##### 



Exhibit 99.2
 Texas Eastern Products Pipeline Company, LLC and Subsidiaries
 Unaudited Consolidated Financial Statements
For the Three Months Ended March 31, 2007 and 2006




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##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 TABLE OF CONTENTS
 PageConsolidated Balance Sheets as of March 31, 2007 and December 31, 2006 (unaudited)
    
    
    1Statements of Consolidated Income and Comprehensive Income For the Three Months
Ended
March 31, 2007 and 2006 (unaudited)
    
    
    2Statements of Consolidated Cash Flows For the Three Months Ended March 31, 2007
and 2006 (unaudited)
    
    
    3Statement of Consolidated Members Equity (Deficit) For the Three Months Ended
March 31,
2007 (unaudited)
    
    
    4Notes to the Consolidated Financial Statements (unaudited)
    
    
    5Note 1. Organization and Basis of Presentation
    
    
    5Note 2. Recent Accounting Developments
    
    
    7Note 3. Employee Benefit Plans
    
    
    8Note 4. Financial Instruments  Interest Rate Swaps
    
    
    9Note 5. Inventories
    
    
    10Note 6. Investments in Unconsolidated Affiliates
    
    
    10Note 7. Dispositions and Discontinued Operations
    
    
    13Note 8. Goodwill and Other Intangible Assets
    
    
    15Note 9. Debt Obligations
    
    
    17Note 10. Minority Interest
    
    
    19Note 11. Members Equity (Deficit)
    
    
    19Note 12. Business Segments
    
    
    20Note 13. Related Party Transactions
    
    
    23Note 14. Commitments and Contingencies
    
    
    25Note 15. Supplemental Cash Flow Information
    
    
    31Note 16. Subsequent Events
    
    
    32
 i




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##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
 March 31,
    
    
    December 31,2007
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    78
    
    
    $
    119Accounts receivable, trade (net of allowance for doubtful accounts of
$103 and $100)
    
    
    776,570
    
    
    
    852,816Accounts receivable, related parties
    
    
    11,046
    
    
    
    11,788Inventories
    
    
    63,834
    
    
    
    72,193Other
    
    
    29,067
    
    
    
    29,843Total current assets
    
    
    880,595
    
    
    
    966,759Property, plant and equipment, at cost(net of accumulated
depreciation and amortization of $526,533 and $509,889)
    
    
    1,650,547
    
    
    
    1,642,095Equity investments
    
    
    997,559
    
    
    
    1,039,710Intangible assets
    
    
    179,499
    
    
    
    185,410Goodwill
    
    
    15,506
    
    
    
    15,506Other assets
    
    
    73,253
    
    
    
    72,661Total assets
    
    $
    3,796,959
    
    
    $
    3,922,141LIABILITIES AND MEMBERS EQUITY (DEFICIT)Current liabilities:Accounts payable and accrued liabilities
    
    $
    780,131
    
    
    $
    855,306Accounts payable, related parties
    
    
    45,889
    
    
    
    34,885Accrued interest
    
    
    15,667
    
    
    
    35,523Other accrued taxes
    
    
    13,649
    
    
    
    14,482Other
    
    
    23,735
    
    
    
    36,776Total current liabilities
    
    
    879,071
    
    
    
    976,972Senior notes
    
    
    1,112,802
    
    
    
    1,113,287Other long-term debt
    
    
    399,500
    
    
    
    490,000Deferred tax liability
    
    
    10
    
    
    
    652Other long term liabilities, related party
    
    
    
    
    
    
    1,814Other liabilities and deferred credits
    
    
    19,330
    
    
    
    19,461Minority interest
    
    
    1,460,465
    
    
    
    1,405,559Members equity (deficit):Accumulated other comprehensive income
    
    
    969
    
    
    
    426Members equity (deficit)
    
    
    (75,188
    )
    
    
    (86,030
    )Total members equity (deficit)
    
    
    (74,219
    )
    
    
    (85,604
    )Total liabilities and members equity (deficit)
    
    $
    3,796,959
    
    
    $
    3,922,141
  1




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##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 STATEMENTS OF CONSOLIDATED INCOME AND COMPREHENSIVE INCOME
(Unaudited)
(Dollars in thousands)
 For the Three Months EndedMarch 31,2007
    
