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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

      [X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

  For the fiscal year ended December 31, 2000 Commission File Number: 1-12872

                                       OR

      [ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                           EOTT ENERGY PARTNERS, L.P.
             (Exact name of registrant as specified in its charter)


              Delaware                                           76-0424520
    -------------------------------                          -------------------
    (State or Other Jurisdiction of                           (I.R.S. Employer
    Incorporation or Organization)                           Identification No.)


  2000 West Sam Houston Parkway South,
               Suite 400
            Houston, Texas                                          77042
----------------------------------------                          ----------
(Address of principal executive offices)                          (Zip Code)


                                 (713) 993-5200
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

     Title of each class          Name of each exchange on which registered
     -------------------          -----------------------------------------
        Common Units                       New York Stock Exchange


           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                                      None

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X]  No [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

     Aggregate market value of the Common Units held by non-affiliates of the
registrant, based on closing prices in the daily composite list for transactions
on the New York Stock Exchange on March 1, 2001, was approximately $249,169,800.

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                           EOTT ENERGY PARTNERS, L.P.
                                TABLE OF CONTENTS

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<S>       <C>                                                                                       <C>
                                     PART I

Item 1.   Business                                                                                    3
Item 2.   Properties                                                                                 13
Item 3.   Legal Proceedings                                                                          14
Item 4.   Submission of Matters to a Vote of Security Holders                                        16

                                     PART II

Item 5.   Market for Registrant's Common Units and Related Security
              Holder Matters                                                                         17
Item 6.   Selected Financial Data                                                                    18
Item 7.   Management's Discussion and Analysis of Financial Condition
              and Results of Operations                                                              19
Item 7a.  Quantitative and Qualitative Disclosures about Market Risk                                 30
Item 8.   Financial Statements and Supplementary Data                                                31
Item 9.   Disagreements on Accounting and Financial Disclosure                                       31

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant                                         32
Item 11.  Executive Compensation                                                                     35
Item 12.  Security Ownership of Certain Beneficial Owners
              and Management                                                                         40
Item 13.  Certain Relationships and Related Transactions                                             41

                                     PART IV

Item 14.  Exhibits, Financial Statement Schedule and Reports on Form 8-K                             42
</TABLE>


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                                     PART I

ITEM 1. BUSINESS

GENERAL

     EOTT Energy Partners, L.P., a Delaware limited partnership, through its
affiliated limited partnerships, EOTT Energy Operating Limited Partnership, EOTT
Energy Canada Limited Partnership, and EOTT Energy Pipeline Limited Partnership,
is engaged in the purchasing, gathering, transporting, trading, storage and
resale of crude oil, refined petroleum products, natural gas liquids and related
activities. EOTT Energy Partners, L.P.'s principal business segments are its
North American - East of Rockies crude oil gathering and marketing operations,
its Pipeline Operations and its West Coast Operations, which include crude oil
gathering and marketing, refined products marketing and a natural gas liquids
business (see Note 14 to the Consolidated Financial Statements for certain
financial information by business segment). Unless the context otherwise
requires, the terms "EOTT" and the "Partnership" herein refer to EOTT Energy
Partners, L.P., its affiliated limited partnerships, and for periods prior to
the Partnership's initial public offering in March 1994, EOTT Energy Corp., its
wholly-owned subsidiary, EOTT Energy Ltd., and its affiliated company, Enron
Products Marketing Company.

     In 1999, EOTT Energy Partners, L.P. formed EOTT Energy Finance Corp. as a
direct wholly-owned subsidiary. This entity was set up in connection with a debt
offering to facilitate certain investors' ability to purchase EOTT's senior
notes, more fully described in Note 7 to the Consolidated Financial Statements.

     EOTT Energy Corp. (the "General Partner"), a Delaware corporation and an
indirect wholly-owned subsidiary of Enron Corp. ("Enron"), serves as the sole
general partner of the Partnership and its affiliated operating limited
partnerships. In addition to its aggregate approximate 2% general partner
interest in the Partnership, the General Partner owns an approximate 25% limited
partner interest in the Partnership in the form of subordinated units. Enron,
through its ownership of EOTT Common Units, holds an approximate 12% interest in
the Partnership.

OVERVIEW

     EOTT is one of the largest independent crude oil gathering and marketing
companies in North America. EOTT gathers and markets from over 33,000 oil wells
in 18 states and Canada, averaging 427,100 barrels per day during 2000. In
addition, EOTT is engaged in interstate and intrastate crude oil transportation,
crude oil terminalling and storage activities, and crude oil blending. EOTT
purchases crude oil from various producers and operators and markets to refiners
and other customers nationwide. EOTT transports crude oil through pipelines,
including approximately 8,200 miles of active EOTT gathering and transmission
pipelines, and trucking operations, which includes a fleet of 285 owned or
leased trucks. There are approximately 12.2 million barrels of active storage
capacity associated with field tanks.

     EOTT engages in the following business activities:

     o  GATHERING AND MARKETING. EOTT gathers, stores and transports crude oil
        in the United States and Canada. This involves purchasing and gathering
        crude oil from producers and other sellers for subsequent sale to
        refiners and other customers. EOTT gathers crude oil from over 3,200
        producers and operators, of which approximately 91% of the volumes are
        from independent producers and the remaining 9% are from major
        integrated oil companies. EOTT operates gathering systems in all major
        production areas in the lower 48 states. EOTT also provides certain
        accounting and administrative services to some producers and operators.
        EOTT believes that its ability to offer reliable and reasonably priced
        services to producers


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        and operators is a key factor in maintaining lease crude oil volumes and
        in obtaining new lease volumes. Most of these operations are included in
        the North American Crude Oil - East of Rockies business segment.

     o  PIPELINE OPERATIONS. Through the Partnership's common carrier pipeline
        systems, EOTT transports crude oil for its gathering and marketing
        operations and for third parties pursuant to published tariff rates
        regulated by the Federal Energy Regulatory Commission and state
        regulatory authorities. EOTT transported an average of 583,700 barrels
        per day in 2000, a significant portion of which was transported for
        EOTT's own gathering and marketing operations. EOTT conducts these
        operations in its Pipeline Operations business segment. Approximately
        85% of the revenues of the Pipeline Operations business segment for the
        twelve months ended December 31, 2000, were generated from tariffs
        charged to the North American Crude Oil - East of Rockies business
        segment and sales of crude oil inventory to the North American Crude Oil
        - East of Rockies business segment.

     o  CRUDE OIL BLENDING AND NATURAL GAS LIQUIDS PROCESSING. EOTT blends West
        Coast sour crude with sweet crude oil and natural gas liquids to upgrade
        heavy sour crude oil into a medium gravity Alaskan North Slope type of
        crude oil, which is sold to Los Angeles Basin refineries. In addition,
        EOTT has a gas processing plant, a fractionation plant, and refrigerated
        propane storage and related distribution facilities, which provide
        natural gas liquids to EOTT's crude oil blending operation as well as
        other services for the natural gas liquids operations. EOTT conducts
        these operations in its West Coast Operations business segment.


NORTH AMERICAN CRUDE OIL - EAST OF ROCKIES OPERATIONS

     EOTT's crude oil gathering and marketing operations consist of purchasing
and gathering crude oil from producers and operators in 18 states and Canada for
subsequent sale to refiners and other customers. Gathering and marketing of
crude oil consists of:

     o  purchasing lease crude oil from producers and operators at the oil well
        and in bulk from aggregators at major pipeline interconnects and
        marketing locations,

     o  transporting crude oil on the Partnership's own proprietary or common
        carrier pipelines, through its fleet of trucks or on assets owned and
        operated by third parties,

     o  buying and selling crude oil or exchanging it for either another grade
        of crude oil or for crude oil at a different geographic location or
        delivery time in order to increase margins or meet contract delivery
        requirements, and

     o  marketing crude oil to refiners, large integrated oil companies and
        other customers.

     As a gatherer and marketer, EOTT seeks to earn profits primarily by buying
crude oil at competitive prices, efficiently transporting and handling the
purchased crude oil and marketing the crude oil to refinery customers or other
trade partners. EOTT purchases and sells crude oil primarily under contracts
with 30-day renewable terms, with some contracts having terms from two months to
one year. In December 1998, the Partnership entered into a 15-year supply
contract at market-based prices with Koch Oil Company, now Koch Petroleum Group,
L.P., for less than 25% of EOTT's lease crude oil volumes.


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Crude Oil Gathering

     In a typical producer's operation, crude oil flows from the oil well to a
separator where the petroleum gases are removed. After separation, the crude oil
is treated to remove water, sand and other contaminants and is then moved into
the producer's on-site storage tanks. When the tank is full, the producer
contacts EOTT's field personnel to purchase and transport the crude oil to
market. EOTT utilizes its pipelines and trucks to transport most of the crude
oil purchased to market.

     EOTT engages in several types of purchases, sales and exchanges of crude
oil. Most transactions EOTT enters into are at market responsive prices for a
term or duration of 90 days or less, with a large number of transactions on a
30-day renewable basis. These purchases are automatically renewable on a
month-to-month basis until terminated by either party. The purchases are
typically based on EOTT's posted prices, or the price at which EOTT is willing
to pay producers in a particular region, plus a bonus. The bonus is determined
based on grade of oil, transportation costs and competitive factors. Both the
posted price and the bonus change in response to market conditions. Posted
prices can change daily, and bonuses, in general, can change every 30 days as
contracts renew. Conducting business under these short-term contracts with
multiple producers helps EOTT reduce the overall basis risk. (the risk that
price relationships between delivery points, grades of crude oil or delivery
periods will change). See "Business - Risk Management Services / Derivatives."

     The North American Crude Oil - East of Rockies operation is organized into
five operating regions. Of the 427,100 barrels per day of lease crude oil EOTT
purchased in 2000, approximately 408,200 barrels per day or 96% was gathered in
the North American Crude Oil - East of Rockies business segment. The remainder
of the lease crude oil was gathered in the West Coast region.

Crude Oil Marketing

     The marketing of crude oil is complex and requires detailed knowledge of
the crude oil market and a familiarity with a number of factors including: types
of crude oil, individual refinery demand for specific grades of crude oil, area
market price structures for the different grades of crude oil, location of
customers, availability of transportation facilities and timing and costs
(including storage) involved in delivering crude oil to the appropriate
customer. EOTT markets crude oil through its extensive gathering and marketing
asset base which allows EOTT to select among several transportation, storage and
delivery alternatives.

     Generally, as EOTT purchases lease crude oil, it enters into corresponding
sale transactions involving physical deliveries of crude oil to third party
users, such as independent refineries, or corresponding sales of futures
contracts on the NYMEX. This process enables EOTT to minimize its exposure
related to price risk until it makes physical delivery of the crude oil. After
purchase of a lease barrel, EOTT may re-market that barrel both in the futures
and physical markets in order to maximize the value of the lease crude oil
volumes. Throughout the process, EOTT seeks to maintain a substantially balanced
position at all times with respect to lease volumes; however, EOTT has certain
risks which cannot be completely hedged such as basis risks and the risk that
transportation costs will change.

     Market conditions significantly impact EOTT's sales and marketing
strategies. During periods when the demand for crude oil is weak, the market for
crude oil is often in contango, meaning that the price of crude oil in a given
month is less than the price of crude oil in a subsequent month. In a contango
market, storing crude oil is favorable, because storage owners at major trading
locations can simultaneously purchase production at low current prices for
storage and sell at higher prices for future delivery. When there is a higher
demand than supply of crude oil in the near term, the market is backwardated,
meaning that the price of crude oil in a given month exceeds the price of crude
oil in a subsequent month. A backwardated market has a positive impact on
marketing margins because crude oil gatherers can capture a premium for prompt
deliveries.


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Producer Services

     Purchasing crude oil from producers and operators is done on the basis of
competitive pricing and reliable and responsive customer service. EOTT believes
its ability to offer enhanced customer services to producers and operators is an
important factor in maintaining lease crude oil volumes and in obtaining new
volumes. Services offered include gathering capabilities, timely pickup of crude
oil from producers' tanks at the lease or production point, accurate measurement
of crude oil volumes delivered, and certain accounting and administrative
services. Accounting and administrative services include processing division
orders (dividing payments among the owners of interests in a lease), providing
statements of the crude oil purchased by EOTT each month, disbursing production
proceeds to interest owners and calculation and payment of severance and
production taxes on behalf of interest owners. In order to compete effectively,
EOTT must efficiently handle title and division order issues and payment and
regulatory reporting of all severance and production taxes. EOTT must do this in
a professional and timely manner, thereby ensuring the prompt and correct
processing or payment of crude oil production proceeds and taxes. These producer
services will continue to be a key component in EOTT's strategy as the smaller
producers find it difficult to maintain these services internally.

PIPELINE OPERATIONS

     Through the common carrier pipeline systems, EOTT transports crude oil for
the North American Crude Oil - East of Rockies and West Coast business segments
and third party customers pursuant to published tariff rates regulated by the
Federal Energy Regulatory Commission ("FERC") and state regulatory authorities.
Accordingly, EOTT offers transportation services to any shipper of crude oil,
provided that the crude oil meets the conditions and specifications contained in
the applicable pipeline tariff. During 2000, EOTT's Pipeline Operations business
segment transported an average of approximately 583,700 barrels per day through
its regulated pipeline systems. Pipeline revenues are primarily a function of
the level of crude oil transported through the pipeline, known as throughput,
and the applicable pipeline tariffs. Approximately 85% of the revenues from the
Pipeline Operations business segment for the twelve months ended December 31,
2000 were generated from tariffs charged to the North American Crude Oil - East
of Rockies business segment and sales of crude oil inventory to the North
American Crude Oil - East of Rockies business segment. The operating income from
the Pipeline Operations business segment is primarily generated by the
difference between the published tariff and the fixed and variable costs of
operating the pipelines.

     The General Partner entered into an agreement with Enron Pipeline Services
Company ("EPSC"), a wholly owned subsidiary of Enron Corp., to provide certain
operating and administrative services to the General Partner, effective October
1, 2000. These services were previously performed directly by the General
Partner. The agreement provides that the General Partner will reimburse EPSC for
its costs and expenses in rendering the services. The General Partner will in
turn be reimbursed by the Partnership. The arrangement is not expected to
increase the costs and expenses borne by the Partnership.

     EOTT believes that pipelines provide the lowest-cost method of
transportation, and accordingly, EOTT has focused on increasing the percentage
of barrels transported on pipelines through acquisitions of pipeline assets.
EOTT's extensive pipeline network allows it to be the low-cost operator in many
of the regions in which it operates. In addition, EOTT has the opportunity to
add incremental cash flow at marginal additional cost given that its pipeline
system operates at approximately two-thirds of capacity.

WEST COAST OPERATIONS

     EOTT conducts a number of business activities in the petroleum market on
the West Coast, including the following: (i) crude oil blending; (ii) lease
crude oil gathering and marketing; (iii) natural gas liquids marketing;


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and (iv) refined petroleum products marketing. These business activities are
operated as an integrated business, with the lease crude oil and gas
fractionation operations being the primary components in the crude oil blending
operations.

     EOTT acquired assets from Koch Pipeline Company, L.P. ("Koch") in 1998 that
improved the transportation economics of the blending and marketing activities
and greatly expanded the existing natural gas liquids marketing business on the
West Coast. These assets primarily included a gas processing plant with 20
million cubic feet per day of gas processing capacity, a fractionation plant
with 8,000 barrels per day of fractionation capacity and five million gallons of
refrigerated propane storage along with related distribution facilities.

     The primary function of lease crude oil gathering on the West Coast is to
support the crude blending operation. EOTT purchases crude oil from a number of
producers on the West Coast, ranging from small independents to major oil
companies. The West Coast lease crude oil volumes are transported by a variety
of pipeline gathering systems as well as by truck.

     The acquisition of the fractionation plant from Koch has given EOTT the
ability to produce natural gasoline, which is a valuable component of the crude
blending operation. The fractionator and the associated five million gallon
refrigerated storage facility has also turned EOTT into a major participant in
the wholesale marketing of propane on the West Coast.

