##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 [ü] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
  OR
 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
   DUNCAN ENERGY PARTNERS L.P.
  Delaware
(State or Other Jurisdiction of 
Incorporation or Organization)
    
    20-5639997
(I.R.S. Employer Identification No.)
 1100 Louisiana, 10th Floor
Houston, Texas 77002
 (713) 381-6500
  o þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated
filer þ
  o þ




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##### 



DUNCAN ENERGY PARTNERS L.P.
TABLE OF CONTENTS
 Page No.PART I. FINANCIAL INFORMATION.Item 1.
    
    Financial Statements.Unaudited Condensed Consolidated Balance Sheets
    
    
    2Unaudited Condensed Statements of Consolidated Operations
and Comprehensive Income
    
    
    3Unaudited Condensed Statements of Consolidated Cash Flows
    
    
    4Unaudited Condensed Statement of Consolidated Partners Equity
    
    
    5Notes to Unaudited Condensed Consolidated Financial Statements:1. Background and Basis of Financial Statement Presentation
    
    
    62. General Accounting Policies and Related Matters
    
    
    83. Financial Instruments
    
    
    104. Inventories
    
    
    115. Property, Plant and Equipment
    
    
    116. Investments in and Advances to Unconsolidated Affiliate
    
    
    127. Intangible Assets
    
    
    128. Debt Obligations
    
    
    129. Parent Interest in Subsidiaries
    
    
    1510. Partners Equity and Distributions
    
    
    1511. Business Segments
    
    
    1712. Related Party Transactions
    
    
    2013. Earnings Per Unit
    
    
    2314. Commitments and Contingencies
    
    
    2315. Supplemental Cash Flow Information
    
    
    25Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations.
    
    
    26Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk.
    
    
    41Item 4.
    
    Controls and Procedures.
    
    
    42PART II. OTHER INFORMATION.Item 1.
    
    Legal Proceedings.
    
    
    43Item 1A.
    
    Risk Factors.
    
    
    43Item 2.
    
    Unregistered
Sales of Equity Securities and Use of Proceeds.
    
    
    43Item 3.
    
    Defaults upon Senior Securities.
    
    
    43Item 4.
    
    Submission of Matters to a Vote of Unit Holders.
    
    
    43Item 5.
    
    Other Information.
    
    
    43Item 6.
    
    Exhibits.
    
    
    44Signatures
    
    
    47Amended Limited Liability Company AgreementCertification Pursuant to Section 302Certification Pursuant to Section 302Certification Pursuant to Section 1350Certification Pursuant to Section 1350




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##### Table of Contents



PART I. FINANCIAL INFORMATION.
 
 Item 1. Financial Statements .
 
 DUNCAN ENERGY PARTNERS L.P.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(See Note 1 for Basis of Financial Statement Presentation)
(Dollars in thousands)
 March 31,
    
    December 31,2007
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    4,097
    
    
    $
    Accounts receivable  trade, net of allowance for doubtful accounts
of $54 at March 31, 2007 and $402 at December 31, 2006
    
    
    65,935
    
    
    
    71,776Accounts receivable  related parties
    
    
    12,243
    
    
    
    Inventories
    
    
    7,259
    
    
    
    13,538Prepaid and other current assets
    
    
    1,183
    
    
    
    792Total current assets
    
    
    90,717
    
    
    
    86,106Property, plant and equipment, net
    
    
    762,309
    
    
    
    707,649Investments in and advances to unconsolidated affiliate
    
    
    3,514
    
    
    
    3,391Intangible assets, net of accumulated amortization of $1,219 at
March 31, 2007 and $1,161 at December 31, 2006
    
    
    6,908
    
    
    
    6,966Deferred tax asset
    
    
    21
    
    
    
    Other assets
    
    
    362
    
    
    
    Total assets
    
    $
    863,831
    
    
    $
    804,112LIABILITIES AND EQUITYCurrent liabilities:Accounts payable  trade
    
    $
    22,802
    
    
    $
    702Accounts payable  related parties
    
    
    22,393
    
    
    
    Accrued gas payables
    
    
    57,473
    
    
    
    62,571Accrued costs and expenses
    
    
    58
    
    
    
    5,093Accrued interest
    
    
    107
    
    
    
    Other current liabilities
    
    
    6,027
    
    
    
    9,263Total current liabilities
    
    
    108,860
    
    
    
    77,629Long-term debt(see Note 8)
    
    
    169,000
    
    
    
    Other long-term liabilities
    
    
    713
    
    
    
    686Parent interest in subsidiaries(see Note 9)
    
    
    259,303
    
    
    
    Commitments and contingenciesPartners equity:Limited partners (20,301,571 common units outstanding at March 31, 2007)
    
    
    325,305
    
    
    
    General partner
    
    
    683
    
    
    
    Accumulated other comprehensive income
    
    
    (33
    )
    
    
    Owners net investment  predecessor
    
    
    
    
    
    
    725,797Total partners equity
    
    
    325,955
    
    
    
    725,797Total liabilities and partners equity
    
    $
    863,831
    
    
    $
    804,112
  2




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DUNCAN ENERGY PARTNERS L.P.
UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
AND COMPREHENSIVE INCOME
(See Note 1 for Basis of Financial Statement Presentation)
(Dollars in thousands, except per unit amounts)
 Duncan Energy
    
    
    
    Duncan EnergyPartners
    
    
    
    Partners PredecessorFor the Two
    
    
    One Month
    
    For the ThreeMonths Ended
    
    
    Ended
    
    Months EndedMarch 31, 2007
    
    
    January 31, 2007
    
    March 31, 2006Revenues:Third parties
    
    $
    91,494
    
    
    
    $
    42,657
    
    
    $
    178,858Related parties
    
    
    42,380
    
    
    
    
    24,017
    
    
    
    103,584Total (see Note 11)
    
    
    133,874
    
    
    
    
    66,674
    
    
    
    282,442Costs and expenses:Operating costs and expenses:Third parties
    
    
    120,078
    
    
    
    
    58,038
    
    
    
    256,989Related parties
    
    
    4,353
    
    
    
    
    3,149
    
    
    
    13,195Total operating costs and expenses
    
    
    124,431
    
    
    
    
    61,187
    
    
    
    270,184General and administrative costs:Third parties
    
    
    133
    
    
    
    
    22
    
    
    
    23Related parties
    
    
    224
    
    
    
    
    455
    
    
    
    753Total general and administrative costs
    
    
    357
    
    
    
    
    477
    
    
    
    776Total costs and expenses
    
    
    124,788
    
    
    
    
    61,664
    
    
    
    270,960Equity in income of unconsolidated affiliate
    
    
    46
    
    
    
    
    25
    
    
    
    154Operating income
    
    
    9,132
    
    
    
    
    5,035
    
    
    
    11,636Other income (expense):Interest expense
    
    
    (1,131
    )
    
    
    
    
    
    
    
    Interest income
    
    
    144
    
    
    
    
    
    
    
    
    Other, net
    
    
    
    
    
    
    
    
    
    
    
    4Other expense
    
    
    (987
    )
    
    
    
    
    
    
    
    4Income before provision for income taxes, parent interest in the income
of subsidiaries and the cumulative effect of a change in
accounting principle
    
    
    8,145
    
    
    
    
    5,035
    
    
    
    11,640Provision for income taxes
    
    
    (173
    )
    
    
    
    
    
    
    
    Income before parent interest in income of subsidiaries and the
cumulative effect of a change in accounting principle
    
    
    7,972
    
    
    
    
    5,035
    
    
    
    11,640Parent interest in income of subsidiaries
    
    
    (4,049
    )
    
    
    
    
    
    
    
    Income before the cumulative effect of a change in accounting principle
    
    
    3,923
    
    
    
    
    5,035
    
    
    
    11,640Cumulative effect of a change in accounting principle (see Note 2)
    
    
    
    
    
    
    
    
    
    
    
    9Net income
    
    
    3,923
    
    
    
    
    5,035
    
    
    
    11,649Change in fair value of commodity financial instruments
    
    
    (33
    )
    
    
    
    
    
    
    
    (72
    )Comprehensive income
    
    $
    3,890
    
    
    
    $
    5,035
    
    
    $
    11,577Net income allocation:(see Note 13)Limited partners interest in net income
    
    $
    3,845General partner interest in net income
    
    $
    78Earnings per unit:(see Note 13)Basic and diluted income per unit
    
    $
    0.19
  3




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DUNCAN ENERGY PARTNERS L.P.
UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(See Note 1 for Basis of Financial Statement Presentation)
(Dollars in thousands)
 Duncan Energy

    
        
    
    Duncan EnergyPartners
    
    
    
    Partners PredecessorFor the Two
    
    
    One Month
    
    For the ThreeMonths Ended
    
    
    Ended
    
    Months EndedMarch 31, 2007
    
    
    January 31, 2007
    
    March 31, 2006Operating activities:Net income
    
    $
    3,923
    
    
    