    
    2006Operating revenues:Sales of petroleum products
    
    $
    1,850,128
    
    
    $
    2,396,346Transportation  Refined products
    
    
    37,135
    
    
    
    31,799Transportation  LPGs
    
    
    36,053
    
    
    
    29,421Transportation  Crude oil
    
    
    10,790
    
    
    
    8,923Transportation  NGLs
    
    
    10,941
    
    
    
    10,653Gathering  Natural gas
    
    
    15,408
    
    
    
    41,375Other
    
    
    17,974
    
    
    
    17,852Total operating revenues
    
    
    1,978,429
    
    
    
    2,536,369Costs and expenses:Purchases of petroleum products
    
    
    1,813,994
    
    
    
    2,371,040Operating expense
    
    
    45,166
    
    
    
    46,503Operating fuel and power
    
    
    15,274
    
    
    
    14,297General and administrative
    
    
    8,704
    
    
    
    8,964Depreciation and amortization
    
    
    25,369
    
    
    
    28,757Taxes  other than income taxes
    
    
    5,243
    
    
    
    5,311Gains on sales of assets
    
    
    (18,649
    )
    
    
    (1,378
    )Total costs and expenses
    
    
    1,895,101
    
    
    
    2,473,494Operating income
    
    
    83,328
    
    
    
    62,875Other income (expense):Interest expense  net
    
    
    (22,211
    )
    
    
    (21,143
    )Gain on sale of ownership interest in Mont Belvieu
Storage Partners, L.P.
    
    
    59,837
    
    
    
    Equity earnings
    
    
    16,563
    
    
    
    989Interest income
    
    
    342
    
    
    
    472Other income  net
    
    
    244
    
    
    
    428Income before provision for income taxes
    
    
    138,103
    
    
    
    43,621Provision for income taxes
    
    
    16
    
    
    
    Minority interest
    
    
    115,524
    
    
    
    30,628Income from continuing operations
    
    
    22,563
    
    
    
    12,993Discontinued operations
    
    
    
    
    
    
    1,607Gain on sale of discontinued operations
    
    
    
    
    
    
    17,884Minority interest for discontinued operations
    
    
    
    
    
    
    (13,760
    )Discontinued operations
    
    
    
    
    
    
    5,731Net income
    
    $
    22,563
    
    
    $
    18,724Changes in fair values of interest rate cash flow hedges
    
    
    217
    
    
    
    1,671Changes in fair values of crude oil cash flow hedges
    
    
    360
    
    
    
    236Comprehensive income
    
    $
    23,140
    
    
    $
    20,631
  2




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##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 STATEMENTS OF CONSOLIDATED CASH FLOWS
(Unaudited)
(Dollars in thousands)
 For the Three Months EndedMarch 31,2007
    
    
    2006Operating activities:Net income
    
    $
    22,563
    
    
    $
    18,724Adjustments to reconcile net income to cash provided by
continuing operating activities:Minority interest
    
    
    115,524
    
    
    
    44,388Income from discontinued operations
    
    
    
    
    
    
    (19,491
    )Deferred income taxes
    
    
    (642
    )
    
    
    Depreciation and amortization
    
    
    25,369
    
    
    
    28,757Earnings in equity investments
    
    
    (16,563
    )
    
    
    (989
    )Distributions from equity investments
    
    
    40,304
    
    
    
    16,297Gains on sales of assets
    
    
    (18,649
    )
    
    
    (1,378
    )Gain on sale of ownership interest in Mont Belvieu Storage
Partners, L.P.
    
    
    (59,837
    )
    
    
    Non-cash portion of interest expense
    
    
    294
    
    
    
    443Net effect of changes in operating accounts
    
    
    (39,724
    )
    
    
    (49,419
    )Net cash provided by continuing operating activities
    
    
    68,639
    
    
    
    37,332Net cash provided by discontinued operations
    
    
    
    
    
    
    1,631Net cash provided by operating activities
    
    
    68,639
    
    
    
    38,963Investing activities:Proceeds from sales of assets and ownership interest
    
    
    165,266
    
    
    
    39,030Investment in Mont Belvieu Storage Partners, L.P.
    