     The bulk of EOTT's profitability in the West Coast market is derived from
crude oil blending and natural gas liquids marketing. The margins for the West
Coast crude oil business are primarily tied to EOTT's ability to upgrade heavy
sour crude into a medium gravity, Alaskan North Slope type of crude oil, called
Line 63. To accomplish this, EOTT gathers crude oil by truck and pipeline and
delivers it to proprietary blend stations strategically placed along EOTT's
gathering system.

     In addition, the West Coast Operations include a refined petroleum products
marketing business. This business specializes mostly in marketing distillate and
gasoline at terminals.

RISK MANAGEMENT SERVICES/DERIVATIVES

     EOTT attempts to minimize its exposure to commodity prices. Generally, as
EOTT purchases lease crude oil at prevailing market prices, EOTT enters into
corresponding sales transactions involving physical deliveries of crude oil to
third party users, such as refiners or other trade partners, or a sale of
futures contracts on the NYMEX. This process gives EOTT the opportunity to
profit on the transaction at the time of purchase and to minimize EOTT's
exposure to commodity price fluctuations.

     Sophisticated price risk management strategies, including those involving
price hedges using NYMEX futures contracts, are very important in maintaining or
increasing EOTT's gross margins. Such hedging techniques require significant
resources dedicated to the management of futures positions and physical
inventories. Another important element of the hedging techniques is the accurate
estimation of lease crude oil volumes that will actually be purchased when EOTT
picks them up from the producers. EOTT effects transactions both in the futures
and physical markets in order to deliver the crude oil to its highest value
location or otherwise to maximize the value of the crude oil EOTT controls.
Throughout the process, EOTT seeks to maintain a substantially balanced risk
position at all times. EOTT does have certain risks that cannot be completely
hedged such as basis risks (the risk that price relationships between delivery
points, grades of crude oil or delivery periods will change) and the risk that
transportation costs will change, and from time to time enters into transactions
providing for purchases and sales in future periods in which the volumes of
crude oil are balanced but where either the purchase or sale prices are not
fixed at the time at which the transactions are


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consummated. In such cases, EOTT is subject to the risk that prices may change
or that price changes will not occur as anticipated. EOTT's ability to maintain
or increase the gross margins and to protect the Partnership from adverse price
changes is dependent on the success of the marketing and price risk management
strategies. EOTT can make no assurance that the marketing and price risk
management strategies will be successful in protecting the Partnership from
risks or in maintaining the gross margins at desirable levels.

CREDIT

     Credit review and analysis are integral to EOTT's crude oil purchases
marketing activities. Payment for all or substantially all of the monthly lease
crude oil gathered is sometimes made to the operator of the lease. The operator,
in turn, is responsible for the correct payment and distribution of such
production proceeds to the proper parties. In these situations, EOTT determines
whether the operator has sufficient financial resources to make such payments
and distributions and to indemnify and defend EOTT in the event any third party
should bring a protest, action or complaint in connection with the ultimate
distribution of production proceeds by the operator.

     When EOTT markets crude oil, it determines the amount, if any, of the line
of credit to be extended to any given customer. EOTT uses a proprietary credit
rating system that analyzes credit suitability and determines the amount of
credit extended. Since typical sales transactions can involve tens of thousands
of barrels of crude oil, the risk of non-payment and non-performance by
customers is a major consideration in the Partnership's business. EOTT believes
its sales are made to creditworthy entities or entities with adequate credit
support, of which approximately two-thirds have investment grade credit ratings.
However, EOTT can make no assurances that its credit policies and procedures
will be successful in preventing a significant loss from customer default.

COMPETITION

     Competitive factors in the crude oil gathering and marketing business
include price, quality of service, transportation facilities, financial strength
and knowledge of products and markets. There are a number of major structural
and economic changes impacting all of the Partnership's market segments that are
driving new customer needs, changing competitor dynamics and, consequently,
creating new challenges and opportunities for responsive market participants.
The decline in domestic lease crude oil production has made competition among
gatherers and marketers even more intense.

     EOTT competes with major oil companies, large independent crude gatherers
and a large number of small independent gatherers. EOTT's principal competitors
in the purchase of leasehold crude oil production include BP Amoco PLC, Equiva
(the joint venture of Shell and Texaco Trading & Transportation Co., Inc.),
Gulfmark Energy, Inc., Plains All American, Sun Refining & Marketing and TEPPCO
Partners, L.P.

ENVIRONMENTAL MATTERS

     EOTT is subject to federal, state and local laws and regulations governing
the discharge of materials into the environment or otherwise relating to
environmental protection. At the federal level, such laws include, among others,
the Clean Air Act, the Clean Water Act, the Oil Pollution Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, and the National Environmental Policy Act, as
each may be amended from time to time. Failure to comply with these laws and
regulations may result in the assessment of administrative, civil, and criminal
penalties or the imposition of injunctive relief. Moreover, compliance with such
laws and regulations in the future could prove to be costly, and there can be no
assurance that EOTT will not incur such costs in material amounts. Environmental
laws and regulations have changed substantially and rapidly over the last 20
years, and EOTT anticipates that there will be continuing changes. The clear
trend in environmental regulation is to place more restrictions and limitations


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on activities that may impact the environment, such as emissions of pollutants,
generation and disposal of wastes and use and handling of chemical substances.
Increasingly strict environmental restrictions and limitations have resulted in
increased operating costs for EOTT and other businesses throughout the United
States, and it is possible that the costs of compliance with environmental laws
and regulations will continue to increase. EOTT will attempt to anticipate
future regulatory requirements that might be imposed and to plan accordingly in
order to remain in compliance with changing environmental laws and regulations
and to minimize the costs of such compliance.

     The Clean Air Act controls, among other things, the emission of volatile
organic compounds, nitrogen oxides, and all other ozone-producing compounds in
order to protect national ambient air quality in accordance with standards
established for ozone and other pollutants. Such emissions may occur from the
handling or storage of petroleum or natural gas. The sources of emissions that
are subject to control and the types of controls required are a matter of
individual state air quality control implementation plans that set forth
emission limitations. Both federal and state laws impose substantial
administrative, civil and even criminal penalties for violation of applicable
requirements. As part of its regular overall evaluation of current operations,
EOTT assesses the need for new, or amendment of existing, air permits at its
properties. EOTT believes that its overall operations are in substantial
compliance with applicable air requirements.

     EOTT generates wastes, including hazardous wastes, that are subject to the
federal Resources Conservation and Recovery Act ("RCRA") and comparable state
statutes. The U.S. Environmental Protection Agency ("EPA") and various state
agencies have limited the approved methods of disposal for certain hazardous and
nonhazardous wastes. Furthermore, certain oil and gas exploration and production
wastes generated by EOTT that are currently exempt from treatment as "hazardous
wastes" may in the future be designated as "hazardous wastes" and therefore be
subject to more rigorous and costly operating and disposal requirements.

     The Comprehensive Environmental Response, Compensation, and Liability Act
("CERCLA"), also known as the "Superfund" law, imposes liability, without regard
to fault or the legality of the original conduct, on certain classes of persons
that are considered to have contributed to the release of a "hazardous
substance" into the environment. These persons include the owner or operator of
the disposal site or sites where the release occurred and companies that
transported or disposed or arranged for the transport or disposal of the
hazardous substances that have been released at the site. Persons who are or
were responsible for releases of hazardous substances under CERCLA may be
subject to joint and several liability for the costs of cleaning up the
hazardous substances that have been released into the environment and for
damages to natural resources, and it is not uncommon for neighboring landowners
and other third parties to file claims for personal injury and property damage
allegedly caused by the hazardous substances released into the environment. In
the ordinary course of EOTT's operations, substances may be generated that fall
within the definition of "hazardous substances." Although EOTT has utilized
operating and disposal practices that were standard in the industry at the time,
hydrocarbons or other wastes may have been disposed of or released on or under
the properties owned or leased by EOTT or under other locations where such
wastes have been taken for disposal. Moreover, EOTT may own or operate
properties that in the past were operated by third parties whose operations were
not under EOTT's control. Those properties and any wastes that may have been
disposed or released on them may be subject to CERCLA, RCRA and analogous state
laws, and EOTT potentially could be required to remediate such properties.

     The Clean Water Act, as amended by the Oil Pollution Act of 1990 ("OPA"),
controls, among other things, the discharge of oil and other petroleum products
into waters of the United States. The Clean Water Act provides penalties for any
unauthorized discharges of pollutants (including petroleum products) into waters
of the United States and imposes substantial potential liability for the costs
of responding to an unauthorized discharge of pollutants, such as an oil spill.
State laws governing the control of water pollution also provide varying
administrative, civil and criminal penalties and liabilities in the event of a
release of petroleum or other


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related products in surface waters or the ground. Federal and state permits for
such water discharges may be required.

     OPA also imposes a variety of requirements on "responsible parties" for oil
and gas facilities related to the prevention of oil spills and liability for
damages resulting from such spills in waters of the United States. The term
"responsible party" includes the owner or operator of an oil or gas facility
that could be the source of an oil spill affecting jurisdictional waters of the
United States. OPA assigns liability to each responsible party for oil spill
removal costs and a variety of public and private damages from oil spills. OPA
establishes a liability limit for onshore facilities of up to $350 million while
the limit for offshore facilities is all removal costs plus up to $75 million in
other damages. However, a party cannot take advantage of liability limits if the
spill is caused by gross negligence or willful misconduct, if the spill resulted
from violation of a federal safety, construction or operating regulation, or if
a party fails to report a spill or to cooperate fully in the cleanup. Few
defenses exist to the liability for oil spills imposed by OPA. OPA also imposes
other requirements on facility operators, such as the preparation of an oil
spill response plan, and a demonstration of the operator's ability to pay for
environmental cleanup and restoration costs likely to be incurred in connection
with an oil spill. Failure to comply with these OPA requirements or inadequate
cooperation in a spill event may subject a responsible party to administrative,
civil or criminal actions. The General Partner believes that EOTT is in
substantial compliance with the requirements of OPA and that any noncompliance
would not have a material adverse effect on EOTT's financial condition and
results of operations.

     The National Environmental Policy Act ("NEPA") may apply to certain
extensions or additions to a pipeline system. Under NEPA, if any project is to
be undertaken which would significantly affect the quality of the environment
and require a permit or approval from a federal agency, the federal agency may
require preparation of a detailed environmental impact study. The issuance by a
federal agency of a permit or approval to construct or extend a pipeline system
may constitute a major federal action under NEPA. The effect of NEPA may be to
delay or prevent construction of new facilities or to alter their location,
design or method of construction. Similar state laws may also be applicable.

     Expenditures for ongoing compliance with environmental regulations that
relate to current operations are expensed or capitalized as appropriate.
Estimated liabilities are recorded when environmental assessments indicate that
remedial efforts are probable and the costs can be reasonably estimated.
Estimates of the liability and insurance recovery, if any, are based upon
currently available facts, existing technology and presently enacted laws and
regulations. These estimated liabilities and recoveries from insurance are
subject to revision in future periods based on actual costs or new information
and are included in the balance sheet at undiscounted amounts.

     EOTT may experience future releases of crude oil into the environment or
discover releases that were previously unidentified. While an inspection program
is maintained on EOTT's pipelines to prevent and detect such releases, damages
and liabilities incurred due to any future environmental releases could affect
EOTT's business. The management of EOTT believes that its operations and
facilities are in general compliance with applicable environmental laws and
regulations and that there are no outstanding potential liabilities or claims
relating to safety and environmental matters the resolution of which,
individually or in the aggregate, would have a materially adverse effect on
EOTT's financial position or results of operations. No assurance can be given,
however, as to the amount or timing of future expenditures for environmental
remediation or compliance, and actual future expenditures may be different from
the amounts currently anticipated. In the event of future increases in costs,
EOTT may be unable to pass on those increases to its customers.


                                       10
<PAGE>   11
REGULATION

     EOTT is subject to a variety of federal and state regulations relating to
its interstate and intrastate pipeline transportation and safety activities,
motor carrier activities, and commodities trading business, the most significant
of which are discussed below.

Pipeline FERC Regulation

     Interstate Regulation Generally. EOTT's interstate common carrier pipeline
operations are subject to rate regulation by the FERC under the provisions of
the Interstate Commerce Act ("ICA"). These operations include the Hobbs Pipeline
in New Mexico and Texas, the crude oil system in Mississippi and Alabama ("the
Mississippi-Alabama Pipeline"), the crude oil systems acquired from CITGO
Pipeline Company ("CITGO Pipelines"), portions of the crude oil systems acquired
from Koch Pipeline Company, L.P. ("Koch Pipelines") and crude oil systems
acquired from Texas-New Mexico Pipe Line Company ("Texas-New Mexico Pipelines").
The ICA requires, among other things, that petroleum pipeline rates be just and
reasonable and non-discriminatory. The ICA permits interested parties to
challenge proposed new or changed rates and authorizes the FERC to suspend the
effectiveness of such rates for a period of up to seven months and to
investigate such rates. If, upon the completion of an investigation, the FERC
finds that the new or changed rate is unlawful, it is authorized to require the
carrier to refund the revenues collected during the pendency of the
investigation in excess of those that would have been collected under the prior
tariff. In addition, the FERC, upon complaint or on its own motion and after
investigation, may order a carrier to change its rate prospectively. Upon an
appropriate showing, a shipper may obtain reparations for damages sustained for
a period of up to two years prior to the filing of a complaint.

     Energy Policy Act of 1992 and Subsequent Developments. In October 1992,
Congress passed the Energy Policy Act of 1992, which, among other things,
required the FERC to issue rules establishing a simplified and generally
applicable ratemaking methodology for petroleum pipelines and to streamline
procedures in petroleum pipeline proceedings. The FERC responded to this mandate
by issuing several orders, including Order No. 561. As of January 1, 1995, Order
No. 561 enabled petroleum pipelines to change their rates within prescribed
ceiling levels that are tied to an inflation index. Rate increases made pursuant
to the indexing methodology are subject to protest, but such protests must show
that the portion of the rate increase resulting from application of the index is
substantially in excess of the pipeline's increase in costs. If the indexing
methodology results in a reduced ceiling level that is lower than a pipeline's
filed rate, Order No. 561 requires the pipeline to reduce its rate to comply
with the lower ceiling. A pipeline must, as a general rule, utilize the indexing
methodology to change its rates. Since July of 1995, EOTT has annually amended
its tariffs on all of its regulated pipelines as provided by FERC regulations.
Although no assurance can be given that the tariffs charged by EOTT will
ultimately be upheld if challenged, EOTT believes that the tariffs now in effect
for all of its pipelines are within the maximum rates allowed under the current
FERC guidelines.

     In issuing Order No. 561, the FERC retained cost-of-service ratemaking,
market-based rates, and settlement as alternatives to the indexing approach,
which alternatives may be used in certain specified circumstances.

     In addition to the regulatory considerations noted above, it is expected
that the tariff rates of the Hobbs, Mississippi-Alabama, CITGO, Koch and
Texas-New Mexico Pipelines will continue to be constrained by competitive and
other market factors.

     State Regulation. EOTT's intrastate pipeline transportation activities are
subject to various state laws and regulations, as well as orders of regulatory
bodies pursuant thereto.

     Petroleum Pipeline Safety Regulation. EOTT's petroleum pipelines are
subject to regulation by the Department of Transportation with respect to the
design, installation, testing, construction, operation,


                                       11
<PAGE>   12
replacement, and management of pipeline facilities. In addition, EOTT must
permit access to and copying of records, and to prepare certain reports and
provide information as required by the Secretary of Transportation. Comparable
regulation exists in some states in which EOTT conducts intrastate common
carrier or private pipeline operations.

     Pipeline safety issues are currently receiving significant attention in
various political and administrative arenas at both the state and federal
levels. Significant expenses could be incurred by EOTT if additional safety
requirements are imposed that exceed the current pipeline control system
capabilities.

