
    Conway; and
    purchase put options and collars
    and/or sell
    fixed for floating swaps on the fractionation spread
    or the processing margin spread for any processing
    plant relevant to our operations or a Pending Acquisition.    
    Maturities with respect to the purchase of any crude oil,
    natural gas, NGLs, fractionation spread or processing margin
    spread hedge instruments must be limited to five years from the
    date of the transaction;
    Except as provided in the policy amendment described below, we
    may not (i) purchase crude oil or natural gas liquids put
    options, (ii) purchase natural gas put or call options,
    (iii) purchase fractionation spread or processing margin
    spread put options or (iv) enter into any crude oil,
    natural gas or natural gas liquids spread options permitted by
    the policy if, as a result of the proposed transaction, net
    notional hedged volumes with respect to the underlying hedged
    commodity would be an amount in excess of 80% of the projected
    requirements or output, as applicable, for the hedged period (a
    calendar year or any remaining portion thereof). Notwithstanding
    this limitation, we are not required to divest outstanding hedge
    positions except to the extent net notional hedged volumes with
    respect to an underlying hedged commodity exceed 100% of the
    projected requirements or output, as applicable, for the hedged
    period; and
    The aggregate volumetric exposure associated with swaps, collars
    and written calls relating to any product must not exceed the
    lesser of 50% of the aggregate hedged position or 35% of the
    projected requirements or output with respect to such product.       51




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##### Table of Contents



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

Put Volumes(Per MMBtu)

(MMBtu/d)2008

$
7.75



3,1002009

$
6.95



5,000   Purchased
    HSC Index Natural Gas Call Spreads
  Call Strike


Call Volumes(Per MMBtu)


(MMBtu/d)Bought


Sold2008

$
8.15


$
10.00



9,4002009

$
7.75


$
10.00



8,0002010

$
7.35


$
10.00



7,1002011

$
6.95


$
10.00



7,100  52




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##### Table of Contents



Purchased
    Purity Ethane Puts and Entered into Swaps
  Put


SwapStrike


Volumes


Price


Volumes(Per Gallon)


(Bbls/d)


(Per Gallon)


(Bbls/d)2008

$
0.5700



607


$
0.5650



6072008

$
0.6250



2,900


$
0.6525



1,3002009

$
0.5900



2,200


$
0.6025



1,1002010

$
0.5550



1,600


$
0.5700



5002011

$
0.5300



1,700


$
0.5450



500   Purchased
    Purity Ethane Put Spread Options
  Put Strike


Put Volumes(Per Gallon)


(Barrels/d)Bought


Sold2008

$
0.93


$
0.625



1,1002008

$
0.93


$
0.570



607July  December 2008

$
0.85


$
0.625



1,7002009

$
0.83


$
0.590



1,1002009

$
0.79


$
0.590



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


SwapStrike


Volumes


Price


Volumes(Per Gallon)


(Bbls/d)


(Per Gallon)


(Bbls/d)2008

$
0.8360



2,594


$
0.8700



7452008

$
0.8975



1,100







2008

$
1.0500



396







2009

$
0.8725



2,200







2009

$
0.9650



1,000


$
1.0275



1,0002010

$
0.8500



1,100







2010

$
0.9460



700


$
0.9925



7002011

$
0.8265



1,100







2011

$
0.9340



700


$
0.9750



700   Purchased
    TET Propane Put Spread Options
  Put Strike


Put Volumes(Per Gallon)


(Barrels/d)Bought


Sold2008

$
1.44


$
0.8360



2,000July  December 2008

$
1.38


$
0.8360



594July  December 2008

$
1.38


$
0.8975



3702009

$
1.33


$
0.8725



1,6002009

$
1.33


$
0.8725



6002009

$
1.33


$
0.9650



1002010

$
1.49


$
0.8500



1,1002010

$
1.49


$
0.9460



700  53




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##### Table of Contents



Purchased
    Non-TET Isobutane Puts and Entered into Swaps
  Put


SwapStrike


Volumes


Price


Volumes(Per Gallon)


(Bbls/d)


(Per Gallon)


(Bbls/d)2008

$
0.9900



622


$
1.0450



922008

$
1.0900



250







2009

$
1.0600



450







2009

$
1.1600



100


$
1.2425



1002010

$
1.0350



300







2010

$
1.1145



100


$
1.2025



1002011

$
1.0205



300







2011

$
1.1100



100


$
1.1800



100   Purchased
    Non-TET Isobutane Put Spread Options
  Put Strike


Put Volumes(Per Barrel)


(Barrels/d)Bought


Sold2008

$
1.67


$
0.9900



400July  December 2008

$
1.71


$
0.9900



2222009

$
1.62


$
1.0600



1752009

$
1.57


$
1.0600



2752009

$
1.62


$
1.1600



1002010

$
1.89


$
1.1145



1002010

$
1.89


$
1.0350



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


SwapStrike


Volumes


Price


Volumes(Per Gallon)


(Bbls/d)


(Per Gallon)


(Bbls/d)2008

$
0.9875



810


$
1.0400



2712008

$
1.0800



300







2009

$
1.0525



700







2009

$
1.1400



400


$
1.2275



4002009









$
(1.7025
)