    $
    5,035
    
    
    $
    11,649Adjustments to reconcile net income to net cash flows
provided by operating activities:Depreciation, amortization and accretion
in operating costs and expenses
    
    
    4,515
    
    
    
    
    2,209
    
    
    
    4,841Amortization in interest expense
    
    
    21
    
    
    
    
    
    
    
    
    Equity in income of unconsolidated affiliate
    
    
    (46
    )
    
    
    
    (25
    )
    
    
    (154
    )Cumulative effect of a change in accounting principle
    
    
    
    
    
    
    
    
    
    
    
    (9
    )Parent interest in income of subsidiaries
    
    
    4,049
    
    
    
    
    
    
    
    
    Gain on sale of assets
    
    
    (2
    )
    
    
    
    
    
    
    
    (7
    )Deferred income tax expense
    
    
    (21
    )
    
    
    
    
    
    
    
    Changes in fair market value of financial instruments
    
    
    (2
    )
    
    
    
    
    
    
    
    (53
    )Net effect of changes in operating accounts (see Note 15)
    
    
    36,259
    
    
    
    
    (10,754
    )
    
    
    (13,077
    )Net cash flows provided by (used in) operating activities
    
    
    48,696
    
    
    
    
    (3,535
    )
    
    
    3,190Investing activities:Capital expenditures
    
    
    (48,480
    )
    
    
    
    (5,348
    )
    
    
    (14,362
    )Contributions in aid of construction costs
    
    
    154
    
    
    
    
    349
    
    
    
    14Proceeds from sale of assets
    
    
    2
    
    
    
    
    
    
    
    
    7Advances to unconsolidated affiliate
    
    
    (51
    )
    
    
    
    
    
    
    
    (56
    )Cash used in investing activities
    
    
    (48,375
    )
    
    
    
    (4,999
    )
    
    
    (14,397
    )Financing activities:Borrowings under debt agreements
    
    
    200,000
    
    
    
    
    
    
    
    
    Repayments of debt
    
    
    (31,000
    )
    
    
    
    
    
    
    
    Debt issuance costs
    
    
    (510
    )
    
    
    
    
    
    
    
    Distributions paid to Parent at IPO
    
    
    (459,551
    )
    
    
    
    
    
    
    
    Net
contributions from Parent to subsidiaries
    
    
    2,962
    
    
    
    
    
    
    
    
    Net cash contributions from and distributions
to owners  predecessor (see Note 2)
    
    
    
    
    
    
    
    8,534
    
    
    
    11,207Net proceeds from issuance of common units
    
    
    291,872
    
    
    
    
    
    
    
    
    Cash provided by financing activities
    
    
    3,773
    
    
    
    
    8,534
    
    
    
    11,207Net change in cash and cash equivalents
    
    
    4,094
    
    
    
    
    
    
    
    
    Cash and
cash equivalents, beginning of period
    
    
    3
    
    
    
    
    
    
    
    
    Cash and
cash equivalents, end of period (see Note 2)
    
    $
    4,097
    
    
    
    $
    
    
    
    $
    
  4




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DUNCAN ENERGY PARTNERS L.P.
UNAUDITED CONDENSED STATEMENT OF CONSOLIDATED PARTNERS EQUITY
(See Note 1 for Basis of Financial Statement Presentation and Note 10 for Unit History)
(Dollars in thousands)
 DuncanEnergyPartnersPredecessor
    
    Duncan Energy PartnersOwners'
    
    LimitedNet
    
    Partner
    
    GeneralInvestment
    
    Interests
    
    Partner
    
    AOCI
    
    TotalBalance, December 31, 2006
    
    $
    725,797
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    725,797Net income  January 1, 2007 to January 31, 2007
    
    
    5,035
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,035Net cash contribution from owners
    
    
    8,534
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,534Non-cash contribution from owners
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6Balance, January 31, 2007
    
    
    739,372
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    739,372Adjustment for Predecessor liabilities not
transferred to Duncan Energy Partners
    
    
    2,664
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,664Retention by Parent of 34% ownership interest
in certain operating subsidiaries
    
    
    (252,292
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (252,292
    )Allocation of Predecessor equity to Parent in exchange
for 5,351,571 common units of Duncan Energy Partners and
general partner interest
    
    
    (489,744
    )
    
    $
    479,948
    
    
    $
    9,796
    
    
    
    
    
    
    
    Net proceeds from issuance of 14,950,000 common units
to public at initial public offering
    
    
    
    
    
    
    291,872
    
    
    
    
    
    
    
    
    
    
    
    291,872Cash distribution to Parent at time of initial public offering
    
    
    
    
    
    
    (450,360
    )
    
    
    (9,191
    )
    
    
    
    
    
    
    (459,551
    )Balance after completion of initial public offering
and related transactions
    
    
    
    
    
    
    321,460
    
    
    
    605
    
    
    
    
    
    
    
    322,065Net income  February 1, 2007 to March 31, 2007
    
    
    
    
    
    
    3,845
    
    
    
    78
    
    
    
    
    
    
    
    3,923Change in fair value of commodity financial instruments -
February 1, 2007 to March 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (33
    )
    
    
    (33
    )Balance, March 31, 2007
    
    $
    
    
    
    $
    325,305
    
    
    $
    683
    
    
    $
    (33
    )
    
    $
    325,955
  5




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DUNCAN ENERGY PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 Note 1. Background and Basis of Financial Statement Presentation
 Significant Relationships Referenced in these Notes
             Basis of Financial Statement Presentation
   6




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
    
    the fees we charge EPOLP for underground storage services at the facility owned by Mont
Belvieu Caverns increased as a result of new agreements executed in connection with our
initial public offering;
    
    all storage well measurement gains and losses relating to Mont Belvieu Caverns
facility are now retained by EPOLP;
    
    Mont Belvieu Caverns now makes a special allocation of operational measurement gains
and losses to EPOLP; and
    
    the transportation revenues recorded by Lou-Tex Propylene and Sabine Propylene
decreased after our initial public offering due to the assignment of certain exchange
agreements to us by EPOLP.
  Overview of Business
  7




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
    
    Mont Belvieu Caverns owns and operates salt dome caverns and a brine system located in
Mont Belvieu, Texas.
    
    Acadian Gas gathers, transports, stores and markets natural gas in Louisiana utilizing
over 1,000 miles of high-pressure transmission lines and lateral and gathering lines with
an aggregate throughput capacity of one billion cubic feet per day (the Acadian Gas
System), including a 27-mile pipeline owned by its unconsolidated affiliate Evangeline
Gas Pipeline L.P. (Evangeline) and a leased storage cavern with three billion cubic feet
of storage capacity.
    
    Lou-Tex Propylene owns a 263-mile pipeline used to transport chemical-grade propylene
from Sorrento, Louisiana to Mont Belvieu, Texas.
    
    Sabine Propylene owns a 21-mile pipeline used to transport polymer-grade propylene from
Port Arthur, Texas to a pipeline interconnect in Cameron Parish, Louisiana on a
transport-or-pay basis.
    
    South Texas NGL owns a 220-mile pipeline extending from Corpus Christi, Texas to
Pasadena, Texas that was purchased by EPOLP from a third party in August 2006 for $97.7
million. Beginning in January 2007, this pipeline (together with other pipelines
constructed, leased or acquired since August 2006) commenced transportation of NGLs from
two of EPOLPs processing facilities located in South Texas to Mont Belvieu, Texas.
Collectively, these pipelines are called the DEP South Texas NGL Pipeline System.
   
 Note 2. General Accounting Policies and Related Matters
 Cash and Cash Equivalents
  8




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Consolidation Policy
    Cumulative effect of a change in accounting principle
  Estimates
  9




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Income Taxes
   Recent Accounting Developments
 SFAS 157
 SFAS 159
 
 Note 3. Financial Instruments
     10




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Note 4. Inventories
    
 Note 5. Property, Plant and Equipment
  Estimated Useful
    
    March 31,
    
    December 31,Life in Years
    
    2007
    
    2006Natural gas and petrochemical pipelines
and related equipment (1)
    
    
    3-35
    (4)
    
    $
    405,054
    
    
    $
    350,360Underground storage wells and related
assets (2)
    
    
    5-35
    (5)
    
    
    272,010
    
    
    
    324,685NGL pipelines and related equipment
    
    
    5-35
    (6)
    
    
    132,413
    
    
    
    98,148Transportation equipment (3)
    
    
    3-10
    
    
    
    1,222
    
    
    
    1,240Land
    
    
    
    
    
    
    15,809
    
    
    
    15,809Construction in progress
    
    
    
    
    
    
    86,797
    
    
    
    61,839Total
    
    
    
    
    
    
    913,305
    
    
    
    852,081Less accumulated depreciation
    
    
    
    
    
    
    150,996
    
    
    
    144,432Property, plant and equipment, net
    
    
    
    
    
    $
    762,309
    
    
    $
    707,649
 
 (1)
    