Trucking Regulation

     Generally, EOTT operates its fleet of trucks as a private carrier.
Additionally, it is engaged in contract carrier hauling of crude oil in
Louisiana and natural gas liquids in California for third parties. In Oklahoma,
Texas, Alabama and Mississippi, EOTT hauls salt water, crude oil and other
fluids for others as a common carrier. Although a private or common carrier that
transports property in interstate commerce is not required to obtain operating
authority from the Surface Transportation Board, the carrier is subject to
certain motor carrier safety regulations issued by the Department of
Transportation. The trucking regulations extend to driver operations, keeping of
log books, truck manifest preparations, safety placards on the trucks and
trailer vehicles, drug and alcohol testing, safety of operation and equipment,
and many other aspects of truck operations. EOTT is also subject to Occupational
Safety and Health Administration ("OSHA") regulations with respect to its
trucking operations.

     EOTT provides contract and common carrier services pursuant to permits
issued by the various state regulatory agencies. Accordingly, EOTT as a common
or contract carrier is also subject to certain safety regulations related to
service and operations.

Commodities Regulation

     EOTT's price risk management operations are subject to constraints imposed
under the Commodity Exchange Act (the "CEA"). The futures and options contracts
that are traded on the NYMEX are subject to strict regulation by the Commodity
Futures Trading Commission (the "CFTC"). Although NYMEX futures contracts
include contracts on sweet crude oil, propane, No. 2 heating oil and other
refined petroleum products, there are many products that EOTT will purchase and
sell for which no futures contracts are available, due in part to the strict
regulatory scheme for futures contracts. In addition, the trading volumes and
pricing bases of futures contracts on some products are such that the ability to
use them to hedge EOTT's price risks may be limited.

Other Regulation

     EOTT currently markets refined products at the wholesale level in four
states. EOTT markets reformulated gasoline in California and oxygenated gasoline
and conventional gasoline in ozone non-attainment areas during control periods.
EOTT is subject to extensive federal and state laws and regulations governing
product specifications, transfer documentation, record keeping and sampling.
Many of these laws and regulations impose significant financial penalties for
non-compliance.

INFORMATION REGARDING FORWARD-LOOKING INFORMATION

     The statements in this Annual Report on Form 10-K that are not historical
information are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Such forward-looking statements include the discussion under "Business -


                                       12
<PAGE>   13
Environmental Matters," the discussion under "Legal Proceedings," the discussion
in "Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources" and the discussion in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Other Matters, Environmental Matters and Outlook." Any
forward-looking statements are not guarantees of future performance, and involve
significant risks and uncertainties, and actual results may vary materially from
those in the forward-looking statements as a result of various factors.
Important factors that could cause actual results to differ materially from
those in the forward-looking statements herein include the Partnership's success
in obtaining additional lease crude oil barrels and maintaining existing lease
crude oil barrels, demand for various grades of crude oil and the resulting
changes in pricing relationships, developments relating to possible acquisitions
or business combination opportunities, industry conditions, the ability of the
Partnership to avoid environmental liabilities, developments at FERC relating to
pipeline tariff regulation, the successful resolution of litigation, the success
of the Partnership's risk management activities and conditions of the capital
markets and equity markets during the periods covered by the forward-looking
statements. Although the Partnership believes that its expectations regarding
future events are based on reasonable assumptions, it can give no assurance that
these are all the factors that could cause actual results to vary materially
from the forward-looking statements or that its expectations regarding future
developments will prove to be correct.


ITEM 2.  PROPERTIES

PIPELINE AND TRANSPORTATION ASSETS AND PROPERTIES

     At year end 2000, EOTT owned and operated approximately 8,200 miles of
active crude oil gathering and transmission pipelines, including the assets
acquired from Koch Pipeline Company, L.P. and Texas-New Mexico Pipe Line Company
discussed below, covering fourteen states (Alabama, Arkansas, California,
Louisiana, Mississippi, New Mexico, Oklahoma, Texas, Kansas, Nebraska, Colorado,
Montana, North Dakota and South Dakota), including approximately 7,400 miles of
regulated intrastate and interstate common carrier pipeline systems located in
Alabama, Louisiana, Mississippi, Texas, New Mexico, Oklahoma, Kansas, Nebraska,
Colorado, California, Montana, North Dakota and South Dakota. There are
approximately 12.2 million barrels of active storage capacity associated with
field tanks. By state, the pipeline assets are as follows:

<TABLE>
<CAPTION>
                     COMMON CARRIER PIPELINES                                PROPRIETARY PIPELINES
                     ------------------------                                ---------------------
                                          MILES BY STATE                                   MILES BY STATE
                                          --------------                                   --------------
<S>                                       <C>                  <C>                         <C>
         Alabama.................                43            Alabama.................          38
         Arkansas................                --            Arkansas................           2
         California..............                16            California..............         158
         Colorado................                91            Colorado................          --
         Kansas..................             1,025            Kansas..................          --
         Louisiana...............               348            Louisiana...............         131
         Mississippi.............               306            Mississippi.............         267
         Montana.................               146            Montana.................          --
         Nebraska................                62            Nebraska................          --
         New Mexico..............             1,158            New Mexico..............         157
         North Dakota............               435            North Dakota............          --
         Oklahoma................             1,422            Oklahoma................          --
         South Dakota............                38            South Dakota............          --
         Texas...................             2,348            Texas...................           4
                                              -----                                             ---
                   Total.........             7,438                      Total.........         757
                                              =====                                             ===
</TABLE>


     In two separate transactions, on July 1 and December 1, 1998, the
Partnership acquired approximately 4,200 miles of active intrastate and
interstate common carrier pipelines in Texas, Oklahoma, Kansas, Nebraska,
Colorado, Louisiana, California, Montana, North Dakota, and South Dakota from
Koch Pipeline Company, L.P. Storage associated with the pipeline systems totals
approximately 3.5 million barrels. In addition, EOTT acquired a gas processing
plant referred to as Plant 8, with 20 million cubic feet per day of gas
processing


                                       13
<PAGE>   14
capacity; a fractionation plant with 8,000 bpd of fractionation capacity; five
million gallons of refrigerated propane storage and related distribution
facilities.

     On May 1, 1999, EOTT acquired crude oil transportation and storage assets
in West Texas and New Mexico from Texas-New Mexico Pipe Line Company which
included approximately 1,800 miles of common carrier crude oil pipelines.

     EOTT operates six active barge facilities in Louisiana, and one in Alabama.
Approximately 2.2 million barrels of storage capacity are associated with these
barge facilities. EOTT owns two terminal facilities for the storage and
terminalling of bulk petroleum products in Ohio, which are currently held for
sale, and one refined products terminal in Alabama. Approximately 431,000
barrels of storage capacity are associated with these bulk petroleum product
facilities.


ITEM 3.  LEGAL PROCEEDINGS

     EOTT is, in the ordinary course of business, a defendant in various
lawsuits, some of which are covered in whole or in part by insurance. Although
no assurance can be given, the General Partner believes that the ultimate
resolution of litigation, individually and in the aggregate, will not have a
materially adverse impact on the Partnership's financial position or results of
operations. Various legal actions have arisen in the ordinary course of
business, the most significant of which are discussed below.

     State of Texas Royalty Suit. EOTT was served on November 9, 1995 with a
petition styled The State of Texas, et al. vs. Amerada Hess Corporation, et al.
The matter was filed in District Court in Lee County, Texas and involves several
major and independent oil companies and marketers as defendants. The plaintiffs
are attempting to put together a class action lawsuit alleging that the
defendants acted in concert to buy oil owned by members of the plaintiff class
in Lee County, Texas, and elsewhere in Texas, at "posted" prices, which the
plaintiffs allege were lower than true market prices. There is not sufficient
information in the petition to fully quantify the allegations set forth in the
petition, but the General Partner believes that any such claims against the
Partnership will prove to be without merit.

     The State of Texas, et al. vs. Amerada Hess Corporation, et al., Cause No.
97-12040; In the 53rd Judicial District Court of Travis County, Texas (Common
Purchaser Act Suit). This case was filed on October 23, 1997 in Austin by the
Texas Attorney General's office and involves several major and independent oil
companies and marketers as defendants. EOTT was served on November 18, 1997. The
petition states that the State of Texas brought this action in its sovereign
capacity to collect statutory penalties recoverable under the Texas Common
Purchaser Act, arising from defendants' alleged willful breach of statutory
duties owed to royalty, overriding royalty and working interest owners of crude
oil sold to defendants, as well as alleged breach of defendants' common law and
contractual duties. The plaintiffs also allege that the defendants have engaged
in discriminatory pricing of crude oil. This case appears to be similar to the
State of Texas Royalty Suit filed by the State of Texas on November 9, 1995.
EOTT and several of the defendants reached a settlement with the State in the
Common Purchaser Act Suit in a Settlement Agreement dated August 5, 1999.
Settlement amounts for each defendant were confidential. This settlement
disposed of any claims the State may have in the State of Texas Royalty Suit,
discussed above, but did not dismiss that case. Also, any severance tax claims
the State may have were specifically excluded from this settlement. However, no
severance tax claims were asserted in the petition filed by the plaintiffs.

     McMahon Foundation and J. Tom Poyner vs. Amerada Hess Corporation, et al.
(Including EOTT Energy Operating Limited Partnership), Civil Action No.
H-96-1155; United States District Court, Southern District of Texas, Houston
Division (Texas Federal Anti-Trust Suit). This suit was filed on April 10, 1996
as a class


                                       14
<PAGE>   15
action complaint for violation of the federal antitrust laws and involves
several major and independent oil companies and marketers as defendants. The
relevant area is the entire continental United States, except for Alaska, New
York, Ohio, Pennsylvania, West Virginia and the Wilmington Field at Long Beach,
California. The plaintiffs claim that there is a combination and conspiracy
among the defendant oil companies to fix, depress, stabilize and maintain at
artificially low levels the price paid for the first purchase of lease
production oil sold from leases in which the class members own interests. This
was allegedly accomplished by agreement of the defendants to routinely pay for
first purchases at posted prices rather than competitive market prices and
maintain them in a range below competitive market prices through an undisclosed
scheme of using posted prices in buy/sell transactions among themselves to
create the illusion that posted prices are genuine market prices. The plaintiffs
allege violations from October of 1986 forward. No money amounts were claimed.
See summary paragraph below for current status.

     Randolph Energy, Inc., et al. vs. Amerada Hess Corporation, et al., Civil
Action No. 2:97CV273PG; In the United States District Court for the Southern
District of Mississippi, Jackson Division (Mississippi Federal Anti-Trust Suit).
EOTT received its summons in this matter on August 18, 1997. The case was filed
on August 5, 1997 and is a class action complaint for alleged violation of the
federal antitrust laws which involves several major and independent oil
companies and marketers as defendants. The plaintiffs claim that this litigation
arises out of a combination and conspiracy of the defendant oil companies to
fix, depress, stabilize and maintain at artificially low levels the prices paid
for the first purchase of lease production oil sold from leases in which the
class members own interests. The issues appear to be a duplication of the issues
in the Texas Federal Anti-Trust Suit previously discussed. No money amounts were
claimed. See summary paragraph below for current status.

     Cameron Parish School Board, et al. vs. Texaco, Inc., et al.; Civil Action
No. C-98-111; In the United States District Court for the Western District of
Louisiana, Lake Charles Division (Louisiana Federal Anti-Trust Suit). This case
was originally filed as a state law claim in Louisiana. When the case was
removed to federal court, the anti-trust claims were added, similar to the
claims made in the Texas Federal Anti-Trust Suit and the Mississippi Federal
Anti-Trust Suit. The plaintiffs claim that this litigation arises out of a
combination and conspiracy of the defendant oil companies to fix, depress,
stabilize and maintain at artificially low levels the prices paid for the first
purchase of lease production oil sold from leases in which the class members own
interests. The issues appear to be a duplication of the issues in the Texas
Federal Anti-Trust Suit and the Mississippi Federal Anti-Trust Suit, both
previously discussed. On October 22, 1998, the judge granted the Plaintiffs'
motion to amend the petition and add additional defendants. The Partnership and
the General Partner were added to the case as defendants at that time. No money
amounts were claimed. See summary paragraph below for current status.

     Summary. The Texas Federal Anti-Trust Suit, the Mississippi Federal
Anti-Trust Suit and the Louisiana Federal Anti-Trust Suit, along with several
other suits to which EOTT is not a party, were consolidated and transferred to
the Southern District of Texas by Transfer Order dated January 14, 1998. The
Judicial Panel on Multidistrict Litigation made this recommendation due to
similarity of issues in the cases. EOTT and the General Partner, along with a
number of other defendants, have entered into a class-wide settlement with the
defendants which was approved by the Court on April 7, 1999, with a Final
Judgment entered on August 11, 1999. Several appeals have been filed concerning
the settlement. Consequently, the settlement has not been funded, nor has the
case been dismissed.

     Assessment for Crude Oil Production Tax from the Comptroller of Public
Accounts, State of Texas. The Partnership received a letter from the
Comptroller's Office dated October 9, 1998 assessing the Partnership for
severance taxes the Comptroller's Office alleges are due on a difference the
Comptroller's Office believes exists between the market value of crude oil and
the value reported on the Partnership's crude oil tax report for the period of
September 1, 1994 through December 31, 1997. The letter states that the action,
based on a desk audit


                                       15
<PAGE>   16
of the Partnership's crude oil production reports, is partly to preserve the
statute of limitations where crude oil severance tax may not have been paid on
the true market price of the crude oil. The letter further states that the
Comptroller's position is similar to claims made in several lawsuits, including
the Texas Federal Anti-Trust Suit, in which the Partnership is a defendant. The
amount of the assessment, including penalty and interest, is approximately $1.1
million. While the claim is still being reviewed, the General Partner believes
the Partnership should be without liability in this matter.

     Export License with United States Department of Commerce. EOTT has applied
for and maintained Export Licenses through the U.S. Department of Commerce
("DOC") since 1994. These licenses authorized EOTT to export crude oil to
Canada. Each license provided an applicable license quantity and value of
merchandise as authorized by the DOC to be exported. The licenses generally
covered either a one or two year period. In early 1999, as it was preparing a
new license application, EOTT discovered that it had exported more barrels and
value than had been authorized by the DOC under EOTT's current (and prior)
license. Pursuant to Section 764.5 of the Export Administration Regulations,
EOTT filed a Voluntary Disclosure with the DOC on February 5, 1999, giving the
DOC notice of these license overruns. The next formal stage of the Voluntary
Disclosure process will be for the DOC to issue a Charging Letter to EOTT
regarding a proposed fine for the export license overruns. To date, EOTT does
not have any information as to when or in what amount the Charging Letter will
be issued.

     John H. Roam, et al. vs. Texas-New Mexico Pipe Line Company and EOTT Energy
Pipeline Limited Partnership, Cause No. CV43296, In the District Court of
Midland County, Texas, 238th Judicial District (Kniffen Estates Suit). The
Kniffen Estates Suit was filed on March 2, 2001 by certain residents of the
Kniffen Estates, a residential subdivision located outside of Midland, Texas.
The allegations in the petition state that free crude oil products were
discovered in water wells in the Kniffen Estates area, on or about October 3,
2000. The plaintiffs claim that the crude oil products are from a 1992 release
from a pipeline then owned by the Texas-New Mexico Pipe Line Company ("Tex-New
Mex"). EOTT purchased that pipeline from Tex-New Mex in 1999. The plaintiffs
have alleged that Tex-New Mex was negligent, grossly negligent and malicious in
failing to accurately report and remediate the spill. With respect to EOTT, the
plaintiffs are seeking damages arising from any contamination of the soil or
groundwater since EOTT acquired the pipeline in question. No specific amount of
money damages was claimed, and it is not possible to determine any potential
exposure to EOTT at this stage of the matter. In response to the Kniffen Estates
Suit, EOTT filed a cross-claim against Tex-New Mex. In the cross-claim, EOTT
claims that, in relation to the matters alleged by the plaintiffs, Tex-New Mex
breached the Purchase and Sale Agreement between the parties dated May 1, 1999,
by failing to disclose the 1992 release and by failing to undertake the defense
and handling of the toxic tort claims, fair market value claims, and remediation
claims arising from the release. Additionally, EOTT is asserting claims of gross
negligence, fraud and specific performance. Due to the early stages of the
proceedings, it is not possible to speculate on the possible outcome of this
matter.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     There were no matters submitted to a vote of security holders during the
fourth quarter of 2000.