    
    
    
    
    
    (1,720
    )Investment in Centennial Pipeline LLC
    
    
    (6,081
    )
    
    
    Investment in Jonah Gas Gathering Company
    
    
    (30,942
    )
    
    
    Capital expenditures
    
    
    (34,084
    )
    
    
    (38,272
    )Net cash provided by (used in) investing activities
    
    
    94,159
    
    
    
    (962
    )Financing activities:Proceeds from revolving credit facility
    
    
    235,000
    
    
    
    187,700Repayments on revolving credit facility
    
    
    (325,500
    )
    
    
    (158,600
    )Contributions from member
    
    
    50
    
    
    
    Distributions paid to minority interest
    
    
    (60,618
    )
    
    
    (47,224
    )Distributions paid to member
    
    
    (11,771
    )
    
    
    (19,668
    )Net cash used in financing activities
    
    
    (162,839
    )
    
    
    (37,792
    )Net change in cash and cash equivalents
    
    
    (41
    )
    
    
    209Cash and cash equivalents, January 1
    
    
    119
    
    
    
    119Cash and cash equivalents, March 31
    
    $
    78
    
    
    $
    328
  3




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##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 STATEMENTS OF CONSOLIDATED MEMBERS EQUITY (DEFICIT)
(Unaudited)
(Dollars in thousands)
 AccumulatedOtherMembers
    
    
    ComprehensiveEquity (Deficit)
    
    
    (Loss) Income
    
    
    TotalBalance, December 31, 2006
    
    $
    (86,030
    )
    
    $
    426
    
    
    $
    (85,604
    )Contribution from member
    
    
    50
    
    
    
    
    
    
    
    50Distributions paid to member
    
    
    (11,771
    )
    
    
    
    
    
    
    (11,771
    )Changes in fair values of crude oil cash flow hedges
    
    
    
    
    
    
    360
    
    
    
    360Changes in fair values of interest rate cash flow hedges
    
    
    
    
    
    
    217
    
    
    
    217Pension benefit SFAS No. 158 adjustment
    
    
    
    
    
    
    (34
    )
    
    
    (34
    )Net income  quarter ended March 31, 2007
    
    
    22,563
    
    
    
    
    
    
    
    22,563Balance, March 31, 2007
    
    $
    (75,188
    )
    
    $
    969
    
    
    $
    (74,219
    )
  4




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##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION
    Basis of Presentation and Principles of Consolidation
 Determining
Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or
Similar Entity When the Limited Partners Have Certain Rights
   5




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##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Business Segments
   Dollar Amounts
  Income Taxes
  Revenue Recognition
    6




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##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  Accounting for Purchases and Sales of Inventory with
the Same Counterparty
  NOTE 2. RECENT ACCOUNTING DEVELOPMENTS
 How Taxes Collected from Customers and
Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross
versus Net Presentation)
 Accounting for Uncertainty in Income Taxes Accounting for Income Taxes
 7




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##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115
 NOTE 3. EMPLOYEE BENEFIT PLANS
   Employers Accounting for Settlements and Curtailments of Defined
Benefit Pension Plans and
 8




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##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 for Termination Benefits
  NOTE 4. FINANCIAL INSTRUMENTS  INTEREST RATE SWAPS
     9




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##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 .
 NOTE 5. INVENTORIES
  March 31,
    
    
    December 31,2007
    
    
    2006Crude oil (1)
    
    $
    42,098
    
    
    $
    49,312Refined products and LPGs (2)
    
    
    7,226
    
    
    
    7,636Lubrication oils and specialty chemicals
    
    
    7,545
    
    
    
    7,500Materials and supplies
    
    
    6,965
    
    
    
    7,029Other
    
    
    
    
    
    
    716Total
    
    $
    63,834
    
    
    $
    72,193
 
 (1)
    
    At March 31, 2007 and December 31, 2006, the substantial majority of our crude oil
inventory was subject to forward sales contracts.(2)
    