    Includes natural gas and petrochemical pipelines, office furniture and equipment, buildings, and related assets.(2)
    
    Underground storage facilities include underground product storage caverns and related assets such as pipes and compressors.(3)
    
    Transportation equipment includes vehicles and similar assets used in our operations.(4)
    
    In general, the estimated useful lives of major components of this category are: pipelines, 18-35 years (with some equipment at 5
years); office furniture and equipment, 3-20 years; and buildings 20-35 years.(5)
    
    In general, the estimated useful life of underground storage facilities is 20-35 years (with some components at 5 years).(6)
    
    In general, the estimated useful life of NGL pipelines will be 20-35 years (with some equipment at 5 years).   11




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Note 6. Investments in and Advances to Unconsolidated Affiliate
    Summarized Financial Information of Unconsolidated Affiliate
  For the Three MonthsEnded March 31,2007
    
    2006Revenues
    
    $
    52,374
    
    
    $
    80,542Operating income (loss)
    
    
    1,603
    
    
    
    1,941Net income (loss)
    
    
    144
    
    
    
    314
 
 Note 7. Intangible Assets
   
 Note 8. Debt Obligations
  12




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
    
    London Interbank Offered Rate(LIBOR) Loans.LIBOR loans can be exercised in
a minimum borrowing amount of $5.0 million and multiples of $1.0 million thereafter. No
more than eight LIBOR loans may be outstanding at any time under the revolving credit
facility. LIBOR loans bear interest at a rate per annum equal to LIBOR plus the
applicable LIBOR margin. Unless LIBOR loans are repaid on interest payment dates,
breakage costs could be incurred.
    
    Base Rate Loans.Base Rate loans can be exercised in a minimum borrowing
amount of $1.0 million and multiples of $500.0 thousand thereafter. These loans bear
interest at a rate per annum equal to the Base Rate. The Base Rate is the higher of (i)
the rate of interest publicly announced by the administrative agent, Wachovia Bank,
National Association, as its Base Rate and (ii) 0.5% per annum above the Federal Funds
Rate in effect on such date.
    
    Swingline Loans.Swingline loans can be exercised in a minimum borrowing
amount of $1.0 million and multiples of $100.0 thousand thereafter. These loans bear
interest at a rate per annum equal to LIBOR plus an applicable LIBOR margin.
    
    
    make distributions;
    
    incur additional indebtedness;
    
    grant liens or make certain negative pledges;
    
    engage in certain asset conveyances, sales, leases, transfers, distributions or
otherwise dispose of certain assets, businesses or operations;
    
    make certain investments;
 13




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
    
    enter into a merger, consolidation, or dissolution;
    
    engage in transactions with affiliates;
    
    directly or indirectly make or permit any payment or distribution in respect of our
partnership interests; or
    
    permit or incur any limitation on the ability of any of our subsidiaries to pay
dividends or make distributions to, repay indebtedness to, or make subordinated loans or
advances to us.
  
    
    non-payment of any principal, interest or fees when due under the credit agreement
subject to grace periods;
    
    non-performance of covenants subject to grace periods;
    
    failure of any representation or warranty to be true and correct in any material
respect when made;
    
    failure to pay any other material debt exceeding $10.0 million in the aggregate;
    
    a change of control; and
    
    other customary defaults.
 Evangeline joint venture debt obligation
   14




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Note 9. Parent Interest in Subsidiaries
   Retention by Parent of 34% ownership interest in certain
operating subsidiaries contributed to us on February 1, 2007
    
    $
    252,292Parent interest in income of subsidiaries  February 1, 2007 through March 31, 2007
    
    
    4,049Parent capital contributions to subsidiaries, net  February 1, 2007 through March 31, 2007
    
    
    2,962Parent interest in subsidiaries, March 31, 2007
    
    $
    259,303
   ParentInterest inIncome ofSubsidiariesNet income amounts for two months ended March 31, 2007:Mont Belvieu Caverns net income (before special allocation of operational
measurement gains and losses (see Note 12)
    
    $
    4,554Less operational measurement gain allocated to Parent
    
    
    1,327
    
    
    $
    1,327Remaining Mont Belvieu Caverns net income to allocate to partners
    
    
    3,227Multiplied by Parent 34% interest in remaining net income
    
    
    x 34
    %Mont Belvieu Caverns net income allocated to Parent
    
    
    1,097
    
    
    
    1,097Acadian Gas net income multiplied by Parent 34% interest
    
    
    
    
    
    
    217Lou-Tex Propylene net income multiplied by Parent 34% interest
    
    
    
    
    
    
    505Sabine Propylene net income multiplied by Parent 34% interest
    
    
    
    
    
    
    55South Texas NGL net income multiplied by Parent 34% interest
    
    
    
    
    
    
    848Parent interest in income of subsidiaries  February 1, 2007 through March
31, 2007
    
    
    
    
    
    $
    4,049
 
 Note 10. Partners Equity and Distributions
    15




---



##### Table of Contents



Balance, December 31, 2006
    
    $
    725,797Net income  January 1, 2007 to January 31, 2007
    
    
    5,035Net cash contribution from owners
    
    
    8,534Non-cash contribution from owners
    
    
    6Balance, January 31, 2007
    
    
    739,372Adjustment for Predecessor liabilities not
transferred to Duncan Energy Partners (1)
    
    
    2,664Retention by Parent of 34% ownership interest
in certain operating subsidiaries (2)
    
    
    (252,292
    )Allocation of Predecessor equity to Parent in exchange
for 5,351,571 common units of Duncan Energy Partners
    
    
    (489,744
    )Balance after completion of initial public offering
and related transactions
    
    $
    
 
 (1)
    
    Reflects the retention by EPOLP of the storage well measurement imbalance account.(2)
    
    Reflects the retention by EPOLP (the sponsor of the Partnership) of a 34% ownership interest in each of operating
subsidiaries. Unit History
  Activity on February 5, 2007:Common units originally issued to EPOLP in connection with its contribution of assets to us
    
    
    7,301,571Common units originally issued in connection with our initial public offering
    
    
    13,000,000Redemption of common units using proceeds of overallotment
    
    
    (1,950,000
    )Additional common units issued to public in connection with our initial public offering
(overallotment amount)
    
    
    1,950,000Common units outstanding, March 31, 2007
    
    
    20,301,571
 Distributions
   16




---



##### Table of Contents



Note 11. Business Segments
       17




---



##### Table of Contents



Duncan Energy
    
    
    
    Duncan EnergyPartners
    
    
    
    Partners PredecessorFor the Two
    
    
    
    One Month
    
    
    For the ThreeMonths Ended
    
    
    
    Ended
    
    
    Months EndedMarch 31, 2007
    
    
    
    January 31, 2007
    
    
    March 31, 2006Revenues (1)
    
    $
    133,874
    
    
    
    $
    66,674
    
    
    $
    282,442Less: Operating costs and expenses (1)
    
    
    (124,431
    )
    
    
    
    (61,187
    )
    
    
    (270,184
    )Add:  Equity in income of unconsolidated affiliate (1)
    
    
    46
    
    
    
    
    25
    
    
    
    154Depreciation, amortization and accretion
in operating costs and expenses (2)
    
    
    4,515
    
    
    
    
    2,209
    
    
    
    4,841Gain on sale of assets (2)
    
    
    (2
    )
    
    
    
    
    
    
    
    (7
    )Total segment gross operating margin
    
    $
    14,002
    
    
    
    $
    7,721
    
    
    $
    17,246
 
 (1)
    
    These amounts are taken from our Unaudited Condensed Statements of Consolidated Operations and Comprehensive Income.(2)
    
    These non-cash amounts are taken from the operating activities section of our Unaudited Condensed Statements of
Consolidated Cash Flows.  Duncan Energy
    
    
    
    Duncan EnergyPartners
    
    
    
    Partners PredecessorFor the Two
    
    
    
    One Month
    
    
    For the ThreeMonths Ended
    
    
    
    Ended
    
    
    Months EndedMarch 31, 2007
    
    
    
    January 31, 2007
    
    
    March 31, 2006Total segment gross operating margin
    
    $
    14,002
    
    
    
    $
    7,721
    
    
    $
    17,246Adjustments to reconcile total non-GAAP segment gross
operating margin to operating income:Depreciation, amortization and accretion in operating
costs and expenses
    
    
    (4,515
    )
    
    
    
    (2,209
    )
    
    
    (4,841
    )Gain on sale of assets in operating costs and expenses
    
    
    2
    
    
    
    
    
    
    
    
    7General and administrative costs
    
    
    (357
    )
    
    
    
    (477
    )
    
    
    (776
    )Operating income
    
    
    9,132
    
    
    
    
    5,035
    
    
    
    11,636Other income (expense), net
    
    
    (987
    )
    
    
    
    
    
    
    
    4Provision for income taxes
    
    
    (173
    )
    
    
    
    
    
    
    