                                       16
<PAGE>   17
                                     PART II


ITEM 5. MARKET FOR REGISTRANT'S COMMON UNITS AND RELATED SECURITY HOLDER
        MATTERS.

     The following table sets forth, for the periods indicated, the high and low
sale prices per Common Unit, as reported on the New York Stock Exchange
Composite Tape, and the amount of cash distributions paid per Common Unit.

<TABLE>
<CAPTION>
                                                                      Price Range
                                                                  -------------------         Cash
                                                                    High        Low       Distributions
                                                                  -------     -------     -------------
<S>                                                               <C>         <C>         <C>
2000
     First Quarter..............................................  $14.250     $11.125        $0.475
     Second Quarter.............................................   15.000      13.188         0.475
     Third Quarter..............................................   16.125      13.063         0.475
     Fourth Quarter.............................................   17.000      14.250         0.475


1999
     First Quarter..............................................  $17.500     $15.375        $0.475
     Second Quarter.............................................   18.750      17.000         0.475
     Third Quarter..............................................   19.250      14.563         0.475
     Fourth Quarter.............................................   16.500      12.250         0.475
</TABLE>

----------
     Distributions are shown in the quarter paid to Common Unitholders


     As of February 15, 2001, there were approximately 388 record holders of the
Partnership's Common Units, and there were an estimated 15,600 beneficial owners
of the Common Units held in a street name. There is no established public
trading market for the Partnership's Subordinated Units. The Partnership will
distribute 100% of its Available Cash as defined in the Partnership Agreement
within 45 days after the end of each quarter to Unitholders of record and to the
General Partner. Available Cash consists generally of all of the cash receipts
of the Partnership adjusted for its cash disbursements and net changes to
reserves. The full definition of Available Cash is set forth in the Partnership
Agreement and amendments thereto, a form of which is filed or has been filed
previously as an exhibit hereto. Distributions of Available Cash to the
Subordinated Unitholders will be subject to the prior rights of the Common
Unitholders to receive the Minimum Quarterly Distribution of $0.475 per Unit
("MQD") for each quarter during the Subordination Period and to receive any
arrearages in the distribution of the MQD on the Common Units for prior quarters
during the Subordination Period.

     As discussed further in Note 8 to the Consolidated Financial Statements,
Enron increased its cash distribution support to the Partnership in February
1999 to $29 million in exchange for Additional Partnership Interests ("APIs") if
necessary to support the Partnership's ability to pay the MQD on Common Units
with respect to quarters ending on or prior to December 31, 2001. Enron
purchased $2.5 million of APIs in connection with the distribution for the first
quarter of 1999 and $6.8 million of APIs in connection with the distribution for
the fourth quarter of 1999.


                                       17
<PAGE>   18
ITEM 6.  SELECTED FINANCIAL DATA (UNAUDITED)
         (In Thousands, Except Per Unit and Operating Data)

<TABLE>
<CAPTION>
                                                                            Year Ended December 31,
                                             ------------------------------------------------------------------------------------
                                                 2000              1999            1998 (1)           1997               1996
                                             ------------      ------------      ------------      ------------      ------------
<S>                                          <C>               <C>               <C>               <C>               <C>
INCOME DATA:
Revenue ................................     $ 11,614,005      $  8,664,401      $  5,294,697      $  7,646,099      $  7,469,730
Cost of sales ..........................       11,374,090         8,452,086         5,162,092         7,533,054         7,320,203
                                             ------------      ------------      ------------      ------------      ------------
Gross margin ...........................          239,915           212,315           132,605           113,045           149,527
Operating expenses .....................          161,090           153,194           104,425            96,158           101,945
Depreciation and amortization ..........           33,868            33,136            20,951            16,518            15,720
Impairment of assets ...................               --                --                --             7,961                --
                                             ------------      ------------      ------------      ------------      ------------
Operating income (loss) ................           44,957            25,985             7,229            (7,592)           31,862
Interest and related charges, net ......          (28,780)          (28,942)           (9,491)           (6,041)           (3,211)
Other income (expense), net ............           (2,344)              742            (1,805)             (766)              158
                                             ------------      ------------      ------------      ------------      ------------
Income (loss) before cumulative
   effect of accounting change (2) .....     $     13,833      $     (2,215)     $     (4,067)     $    (14,399)     $     28,809
                                             ============      ============      ============      ============      ============
Net income (loss) (2) ..................     $     13,833      $       (468)     $     (4,067)     $    (14,399)     $     28,809
                                             ============      ============      ============      ============      ============
Basic income (loss) per Unit:
   Common ..............................     $       0.49      $      (0.06)     $      (0.17)     $      (0.75)     $       1.50
                                             ============      ============      ============      ============      ============
   Subordinated ........................     $       0.49      $       0.06      $      (0.26)     $      (0.75)     $       1.50
                                             ============      ============      ============      ============      ============
Diluted income (loss) per Unit .........     $       0.49      $      (0.02)     $      (0.21)     $      (0.75)     $       1.50
                                             ============      ============      ============      ============      ============
Cash distributions per Common Unit .....     $       1.90      $       1.90      $       1.90      $       1.90      $       1.90
                                             ============      ============      ============      ============      ============

BALANCE SHEET DATA (AT END OF PERIOD):
Total assets ...........................     $  1,492,993      $  1,558,661      $    965,820      $    782,921      $  1,026,197
Total debt (3) .........................          235,000           309,055           328,313           109,300            62,728
Partners' capital (2) (4) ..............           96,364           120,117            75,582            62,093           106,173
Additional Partnership Interests(5) ....            9,318             2,547            21,928            12,775             9,091
Capital expenditures (6) ...............           14,270            58,729           266,569            22,837             6,723
Cash distributions .....................           37,586            30,380            22,842            29,681            28,831

OPERATING DATA:
North American Crude Oil - East of
   Rockies Operations:
   Total lease volumes (thousand bpd) ..            408.2             408.8             285.6             282.4             278.6
Pipeline Operations:
   Average volumes (thousand bpd) ......            583.7             513.7             188.3             142.3             103.8
</TABLE>

----------

(1)  Includes one month of results of operations associated with the assets
     acquired from Koch Pipeline Company, L.P. on December 1, 1998.
(2)  1997 includes nonrecurring charges of $8.0 million related to asset
     impairments and $2.0 million of severance costs related to the exit of the
     East of Rockies refined products business and corporate realignment. 1999
     includes nonrecurring charges of $7.8 million of costs related to
     mid-continent NGL activity and $2.0 million of severance costs for
     reduction of workforce. 2000 includes nonrecurring income of $0.6 million
     related to an insurance recovery related to the theft of NGL product in
     1999 partially offset by charges related to mid-continent NGL activity and
     severance costs related to a former officer of the company. See additional
     discussion in Note 6 to the Consolidated Financial Statements.
(3)  Excludes other long-term liabilities.
(4)  Partners' Capital in 1999 includes the issuance of 3,500,000 Common Units
     to the public in September 1999. See additional discussion in Note 7 to the
     Consolidated Financial Statements.
(5)  In February 1999, Enron contributed $21.9 million in Additional Partnership
     Interests to the Partnership pursuant to its commitment made in connection
     with the Support Agreement. See additional discussion in Note 9 to the
     Consolidated Financial Statements. In May 1999 and February 2000, Enron
     paid $2.5 million and $6.8 million, respectively, in support of EOTT's
     first and fourth quarter 1999 distributions to its Common Unitholders in
     exchange for Additional Partnership Interests.
(6)  1997 includes $12 million for the purchase of crude gathering and pipeline
     assets in Arkansas, Louisiana and Texas. 1998 includes $258.1 million for
     the purchase of crude oil gathering and transportation assets in multiple
     states. 1999 includes $38.4 million for the purchase of crude oil
     transportation and storage assets in New Mexico and Texas. See additional
     discussion in Note 4 to the Consolidated Financial Statements.


                                       18
<PAGE>   19
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

INFORMATION REGARDING FORWARD-LOOKING INFORMATION

     The statements in this Annual Report on Form 10-K that are not historical
information are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Such forward-looking statements include the discussions in "Management's
Discussion and Analysis of Financial Condition and Results of Operations." Any
forward-looking statements are not guarantees of future performance and involve
significant risks and uncertainties, and actual results may vary materially from
those in the forward-looking statements as a result of various factors. See Item
1. Business - Information Regarding Forward-Looking Information for statements
regarding important factors that could cause actual results to differ materially
from those in the forward-looking statements herein. Although the Partnership
believes that its expectations regarding future events are based on reasonable
assumptions, it can give no assurance that these are all the factors that could
cause actual results to vary materially from the forward-looking statements or
that its expectations regarding future developments will prove to be correct.

OVERVIEW

     Through its affiliated limited partnerships, EOTT Energy Operating Limited
Partnership, EOTT Energy Canada Limited Partnership, and EOTT Energy Pipeline
Limited Partnership, EOTT purchases, gathers, transports, stores and resells
crude oil and other petroleum products. EOTT's principal business segments are
North American Crude Oil - East of Rockies, Pipeline Operations and West Coast
Operations (see Note 14 to our Consolidated Financial Statements for certain
financial information by business segment).

Gathering and Marketing Operations

     In general, as EOTT purchases crude oil in its gathering and marketing
operations, EOTT establishes a margin by selling crude oil for physical delivery
to third party users, such as independent refiners or major oil companies, or by
entering into a future delivery obligation with respect to futures contracts on
the NYMEX, thereby minimizing or reducing exposure to price fluctuations.
Through these transactions, EOTT seeks to maintain positions that are
substantially balanced between crude oil purchases and sales or future delivery
obligations. As a result, changes in the absolute price level for crude oil do
not necessarily impact the margin from gathering and marketing.

     Throughout the marketing process, EOTT seeks to maintain a substantially
balanced risk position at all times. EOTT does have certain risks that cannot be
completely hedged, such as a portion of certain basis risks. Basis risk arises
when crude oil is acquired by a purchase or exchange that does not meet the
specifications of the crude oil EOTT is contractually obligated to deliver,
whether in terms of geographic location, grade or delivery schedule. In
accordance with its risk management policy, EOTT seeks to limit price risk and
maintain margins through a combination of physical sales, NYMEX hedging
activities and exchanges of crude oil with third parties.

     EOTT's operating results are sensitive to a number of factors including:
grades or types of crude oil, variability in lease crude oil barrels produced,
individual refinery demand for specific grades of crude oil, area market price
structures for the different grades of crude oil, location of customers,
availability of transportation facilities, and timing and costs (including
storage) involved in delivering crude oil to the appropriate customer.


                                       19
<PAGE>   20
     Gross margin from gathering, marketing and pipeline operations varies from
period-to-period, depending to a significant extent upon changes in the supply
and demand of crude oil and the resulting changes in United States crude oil
inventory levels. The gross margin from gathering and marketing operations is
generated by the difference between the price of crude oil at the point of
purchase and the price of crude oil at the point of sale, minus the associated
costs of gathering and transportation. In addition to purchasing crude oil at
the wellhead, EOTT purchases crude oil in bulk at major pipeline terminal points
and major marketing points and enters into exchange transactions with third
parties. These bulk and exchange transactions are characterized by large volumes
and narrow profit margins on purchase and sale transactions, and the absolute
price levels for crude oil do not necessarily bear a relationship to gross
margin, although such price levels significantly impact revenues and cost of
sales. Because period-to-period variations in revenues and cost of sales are not
generally meaningful in analyzing the variation in gross margin for gathering
and marketing operations, such changes are not addressed in the following
discussion.

     EOTT operates the business differently as market conditions change. During
periods when the demand for crude oil is weak, the market for crude oil is often
in contango, meaning that the price of crude oil in a given month is less than
the price of crude oil in a subsequent month. In a contango market, storing
crude oil is favorable, because storage owners at major trading locations can
simultaneously purchase production at low current prices for storage and sell at
higher prices for future delivery. When there is a higher demand than supply of
crude oil in the near term, the market is backwardated, meaning that the price
of crude oil in a given month exceeds the price of crude oil in a subsequent
month. A backwardated market has a positive impact on marketing margins because
crude oil gatherers can capture a premium for prompt deliveries.

Pipeline Operations

     Pipeline revenues and gross margins are primarily a function of the level
of throughput and storage activity and are generated by the difference between
the regulated published tariff and the fixed and variable costs of operating the
pipeline. A majority of the pipeline revenues are generated by transporting
crude oil at published pipeline tariffs for the North American Crude Oil - East
of Rockies business segment. Approximately 85% of the revenues of the Pipeline
Operations business segment for the twelve months ended December 31, 2000 were
generated from tariffs charged to the North American Crude Oil - East of Rockies
business segment and sales of crude oil inventory to the North American Crude
Oil - East of Rockies business segment. Changes in revenues and pipeline
operating costs, therefore, are relevant to the analysis of financial results of
the Pipeline Operations business segment and are addressed in the following
discussions of the Pipeline Operations business segment.

     Effective October 1, 2000, the General Partner entered into an agreement
with Enron Pipeline Services Company ("EPSC"), a wholly owned subsidiary of
Enron Corp., to provide certain operating and administrative services to the
General Partner. These services were previously performed directly by the
General Partner. The agreement provides that the General Partner will reimburse
EPSC for its costs and expenses in rendering the services. The General Partner
will in turn be reimbursed by the Partnership. The arrangement is not expected
to increase the costs and expenses borne by the Partnership.

ACQUISITIONS AND FINANCINGS

     On September 29, 1999, EOTT issued 3,500,000 Common Units to the public
with net proceeds to EOTT of $52.9 million. On October 1, 1999, EOTT issued to
the public $235 million of 11% senior notes. The senior notes are due October 1,
2009, and interest is paid semiannually. The senior notes are guaranteed by all
of EOTT's operating limited partnerships. The net proceeds from the issuance of
the notes and the issuance of the Common Units were used to repay loans and
short-term borrowings from Enron.


                                       20
<PAGE>   21
     On May 1, 1999, EOTT acquired crude oil transportation and storage assets
in West Texas and New Mexico from Texas-New Mexico Pipe Line Company which
included approximately 1,800 miles of common carrier crude oil pipelines. The
Partnership paid $33.0 million in cash and recorded a $4 million liability
related to assumed environmental obligations and financed the acquisition using
short-term borrowings from Enron.

     On July 1, 1998, the Partnership acquired crude oil gathering and
transportation assets in West Texas and New Mexico from Koch Pipeline Company,
L.P., a subsidiary of Koch Industries, Inc., and Koch Oil Company, a division of
Koch Industries, Inc. (collectively "Koch"). The asset purchase included
approximately 300 miles of common carrier pipelines, associated storage
facilities for approximately 500,000 barrels and lease purchase contracts for up
to 40,000 barrels of lease crude oil per day. The purchase price was
approximately $28.5 million and was financed with short-term borrowings from
Enron.

     On December 1, 1998, the Partnership acquired certain additional crude oil
gathering and transportation assets in key oil producing regions from Koch. The
asset purchase included approximately 3,900 miles of active crude oil pipelines,
crude oil transport trucks, meter stations, vehicles, storage tanks and lease
purchase contracts for approximately 180,000 barrels of lease crude oil per day
from production in 11 central and western states including Texas, Oklahoma,
Kansas and California (the "Assets"). The total purchase price of the Assets was
$235.6 million and included consideration given to Koch of $184.5 million in
cash, 2,000,000 Common Units and 2,000,000 Subordinated Units. EOTT financed the
cash portion of the purchase price through borrowings from Enron, consisting of
a $42 million bridge loan, $135.7 million of term debt, and $6.8 million from
the Partnership's existing credit facility with Enron. EOTT also increased its
existing credit facility with Enron to $1 billion in order to provide increased
credit support for the Partnership because of its increased size following the
Koch acquisitions.