    Refined products and LPGs inventory is managed on a combined basis. NOTE 6. INVESTMENTS IN UNCONSOLIDATED AFFILIATES
 Seaway
  10




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##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Centennial
  MB Storage
   Summarized Financial Information for Seaway, Centennial and MB Storage
  For the Three Months EndedMarch 31,2007
    
    
    2006Revenues
    
    $
    34,585
    
    
    $
    38,635Net income
    
    
    9,287
    
    
    
    7,041
 11




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##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  March 31,
    
    
    December 31,2007
    
    
    2006Current assets
    
    $
    34,219
    
    
    $
    58,241Noncurrent assets
    
    
    510,482
    
    
    
    615,790Current liabilities
    
    
    29,552
    
    
    
    37,663Long-term debt
    
    
    137,500
    
    
    
    150,000Noncurrent liabilities
    
    
    6,742
    
    
    
    6,055Partners capital
    
    
    370,907
    
    
    
    480,313
 Jonah
   12




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##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  Revenues
    
    $
    56,524Net income
    
    
    20,169
  March 31,
    
    December 31,2007
    
    2006Current assets
    
    $
    49,362
    
    
    $
    33,963Noncurrent assets
    
    
    868,992
    
    
    
    800,591Current liabilities
    
    
    31,467
    
    
    
    25,113Noncurrent liabilities
    
    
    195
    
    
    
    191Partners capital
    
    
    886,692
    
    
    
    809,250
 NOTE 7. DISPOSITIONS AND DISCONTINUED OPERATIONS
 MB Storage
   Other Refined Products Assets
  13




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##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Pioneer Plant
   For the Three MonthsEnded March 31,2006Operating revenues:Sales of petroleum products
    
    $
    3,810Other
    
    
    921Total operating revenues
    
    
    4,731Costs and expenses:Purchases of petroleum products
    
    
    2,861Operating expense
    
    
    182Depreciation and amortization
    
    
    51Taxes  other than income taxes
    
    
    30Total costs and expenses
    
    
    3,124Income from discontinued operations
    
    $
    1,607
  For the Three MonthsEnded March 31,2006Cash flows from discontinued operations:Net income
    
    $
    19,491Depreciation and amortization
    
    
    51Gain on sale of Pioneer plant
    
    
    (17,884
    )Increase in inventories
    
    
    (27
    )Net cash provided by discontinued operations
    
    $
    1,631
 14




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##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 NOTE 8. GOODWILL AND OTHER INTANGIBLE ASSETS
 Goodwill
 Goodwill and Other Intangible Assets,
   Downstream
    
    Midstream
    
    Upstream
    
    SegmentsSegment
    
    Segment
    
    Segment
    
    TotalGoodwill
    
    $
    1,339
    
    
    $
    
    
    
    $
    14,167
    
    
    $
    15,506
 Other Intangible Assets
  March 31, 2007
    
    
    December 31, 2006Gross Carrying
    
    
    Accumulated
    
    
    Gross Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationIntangible assets:Gathering and transportation agreements
    
    $
    241,537
    
    
    $
    (92,279
    )
    
    $
    241,537
    
    
    $
    (87,121
    )Fractionation agreement
    
    
    38,000
    
    
    
    (17,100
    )
    
    
    38,000
    
    
    
    (16,625
    )Other
    
    
    12,310
    
    
    
    (2,969
    )
    
    
    12,310
    
    
    
    (2,691
    )Subtotal
    
    
    291,847
    
    
    
    (112,348
    )
    
    
    291,847
    
    
    
    (106,437
    )Excess investments:Centennial Pipeline LLC
    
    
    33,390
    
    
    
    (17,196
    )
    
    
    33,390
    
    
    
    (16,579
    )Seaway Crude Pipeline Company
    
    
    26,908
    
    
    
    (4,621
    )
    
    
    26,908
    
    
    
    (4,450
    )Jonah Gas Gathering Company
    
    
    3,949
    
    
    
    (19
    )
    
    
    2,924
    
    
    
    Subtotal
    
    
    64,247
    
    
    
    (21,836
    )
    
    
    63,222
    
    
    
    (21,029
    )Total intangible assets
    
    $
    356,094
    
    
    $
    (134,184
    )
    