    Parent interest in income of subsidiaries
    
    
    (4,049
    )
    
    
    
    
    
    
    
    Income before the cumulative effect of a change in
accounting principle
    
    $
    3,923
    
    
    
    $
    5,035
    
    
    $
    11,640
 18




---



##### Table of Contents



Reportable SegmentsNGL and
    
    
    Natural GasPetrochemical
    
    
    Pipelines
    
    
    Petrochemical
    
    
    NGL
    
    
    AdjustmentsStorage
    
    
    &
    
    
    Pipeline
    
    
    Pipeline
    
    
    and
    
    
    ConsolidatedServices
    
    
    Services
    
    
    Services
    
    
    Services
    
    
    Eliminations
    
    
    TotalsRevenues from third parties:Two months ended March 31, 2007
    
    $
    6,672
    
    
    $
    82,147
    
    
    $
    2,675
    
    
    
    
    
    
    
    
    
    
    $
    91,494One month ended January 31, 2007
    
    
    3,630
    
    
    
    39,027
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,657Three months ended March 31, 2006
    
    
    8,757
    
    
    
    170,101
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    178,858Revenues from related parties:Two months ended March 31, 2007
    
    
    4,767
    
    
    
    34,148
    
    
    
    
    
    
    $
    3,465
    
    
    
    
    
    
    $
    42,380One month ended January 31, 2007
    
    
    1,534
    
    
    
    17,742
    
    
    
    2,990
    
    
    
    1,751
    
    
    
    
    
    
    
    24,017Three months ended March 31, 2006
    
    
    4,466
    
    
    
    90,653
    
    
    
    8,465
    
    
    
    
    
    
    
    
    
    
    
    103,584Intersegment and intrasegment revenues:Two months ended March 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total revenues:Two months ended March 31, 2007
    
    
    11,439
    
    
    
    116,295
    
    
    
    2,675
    
    
    
    3,465
    
    
    
    
    
    
    
    133,874One month ended January 31, 2007
    
    
    5,164
    
    
    
    56,769
    
    
    
    2,990
    
    
    
    1,751
    
    
    
    
    
    
    
    66,674Three months ended March 31, 2006
    
    
    13,223
    
    
    
    260,754
    
    
    
    8,465
    
    
    
    
    
    
    
    
    
    
    
    282,442Equity in income in unconsolidated affiliate:Two months ended March 31, 2007
    
    
    
    
    
    
    46
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46One month ended January 31, 2007
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25Three months ended March 31, 2006
    
    
    
    
    
    
    154
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    154Gross
operating margin by individual business segment and in total:Two months ended March 31, 2007
    
    
    6,680
    
    
    
    1,877
    
    
    
    2,216
    
    
    
    3,229
    
    
    
    
    
    
    
    14,002One month ended January 31, 2007
    
    
    1,770
    
    
    
    1,605
    
    
    
    2,700
    
    
    
    1,646
    
    
    
    
    
    
    
    7,721Three months ended March 31, 2006
    
    
    3,125
    
    
    
    6,927
    
    
    
    7,194
    
    
    
    
    
    
    
    
    
    
    
    17,246Segment assets:At March 31, 2007
    
    
    245,093
    
    
    
    207,726
    
    
    
    91,234
    
    
    
    131,459
    
    
    $
    86,797
    
    
    
    762,309At December 31, 2006
    
    
    246,068
    
    
    
    209,550
    
    
    
    92,044
    
    
    
    98,148
    
    
    
    61,839
    
    
    
    707,649Investments
in and advances to unconsolidated affiliate (see Note 6):At March 31, 2007
    
    
    
    
    
    
    3,514
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,514At December 31, 2006
    
    
    
    
    
    
    3,391
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,391Intangible Assets (see Note 7):At March 31, 2007
    
    
    6,908
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,908At December 31, 2006
    
    
    6,966
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,966
  19




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##### Table of Contents



Note 12. Related Party Transactions
  Duncan Energy
    
    
    Duncan EnergyPartners
    
    
    Partners PredecessorFor the Two
    
    
    One Month
    
    For the ThreeMonths Ended
    
    
    Ended
    
    Months EndedMarch 31, 2007
    
    
    January 31, 2007
    
    March 31, 2006Revenues:EPOLP
    
    $
    10,130
    
    
    
    $
    8,602
    
    
    $
    25,364Evangeline
    
    
    32,250
    
    
    
    
    15,415
    
    
    
    78,220Total
    
    $
    42,380
    
    
    
    $
    24,017
    
    
    $
    103,584Operating costs and expenses:EPCO
    
    $
    2,613
    
    
    
    $
    2,487
    
    
    $
    8,857EPOLP
    
    
    1,740
    
    
    
    
    654
    
    
    
    4,338TEPPCO
    
    
    
    
    
    
    
    
    
    
    
    Evangeline
    
    
    
    
    
    
    
    8
    
    
    
    Total
    
    $
    4,353
    
    
    
    $
    3,149
    
    
    $
    13,195General and administrative costs:EPCO
    
    $
    224
    
    
    
    $
    455
    
    
    $
    753
 Relationship with EPOLP
      20




---



##### Table of Contents



Omnibus Agreement
 
    
    indemnification for certain environmental liabilities, tax liabilities and right-of-way defects;
    
    reimbursement of certain expenditures for South Texas NGL and Mont Belvieu Caverns;
    
    a right of first refusal to EPOLP on the Partnerships current and future subsidiaries
and a right of first refusal on the material assets of these entities, other than sales of
inventory and other assets in the ordinary course of business; and
    
    a preemptive right with respect to equity securities issued by certain of the
Partnerships subsidiaries, other than as consideration in an acquisition or in connection
with a loan or debt financing.
   
    
    certain defects in the easement rights or fee ownership interests in and to the lands
on which any assets contributed to us are located and failure to obtain certain consents
and permits necessary to conduct our operations that arise through February 5, 2010; and
    
    certain income tax liabilities attributable to the operation of the contributed assets
prior to February 5, 2007.
  21




---



##### Table of Contents



Relationship with EPCO
      Relationship with Evangeline
   22




---



##### Table of Contents



Relationship with TEPPCO
  
 Note 13. Earnings Per Unit
   For the TwoMonths EndedMarch 31, 2007Net income
    
    $
    3,923Multiplied by DEP GP ownership interest
    
    
    2.0
    %Net income allocation to DEP GP
    
    $
    78
  For the TwoMonths EndedMarch 31, 2007Net income
    
    $
    3,923Less net income allocation to DEP GP
    
    
    78Net income available to limited partners
    
    $
    3,845Basic and Diluted Earnings per Unit:Numerator:Net income available to limited partners
    
    $
    3,845Denominator:Common units
    
    
    20,302Earnings per unit
    
    $
    0.19
 
 Note 14. Commitments and Contingencies
 Litigation
  23




---



##### Table of Contents



Qui Tam
  Redelivery Commitments
  Operating lease
   Purchase Obligations
   24




---



##### Table of Contents



Note 15. Supplemental Cash Flow Information
  Duncan Energy
    
    
    Duncan EnergyPartners
    
    
    Partners PredecessorFor The Two
    
    
    One Month
    
    For the ThreeMonths Ended
    
    
    Ended
    
    Months EndedMarch 31, 2007
    
    
    January 31, 2007
    
    March 31, 2006Decrease (increase) in:Accounts receivable
    
    $
    (14,504
    )
    
    
    $
    8,088
    
    
    $
    26,148Inventories
    
    
    2,110
    
    
    
    
    4,169
    
    
    
    (3,139
    )Prepaid and other current assets
    
    
    (275
    )
    
    
    
    13
    
    
    
    (146
    )Other assets
    
    
    14
    
    
    
    
    
    
    
    
    Increase (decrease) in:Accounts payable
    
    
    44,426
    
    
    
    
    65
    
    
    
    (572
    )Accrued gas payable
    
    
    7,982
    
    
    
    
    (13,080
    )
    
    
    (26,587
    )Accrued expenses
    
    
    (5,855
    )
    
    
    
    (7,148
    )
    
    
    (4,582
    )Accrued interest
    
    
    107
    
    
    
    
    
    
    
    
    Other current liabilities
    
    
    2,254
    
    
    
    
    (2,841
    )
    
    
    (4,204
    )Other long-term liabilities
    
    
    
    
    
    
    
    (20
    )
    
    
    5Net effect of changes in operating accounts
    
    $
    36,259
    
    
    
    $
    (10,754
    )
    
    $
    (13,077
    )
   25




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations .
 For the three months ended March 31, 2007 and 2006.
  
    
    Overview of Business.
    
    Results of Operations  Discusses material quarter-to-quarter variances in our
Unaudited Condensed Statements of Consolidated Operations.
    
    Liquidity and Capital Resources  Addresses available sources of liquidity and
analyzes cash flows.
    
    Critical Accounting Policies  Presents accounting policies that are among the most
significant to the portrayal of our financial condition and results of operations.
    