     The following review of the results of operations and financial condition
should be read in conjunction with the Consolidated Financial Statements and
Notes thereto. The results of operations for the twelve months ended December
31, 2000, 1999, and 1998, and the financial condition at December 31, 2000 and
1999, reflect the activities of EOTT Energy Partners, L.P. and its subsidiary
partnerships ("EOTT" or the "Partnership").

RESULTS OF OPERATIONS

     EOTT reported net income of $13.8 million or $0.49 per diluted Unit for
2000, a net loss of $0.5 million or $0.02 per diluted Unit for 1999, and a net
loss of $4.1 million or $0.21 per diluted Unit for 1998. Excluding nonrecurring
items, EOTT reported net income of $13.2 million or $0.47 per diluted Unit for
2000, net income of $9.3 million or $0.37 per diluted Unit in 1999 and a net
loss of $4.1 million or $0.21 per diluted Unit in 1998. Nonrecurring income of
$0.6 million in 2000 included income of $2.5 million resulting from an insurance
settlement related to the theft of NGL product in 1999, offset by nonrecurring
charges of $1.9 million which are primarily related to severance charges for a
former officer and the closing of the remaining contract for mid-continent NGL
activities. The nonrecurring loss of $9.8 million in 1999 included a $6.2
million charge for the theft of NGL product, concealment of commercial
activities and other unauthorized actions by a former employee, $1.6 million
related to incremental costs to terminate contracts prior to maturity during the
wind down of the mid-continent NGL activity, and a $2 million severance charge
for workforce reductions.

     Emerging Issues Task Force Issue 98-10, "Accounting for Contracts Involved
in Energy Trading and Risk Management Activities," was adopted January 1, 1999.
The cumulative effect of adopting Issue 98-10 was $1.7 million and is reflected
as an increase in net income in the Consolidated Statement of Operations.


                                       21
<PAGE>   22
     The increase in net income, excluding nonrecurring items, for the twelve
months ended December 31, 2000 compared to the same period in 1999 is due to
improvements in the Pipeline Operations and the North American Crude Oil - East
of Rockies business segments related to improved market conditions and owning
assets acquired from Texas-New Mexico Pipe Line Company for all of 2000. The
factors increasing net income were partially offset by higher operating costs
related to owning the assets from Texas-New Mexico Pipe Line Company for all of
2000 and higher energy and environmental costs.

     Selected financial data for EOTT's business segments are summarized below,
in millions:

<TABLE>
<CAPTION>
                                                               Year Ended December 31,
                                                       ---------------------------------------
                                                         2000           1999           1998
                                                       ---------      ---------      ---------
<S>                                                    <C>            <C>            <C>
Revenues:
     N. A. Crude Oil - East of Rockies ...........     $10,710.2      $ 8,042.8      $ 4,637.8
     Pipeline Operations .........................         140.3          118.5           31.5
     West Coast Operations .......................         893.3          654.0          590.1
     Corporate and Other (1) .....................            --             --          110.7
     Intersegment eliminations ...................        (129.8)        (150.9)         (75.4)
                                                       ---------      ---------      ---------
       Total .....................................     $11,614.0      $ 8,664.4      $ 5,294.7
                                                       =========      =========      =========

Gross margin:
     N. A. Crude Oil - East of Rockies (2) .......     $    81.3      $    78.2      $    92.0
     Pipeline Operations .........................         136.7          115.7           30.9
     West Coast Operations .......................          21.9           18.4            9.7
                                                       ---------      ---------      ---------
       Total .....................................     $   239.9      $   212.3      $   132.6
                                                       =========      =========      =========

Operating Income (Loss):
     N. A. Crude Oil - East of Rockies ...........     $     1.9      $    (2.5)     $    28.0
     Pipeline Operations .........................          66.2           51.0            4.3
     West Coast Operations .......................          (0.4)          (2.2)           0.2
     Corporate and Other (1) .....................         (22.8)         (20.3)         (25.3)
                                                       ---------      ---------      ---------
       Total .....................................     $    44.9      $    26.0      $     7.2
                                                       =========      =========      =========
</TABLE>

(1)  1998 results include the East of Rockies refined products business which
     was exited in 1997.

(2)  Includes intersegment transportation costs from the Pipeline Operations
     segment for the transport of crude oil at published pipeline tariffs and
     purchases of crude oil inventory from the Pipeline Operations segment.
     Intersegment transportation costs and purchases of crude oil inventory from
     the Pipeline Operations segment were $119.3 million, $89.9 million and
     $24.5 million for the twelve months ended December 31, 2000, 1999 and 1998,
     respectively.


     The North American Crude Oil - East of Rockies business segment and West
Coast Operations business segment are characterized by generally very thin and
variable profit margins on purchase and sale transactions. Absolute price levels
for crude oil and other petroleum products do not necessarily bear a direct
relationship to margins per barrel, although such price levels significantly
impact revenues and cost of sales. Gross margin is the difference between the
sales price of crude oil or other petroleum products and the cost of crude oil
and products purchased, including costs paid to third parties for transportation
and handling charges. As a result, period-to-period variations in revenues and
cost of sales are not meaningful, and therefore are not discussed for the North
American Crude Oil - East of Rockies and West Coast Operations business
segments. Pipeline Operations revenues are primarily a function of the level of
crude oil transported through the pipeline, known as throughput, and the
applicable pipeline tariffs.


                                       22
<PAGE>   23
TWELVE MONTHS ENDED DECEMBER 31, 2000 COMPARED WITH TWELVE MONTHS ENDED
DECEMBER 31, 1999

     North American Crude Oil - East of Rockies. The North American Crude Oil -
East of Rockies segment had operating income of $1.9 million in 2000 compared to
an operating loss of $2.5 million in 1999. The improved market conditions,
continued optimization of crude oil bulk sales activities and the elimination of
certain low margin crude oil lease volumes were largely responsible for the
increase in operating income. Intersegment costs charged by the Pipeline
Operations segment were $119.3 million and $89.9 million for the years ended
December 31, 2000 and 1999, respectively. Gross margin increased $3.1 million to
$81.3 million due primarily to improved market conditions and the elimination of
low margin crude oil lease volumes. Lease crude oil purchases averaged 408,200
barrels per day ("bpd") for 2000, substantially unchanged from the annual
average of 408,800 bpd in 1999. Operating expenses of $79.4 million for 2000
were $1.3 million lower than 1999 due primarily to lower employee related costs
and amortization expense partially offset by increased gasoline and diesel
costs.

     Pipeline Operations. Pipeline Operations had operating income of $66.2
million in 2000 compared to $51.0 million in 1999. Revenues increased $21.8
million to $140.3 million in 2000 due primarily to increased activity related to
the acquisition of pipelines from Texas-New Mexico Pipe Line Company.
Approximately $119.3 million or 85% and $89.9 million or 76% of revenues for the
years ended December 31, 2000 and 1999, respectively, were generated from
tariffs charged to the North American Crude Oil segment and sales of crude oil
inventory to the North American Crude Oil segment. Pipeline volumes were 583,700
bpd in 2000 compared to 513,700 bpd in 1999. Operating expenses of $70.5 million
in 2000 were $5.8 million higher than 1999 due primarily to owning the assets
acquired from Texas-New Mexico Pipe Line Company for a full year, as well as
higher energy and environmental costs.

     West Coast Operations. West Coast Operations had an operating loss of $0.4
million in 2000 compared to an operating loss of $2.2 million in 1999. Excluding
nonrecurring income of $1.3 million for 2000, West Coast Operations had an
operating loss of $1.7 million compared to recurring operating income of $5.6
million for 1999. Nonrecurring income for 2000 includes $2.5 million
attributable to reimbursements received in the second quarter of 2000 in
connection with an insurance claim related to the theft of NGL product in 1999
by a former employee offset by charges of $1.2 million related to the remaining
contracts for the NGL activity. Nonrecurring charges for 1999 reflect a $6.2
million charge for the theft of NGL product, concealment of commercial
activities and other unauthorized actions by a former employee and $1.6 million
related to incremental costs to terminate contracts prior to their maturity in
winding down the mid-continent NGL activity. The mid-continent NGL activity
originally served as a supply source for the West Coast crude oil blending
operations prior to the acquisition of assets from Koch. The significant decline
in gross margin, excluding nonrecurring items, is due to the limited
availability of blending stock for the crude oil operations as a result of the
high prices for natural gas products during 2000. Operating expenses of $22.3
million in 2000 were $1.7 million higher than 1999 due primarily to higher third
party truck transportation costs and plant fuel costs.

     Corporate and Other. Corporate and other costs of $22.8 million for 2000
were $2.5 million higher compared to 1999 due primarily to higher employee
related costs and depreciation partially offset by lower system operating costs.
Interest and related charges, net for 2000 were $28.8 million compared to $28.9
million in 1999. Other income (expense), net, consisting primarily of discount
fees on the sale of receivables, gains (losses) on transactions denominated in
foreign currency and gains on sales of fixed assets, decreased $3.1 million to
an expense of $2.3 million in 2000 primarily due to higher discount fees on the
sale of receivables incurred in 2000 and losses on transactions denominated in
foreign currency.


                                       23
<PAGE>   24
TWELVE MONTHS ENDED DECEMBER 31, 1999 COMPARED WITH TWELVE MONTHS ENDED
DECEMBER 31, 1998

     North American Crude Oil - East of Rockies. The North American Crude Oil -
East of Rockies segment had an operating loss of $2.5 million in 1999 compared
to operating income of $28.0 million in 1998. As a result of the acquisition of
assets from Koch, the North American Crude Oil segment is incurring increased
transportation costs from the Pipeline Operations segment due to the significant
increase in the volume of crude oil transported at higher published tariff rates
as well as incurring additional operating costs associated with the asset
acquisitions. Intersegment transportation costs charged by the Pipeline
Operations segment were $89.9 million and $24.5 million for the years ended
December 31, 1999 and 1998, respectively. Gross margin decreased $13.8 million
to $78.2 million due primarily to increased transportation costs or tariffs paid
to the Pipeline Operations segment. Lease crude oil purchases were up
significantly from an annual average of 285,600 bpd for 1998 to an annual
average of 408,800 bpd in 1999 due to the acquisition of assets from Koch.
Operating expenses of $80.7 million for 1999 were $16.7 million higher than 1998
due primarily to higher operating costs and employee related costs associated
with the acquisition of assets from Koch in December 1998.

     Pipeline Operations. Pipeline Operations had operating income of $51.0
million in 1999 compared to $4.3 million in 1998. Revenues, which include eight
months of activity related to the asset acquisition from Texas-New Mexico Pipe
Line Company in 1999, increased $87.0 million to $118.5 million in 1999 due
primarily to increased activity related to the acquisitions of pipelines from
Koch and Texas-New Mexico Pipe Line Company. Approximately $89.9 million or 76%
and $24.5 million or 78% of revenues for the years ended December 31, 1999 and
1998, respectively, were generated from tariffs charged to the North American
Crude Oil segment. Pipeline volumes were 513,700 bpd in 1999 compared to 188,300
bpd in 1998. Operating expenses of $64.7 million in 1999 were $38.1 million
higher than 1998 due primarily to higher employee related costs, operating costs
and depreciation associated with the acquisitions of assets from Koch and
Texas-New Mexico Pipe Line Company.

     West Coast Operations. West Coast Operations had an operating loss of $2.2
million in 1999 compared to operating income of $0.2 million in 1998. Excluding
nonrecurring charges of $7.8 million for 1999, West Coast Operations had
operating income of $5.6 million. Nonrecurring charges reflect a $6.2 million
charge for the apparent theft of NGL product, concealment of commercial
activities and other unauthorized actions by a former employee and $1.6 million
related to incremental costs to terminate contracts prior to their maturity in
winding down the mid-continent NGL activity. The mid-continent NGL activity
originally served as a supply source for the West Coast crude oil blending
operations prior to the acquisition of assets from Koch. Gross margin increased
$8.7 million to $18.4 million due primarily to the acquisition of crude oil
gathering and natural gas liquid assets from Koch. Operating expenses of $20.6
million in 1999 were $11.1 million higher than 1998 due primarily to higher
employee related costs, operating costs and depreciation with the acquisition of
assets from Koch.

     Corporate and Other. Corporate and other costs of $20.3 million for 1999
were $5.0 million lower compared to 1998 due primarily to a $1.0 million
write-off of certain information system development costs in 1998 and lower
severance costs in 1999. Interest and related charges, net for 1999 were $28.9
million compared to $9.5 million in 1998 due to the higher average debt in 1999
due to the financing of the acquisitions from Koch and Texas-New Mexico Pipe
Line Company. Other income (expense), net, consisting primarily of gains on
transactions denominated in foreign currency and gains on sales of fixed assets,
increased $2.5 million to income of $0.7 million in 1999.


                                       24
<PAGE>   25
LIQUIDITY AND CAPITAL RESOURCES

General

     Management anticipates that short-term liquidity as well as sustaining
capital expenditures for the foreseeable future will be funded primarily by cash
generated from operations, commodity repurchase agreements and sales of
receivables. Additionally, through December 31, 2001, EOTT may access the $100.0
million working capital line under the $1.0 billion Enron credit facility,
described below. To the extent EOTT makes future significant acquisitions, the
Partnership may be required to seek financing from other sources. No assurance
can be given that this financing will be available from Enron or another source.
The Partnership may also issue additional limited partner interests, the
proceeds from which could be used to reduce indebtedness, provide additional
funds for acquisitions or other Partnership needs.

Cash Flows From Operating Activities

     Net cash provided by operating activities totaled $154.2 million in 2000
compared to $69.3 million in 1999. The increase in operating cash flow is
primarily attributable to the sale of certain trade receivables and reduced
inventory levels due to the market being backwardated during 2000.

Cash Flows From Investing Activities

     Net cash used in investing activities totaled $12.6 million in 2000
compared to $53.3 million in 1999. The decline is primarily due to the asset
acquisition from Texas-New Mexico Pipe Line Company in 1999. Cash additions to
property, plant, and equipment of $14.3 million in 2000 primarily include $4.0
million for pipeline connections and improvements, and $4.1 million for computer
hardware and software. Proceeds from asset sales were $1.6 million in 2000
compared to $1.4 million in 1999.

     The General Partner estimates that capital expenditures necessary to
maintain the existing asset base at current operating levels will be
approximately $7 - $10 million each year. The level of capital expenditures by
the Partnership will vary depending upon prevailing energy markets, general
economic conditions and the current regulatory environment.

Cash Flows From Financing Activities

     Net cash used in financing activities totaled $104.9 million in 2000
compared to $1.5 million in 1999. The 2000 amount represents a reduction of
repurchase agreements outstanding and distributions paid to Unitholders for the
period October 1, 1999 through September 30, 2000. The 1999 amount represents
borrowings to fund working capital needs and acquisition financing reduced by
distributions paid to Unitholders for the period October 1, 1998 through
September 30, 1999.

     Cash distributions paid to Unitholders were $37.6 million and $30.4 million
for 2000 and 1999, respectively. The 1999 first quarter distribution was paid
using $2.5 million in cash support from Enron. The 1999 fourth quarter
distribution was paid in February 2000 using $6.8 million in cash support from
Enron. See further discussion in Note 9 to the Consolidated Financial Statements
regarding Enron's distribution support. The increase in distributions paid to
Unitholders in 2000 is due to the additional 3,500,000 Common Units issued in
September 1999 and a cash distribution of $0.20 per Unit ($1.8 million) paid to
all Subordinated Unitholders for the third quarter of 2000. In addition, a cash
distribution of $0.20 per Unit ($1.8 million) was paid to all Subordinated
Unitholders on February 14, 2001 related to the fourth quarter of 2000.


                                       25
<PAGE>   26
Acquisition of Assets

     On May 1, 1999, EOTT acquired crude oil transportation and storage assets
in West Texas and New Mexico from Texas-New Mexico Pipe Line Company which
included approximately 1,800 miles of common carrier crude oil pipelines. EOTT
paid $33 million in cash and financed the acquisition using short-term
borrowings from Enron.