(320
)2010

$
1.0300



300







2010

$
1.1000



200


$
1.1850



2002011

$
1.0205



300







2011

$
1.0850



200


$
1.1700



200  54




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##### Table of Contents



Purchased
    Non-TET Normal Butane Put Spread Options
  Put Strike


Put Volumes(Per Gallon)


(Barrels/d)Bought


Sold2008

$
1.66


$
0.9875



500July  December 2008

$
1.65


$
0.9875



3002009

$
1.58


$
1.0525



1502009

$
1.54


$
1.0525



5502009

$
1.58


$
1.1400



2002010

$
1.88


$
1.1000



2002010

$
1.88


$
1.0300



300   Purchased
    Non-TET Natural Gasoline Puts and Entered into Swaps
  Put


SwapStrike


Volumes


Price


Volumes(Per Gallon)


(Bbls/d)


(Per Gallon)


(Bbls/d)2008

$
1.485



300


$
1.585



3002009

$
1.440



200


$
1.540



2002010

$
1.408



300







2011

$
1.410



300







   Purchased
    Non-TET Natural Gasoline Put Spread Options
  Put Strike

Put Volumes(Per Gallon)

(Barrels/d)Bought

Sold2009

$
1.98


$
1.440



1202010

$
2.54


$
1.408



300   Purchased
    WTI Crude Oil Puts
  Put Strike


Put Volumes(Per Barrel)


(Bbls/d)2008

$
55.00



1,0002008

$
60.00



7002009

$
55.00



1,0002009

$
60.00



5002010

$
55.00



1,0002010

$
60.00



4002011

$
55.00



1,0002011

$
60.00



400  55




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##### Table of Contents



Purchased
    WTI Crude Oil Put Spread Options
  Put Strike


Put Volumes(Per Gallon)


(Barrels/d)Bought


Sold2008

$
91.50


$
55.00



850July  December 2008

$
97.00


$
55.00



150July  December 2008

$
97.00


$
60.00



6102009

$
86.50


$
55.00



7502009

$
92.00


$
55.00



2502009

$
92.00


$
60.00



5002010

$
118.00


$
55.00



1,0002010

$
118.00


$
60.00



400     Interest Rates.
            Risk Management Oversight.
 56




---



##### Table of Contents



Credit Risk.
  Item 4.
    Controls
    and Procedures.   57




---



##### Table of Contents



PART II-OTHER
    INFORMATION  Item 1.
    Legal
    Proceedings.    Item 1A.
    Risk
    Factors  Form 10-K
  Our
    acquisitions could expose us to potential significant
    liabilities.
    Item 4.
    Submission
    of Matters to a Vote of Security Holders.      For


WithheldJohn R. Eckel, Jr.


36,042,130



156,925James G. Crump


36,054,644



144,411Ernie L. Danner


36,055,034



144,021Scott A. Griffiths


36,049,082



149,973Michael L. Johnson


36,055,194



143,861T. William Porter


36,048,275



150,780William L. Thacker


36,048,540



150,515     For


36,036,377Against


95,421Abstentions


67,257    58




---



##### Table of Contents



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).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). 59




---



##### Table of Contents



Number

Description10
.1

Purchase Agreement, dated May 13, 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 10.1 to
    Current Report on
    Form 8-K
    filed May 19, 2008).10
.2

Form of Phantom Unit Award Agreement (incorporated by reference
    to Exhibit 10.1 to Current Report on
    Form 8-K
    filed June 6, 2008).10
.3

Form of Performance Based Phantom Unit Award Agreement
    (incorporated by reference to Exhibit 10.2 to Current
    Report on
    Form 8-K
    filed June 6, 2008).10
.4

Form of Long-Term Retention Award Agreement (incorporated by
    reference to Exhibit 10.3 to Current Report on
    Form 8-K
    filed June 6, 2008).10
.5*

Retirement, Release and Consulting Services Agreement, dated
    May 15, 2008, between Copano Energy, L.L.C. and Ronald W.
    Bopp.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. 60




---



##### Table of Contents



SIGNATURES
      By:
    /s/  John
    R. Eckel, Jr.     By:
    /s/  Matthew
    J. Assiff    61




---



##### Table of Contents



Exhibit
    Index
    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).




---



##### Table of Contents



Number

Description10
.1

Purchase Agreement, dated May 13, 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 10.1 to
    Current Report on
    Form 8-K
    filed May 19, 2008).10
.2

Form of Phantom Unit Award Agreement (incorporated by reference
    to Exhibit 10.1 to Current Report on
    Form 8-K
    filed June 6, 2008).10
.3

Form of Performance Based Phantom Unit Award Agreement
    (incorporated by reference to Exhibit 10.2 to Current
    Report on
    Form 8-K
    filed June 6, 2008).10
.4

Form of Long-Term Retention Award Agreement (incorporated by
    reference to Exhibit 10.3 to Current Report on
    Form 8-K
    filed June 6, 2008).10
.5*

Retirement, Release and Consulting Services Agreement, dated
    May 15, 2008, between Copano Energy, L.L.C. and Ronald W.
    Bopp.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.