    Other Items  Includes information related to contractual obligations, off-balance
sheet arrangements, related party transactions, recent accounting pronouncements and
similar disclosures.
 This discussion contains various forward-looking statements and information that are based on
our beliefs and those of our general partner, as well as assumptions made by us and information
currently available to us. When used in this document, words such as anticipate, project,
expect, plan, goal, forecast, intend, could, believe, may and similar expressions
and statements regarding our plans and objectives for future operations, are intended to identify
forward-looking statements. Although we and our general partner believe that such expectations
reflected in such forward-looking statements are reasonable, neither we nor our general partner can
give any assurances that such expectations will prove to be correct. Such statements are subject
to a variety of risks, uncertainties and assumptions as described in more detail in Item 1A, Risk
Factors, included in our annual report on Form 10-K for 2006. If one or more of these risks or
uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may
vary materially from those anticipated, estimated, projected or expected. You should not put undue
reliance on any forward-looking statements.
  /d
    
    = per dayBBtus
    
    = billion British thermal unitsBcf
    
    = billion cubic feetMBPD
    
    = thousand barrels per dayMdth
    
    = thousand decathermsMMBbls
    
    = million barrelsMMBtus
    
    = million British thermal unitsMMcf
    
    = million cubic feetMcf
    
    = thousand cubic feetTBtu
    
    = trillion British thermal units
  26




---



##### Table of Contents



Significant Relationships Referenced in this Quarterly Report
             Overview of Business
   27




---



##### Table of Contents



Basis of Presentation
    Recent Developments
    
    
    Mont Belvieu Caverns owns and operates salt dome caverns and a brine system located in
Mont Belvieu, Texas.
 28




---



##### Table of Contents




    
    Acadian Gas gathers, transports, stores and markets natural gas in Louisiana utilizing
over 1,000 miles of high-pressure transmission lines and lateral and gathering lines with
an aggregate throughput capacity of one billion cubic feet per day (the Acadian Gas
System), including a 27-mile pipeline owned by its unconsolidated affiliate Evangeline
Gas Pipeline L.P. (Evangeline) and a leased storage cavern with three billion cubic feet
of storage capacity.
    
    Lou-Tex Propylene owns a 263-mile pipeline used to transport chemical-grade propylene
from Sorrento, Louisiana to Mont Belvieu, Texas.
    
    Sabine Propylene owns a 21-mile pipeline used to transport polymer-grade propylene from
Port Arthur, Texas to a pipeline interconnect in Cameron Parish, Louisiana on a
transport-or-pay basis.
    
    South Texas NGL owns a 220-mile pipeline extending from Corpus Christi, Texas to
Pasadena, Texas that was purchased by EPOLP from a third party in August 2006 for $97.7
million. Beginning in January 2007, this pipeline (together with other pipelines
constructed, leased or acquired since August 2006) commenced transportation of NGLs from
two of EPOLPs processing facilities located in South Texas to Mont Belvieu, Texas.
Collectively, these pipelines are called the DEP South Texas NGL Pipeline System.
    Capital Spending
  DEP South Texas NGL Pipeline System
   Mont Belvieu Caverns Brine-Related Projects
 29




---



##### Table of Contents



Commitments
 Reimbursement for Certain Expenditures
 Results of Operations
     30




---



##### Table of Contents



Factors Affecting Comparability of Results
  Partial Ownership of Operating Assets .
 No Historical Results for Our NGL Pipeline Services Segment .
 Increase in Outstanding Indebtedness .
 Increased Storage Fees .
 Special Allocation of Storage Well and Operational Measurement Gains and Losses .
  Decrease in Propylene Transportation Rates .
 31




---



##### Table of Contents



Additional General and Administrative Expenses .
 Selected Volumetric Data
  Duncan Energy
    
    
    Duncan EnergyPartners
    
    
    Partners PredecessorFor the Two
    
    
    One Month
    
    For the ThreeMonths Ended
    
    
    Ended
    
    Months EndedMarch 31, 2007
    
    
    January 31, 2007
    
    March 31, 2006Natural Gas Pipelines & Services, net:Natural gas throughput volumes (BBtus/d)Natural gas transportation volumes
    
    
    362
    
    
    
    
    420
    
    
    
    477Natural gas sales volumes
    
    
    256
    
    
    
    
    281
    
    
    
    289Total natural gas throughput volumes
    
    
    618
    
    
    
    
    701
    
    
    
    766Petrochemical Pipeline Services, net:Propylene throughput volumes (MBPD)Lou-Tex Propylene Pipeline
    
    
    22
    
    
    
    
    24
    
    
    
    24Sabine Propylene Pipeline
    
    
    12
    
    
    
    
    13
    
    
    
    10Total propylene throughput volumes
    
    
    34
    
    
    
    
    37
    
    
    
    34NGL Pipeline Services, net:NGL transportation volumes (MBPD)DEP South Texas NGL Pipeline System
    
    
    70
    
    
    
    
    67
    
    
    
    
 32




---



##### Table of Contents



Duncan Energy
    
    
    Duncan EnergyPartners
    
    
    Partners PredecessorFor the Two
    
    
    One Month
    
    For the ThreeMonths Ended
    
    
    Ended
    
    Months EndedMarch 31, 2007
    
    
    January 31, 2007
    
    March 31, 2006Revenues
    
    $
    133,874
    
    
    
    $
    66,674
    
    
    $
    282,442Operating costs and expenses
    
    
    124,431
    
    
    
    
    61,187
    
    
    
    270,184General and administrative costs
    
    
    357
    
    
    
    
    477
    
    
    
    776Operating income
    
    
    9,132
    
    
    
    
    5,035
    
    
    
    11,636Parent interest in income of subsidiaries
    
    
    4,049
    
    
    
    
    
    
    
    
    Net income
    
    
    3,923
    
    
    
    
    5,035
    
    
    
    11,649
   Duncan Energy
    
    
    Duncan EnergyPartners
    
    
    Partners PredecessorFor the Two
    
    
    One Month
    
    For the ThreeMonths Ended
    
    
    Ended
    
    Months EndedMarch 31, 2007
    
    
    January 31, 2007
    
    March 31, 2006Gross operating margin by segment:NGL & Petrochemical Storage
Services
    
    $
    6,680
    
    
    
    $
    1,770
    
    
    $
    3,125Natural Gas Pipelines & Services
    
    
    1,877
    
    
    
    
    1,605
    
    
    
    6,927Petrochemical Pipeline Services
    
    
    2,216
    
    
    
    
    2,700
    
    
    
    7,194NGL Pipeline Services
    
    
    3,229
    
    
    
    
    1,646
    
    
    
    Total segment gross operating margin
    
    $
    14,002
    
    
    
    $
    7,721
    
    
    $
    17,246
   Duncan Energy
    
    
    Duncan EnergyPartners
    
    
    Partners PredecessorFor the Two
    
    
    One Month
    
    For the ThreeMonths Ended
    
    
    Ended
    
    Months EndedMarch 31, 2007
    
    
    January 31, 2007
    
    March 31, 2006NGL & Petrochemical Storage Services
    
    $
    11,439
    
    
    
    $
    5,164
    
    
    $
    13,223Natural Gas Pipelines & Services
    
    
    116,295
    
    
    
    
    56,769
    
    
    
    260,754Petrochemical Pipeline Services
    
    
    2,675
    
    
    
    
    2,990
    
    
    
    8,465NGL Pipeline Services
    
    
    3,465
    
    
    
    
    1,751
    
    
    
    Total revenues
    
    $
    133,874
    
    
    
    $
    66,674
    
    
    $
    282,442
 33




---



##### Table of Contents



Comparison of Three Months Ended March 31, 2007 with Three Months Ended March 31, 2006
        34




---



##### Table of Contents



NGL & Petrochemical Storage Services
  Natural Gas Pipelines & Services
 Petrochemical Pipeline Services
  NGL Pipeline Services
 35




---



##### Table of Contents



Liquidity and Capital Resources
  Initial Public Offering
  Revolving Credit Facility
     36




---



##### Table of Contents



Cash Flows from Operating, Investing and Financing Activities
  DuncanEnergy
    
    
    Duncan EnergyPartners
    
    
    Partners PredecessorFor The Two
    
    
    One Month
    
    For the ThreeMonths Ended
    
    
    Ended
    
    Months EndedMarch 31, 2007
    
    
    January 31, 2007
    
    March 31, 2006Net cash flow provided by (used in)
operating activities
    
    $
    48,696
    
    
    
    $
    (3,535
    )
    
    $
    3,190Net cash used in investing activities
    
    
    (48,375
    )
    
    
    
    (4,999
    )
    
    
    (14,397
    )Net cash provided by financing activities
    
    
    3,773
    
    
    
    
    8,534
    
    
    
    11,207
  Comparison of Three Months Ended March 31, 2007 with Three Months Ended March 31, 2006
  Operating activities .
  Investing activities .
 37