Working Capital and Credit Resources

The Partnership has a credit facility with Enron to provide credit support in
the form of guarantees, letters of credit and working capital loans through
December 31, 2001. The total amount of the Enron facility is $1.0 billion, and
it contains sublimits of $100 million for working capital loans and $900 million
for guarantees and letters of credit. Letter of credit fees are based on actual
charges by the banks which range from .20% - .375% per annum. Interest on
outstanding loans is charged at LIBOR plus 250 basis points per annum. Prior to
the maturity of the Enron facility, EOTT expects to replace the portion of this
facility used for guarantees and letters of credit with a facility for
approximately $300 million with third party financial institutions. Based upon
the Partnership's financial performance and the Partnership's current efforts to
seek open lines of credit with suppliers, management believes that a $300
million facility will be sufficient to support its marketing activities. The
Partnership's need for working capital loans is expected to be met utilizing
the commodity repurchase agreements or sales of certain receivables.

     The Enron facility is subject to defined borrowing base limitations
relating to the Partnership's activities and to the maintenance and protection
of the collateral. The Enron facility permits distributions to Unitholders
subject to certain limitations based on the Partnership's earnings and other
factors. These covenants and restrictions are not expected to materially affect
the Partnership's ability to operate its ongoing business. The Enron facility is
secured by a first priority lien on and security interest in all receivables and
inventory of the Partnership. The borrowing base is the sum of cash and cash
equivalents, specified percentages of eligible receivables, inventory, and
products contracted for or delivered but not billed. The Enron facility is
non-recourse to the General Partner. The Partnership is restricted from entering
into additional financing arrangements without the prior approval of Enron.

     On September 29, 1999, EOTT issued 3,500,000 Common Units to the public,
with net proceeds to EOTT of $52.9 million. On October 1, 1999, EOTT issued to
the public $235 million of 11% senior notes. The senior notes are due October 1,
2009, and interest is paid semiannually on April 1 and October 1. The senior
notes are fully and unconditionally guaranteed by all of EOTT's operating
limited partnerships. On or after October 1, 2004, EOTT may redeem the notes,
and prior to October 1, 2002, EOTT may redeem up to 35% of the notes with
proceeds of public or private sales of equity at specified redemption prices.
Provisions of the senior notes could limit additional borrowings, sale and lease
back transactions, affiliate transactions, distributions to Unitholders or
merger, consolidation or sale of assets if certain financial performance ratios
are not met. The net proceeds from the issuance of the 11% senior notes and the
issuance of the Common Units were used to repay loans and short-term borrowings
from Enron.

     At December 31, 2000, EOTT had $103.3 million in letters of credit
outstanding under the Enron facility. In addition, guarantees outstanding
totaled $537.5 million of which $458.8 million were used. At December 31, 1999,
EOTT had $143.5 million in letters of credit outstanding under the Enron
facility. In addition, guarantees outstanding totaled $427.0 million of which
$378.5 million were used.

     The General Partner believes that the Enron facility, commodity repurchase
agreements, sales of certain receivables and any new facility to replace the
Enron facility will be sufficient to support the Partnership's crude oil
purchasing activities and working capital and liquidity requirements. No
assurance, however, can be given that the General Partner will not be required
to reduce or restrict the Partnership's gathering and marketing activities
because of limitations on its ability to obtain credit support and financing for
its working capital needs.


                                       26
<PAGE>   27
     The Partnership's ability to obtain letters of credit to support its
purchases of crude oil or other petroleum products is fundamental to the
Partnership's gathering and marketing activities. Additionally, EOTT has a
significant need for working capital due to the large dollar volume of marketing
transactions in which it engages. Any significant decrease in the Partnership's
financial strength, regardless of the reason for such decrease, may increase the
number of transactions requiring letters of credit or other financial support,
may make it more difficult for the Partnership to obtain such letters of credit,
and/or may increase the cost of obtaining them. This could in turn adversely
affect the Partnership's ability to maintain or increase the level of its
purchasing and marketing activities or otherwise adversely affect the
Partnership's profitability and Available Cash as defined in EOTT's Partnership
Agreement and amendments thereto.

     The Partnership Agreement authorizes EOTT to cause the Partnership to issue
additional limited partner interests, the proceeds from which could be used to
provide additional funds for acquisitions or other Partnership needs.

     EOTT has an agreement with a third party which provides for the financing
of purchases of crude oil inventory utilizing forward commodity repurchase
agreements. At December 31, 2000, there were no repurchase agreements
outstanding. At December 31, 1999, EOTT had outstanding repurchase agreements of
approximately $74.1 million. Pursuant to the agreements, which had terms of
thirty days, EOTT repurchased the crude oil inventory on January 21, 2000 for
approximately $74.5 million.

     EOTT has entered into an agreement with a third party which provides for
the sale of up to an aggregate amount of $100 million of certain trade
receivables outstanding at any one time. As of December 31, 2000 and 1999, $45
million and $50 million, respectively, of receivables had been sold under this
agreement. Discount fees related to the sales are reflected in other, net
expenses. EOTT has accounted for these transactions as a sale under the
provisions of Statement of Financial Accounting Standards ("SFAS") No. 125,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishment
of Liabilities," and the related cash received is reflected as cash provided by
operating activities in the Consolidated Statements of Cash Flows.

     The Partnership will distribute 100% of its Available Cash within 45 days
after the end of each quarter to Unitholders of record and to the General
Partner. Available Cash consists generally of all of the cash receipts of the
Partnership adjusted for its cash disbursements and net changes to reserves. The
full definition of Available Cash is set forth in the Partnership Agreement and
amendments thereto, forms of which have been filed as exhibits to this Annual
Report on Form 10-K. Distributions of Available Cash to the Subordinated
Unitholders are subject to the prior rights of the Common Unitholders to receive
the Minimum Quarterly Distribution ("MQD") for each quarter during the
Subordination Period, and to receive any arrearages in the distribution of the
MQD on the Common Units for prior quarters during the Subordination Period.

     MQD is $0.475 per Unit. Enron has committed to provide total cash
distribution support in an amount necessary to pay MQDs, with respect to
quarters ending on or before December 31, 2001, in an amount up to an aggregate
of $29 million ($19.7 million of which remains available) in exchange for
Additional Partnership Interests ("APIs"). See further discussion in Note 9
regarding Enron's distribution support.


                                       27
<PAGE>   28
Summarized Financial Information of the General Partner

     EOTT Energy Corp., a wholly owned subsidiary of Enron Corp., serves as the
General Partner of the Partnership. Summary financial information for 2000 and
1999 is shown below, in thousands:

<TABLE>
<CAPTION>
                                                         Year Ended December 31,
                                                         -----------------------
                                                          2000            1999
                                                         -------         -------
<S>                                                      <C>             <C>
          Balance Sheet Data (at end of period)
            Total assets .............................   $60,328         $52,904
            Total liabilities.........................   $ 9,979         $ 3,841
            Shareholder's equity......................   $50,349         $49,063

          Income Statement Data:
            Net income................................   $ 1,159         $ 1,050
</TABLE>

     Enron Corp. is a publicly traded company listed on the New York Stock
Exchange. Financial information about Enron Corp. can be obtained from its
filings with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934.

OTHER MATTERS

      Early last year, the Partnership identified certain systems integration
issues relating to its new computerized marketing and accounting system, and the
Partnership immediately commenced an extensive review and analysis of the
implementation of the new system. As a result of these efforts, the Partnership
identified and quantified the impacts of the systems integration issues relating
to its new computerized marketing and accounting system and recorded appropriate
financial statement adjustments in the first quarter of 2000. The Partnership
has implemented additional control processes and procedures that it believes are
sufficient to permit the preparation of timely and accurate financial
information, including additional preventative and monitoring controls to ensure
the integrity and reliability of financial information generated by the system
as well as additional system training for users.

      Due to changes in market conditions, EOTT and Koch Petroleum Group, L.P.
("Koch Petroleum") modified a 15-year contract between the parties, which began
December 1, 1998, whereby EOTT supplies crude oil to Koch Petroleum at market
based prices. Koch Petroleum and EOTT amended the supply volume price for six
months, beginning September 1, 2000. In February 2001, Koch Petroleum and EOTT
extended the term of the amendment for an additional six months, beginning March
1, 2001.

     Beginning with the quarterly period ending March 31, 2001, EOTT will begin
reporting derivative activities consistent with Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments
and Hedging Activities". SFAS No. 133, which has been adopted as of January 1,
2001, requires that derivative instruments (including certain derivative
instruments embedded in other contracts) be recorded in the balance sheet as
either an asset or liability measured at its fair value. The Statement requires
that changes in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. Special accounting for
qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement, and requires that a company
must formally document, designate, and assess the effectiveness of transactions
that receive hedge accounting. Under SFAS No. 133, EOTT is required to
"mark-to-market" all of its derivative instruments at each period end. This
contrasts with pre-2001 accounting principles which generally only required
transactions designated as energy trading activities to be marked-to-market.
Changes in the market value of EOTT's derivative


                                       28
<PAGE>   29
instruments resulting from the mark-to-market process will represent unrealized
gains and losses. Such unrealized gains or losses will change, based on
prevailing market prices at each subsequent balance sheet date, until the
transaction date occurs. In general, SFAS No. 133 could result in fluctuations
in net income in periods of price volatility. SFAS No. 133 requires that as of
the date of the initial adoption, the difference between the market value of
derivative instruments and the previous carrying amount of those derivatives be
recorded in net income or other comprehensive income, as appropriate, as the
cumulative effect of a change in accounting principle. As previously discussed,
this impact will be reflected in EOTT's first quarter 2001 financial statements.
The adoption of SFAS No. 133 will result in a benefit of approximately one
million to net income which will be reflected as a cumulative effect of a change
in accounting principle.

ENVIRONMENTAL MATTERS

     EOTT is subject to extensive federal, state and local laws and regulations
covering the discharge of materials into the environment, or otherwise relating
to the protection of the environment, and which require expenditures for
remediation at various operating facilities and waste disposal sites, as well as
expenditures in connection with the construction of new facilities. EOTT
believes that its operations and facilities are in general compliance with
applicable environmental regulations. Environmental laws and regulations have
changed substantially and rapidly over the last 20 years, and EOTT anticipates
that there will be continuing changes. The clear trend in environmental
regulation is to place more restrictions and limitations on activities that may
impact the environment, such as emissions of pollutants, generation and disposal
of wastes and use and handling of chemical substances. Increasingly strict
environmental restrictions and limitations have resulted in increased operating
costs for EOTT and other businesses throughout the United States, and it is
possible that the costs of compliance with environmental laws and regulations
will continue to increase. EOTT will attempt to anticipate future regulatory
requirements that might be imposed and to plan accordingly in order to remain in
compliance with changing environmental laws and regulations and to minimize the
costs of such compliance.

     Expenditures for ongoing compliance with environmental regulations that
relate to current operations are expensed or capitalized as appropriate.
Estimated liabilities are recorded when environmental assessments indicate that
remedial efforts are probable and the costs can be reasonably estimated.
Estimates of the liability and insurance recovery, if any, are based upon
currently available facts, existing technology and presently enacted laws and
regulations. These estimated liabilities and recoveries from insurance are
subject to revision in future periods based on actual costs or new information
and are included in the balance sheet at undiscounted amounts.

     EOTT may experience future releases of crude oil into the environment or
discover releases that were previously unidentified. While an inspection program
is maintained on EOTT's pipelines to prevent and detect such releases, damages
and liabilities incurred due to any future environmental releases could affect
EOTT's business. The management of EOTT believes that its operations and
facilities are in general compliance with applicable environmental laws and
regulations and that there are no outstanding potential liabilities or claims
relating to safety and environmental matters the resolution of which,
individually or in the aggregate, would have a materially adverse effect on
EOTT's financial position or results of operations. No assurance can be given,
however, as to the amount or timing of future expenditures for environmental
remediation or compliance, and actual future expenditures may be different from
the amounts currently anticipated. In the event of future increases in costs,
EOTT may be unable to pass on those increases to its customers.


                                       29
<PAGE>   30
OUTLOOK

     Historically, the crude oil gathering and marketing business has been very
competitive with thin and variable profit margins. The ability to generate
margin in the crude oil marketing and gathering business is not tied to the
absolute price level of crude oil prices but is generated by the difference
between the price at which crude oil is sold and the price paid and other costs
incurred in the purchase and transportation of the crude oil. The fluctuations
in market related indices and the overall levels of supply and demand cannot be
projected with certainty.

     Our business model of extracting the greatest margin per barrel continued
to evolve during 2000. The new executive management team is focusing on
analyzing all aspects of the business to ensure that the greatest value is
realized in all aspects of EOTT's business. Responsibility for performance in
our core crude oil gathering and marketing business is transitioning to a
regional decentralized approach from a historical centralized approach and the
management of EOTT's assets is also transitioning to separate reporting
responsibilities. The outsourcing of substantially all of the pipeline
operations is one example of the results of analyzing how EOTT runs the business
and allowing EOTT to focus on managing the value of the barrels. With the
implementation of new information systems and anticipated enhancements of those
systems planned in the near term, the employees of EOTT will be provided with
better analytical information and more timely information to make decisions on
maximizing the value of each barrel including whether to use company or third
party assets for transportation or to exchange those volumes.

      EOTT paid a cash distribution of $0.475 per Unit to all its Common
Unitholders and a cash distribution of $0.20 per Unit to all its Subordinated
Unitholders on February 14, 2001 without any distribution support from Enron.
The Partnership intends to continue to pay MQDs to Common Unitholders in the
future. Enron has committed to provide total cash distribution support in an
amount necessary to pay MQDs up to $29 million ($19.7 million of which remains
available at February 14, 2001) to the Common Unitholders through the fourth
quarter 2001.

      EOTT will continue to pursue attractive acquisition or business
combination opportunities to increase the scale of its business, and cash flow,
and reduce earnings variability. Acquisitions that result in increased lease
purchase volumes should help to enhance EOTT's gathering, marketing and trading
opportunities. EOTT's management is committed to continually improving internal
business processes in all operational, marketing, and administrative areas and
thereby achieve improvements in productivity.

ITEM 7a.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     EOTT enters into forwards, futures and other contracts primarily for the
purpose of hedging the impact of market fluctuations on assets, liabilities or
other contractual commitments. The use of financial instruments may expose EOTT
to market and credit risks resulting from adverse changes in commodity prices,
interest rates and foreign exchange rates. The major market risks are discussed
below.

     Commodity Price Risk. Commodity price risk is a consequence of gathering
crude oil at the lease and marketing the crude oil to refineries or other trade
partners. EOTT uses forwards, futures, swaps and options to mitigate price
exposure and manages this risk on a portfolio basis.

     Interest Rate Risk. Interest rate risk is the result of having variable
rate debt obligations, as changing interest rates impact the discounted value of
future cash flows and fixed rate debt obligations which impact the change in
fair value.


                                       30
<PAGE>   31
     Foreign Currency Exchange Rate Risk. Foreign currency exchange rate risk is
the result of EOTT's Canadian operations. The primary purpose of EOTT's foreign
currency hedging activities is to protect against the volatility associated with
foreign currency purchase and sale transactions.

COMMODITY PRICE RISK

     EOTT has performed a value at risk analysis of virtually all of its
financial assets and liabilities. Value at risk incorporates numerous variables
that could impact the fair value of EOTT's investments, including commodity
prices and foreign exchange rates, as well as correlation within and across
these variables. EOTT estimates value at risk commodity and foreign exchange
exposures using a model based on Monte Carlo simulation of delta/gamma
positions, which captures a significant portion of the exposure related to open
futures contracts. The value at risk method utilizes a one-day holding period
and a 95% confidence level. Cross-commodity correlations are used as
appropriate. The use of the value at risk model allows management to aggregate
risks across the Partnership, compare risk on a consistent basis and identify
the drivers of risk.