    $
    355,069
    
    
    $
    (127,466
    )
  15




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##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
      Intangible Assets
    
    Excess Investments2007
    
    $
    23,135
    
    
    $
    4,4982008
    
    
    20,664
    
    
    
    4,6212009
    
    
    18,053
    
    
    
    4,8272010
    
    
    18,034
    
    
    
    3,6212011
    
    
    18,026
    
    
    
    919
 16




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##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 NOTE 9. DEBT OBLIGATIONS
  March 31,
    
    
    December 31,2007
    
    
    2006Revolving Credit Facility, due December 2011
    
    $
    399,500
    
    
    $
    490,0006.45% TE Products Senior Notes, due January 2008 (1)
    
    
    179,976
    
    
    
    179,9687.625% TEPPCO Senior Notes, due February 2012
    
    
    498,921
    
    
    
    498,8666.125% TEPPCO Senior Notes, due February 2013
    
    
    199,166
    
    
    
    199,1307.51% TE Products Senior Notes, due January 2028
    
    
    210,000
    
    
    
    210,000Total borrowings
    
    
    1,487,563
    
    
    
    1,577,964Adjustment to carrying value associated with hedges
of
fair value
    
    
    24,739
    
    
    
    25,323Total Debt Instruments (1)
    
    $
    1,512,302
    
    
    $
    1,603,287
 
 (1)
    
    In accordance with SFAS No. 6, Classification of Short-Term Obligations Expected to be
Refinanced, long-term debt reflects the classification of short-term obligations at March 31,
2007 as long-term. With respect to the 6.45% TE Products Senior Notes due in January 2008,
TEPPCO has the ability to use available credit capacity under its Revolving Credit Facility
to fund the repayment of these Senior Notes. Revolving Credit Facility
  Senior Notes
  17




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  Redemption
    
    
    
    
    
    RedemptionYear
    
    Price
    
    Year
    
    Price2008
    
    
    103.755
    %
    
    
    2013
    
    
    
    101.878
    %2009
    
    
    103.380
    %
    
    
    2014
    
    
    
    101.502
    %2010
    
    
    103.004
    %
    
    
    2015
    
    
    
    101.127
    %2011
    
    
    102.629
    %
    
    
    2016
    
    
    
    100.751
    %2012
    
    
    102.253
    %
    
    
    2017
    
    
    
    100.376
    %
     18




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##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  Fair ValueFace Value
    
    March 31, 2007
    
    December 31, 20066.45% TE Products Senior Notes, due January 2008
    
    $
    180,000
    
    
    $
    181,080
    
    
    $
    181,6417.625% TEPPCO Senior Notes, due February 2012
    
    
    500,000
    
    
    
    541,589
    
    
    
    537,0676.125% TEPPCO Senior Notes, due February 2013
    
    
    200,000
    
    
    
    203,100
    
    
    
    201,6107.51% TE Products Senior Notes, due January 2028
    
    
    210,000
    
    
    
    219,450
    
    
    
    221,471
  Letter of Credit
  NOTE 10. MINORITY INTEREST
   Minority interest at December 31, 2006
    
    $
    1,405,559Net income allocation  quarter ended March 31, 2007
    
    
    115,524Cash distributions
    
    
    (60,618
    )Minority interest at March 31, 2007
    
    $
    1,460,465
  NOTE 11. MEMBERS EQUITY (DEFICIT)
  19




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Members Equity (Deficit)
  Accumulated Other Comprehensive Income
 Reporting Comprehensive Income
  Balance at December 31, 2006
    
    $
    426Changes in fair values of interest rate cash flow hedges
    
    
    217Changes in fair values of crude oil cash flow hedges
    
    
    360Pension benefit SFAS No. 158 adjustment
    
    
    (34
    )Balance at March 31, 2007
    
    $
    969
 NOTE 12. BUSINESS SEGMENTS
  
    
    Our Downstream Segment, which is engaged in the transportation, marketing and
storage of refined products, LPGs and petrochemicals;
    
    Our Upstream Segment, which is engaged in the gathering, transportation, marketing
and storage of crude oil and distribution of lubrication oils and specialty chemicals;
and
 20