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##### Table of Contents



Financing activities .
   Critical Accounting Policies
   Depreciation methods and estimated useful lives of property, plant and equipment
   38




---



##### Table of Contents



Measuring recoverability of long-lived assets and equity method investments
   Amortization methods and estimated useful lives of qualifying intangible assets
   Our revenue recognition policies and use of estimates for revenues and expenses
  39




---



##### Table of Contents



Other Items
 Contractual Obligations
  Off-Balance Sheet Arrangements
  Summary of Related Party Transactions
  Duncan Energy
    
    
    Duncan EnergyPartners
    
    
    Partners PredecessorFor the Two
    
    
    One Month
    
    For the ThreeMonths Ended
    
    
    Ended
    
    Months EndedMarch 31, 2007
    
    
    January 31, 2007
    
    March 31, 2006Revenues:EPOLP
    
    $
    10,130
    
    
    
    $
    8,602
    
    
    $
    25,364Evangeline
    
    
    32,250
    
    
    
    
    15,415
    
    
    
    78,220Total
    
    $
    42,380
    
    
    
    $
    24,017
    
    
    $
    103,584Operating costs and expenses:EPCO
    
    $
    2,613
    
    
    
    $
    2,487
    
    
    $
    8,857EPOLP
    
    
    1,740
    
    
    
    
    654
    
    
    
    4,338Evangeline
    
    
    
    
    
    
    
    8
    
    
    
    Total
    
    $
    4,353
    
    
    
    $
    3,149
    
    
    $
    13,195General and administrative costs:EPCO
    
    $
    224
    
    
    
    $
    455
    
    
    $
    753
   40




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##### Table of Contents



Non-GAAP reconciliations
  Duncan Energy
    
    
    
    Duncan EnergyPartners
    
    
    
    Partners PredecessorFor the Two
    
    
    
    One Month
    
    
    For the ThreeMonths Ended
    
    
    
    Ended
    
    
    Months EndedMarch 31, 2007
    
    
    
    January 31, 2007
    
    
    March 31, 2006Total segment gross operating margin
    
    $
    14,002
    
    
    
    $
    7,721
    
    
    $
    17,246Adjustments to reconcile total non-GAAP segment gross
operating margin to operating income:Depreciation, amortization and accretion in operating
costs and expenses
    
    
    (4,515
    )
    
    
    
    (2,209
    )
    
    
    (4,841
    )Gain on sale of assets in operating costs and expenses
    
    
    2
    
    
    
    
    
    
    
    
    7General and administrative costs
    
    
    (357
    )
    
    
    
    (477
    )
    
    
    (776
    )Operating income
    
    
    9,132
    
    
    
    
    5,035
    
    
    
    11,636Other income (expense), net
    
    
    (987
    )
    
    
    
    
    
    
    
    4Provision for income taxes
    
    
    (173
    )
    
    
    
    
    
    
    
    Parent interest in income of subsidiaries
    
    
    (4,049
    )
    
    
    
    
    
    
    
    Income before the cumulative effect of a change in
accounting principle
    
    $
    3,923
    
    
    
    $
    5,035
    
    
    $
    11,640
 Cumulative effect of a change in accounting principle
  Recent Accounting Pronouncements
  
    
    SFAS 157, Fair Value Measurements, and
    
    SFAS 159, Fair Value Option for Financial Assets and Financial Liabilities 
Including an amendment of FASB Statement No. 115.
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risk .
  41




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##### Table of Contents



Commodity financial instrument portfolio
      Commodity FinancialResulting
    
    
    Instrument Portfolio FVScenario
    
    Classification
    
    
    March 31, 2007
    
    
    April 10, 2007FV assuming no change in underlying commodity prices
    
    Asset (Liability)
    
    $
    (31
    )
    
    $
    29FV assuming 10% increase in underlying commodity prices
    
    Asset (Liability)
    
    
    418
    
    
    
    484FV assuming 10% decrease in underlying commodity prices
    
    Asset (Liability)
    
    
    (479
    )
    
    
    (426
    )
 Product purchase commitments
  
 Item 4. Controls and Procedures .
  42




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##### Table of Contents



PART II. OTHER INFORMATION.
 
 Item 1. Legal Proceedings .
  
 Item 1A. Risk Factors .
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds .
  
 Item 3. Defaults Upon Senior Securities .
  
 Item 4. Submission of Matters to a Vote of Unit Holders .
  
 Item 5. Other Information .
  43




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##### Table of Contents



Item 6. Exhibits .
 ExhibitNumber
    
    Exhibit *3.1
    
    Certificate of Limited Partnership of Duncan Energy
Partners L.P. (incorporated by reference to Exhibit 3.1 to
Form S-1 Registration Statement (Reg. No. 333-138371) filed
November 2, 2006).3.2
    
    Amended and Restated Agreement of Limited Partnership of
Duncan Energy Partners L.P., dated February 5, 2007
(incorporated by reference to Exhibit 3.1 to Form 8-K filed
February 5, 2007).3.3
    
    Certificate of Formation of DEP Holdings, LLC (incorporated
by reference to Exhibit 3.3 to Form S-1 Registration
Statement (Reg. No. 333-138371) filed November 2, 2006).3.4#
    
    Amended and Restated Limited Liability Company Agreement of
DEP Holdings, LLC, dated May 3, 2007.3.5
    
    Certificate of Formation of DEP OLPGP, LLC (incorporated by
reference to Exhibit 3.5 to Form S-1 Registration Statement
(Reg. No. 333-138371)filed November 2, 2006).3.6
    
    Amended and Restated Limited Liability Company Agreement of
DEP OLPGP, LLC, dated January 19, 2007 (incorporated by
reference to Exhibit 3.6 to Amendment No. 3 to Form S-1
Registration Statement (Reg. No. 333-138371) filed January
22, 2007).3.7
    
    Certificate of Limited Partnership of DEP Operating
Partnership, L.P. (incorporated by reference to Exhibit 3.7
to Form S-1 Registration Statement (Reg. No. 333-138371)
filed November 2, 2006).3.8
    
    Agreement of Limited Partnership of DEP Operating
Partnership, L.P., dated September 29, 2006 (incorporated
by reference to Exhibit 3.8 to Amendment No. 1 to Form S-1
Registration Statement (Reg. No. 333-138371) filed December
15, 2006).4.1
    
    Revolving Credit Agreement, dated as of January 5, 2007,
among Duncan Energy Partners L.P., as borrower, Wachovia
Bank, National Association, as Administrative Agent, The
Bank of Nova Scotia and Citibank, N.A., as Co-Syndication
Agents, JPMorgan Chase Bank, N.A. and Mizuho Corporate
Bank, Ltd., as Co-Documentation Agents, and Wachovia
Capital Markets, LLC, The Bank of Nova Scotia and Citigroup
Global Markets Inc., as Joint Lead Arrangers and Joint Book
Runners (incorporated by reference to Exhibit 10.20 to
Amendment No. 2 to Form S-1 Registration Statement (Reg.
No. 333-138371) filed January 12, 2007).10.1
    
    Contribution, Conveyance and Assumption Agreement, by and
among Enterprise Products Operating L.P., Duncan Energy
Partners L.P., DEP Holdings, LLC, DEP OLPGP, LLC, DEP
Operating Partnership, L.P., dated February 5, 2007
(incorporated by reference to Exhibit 10.1 to Form 8-K
filed February 5, 2007).10.2+
    
    Storage Lease (Enterprise Products NGL Marketing), dated as
of January 23, 2007, by and between Enterprise Products
Operating L.P. and Mont Belvieu Caverns, LLC (incorporated
by reference to Exhibit 10.2 to Form 8-K filed February 5,
2007).10.3+
    
    Storage Lease (North Propane-Propylene Splitters), dated as
of January 23, 2007, by and between Enterprise Products
Operating L.P. and Mont Belvieu Caverns, LLC (incorporated
by reference to Exhibit 10.3 to Form 8-K filed February 5,
2007).10.4+
    
    Storage Lease (Belvieu Environmental Fuels), dated as of
January 23, 2007, by and between Enterprise Products
Operating L.P. and Mont Belvieu Caverns, LLC (incorporated
by reference to Exhibit 10.4 to Form 8-K filed February 5,
2007).10.5+
    
    Storage Lease (Butane Isomer), dated as of January 23,
2007, by and between Enterprise Products Operating L.P. and
Mont Belvieu Caverns, LLC (incorporated by reference to
Exhibit 10.5 to Form 8-K filed February 5, 2007).10.6+
    
    Storage Lease (Enterprise Fractionation Plant), dated as of
January 23, 2007, by and between Enterprise Products
Operating L.P. and Mont Belvieu Caverns, LLC (incorporated
by reference to Exhibit 10.6 to Form 8-K filed February 5,
2007).10.7+
    