     The following table illustrates the value at risk for commodity price risk
(in millions):

<TABLE>
<CAPTION>
                                                         Year Ended December 31,
                                                         -----------------------
                                                           2000           1999
                                                         --------       --------
<S>                                                      <C>            <C>
         Commodity price  (1)........................      $0.2          $(1.5)
</TABLE>

     (1)  The above value at risk amount represents financial derivative
          commodity instruments, primarily commodity futures contracts, entered
          into to hedge future physical crude oil purchase commitments. The
          commitments to purchase physical crude oil have not been included in
          the above value at risk computation.

INTEREST RATE RISK

     The Partnership's exposure to changes in interest rates primarily results
from its short-term and long-term debt with both fixed and floating interest
rates. The Enron facility has a maturity of December 2001. At December 31, 2000,
no amounts were outstanding under the Enron facility. In October 1999, EOTT
issued $235 million of 11% senior notes due in 2009. At year-end the fair value
of these notes approximated $253.7 million.

Accounting Policies

     Accounting policies for price risk management and hedging activities are
described in Note 2 to the Consolidated Financial Statements.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The information required hereunder is included in this report as set forth
in the "Index to Financial Statements" on page F-1.

ITEM 9.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

     None


                                       31
<PAGE>   32
                                    PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The Partnership does not directly employ any persons responsible for
managing or operating the Partnership or for providing services relating to
day-to-day business affairs. The General Partner provides such services or
obtains such services from third parties or its affiliates and is reimbursed for
substantially all of its direct and indirect costs and expenses including
compensation and benefit costs.

     The Board of Directors of the General Partner has established a committee
(the "Audit Committee") consisting of three individuals who are neither officers
nor employees of the General Partner or any affiliate of the General Partner.
The Audit Committee has the authority to review, at the request of General
Partner, specific matters as to which the General Partner believes there may be
a conflict of interest in order to determine if the resolution of such conflict
is fair and reasonable to the Partnership. In addition, the Audit Committee has
the authority and responsibility for selecting the Partnership's independent
public accountants, reviewing the Partnership's annual audit and resolving
accounting policy questions.

DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL PARTNER

     Set forth below is certain information concerning the directors and
executive officers of the General Partner. All directors of the General Partner
are elected annually by and may be removed by Enron Liquids Holding Corp., a
wholly owned subsidiary of Enron Corp., as the sole shareholder of the General
Partner. All executive officers serve at the discretion of the Board of
Directors of the General Partner.

<TABLE>
<CAPTION>
                                          Years Employed
                                            by Enron or
              Name                 Age   its Subsidiaries                Position
              ----                 ---   ----------------                --------
<S>                                <C>   <C>                  <C>
    Stanley C. Horton..........    50           27            Chairman of the Board and Chief Executive Officer
    Dana R. Gibbs..............    41            8            President, Chief Operating Officer and Director
    John H. Duncan ............    72            -            Director
    Dee S. Osborne ............    69            -            Director
    Edward O. Gaylord..........    69            -            Director
    Daniel P. Whitty ..........    69            -            Director
    Kenneth L. Lay ............    58           23            Director
    Lawrence Clayton, Jr. .....    47            -            Senior Vice President and Chief Financial Officer
    Mary Ellen Coombe..........    50           20            Vice President, Human Resources and Administration
    Molly M. Sample............    45            9            Vice President and General Counsel
    Lori L. Maddox.............    36            4            Vice President and Controller
</TABLE>

     Stanley C. Horton was elected to the EOTT Energy Corp. Board of Directors
in May 1998. He was elected Chairman of the Board of EOTT Energy Corp. in May
2000 and became Chief Executive Officer in June 2000. Mr. Horton is the Chairman
and Chief Executive Officer of Enron Transportation Services Co. and has held
that position since January 1997. From February 1996 to January 1997, he was
Co-Chairman and Chief Executive Officer of Enron Operations Corp and from June
1993 to February 1996, he was President and Chief Operating Officer of Enron
Operations Corp. Mr. Horton was appointed to the Partnership Policy Committee
and Management Committee of Northern Border Partners, L.P. in December 1998. Mr.
Horton serves as Chairman of the Board of Directors of the Interstate Natural
Gas Association. He also serves as a Director of Gas Industry Standards Board
and Gas Technology Institute.


                                       32
<PAGE>   33
     Dana R. Gibbs joined EOTT Energy Corp. as Executive Vice President in April
1999 and became President and Chief Operating Officer and Director in June 2000.
He served as Vice President of Enron North America Corp. from 1992 to 1999.
Prior to joining Enron, he was Vice President Finance to MG Natural Gas Corp.
from 1990 to 1992. Mr. Gibbs served as Experienced Manager with Arthur Andersen
LLP where he worked for nine years.

     John H. Duncan was elected to the EOTT Energy Corp. Board of Directors in
January 1993 and appointed to the Compensation Committee in February 1993. Mr.
Duncan's principal occupation has been investments since 1990. Mr. Duncan is
also a director of Group I Automotive Inc.

     Dee S. Osborne was elected to the EOTT Energy Corp. Board of Directors and
appointed to the Audit Committee and Compensation Committee in February 1993.
Mr. Osborne serves as President of Crest Investment Company. He is a director
and Chairman of the Audit Committee of Ocean Energy, Inc.

     Edward O. Gaylord has served as a member of the Board of Directors since
January 1993. Mr. Gaylord served as Chairman of the Board of EOTT Energy Corp.
from February 1993 until May 2000. He was elected in December 1995 as a member
of the Audit Committee. Mr. Gaylord owned and managed Gaylord & Company, a
private venture capital firm, and he has owned interests in and managed various
trucking, storage and manufacturing entities in his career of more than 30
years. Mr. Gaylord serves on the Board of Directors of Imperial Sugar Company,
Seneca Foods Corporation, Federal Reserve Bank of Dallas - Houston Branch, and
the General Partner of Kinder Morgan Energy Partners, L.P.

     Daniel P. Whitty was elected to the EOTT Energy Corp. Board of Directors in
January 1993 and appointed to the Audit Committee and the Compensation Committee
in February 1993. Mr. Whitty serves as Chairman of the Audit Committee. Mr.
Whitty is an independent financial consultant and serves as the Chairman of the
Audit Committee of Northern Border Partners, L.P. and as a director of Enron
Equity Corp. and Enron Funding Corp. He has also served as a director of
Methodist Retirement Communities, Inc. and a Trustee of the Methodist Retirement
Trust. Until his retirement in 1988, Mr. Whitty served 35 years with Arthur
Andersen LLP and was elected to its worldwide partnership in 1962.

     Kenneth L. Lay was elected to the EOTT Energy Corp. Board of Directors in
January 1993. Mr. Lay has been Chairman of the Board and Chief Executive Officer
of Enron for over fifteen years. From 1986 until February 12, 2001, he was also
the Chief Executive Officer of Enron. Mr. Lay is also a director of Eli Lily and
Company, Compaq Computer Corporation, i2 Technologies, Inc. and NewPower
Holdings, Inc.

     Lawrence Clayton, Jr. has served as Senior Vice President and Chief
Financial Officer since September 2000. Prior to joining EOTT Energy Corp., Mr.
Clayton was Senior Vice President and Chief Financial Officer at Aquila Energy
Corp., a subsidiary of Utilicorp United, Inc. from 1994 to 2000. From June 1990
to May 1994, he served as Vice President and Chief Financial Officer of Sunrise
Energy Services, Inc., an independent marketer and gatherer of natural gas.

     Mary Ellen Coombe has served as Vice President, Human Resources and
Administration of EOTT Energy Corp. since December 1992. Ms. Coombe has served
in various Human Resources and Administration positions within Enron since
joining Enron Corp. in September 1980.

     Molly M. Sample has served as Vice President and General Counsel since
February 2001. She served as General Counsel from September 2000 to January
2001. Ms. Sample has served in various legal positions since joining Enron Corp.
in April 1991.


                                       33
<PAGE>   34
     Lori L. Maddox has served as Vice President and Controller since February
2001 and Chief Accounting Officer since October 1996. Prior to joining EOTT
Energy Corp., Ms. Maddox was associated with Arthur Andersen LLP where she
became a Senior Manager and served in the Energy Group for ten years.

     Officers of EOTT Energy Corp. will not receive any additional compensation
for serving EOTT Energy Corp. as members of the Board of Directors or any of its
committees. Each director who is not an employee of EOTT Energy Corp. or Enron
Corp. will receive an annual fee of $16,000 for serving as a director.
Non-employee directors will be paid a fee of $2,000 for each director's meeting
attended and $1,000 for each committee meeting attended. In addition, each
non-employee audit committee member will be paid a fee of $4,000 annually.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Securities Exchange Act of 1934 requires certain
executive officers and all directors of the General Partner and persons who own
more than ten percent of a registered class of the equity securities of the
Partnership to file reports of ownership and changes in ownership with the SEC
and the New York Stock Exchange. Based solely on its review of the copies of
such reports received by it, or written representations from certain reporting
persons that no Form 5's were required for those persons, the General Partner
believes that during 2000 its reporting persons complied with all applicable
filing requirements in a timely manner, except Enron Corp. and Dana R. Gibbs did
not timely file one report containing one transaction.


                                       34
<PAGE>   35
ITEM 11.  EXECUTIVE COMPENSATION

     The following table summarizes certain information regarding compensation
paid or accrued by EOTT during each of the last three fiscal years to the Chief
Executive Officer and each of EOTT's four other most highly compensated
executive officers (the "Named Officers"):

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                              Annual Compensation                 Long-Term Compensation
                                       ---------------------------------   -------------------------------------
                                                                                           Securities
                                                            Other Annual    Restricted     Underlying    LTIP      All Other
                                         Salary     Bonus   Compensation   Stock Awards   Options/SARs  Payouts   Compensation
Name and Principal Position      Year    ($)(1)      ($)       ($)(2)          ($)          (#'s)(3)      ($)        ($)(3)
---------------------------      ---------------------------------------------------------------------------------------------
<S>                              <C>    <C>        <C>      <C>            <C>            <C>           <C>       <C>
Stanley C. Horton                2000    80,126          -          -             -              -          -             -
Chief Executive Officer          1999         -          -          -             -              -          -             -
                                 1998         -          -          -             -              -          -             -

Dana R. Gibbs                    2000   225,004    250,000          -             -          5,050          -       111,192
President and Chief              1999   150,000          -          -             -              -          -         4,998
Operating Officer                1998         -          -          -             -              -          -             -

Mary Ellen Coombe                2000   160,000     60,000          -             -          5,050          -        14,022
Vice President, Human            1999   160,000     40,000          -             -              -          -         6,838
Resource and Administration      1998   160,000     15,100          -             -              -          -         3,308

Lori L. Maddox                   2000   150,000     50,000          -             -          5,050          -         3,938
Vice President & Controller      1999   150,000     35,000          -             -              -          -        53,063
                                 1998   146,666     10,100          -             -          6,000          -           500

Molly M. Sample                  2000   139,272     55,000          -             -          5,050          -         9,073
Vice President & General         1999   110,772     25,000          -             -              -          -         3,943
Counsel                          1998   105,851          -          -             -          1,000          -         1,053
</TABLE>

----------

     (1)  Mr. Horton serves as Chief Executive Officer of Enron Transportation
          Services, as well as Chief Executive Officer for EOTT. He became
          Chairman and Chief Executive Officer for EOTT in June 2000. The
          compensation reported is his compensation for all duties for EOTT for
          seven months in the year 2000. Enron bears full cost for all payments,
          except for a fixed amount of $160,253 annually which is paid by EOTT.
          His cumulative compensation for all duties for Enron for the year 2000
          is $520,000 salary; $1.2 million bonus; $15,600 other annual
          compensation; $1,000,044 restricted stock awards; 108,035 Securities
          Underlying Options/SARs; $300,000 LTIP Payout and $11,934 in Other
          Compensation. EOTT paid no cost for Mr. Horton's compensation in the
          years 1998 and 1999.
     (2)  Includes perquisites and other personal benefits if value is greater
          than the lesser of $50,000 or 10% of reported salary and bonus. Also,
          Enron maintains three deferral plans for key employees under which
          payment of base salary, annual bonus and long-term incentive awards
          may be deferred to a later specified date. Under the 1985 Deferral
          Plan, interest is credited on amounts deferred based on 150% of
          Moody's seasoned corporate bond yield index with a minimum rate of
          12%, which for 1998, 1999 and 2000 was the minimum rate of 12%.
          Beginning January of 1996, the 1994 Deferral Plan credits interest
          based on fund elections chosen by participants. Since earnings on
          deferred compensation invested in third-party investment vehicles,
          comparable to mutual funds, need not be reported, no interest has been
          reported as Other Annual Compensation under the 1994 Deferral Plan
          during 1998, 1999 and 2000.
     (3)  The amounts shown include the value as of year end 1998, 1999 and 2000
          of Enron Common Stock allocated during those years to employees'
          special subaccounts under the Enron Corp. Employee Stock Ownership
          Plan and 1999 and 2000 matching contributions on employees' Enron
          Corp. Savings Plan account. Mr. Gibbs received a retention payment in
          the amount of $100,000 in January, 2000 under the terms of his
          Employment Agreement dated April, 1999.


Stock Option Grants During 2000

     The following table sets forth information with respect to grants of
options pursuant to the Named Officers reflected in the Summary Compensation
Table and all employee optionees as a group. No unit options were granted during
2000


                                       35
<PAGE>   36
under the EOTT Energy Corp. Unit Option Plan. Stock options were granted during
2000 under Enron's 1994 Stock Plan ("1994 Plan"). No SAR units were granted
during 2000, and none is outstanding.

<TABLE>
<CAPTION>
                                                    INDIVIDUAL GRANTS
                                         ------------------------------------------
                                                   % OF TOTAL
                                                    OPTIONS/
                                                      SARS
                                                     GRANTED                               POTENTIAL REALIZABLE VALUE AT
                                                       TO                                     ASSUMED ANNUAL RATES OF
                                          OPTIONS/  EMPLOYEES  EXERCISE                      STOCK PRICE APPRECIATION
                                           SARS        IN       OR BASE                         FOR OPTION TERM(1)
                                          GRANTED    FISCAL      PRICE   EXPIRATION  ------------------------------------------
NAME                                        (2)       YEAR      ($/SH)      DATE     0%(3)       5%                   10%
----                                     ---------  ---------  --------  ----------  ----- ---------------      ---------------
<S>                      <C>             <C>        <C>        <C>       <C>         <C>   <C>                  <C>
S. Horton                EOTT                  -         -            -          -   $-    $             -      $             -
                         Enron Corp.     102,565(4)   0.26%    $47.3125   01/10/07   $-    $     1,975,498      $     4,603,751
                                              50(5)   0.00%    $62.5000   02/07/07   $-    $         1,272      $         2,965
                                           5,420(6)   0.01%    $83.1250   12/29/07   $-    $       183,414      $       427,433

D. Gibbs                 EOTT                  -         -            -          -   $-    $             -      $             -
                         Enron Corp.          50(5)   0.00%    $55.5000   01/18/07   $-    $         1,130      $         2,633
                                           5,000(7)   0.01%    $66.4375   07/05/07   $-    $       135,234      $       315,152

M.E. Coombe              EOTT                  -         -            -          -   $-    $             -      $             -
                         Enron Corp.          50(5)   0.00%    $55.5000   01/18/07   $-    $         1,130      $         2,633
                                           5,000(7)   0.01%    $66.4375   07/05/07   $-    $       135,234      $       315,152

L. Maddox                EOTT                  -         -            -          -   $-    $             -      $             -
                         Enron Corp.          50(5)   0.00%    $55.5000   01/18/07   $-    $         1,130      $         2,633
                                           5,000(7)   0.01%    $66.4375   07/05/07   $-    $       135,234      $       315,152

M. Sample                EOTT                  -         -            -          -   $-    $             -      $             -
                         Enron Corp.          50(5)   0.00%    $55.5000   01/18/07   $-    $         1,130      $         2,633
                                           5,000(7)   0.01%    $66.4375   07/05/07   $-    $       135,234      $       315,152