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 
    
    Our Midstream Segment, which is engaged in the gathering of natural gas,
fractionation of NGLs and transportation of NGLs.
     21




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  For the Three Months Ended March 31, 2007Downstream
    
    
    Upstream
    
    
    Midstream
    
    
    SegmentsSegment
    
    
    Segment
    
    
    Segment
    
    
    Total
    
    
    Other
    
    
    ConsolidatedSales of petroleum products
    
    $
    9,376
    
    
    $
    1,841,031
    
    
    $
    
    
    
    $
    1,850,407
    
    
    $
    (279
    )
    
    $
    1,850,128Operating revenues
    
    
    85,542
    
    
    
    13,386
    
    
    
    29,373
    
    
    
    128,301
    
    
    
    
    
    
    
    128,301Purchases of petroleum products
    
    
    9,394
    
    
    
    1,807,166
    
    
    
    
    
    
    
    1,816,560
    
    
    
    (2,566
    )
    
    
    1,813,994Operating expenses, including power
and taxes  other than income taxes
    
    
    35,023
    
    
    
    19,038
    
    
    
    11,703
    
    
    
    65,764
    
    
    
    (81
    )
    
    
    65,683General and administrative expenses
    
    
    4,075
    
    
    
    1,828
    
    
    
    2,695
    
    
    
    8,598
    
    
    
    106
    
    
    
    8,704Depreciation and amortization
expense
    
    
    11,136
    
    
    
    4,068
    
    
    
    10,165
    
    
    
    25,369
    
    
    
    
    
    
    
    25,369Gains on sales of assets
    
    
    (18,651
    )
    
    
    2
    
    
    
    
    
    
    
    (18,649
    )
    
    
    
    
    
    
    (18,649
    )Operating income
    
    
    53,941
    
    
    
    22,315
    
    
    
    4,810
    
    
    
    81,066
    
    
    
    2,262
    
    
    
    83,328Gain on sale of ownership interest
in MB Storage
    
    
    59,837
    
    
    
    
    
    
    
    
    
    
    
    59,837
    
    
    
    
    
    
    
    59,837Equity (losses) earnings
    
    
    (1,487
    )
    
    
    1,789
    
    
    
    18,629
    
    
    
    18,931
    
    
    
    (2,368
    )
    
    
    16,563Interest income
    
    
    202
    
    
    
    29
    
    
    
    111
    
    
    
    342
    
    
    
    
    
    
    
    342Other income, net
    
    
    229
    
    
    
    14
    
    
    
    1
    
    
    
    244
    
    
    
    
    
    
    
    244Earnings before interest expense,
provision for income taxes,
discontinued operations and
minority interest
    
    $
    112,722
    
    
    $
    24,147
    
    
    $
    23,551
    
    
    $
    160,420
    
    
    $
    (106
    )
    
    $
    160,314
 For the Three Months Ended March 31, 2006Downstream
    
    
    Upstream
    
    
    Midstream
    
    
    SegmentsSegment
    
    
    Segment
    
    
    Segment
    
    
    Total
    
    
    Other
    
    ConsolidatedSales of petroleum products (1)
    
    $
    
    
    
    $
    2,400,436
    
    
    $
    
    
    
    $
    2,400,436
    
    
    $
    (4,090
    )
    
    $
    2,396,346Operating revenues
    
    
    74,067
    
    
    
    11,146
    
    
    
    56,377
    
    
    
    141,590
    
    
    
    (1,567
    )
    
    
    140,023Purchases of petroleum products (1)
    
    
    
    
    
    
    2,376,396
    
    
    
    
    
    
    
    2,376,396
    
    
    
    (5,356
    )
    
    
    2,371,040Operating expenses, including power
and taxes  other than income taxes
    
    
    35,402
    
    
    
    16,802
    
    
    
    14,208
    
    
    
    66,412
    
    
    
    (301
    )
    
    
    66,111General and administrative expenses
    
    
    5,094
    
    
    
    1,807
    
    
    
    2,300
    
    
    
    9,201
    
    
    
    (237
    )
    
    
    8,964Depreciation and amortization
expense
    
    
    10,297
    
    
    