    Amended and Restated RGP Storage Lease, dated as of January
23, 2007, by and between Enterprise Products Operating L.P.
and Mont Belvieu Caverns, LLC (incorporated by reference to
Exhibit 10.7 to Form 8-K filed February 5, 2007).10.8
    
    Contribution, Conveyance and Assumption Agreement, dated as
of January 23, 2007, by and among Enterprise Products
Operating L.P., Enterprise Products OLPGP, Inc., Enterprise
Products Texas Operating, L.P. and Mont Belvieu Caverns,
LLC (incorporated by reference to Exhibit 10.9 to Form 8-K
filed February 5, 2007).
 44




---



##### Table of Contents



ExhibitNumber
    
    Exhibit *10.9
    
    Contribution, Conveyance and Assumption Agreement, dated as
of January 23, 2007, by and among Enterprise GC, LP,
Enterprise Holding III, L.L.C., Enterprise GTM Holdings
L.P., Enterprise GTMGP, LLC, Enterprise Products GTM, LLC,
Enterprise Products Operating L.P. and South Texas NGL
Pipelines, LLC (incorporated by reference to Exhibit 10.10
to Form 8-K filed February 5, 2007).10.10
    
    Ground Lease Agreement, dated as of January 17, 2002, by
and between Enterprise Products Operating L.P.
(successor-in-interest to Diamond-Koch, L.P.) and Mont
Belvieu Caverns, LLC (successor-in-interest to Enterprise
Products Texas Operating L.P.) (incorporated by reference
to Exhibit 10.10 to Amendment No. 2 to Form S-1
Registration Statement (Reg. No. 333-138371) filed January
12, 2007).10.11
    
    Pipeline Lease Agreement by and between Enterprise GC, L.P.
and TE Products Pipeline Company, Limited Partnership
(incorporated by reference to Exhibit 10.11 to Form 8-K
filed February 5, 2007).10.12
    
    NGL Transportation Agreement by and between Enterprise
Products Operating L.P. and South Texas NGL Pipelines, LLC
(incorporated by reference to Exhibit 10.12 to Form 8-K
filed February 5, 2007).10.13
    
    Amended and Restated Limited Liability Company Agreement of
Mont Belvieu Caverns, LLC, dated February 5, 2007
(incorporated by reference to Exhibit 10.13 to Form 8-K
filed February 5, 2007).10.14
    
    Amended and Restated Limited Liability Company Agreement of
Acadian Gas, LLC, dated February 5, 2007 (incorporated by
reference to Exhibit 10.14 to Form 8-K filed February 5,
2007).10.15
    
    Amended and Restated Limited Liability Company Agreement of
South Texas NGL Pipelines, LLC, dated February 5, 2007
(incorporated by reference to Exhibit 10.15 to Form 8-K
filed February 5, 2007).10.16
    
    Amended and Restated Agreement of Limited Partnership of
Enterprise Lou-Tex Propylene Pipeline L.P., dated February
5, 2007 (incorporated by reference to Exhibit 10.16 to Form
8-K filed February 5, 2007).10.17
    
    Amended and Restated Agreement of Limited Partnership of
Sabine Propylene Pipeline L.P., dated February 5, 2007
(incorporated by reference to Exhibit 10.17 to Form 8-K
filed February 5, 2007).10.18
    
    Fourth Amended and Restated Administrative Services
Agreement by and among EPCO, Inc., Enterprise Products
Partners L.P., Enterprise Products Operating L.P.,
Enterprise Products GP, LLC and Enterprise Products OLPGP,
Inc., Enterprise GP Holdings L.P., Duncan Energy Partners
L.P., DEP Holdings, LLC and DEP Operating Partnership,
L.P., EPE Holdings, LLC, TEPPCO Partners, L.P., Texas
Eastern Products Pipeline Company, LLC, TE Products
Pipeline Company, Limited Partnership, TEPPCO Midstream
Companies, L.P., TCTM, L.P. and TEPPCO GP, Inc. dated
January 30, 2007, but effective as of February 5, 2007
(incorporated by reference to Exhibit 10.18 to Form 8-K
filed February 5, 2007).10.19
    
    Amendment No. 1 to the Fourth Amended and Restated
Administrative Services Agreement dated February 28, 2007
(incorporated by reference to Exhibit 10.8 to Form 10-K
filed February 28, 2007 by Enterprise Products Partners
L.P.).10.20
    
    Omnibus Agreement, dated February 5, 2007, by and among
Duncan Energy Partners L.P., DEP Holdings, LLC, DEP
Operating Partnership, L.P., DEP OLPGP, LLC and Enterprise
Products Operating L.P. (incorporated by reference to
Exhibit 10.19 to Form 8-K filed February 5, 2007).10.21+
    
    Amended and Restated PGP Storage Lease, dated as of January
23, 2007, by and between Enterprise Products Operating L.P.
and Mont Belvieu Caverns, LLC (incorporated by reference to
Exhibit 10.8 to Form 8-K filed February 5, 2007).10.22
    
    Enterprise Products Company 2005 EPE Long-Term Incentive
Plan (amended and restated) (incorporated by reference to
Exhibit 10.1 to Form 8-K filed by Enterprise GP Holdings
L.P. on May 8, 2006).10.23***
    
    Form of Unit Appreciation Right Grant (DEP Holdings, LLC
Directors) based upon the Enterprise Products Company 2005
EPE Long-Term Incentive Plan (incorporated by reference to
Exhibit 10.24 to Form 10-K filed April 2, 2007.)31.1#
    
    Sarbanes-Oxley Section 302 certification of Richard H.
Bachmann for Duncan Energy Partners L.P. for the March 31,
2007 quarterly report on Form 10-Q.31.2#
    
    Sarbanes-Oxley Section 302 certification of Michael A.
Creel for Duncan Energy Partners L.P. for the March 31,
2007 quarterly report on Form 10-Q.
 45




---



##### Table of Contents



ExhibitNumber
    
    Exhibit *32.1#
    
    Section 1350 certification of Richard H. Bachmann for the
March 31, 2007 quarterly report on Form 10-Q.32.2#
    
    Section 1350 certification of Michael A. Creel for the
March 31, 2007 quarterly report on Form 10-Q.
 
 *
    
    With respect to exhibits incorporated by reference to Exchange Act filings, the Commission
file number for Enterprise GP Holdings L.P. is 1-32610.***
    
    Identifies management contract and compensatory plan arrangements.+
    
    Portions of these exhibits have been omitted and filed separately with the Commission pursuant to
a confidential treatment request under Rule 406 of the Securities Act of 1933, as amended.#
    
    Filed with this report. 46




---



##### Table of Contents



SIGNATURES
  DUNCAN ENERGY PARTNERS L.P.(A Delaware Limited Partnership)By:
    
    DEP Holdings, LLC,as General PartnerBy:
    
    /s/ Michael J. KnesekName:
    
    Michael J. KnesekTitle:
    
    Senior Vice President, Controllerand Principal Accounting Officerof the General Partner
 47




---



##### Table of Contents



Exhibit Index
 ExhibitNumber
    
    Exhibit *3.1
    
    Certificate of Limited Partnership of Duncan Energy
Partners L.P. (incorporated by reference to Exhibit 3.1 to
Form S-1 Registration Statement (Reg. No. 333-138371) filed
November 2, 2006).3.2
    
    Amended and Restated Agreement of Limited Partnership of
Duncan Energy Partners L.P., dated February 5, 2007
(incorporated by reference to Exhibit 3.1 to Form 8-K filed
February 5, 2007).3.3
    
    Certificate of Formation of DEP Holdings, LLC (incorporated
by reference to Exhibit 3.3 to Form S-1 Registration
Statement (Reg. No. 333-138371) filed November 2, 2006).3.4#
    
    Amended and Restated Limited Liability Company Agreement of
DEP Holdings, LLC, dated May 3, 2007.3.5
    
    Certificate of Formation of DEP OLPGP, LLC (incorporated by
reference to Exhibit 3.5 to Form S-1 Registration Statement
(Reg. No. 333-138371)filed November 2, 2006).3.6
    
    Amended and Restated Limited Liability Company Agreement of
DEP OLPGP, LLC, dated January 19, 2007 (incorporated by
reference to Exhibit 3.6 to Amendment No. 3 to Form S-1
Registration Statement (Reg. No. 333-138371) filed January
22, 2007).3.7
    
    Certificate of Limited Partnership of DEP Operating
Partnership, L.P. (incorporated by reference to Exhibit 3.7
to Form S-1 Registration Statement (Reg. No. 333-138371)
filed November 2, 2006).3.8
    
    Agreement of Limited Partnership of DEP Operating
Partnership, L.P., dated September 29, 2006 (incorporated
by reference to Exhibit 3.8 to Amendment No. 1 to Form S-1
Registration Statement (Reg. No. 333-138371) filed December
15, 2006).4.1
    
    Revolving Credit Agreement, dated as of January 5, 2007,
among Duncan Energy Partners L.P., as borrower, Wachovia
Bank, National Association, as Administrative Agent, The
Bank of Nova Scotia and Citibank, N.A., as Co-Syndication
Agents, JPMorgan Chase Bank, N.A. and Mizuho Corporate
Bank, Ltd., as Co-Documentation Agents, and Wachovia
Capital Markets, LLC, The Bank of Nova Scotia and Citigroup
Global Markets Inc., as Joint Lead Arrangers and Joint Book
Runners (incorporated by reference to Exhibit 10.20 to
Amendment No. 2 to Form S-1 Registration Statement (Reg.
No. 333-138371) filed January 12, 2007).10.1
    
    Contribution, Conveyance and Assumption Agreement, by and
among Enterprise Products Operating L.P., Duncan Energy
Partners L.P., DEP Holdings, LLC, DEP OLPGP, LLC, DEP
Operating Partnership, L.P., dated February 5, 2007
(incorporated by reference to Exhibit 10.1 to Form 8-K
filed February 5, 2007).10.2+
    
    Storage Lease (Enterprise Products NGL Marketing), dated as
of January 23, 2007, by and between Enterprise Products
Operating L.P. and Mont Belvieu Caverns, LLC (incorporated
by reference to Exhibit 10.2 to Form 8-K filed February 5,
2007).10.3+
    
    Storage Lease (North Propane-Propylene Splitters), dated as
of January 23, 2007, by and between Enterprise Products
Operating L.P. and Mont Belvieu Caverns, LLC (incorporated
by reference to Exhibit 10.3 to Form 8-K filed February 5,
2007).10.4+
    
    Storage Lease (Belvieu Environmental Fuels), dated as of
January 23, 2007, by and between Enterprise Products
Operating L.P. and Mont Belvieu Caverns, LLC (incorporated
by reference to Exhibit 10.4 to Form 8-K filed February 5,
2007).10.5+
    
    Storage Lease (Butane Isomer), dated as of January 23,
2007, by and between Enterprise Products Operating L.P. and
Mont Belvieu Caverns, LLC (incorporated by reference to
Exhibit 10.5 to Form 8-K filed February 5, 2007).10.6+
    
    Storage Lease (Enterprise Fractionation Plant), dated as of
January 23, 2007, by and between Enterprise Products
Operating L.P. and Mont Belvieu Caverns, LLC (incorporated
by reference to Exhibit 10.6 to Form 8-K filed February 5,
2007).10.7+
    
    Amended and Restated RGP Storage Lease, dated as of January
23, 2007, by and between Enterprise Products Operating L.P.
and Mont Belvieu Caverns, LLC (incorporated by reference to
Exhibit 10.7 to Form 8-K filed February 5, 2007).10.8
    
    Contribution, Conveyance and Assumption Agreement, dated as
of January 23, 2007, by and among Enterprise Products
Operating L.P., Enterprise Products OLPGP, Inc., Enterprise
Products Texas Operating, L.P. and Mont Belvieu Caverns,
LLC (incorporated by reference to Exhibit 10.9
 48




---



##### Table of Contents



ExhibitNumber
    
    Exhibit *to Form 8-K
filed February 5, 2007).10.9
    
    Contribution, Conveyance and Assumption Agreement, dated as
of January 23, 2007, by and among Enterprise GC, LP,
Enterprise Holding III, L.L.C., Enterprise GTM Holdings
L.P., Enterprise GTMGP, LLC, Enterprise Products GTM, LLC,
Enterprise Products Operating L.P. and South Texas NGL
Pipelines, LLC (incorporated by reference to Exhibit 10.10
to Form 8-K filed February 5, 2007).10.10
    
    Ground Lease Agreement, dated as of January 17, 2002, by
and between Enterprise Products Operating L.P.
(successor-in-interest to Diamond-Koch, L.P.) and Mont
Belvieu Caverns, LLC (successor-in-interest to Enterprise
Products Texas Operating L.P.) (incorporated by reference
to Exhibit 10.10 to Amendment No. 2 to Form S-1
Registration Statement (Reg. No. 333-138371) filed January
12, 2007).10.11
    
    Pipeline Lease Agreement by and between Enterprise GC, L.P.
and TE Products Pipeline Company, Limited Partnership
(incorporated by reference to Exhibit 10.11 to Form 8-K
filed February 5, 2007).10.12
    
    NGL Transportation Agreement by and between Enterprise
Products Operating L.P. and South Texas NGL Pipelines, LLC
(incorporated by reference to Exhibit 10.12 to Form 8-K
filed February 5, 2007).10.13
    
    Amended and Restated Limited Liability Company Agreement of
Mont Belvieu Caverns, LLC, dated February 5, 2007
(incorporated by reference to Exhibit 10.13 to Form 8-K
filed February 5, 2007).10.14
    
    Amended and Restated Limited Liability Company Agreement of
Acadian Gas, LLC, dated February 5, 2007 (incorporated by
reference to Exhibit 10.14 to Form 8-K filed February 5,
2007).10.15
    
    Amended and Restated Limited Liability Company Agreement of
South Texas NGL Pipelines, LLC, dated February 5, 2007
(incorporated by reference to Exhibit 10.15 to Form 8-K
filed February 5, 2007).10.16
    
    Amended and Restated Agreement of Limited Partnership of
Enterprise Lou-Tex Propylene Pipeline L.P., dated February
5, 2007 (incorporated by reference to Exhibit 10.16 to Form
8-K filed February 5, 2007).10.17
    
    Amended and Restated Agreement of Limited Partnership of
Sabine Propylene Pipeline L.P., dated February 5, 2007
(incorporated by reference to Exhibit 10.17 to Form 8-K
filed February 5, 2007).10.18
    
    Fourth Amended and Restated Administrative Services
Agreement by and among EPCO, Inc., Enterprise Products
Partners L.P., Enterprise Products Operating L.P.,
Enterprise Products GP, LLC and Enterprise Products OLPGP,
Inc., Enterprise GP Holdings L.P., Duncan Energy Partners
L.P., DEP Holdings, LLC and DEP Operating Partnership,
L.P., EPE Holdings, LLC, TEPPCO Partners, L.P., Texas
Eastern Products Pipeline Company, LLC, TE Products
Pipeline Company, Limited Partnership, TEPPCO Midstream
Companies, L.P., TCTM, L.P. and TEPPCO GP, Inc. dated
January 30, 2007, but effective as of February 5, 2007
(incorporated by reference to Exhibit 10.18 to Form 8-K
filed February 5, 2007).10.19
    
    Amendment No. 1 to the Fourth Amended and Restated
Administrative Services Agreement dated February 28, 2007
(incorporated by reference to Exhibit 10.8 to Form 10-K
filed February 28, 2007 by Enterprise Products Partners
L.P.).10.20
    
    Omnibus Agreement, dated February 5, 2007, by and among
Duncan Energy Partners L.P., DEP Holdings, LLC, DEP
Operating Partnership, L.P., DEP OLPGP, LLC and Enterprise
Products Operating L.P. (incorporated by reference to
Exhibit 10.19 to Form 8-K filed February 5, 2007).10.21+
    
    Amended and Restated PGP Storage Lease, dated as of January
23, 2007, by and between Enterprise Products Operating L.P.
and Mont Belvieu Caverns, LLC (incorporated by reference to
Exhibit 10.8 to Form 8-K filed February 5, 2007).10.22
    
    Enterprise Products Company 2005 EPE Long-Term Incentive
Plan (amended and restated) (incorporated by reference to
Exhibit 10.1 to Form 8-K filed by Enterprise GP Holdings
L.P. on May 8, 2006).10.23***
    
    Form of Unit Appreciation Right Grant (DEP Holdings, LLC
Directors) based upon the Enterprise Products Company 2005
EPE Long-Term Incentive Plan (incorporated by reference to
Exhibit 10.24 to Form 10-K filed April 2, 2007.)31.1#
    
    Sarbanes-Oxley Section 302 certification of Richard H.
Bachmann for Duncan Energy Partners L.P. for the March 31,
2007 quarterly report on Form 10-Q.31.2#
    
    Sarbanes-Oxley Section 302 certification of Michael A.
Creel for Duncan Energy Partners L.P. for
 49




---



##### Table of Contents



ExhibitNumber
    
    Exhibit *the March 31,
2007 quarterly report on Form 10-Q.32.1#
    
    Section 1350 certification of Richard H. Bachmann for the
March 31, 2007 quarterly report on Form 10-Q.32.2#
    
    Section 1350 certification of Michael A. Creel for the
March 31, 2007 quarterly report on Form 10-Q.
 
 *
    
    With respect to exhibits incorporated by reference to Exchange Act filings, the Commission
file number for Enterprise GP Holdings L.P. is 1-32610.***
    
    Identifies management contract and compensatory plan arrangements.+
    
    Portions of these exhibits have been omitted and filed separately with the Commission pursuant to
a confidential treatment request under Rule 406 of the Securities Act of 1933, as amended.#
    
    Filed with this report. 50