    3,271
    
    
    
    15,189
    
    
    
    28,757
    
    
    
    
    
    
    
    28,757Gains on sales of assets
    
    
    (7
    )
    
    
    
    
    
    
    (1,371
    )
    
    
    (1,378
    )
    
    
    
    
    
    
    (1,378
    )Operating income
    
    
    23,281
    
    
    
    13,306
    
    
    
    26,051
    
    
    
    62,638
    
    
    
    237
    
    
    
    62,875Equity (losses) earnings
    
    
    (1,266
    )
    
    
    2,255
    
    
    
    
    
    
    
    989
    
    
    
    
    
    
    
    989Interest income
    
    
    396
    
    
    
    
    
    
    
    76
    
    
    
    472
    
    
    
    
    
    
    
    472Other income, net
    
    
    383
    
    
    
    44
    
    
    
    
    
    
    
    427
    
    
    
    1
    
    
    
    428Earnings before interest expense,
provision for income taxes,
discontinued operations and
minority interest
    
    $
    22,794
    
    
    $
    15,605
    
    
    $
    26,127
    
    
    $
    64,526
    
    
    $
    238
    
    
    $
    64,764
 22




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 
 (1)
    
    Effective April 1, 2006, we adopted EITF 04-13, which resulted in the netting of
certain sales and purchases of petroleum products transactions. The three months ended
March 31, 2006 was not adjusted for the adoption of EITF 04-13, as retroactive restatement
was not permitted, which impacts comparability.  Downstream
    
    Upstream
    
    Midstream
    
    SegmentsSegment
    
    Segment
    
    Segment
    
    Total
    
    Other
    
    ConsolidatedMarch 31, 2007:Total assets
    
    $
    1,091,234
    
    
    $
    1,422,182
    
    
    $
    1,365,792
    
    
    $
    3,879,208
    
    
    $
    (82,249
    )
    
    $
    3,796,959Capital expenditures
    
    
    17,797
    
    
    
    13,590
    
    
    
    2,107
    
    
    
    33,494
    
    
    
    590
    
    
    
    34,084Non-cash investing activities
    
    
    
    
    
    
    
    
    
    
    14,935
    
    
    
    14,935
    
    
    
    
    
    
    
    14,935December 31, 2006:Total assets
    
    $
    1,160,929
    
    
    $
    1,504,699
    
    
    $
    1,335,502
    
    
    $
    4,001,130
    
    
    $
    (78,989
    )
    
    $
    3,922,141Capital expenditures
    
    
    75,344
    
    
    
    48,351
    
    
    
    42,929
    
    
    
    166,624
    
    
    
    3,422
    
    
    
    170,046Non-cash investing activities
    
    
    
    
    
    
    
    
    
    
    581,341
    
    
    
    581,341
    
    
    
    
    
    
    
    581,341
  For the Three Months EndedMarch 31,2007
    
    
    2006Earnings before interest expense, provision for income taxes,
discontinued operations and minority interest
    
    $
    160,314
    
    
    $
    64,764Interest expense  net
    
    
    (22,211
    )
    
    
    (21,143
    )Income before provision for income taxes
    
    
    138,103
    
    
    
    43,621Provision for income taxes
    
    
    16
    
    
    
    Minority interest
    
    
    115,524
    
    
    
    30,628Income from continuing operations
    
    
    22,563
    
    
    
    12,993Discontinued operations
    
    
    
    
    
    
    5,731Net income
    
    $
    22,563
    
    
    $
    18,724
 NOTE 13. RELATED PARTY TRANSACTIONS
 EPCO and Affiliates
  23




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##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  For the Three Months EndedMarch 31,2007
    
    2006Revenues from EPCO and affiliates:Sales of petroleum products (1)
    
    $
    355
    
    
    $
    22Transportation  NGLs (2)
    
    
    2,810
    
    
    
    1,712Transportation  LPGs (3)
    
    
    1,606
    
    
    
    1,723Other operating revenues (4)
    
    
    306
    
    
    
    37Costs and Expenses from EPCO and affiliates:Payroll, administrative and other (5) (6)
    
    
    31,351
    
    
    
    31,210Purchases of petroleum products (7)
    
    
    8,784
    
    
    
    5,707
 
 (1)
    
    Includes sales of Lubrication Services, L.P. (LSI) to various EPCO affiliates.(2)
    
    Includes revenues from NGL transportation on the Chaparral and Panola NGL pipelines.(3)
    
    Includes revenues from LPG transportation on the TE Products pipeline.(4)
    
    Includes other operating revenues on the TE Products pipeline.(5)
    
    Includes payroll, payroll related expenses, administrative expenses, including
reimbursements related to employee benefits and employee benefit plans, incurred in
managing us and our subsidiaries in accordance with the ASA, and other operating expenses.(6)
    
    Includes insurance expense for the three months ended March 31, 2007 and 2006, related
to premiums paid by EPCO of $5.1 million and $2.7 million, respectively. The majority of
our insurance coverage, including property, liability, business interruption, auto and
directors and officers liability insurance, was obtained through EPCO.(7)
    
    Includes TCO purchases of condensate for the three months ended March 31, 2007 and 2006
of $8.8 million and $5.7 million, respectively.  March 31,
    
    December 31,2007
    
    2006Accounts receivable, related parties (1)
    
    $
    245
    
    
    $
    272Gas imbalance receivable
    
    
    
    
    
    
    1,278Insurance reimbursement receivable
    
    
    1,426
    
    
    
    1,426Accounts payable, related parties (2)
    
    
    44,911
    
    
    
    26,350Deferred revenue, related parties
    
    
    
    
    
    
    252Other liabilities, related party (3)
    
    
    
    
    
    
    1,814
 
 (1)
    
    Relates to sales and transportation services provided to EPCO and affiliates.(2)
    
    Relates to direct payroll, payroll related costs and other operational related charges
from EPCO and affiliates.(3)
    
    Relates to our share of EPCOs Oil Insurance Limited insurance program retrospective
premiums obligation. 24




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Sale of Pioneer plant
  Jonah Joint Venture
   Other Transactions
  NOTE 14. COMMITMENTS AND CONTINGENCIES
 Litigation
 Ryan E. McCleery and Marcia
S. McCleery, et al. and
 25




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Michael and Linda Robson, et al. v. Texas Eastern Corporation, et al. Michael and
Linda Robson, et al. v. Texas Eastern Corporation, et al
 Rebecca L. Grisham et al. v. TE Products Pipeline
Company, Limited Partnership
 Jimmy R. Green, et al. v. Cities
Service Refinery, et al. th
   26




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##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
     Regulatory Matters
  27




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##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
       28




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
       Contractual Obligations
  29




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Other
      30




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  NOTE 15. SUPPLEMENTAL CASH FLOW INFORMATION
  For the Three Months EndedMarch 31,2007
    
    
    2006Decrease (increase) in:Accounts receivable, trade
    
    $
    76,246
    
    
    $
    (171,920
    )Accounts receivable, related parties
    
    
    (10,774
    )
    
    
    2,397Inventories
    
    
    8,359
    
    
    
    (17,488
    )Advances to related parties
    
    
    
    
    
    
    1Other current assets
    
    
    776
    
    
    
    11,187Other
    
    
    (4,181
    )
    
    
    (3,421
    )Increase (decrease) in:Accounts payable and accrued expenses
    
    
    (111,763
    )
    
    
    134,962Accounts payable, related parties
    
    
    4,803
    
    
    
    (5,639
    )Other
    
    
    (3,190
    )
    
    
    502Net effect of changes in operating accounts
    
    $
    (39,724
    )
    
    $
    (49,419
    )Non-cash investing activities:Payable to Enterprise Gas Processing, LLC for spending
for Phase V expansion of Jonah Gas Gathering Company
    
    $
    14,935
    
    
    $
    Supplemental disclosure of cash flows:Cash paid for interest (net of amounts capitalized)
    
    $
    42,947
    
    
    $
    38,450
 31




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 NOTE 16. SUBSEQUENT EVENTS
  Junior Subordinated Notes
     32




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##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  Treasury Locks
  Centennial Debt Guarantee
  33