All Employee and         EOTT                  -         -            -          -   $-    $             -      $             -
  Director Optionees     Enron Corp.  38,774,038(8)    100%    $62.9200(9)     N/A   $-    $ 1,534,290,619(10)  $ 3,888,193,668(10)

All Stock/Unitholders    EOTT                  -         -            -          -   $-    $             -      $             -
                         Enron Corp.         N/A       N/A          N/A        N/A   $-    $29,741,959,299(10)  $75,371,964,338(10)

Optionee Gain as % of    EOTT                N/A       N/A          N/A        N/A    -                  -                    -
  all Unitholders Gain   Enron Corp.         N/A       N/A          N/A        N/A    -               5.16%                5.16%
</TABLE>

     (1)  The dollar amounts under these columns represent the potential
          realizable value of each grant of options assuming that the market
          price on Enron Common Stock appreciates in value from the date of
          grant at the 5% and 10% annual rates prescribed by the SEC and
          therefore are not intended to forecast possible future appreciation,
          if any, of the price of Enron Common Stock.
     (2)  For Mr. Horton, if a "change of control" (as defined in the Enron
          Corp. 1991 Stock Plan) were to occur before the options become
          exercisable and are exercised, the vesting described below will be
          accelerated and all such outstanding options shall be surrendered and
          the optionee shall receive a cash payment by Enron in an amount equal
          to the value of the surrendered options (as defined in the 1991 Stock
          Plan). Enron stock options that were awarded during 2000 were under
          Enron's 1991 and/or 1994 Stock Plan(s).
     (3)  An appreciation in stock price, which will benefit all shareholders,
          is required for optionees to receive any gain. A stock price
          appreciation of 0% would render the option without value to the
          optionees.
     (4)  Represents stock options awarded under the Enron Corp. Long-Term
          Incentive Program. Awards vest 25% on the grant date and 25% on each
          anniversary thereafter.
     (5)  A grant of 50 stock options was provided to each eligible Enron
          employee in February, 2000, in recognition of Enron stock reaching a
          fair market value of $50 after the August, 1999, 2-for-1 stock split.
     (6)  All eligible Enron employees received an option grant under the Enron
          Options program. Enron Options provide a grant of options equal to 5%
          of base annual salary for each year of participation in the program,
          not to exceed five years of participation. Enron Options program
          grants that were granted in 2000 will vest 20% each year beginning
          June 30, 2001.
     (7)  Options vest 25% on date of grant and 25% on each anniversary
          thereafter.
     (8)  Includes options awarded on December 31, 2000 under the Enron Options
          Program.
     (9)  Weighted average exercise price of all Enron stock options granted to
          employees in 2000.
     (10) Appreciation for All Employee and Director Optionees is calculated
          using the maximum allowable option term of ten years, even though in
          some cases the actual option term is less than ten years. Appreciation
          for all shareholders is calculated using an assumed ten-year option
          term, the weighted average exercise price for All Employee and
          Director Optionees ($62.92) and the number of shares of Common Stock
          acquired and outstanding on December 31, 2000


                                       36
<PAGE>   37
AGGREGATED OPTIONS/SAR EXERCISES DURING 2000 AND OPTION/SAR
     VALUES AT DECEMBER 31, 2000

     The following table sets forth information with respect to the Named
Officers concerning the exercise of options under EOTT's and Enron's option
plans during the last fiscal year and unexercised options and SARs held as of
the end of the fiscal year:

<TABLE>
<CAPTION>
                                                                                                    Value of Unexercised
                                                                   Number of Securities                In-the-Money
                                                                   Underlying Unexercised             Options/SARs at
                                     Shares                           Options/SARs at                December 31, 2000
                                    Acquired         Value           December 31, 2000                   ($)(1)(2)
                                       on          Realized     ---------------------------     -----------------------------
    Name                            Exercise         ($)        Exercisable   Unexercisable     Exercisable     Unexercisable
------------                        --------     -----------    -----------   -------------     -----------     -------------
<S>               <C>               <C>          <C>            <C>           <C>               <C>             <C>
S. Horton         EOTT                    --     $        --           --             --        $        --      $       --
                  Enron Corp.        360,002     $20,601,248      233,146        158,527        $13,238,096      $7,362,286
                                                                                                                 ----------
                  Subtotal                                                                                       $7,362,286

D. Gibbs          EOTT                    --     $        --           --         80,000        $        --      $  864,400
                  Enron Corp.         14,924     $   751,982       80,027         24,533        $ 5,073,474      $1,335,333
                                                                                                                 ----------
                  Subtotal                                                                                       $2,199,733

M.E. Coombe       EOTT                    --     $        --           --         60,000        $        --      $   82,500
                  Enron Corp.         10,800     $   755,175       59,263          3,787        $ 3,994,219      $   63,600
                                                                                                                 ----------
                  Subtotal                                                                                       $  146,100

L. Maddox         EOTT                    --     $        --           --             --        $        --      $       --
                  Enron Corp.             --     $        --        8,763          5,287        $   489,171      $  156,835
                                                                                                                 ----------
                  Subtotal                                                                                       $  156,835

M. Sample         EOTT                    --     $        --           --             --        $        --      $       --
                  Enron Corp.             --     $        --        5,013          4,037        $   256,086      $   79,139
                                                                                                                 ----------
                  Subtotal                                                                                       $   79,139
</TABLE>


(1)  The dollar value for Mr. Gibbs in this column for EOTT Options was
     calculated by assuming the Subordinated Unit option converts to a Common
     Unit option and determining the difference between the fair market value of
     the Common Units and the exercise value of the option at the end of the
     fiscal year. The value of EOTT Common Units at year-end 2000 was $16.375
     and the Subordinated Unit grant price is $ 5.57. These options on
     Subordinated Units are under a Special Compensation Agreement between Mr.
     Gibbs and Enron Corp.
     The dollar value for Ms. Coombe in this column for EOTT Options was
     calculated by assuming the Subordinated Unit option converts to a Common
     Unit option and determining the difference between the fair market value of
     the Common Units and the exercise value of the option at the end of the
     fiscal year. The value of EOTT Energy Common Units at year-end 2000 was
     $16.375 and the Subordinated Unit grant price is $15.00. These options were
     granted under the EOTT Energy Unit Option Plan.

(2)  The dollar value in this column for Enron Corp. stock options was
     calculated by determining the difference between the fair market value
     underlying the options as of December 31, 2000 ($83.1250) and the grant
     price.


                                       37
<PAGE>   38
LONG TERM INCENTIVE PLAN AWARDS IN 2000

     In October 1997, the Board of Directors adopted the EOTT Energy Corp. Long
Term Incentive Plan ("Plan"). The Plan is intended to provide key employees with
Phantom Appreciation Rights ("PAR"), which is a right to receive cash based on
the performance of the Partnership prior to the time the PAR is redeemed. The
Plan has a five-year term beginning January 1, 1997 and PAR awards vest in 25%
increments over a four-year period following the grant year. The following table
provides information concerning awards of PARs under the Plan during 2000
pursuant to the Named Officers reflected in the Summary Compensation Table.


<TABLE>
<CAPTION>
                                          Performance                    Future Estimated
                               Number       or Other                      Payments Under
                             of Shares,   Period Until               Non-Stock Based Plans (1)
                              Units or     Maturation      ----------------------------------------------
      Name                     Rights        Payout        Threshold $       Target $        Maximum $
  -------------              ----------   ------------     -------------    -----------    --------------
<S>               <C>        <C>          <C>              <C>              <C>            <C>
   S. Horton      EOTT           -              -             $   -           $     -          $   -
   D. Gibbs       EOTT           -              -             $   -           $     -          $   -
   M.E. Coombe    EOTT           -              -             $   -           $     -          $   -
   L. Maddox      EOTT           -              -             $   -           $     -          $   -
   M. Sample      EOTT           -              -             $   -           $     -          $   -
</TABLE>

     (1)  Future estimated payments were based on a 10% targeted growth for each
          year of the 5 year performance period. Maximum payments were estimated
          at a 20% growth rate for the five year performance period.

ENRON BENEFIT AND COMPENSATION PLANS

     EOTT Energy Corp. employees continue benefit accrual under the Enron Corp.
Cash Balance Pension Plan. EOTT Energy Corp. employees continue to be eligible
for participation in the Enron Corp. Savings Plan.

RETIREMENT PLANS AND SUPPLEMENTAL BENEFIT PLANS

     Enron maintains the Enron Corp. Cash Balance Pension Plan ("Cash Balance
Plan") which is a noncontributory defined benefit pension plan to provide
retirement income for employees of Enron and its subsidiaries. Through December
31, 1994, participants in the Cash Balance Plan with five years or more of
service were entitled to retirement benefits in the form of an annuity based on
a formula that uses a percentage of final average pay and years of service. In
1995, Enron's Board of Directors adopted an amendment to and restatement of the
Cash Balance Plan changing the plan's name from the Enron Corp. Retirement Plan
to the Enron Corp. Cash Balance Plan. In connection with a change to the
retirement benefit formula, all employees became fully vested in retirement
benefits earned through December 31, 1994. The formula in place prior to January
1, 1995 was suspended and replaced with a benefit accrual in the form of a cash
balance of 5% of annual base pay beginning January 1, 1996. Under the Cash
Balance Plan, each employee's accrued benefit will be credited with interest
based on ten year Treasury Bond yields. Directors who are not employees are not
eligible to participate in the Cash Balance Plan.

     Enron also maintains a noncontributory employee stock ownership plan
("ESOP") which covers all eligible employees. Allocations to individual
employees' retirement accounts within the ESOP offset a portion of benefits
earned under the Cash Balance Plan prior to December 31, 1994. December 31, 1993
was the final date on which ESOP allocations were made to employees' retirement
accounts.

     In addition, Enron has a Supplemental Retirement Plan that is designed to
restore payments to certain employees that are lost under the Cash Balance Plan
due to the benefit limitations under Internal Revenue Code Section 415 and
limitations on considering pay under Internal Revenue Code Section 401(a)(17).


                                       38
<PAGE>   39
     The following table sets forth the estimated annual benefits payable under
normal retirement at age 65, assuming current remuneration levels without any
salary projection, and participation until normal retirement at age 65, with
respect to the Named Officers under the provisions of the foregoing retirement
plans:

<TABLE>
<CAPTION>
                                                        Estimated            Current
                                  Current Credited   Credited Years       Compensation      Estimated Annual
                                     Years of         of Service at          Covered        Benefit Payable
                                    of Service          at Age 65           by Plans        Upon Retirement
                                  ----------------   --------------       ------------      ----------------
<S>                               <C>                <C>                  <C>               <C>
   S. Horton.....................      27.0               41.1              $520,000            $233,933
   D. Gibbs......................       8.5               32.0              $225,004            $110,060
   M.E. Coombe...................      20.5               35.4              $160,000            $ 75,528
   L. Maddox.....................       4.3               33.0              $150,000            $ 99,012
   M. Sample.....................       9.8               29.1              $139,272            $ 52,080
</TABLE>

         Note: The estimated annual benefits payable are based on the straight
     life annuity form without adjustment for any offset applicable to a
     participant's retirement subaccount in Enron's Employee Stock Ownership
     Plan.

EOTT ENERGY CORP. SEVERANCE PLAN

     The EOTT Energy Corp. Severance Pay Plan as amended provides for the
payment of benefits to employees who are terminated for failing to meet
performance objectives or standards, or who are terminated due to reorganization
or economic factors. The amount of benefits payable for performance related
terminations is based on length of service and may not exceed six weeks' pay in
the event such employee signs a Waiver and Release of Claims Agreement. For
those terminated as the result of reorganization or economic circumstances, the
benefit is based on length of service with one week's pay per year of service up
to an amount of a maximum payment of 26 weeks of base pay. If the employee signs
a Waiver and Release of Claims Agreement, the severance pay benefits are
doubled. The plan provides a grandfather provision for those employees whose
employment date is prior to January 1, 1993. This provision provides a severance
benefit equal to two weeks of base pay multiplied by the number of full or
partial years of service, plus two weeks of base pay for each $10,000 (or
portion of $10,000) included in the employee's annual base pay, provided the
employee signs a Waiver and Release of Claims Agreement. In the event of an
unapproved change of control of the Company, any employee who is involuntarily
terminated within two years following the change of control will be eligible for
severance benefits equal to two weeks of base pay multiplied by the number of
full or partial years of service, plus two weeks of base pay for each $10,000
(or portion of $10,000) included in the employee's annual base pay. Under no
circumstances will the total severance pay benefit exceed 52 weeks of pay.

     Severance arrangements for Mr. Gibbs, Mr. Clayton, Ms. Coombe, Ms. Maddox,
and Ms. Sample include an involuntary termination provision pursuant to the
executive officer's Employment Agreements. An involuntary termination includes
(a) termination without cause; (b) a termination within 90 days after the
happening of one of the following events without the approval of the executive
officer: (i) a substantial and/or material reduction in the nature or scope of
the executive officer's duties and/or responsibilities, which results in the
executive officer no longer having an officer status and results in an overall
material and substantial reduction from the duties and stature of the officer
position he presently holds, which reduction remains in place and uncorrected
for 30 days following written notice of such breach to the General Partner by
the executive officer, (ii) a reduction in the executive officer's base pay or
an exclusion from a benefit plan or program (except the executive officer may be
subject to exclusion from a benefit plan or program as part of a general cutback
for all employees or officers) or (iii) a change in the location for the primary
performance of the executive officer's services under the agreement to a city
which is more than 100 miles away from such location; and (c) a termination by
the executive officer within one year after a change of control of the General
Partner if one of the events described in (b) has occurred. The severance
agreement's, the "confidential information" and "noncompete" provisions will
continue for one year following the termination date.


                                       39
<PAGE>   40
Employment Agreements

     Mr. Gibbs' entered into a new Employment Agreement with EOTT Energy Corp.
on July 1, 2000 for a term of three years. The Agreement provides for an annual
base salary of not less than $250,000 and an annual incentive plan target of
100%. His annual bonus for calendar year 2000 shall be 100% of his annual base
salary if during the four quarters of the year 2000, all distributions to Common
Units are met without API support from Enron Corp. Mr. Gibbs shall also receive
an additional bonus opportunity of 100% of his annual base salary if during any
calendar year under the term of his agreement, conversion requirements under the
Partnership Agreement are met to allow conversion of the Subordinated Units to
Common Units. The Agreement further provides a retention bonus of $100,000
payable on January 31, 2001. The Agreement provides for post employment
noncompete obligations in the event of termination. Per his prior Agreement, Mr.
Gibbs received a grant of 53,475 PAR Units under the EOTT Energy Long Term
Incentive Plan.

     Mr. Clayton, Ms. Maddox and Ms. Sample entered into Employment Agreements
with EOTT Energy Corp. in 2000. Mr. Clayton's agreement is for a term of three
years. The Agreement provides for an annual base salary of $225,000 and an
annual incentive plan target of 100%. His annual bonus for calendar year 2000,
payable in the first quarter of 2001, shall be a minimum amount of $75,000
provided Mr. Clayton meets the identified objectives of EOTT Energy Corp. Per
his agreement, Mr. Clayton received a grant of 30,000 EOTT Energy PAR Units
under the EOTT Energy Long Term Incentive Plan and 5,000 Enron Corp. options.
Ms. Maddox's agreement is for a term of two years. The Agreement provides for an
annual base salary of $160,000. Ms. Sample's agreement is for a term of two
years. The Agreement provides for an annual base salary of at least $130,000.
Mr. Clayton's agreement provides for severance benefits of one year's annual
base salary if a voluntary termination occurs within the first year of the term.
In the event that the involuntary termination occurs after the first year of the
term, the severance benefits are the greater of the remaining months of annual
salary under the term of the agreement or one year's annual base salary. Ms.
Maddox's and Ms. Sample's agreements provide for severance benefits of two
years' base salary in the event of involuntary termination and include
confidentiality and noncompete provisions for a period of one year following
such termination. A surviving provision of an expired Employment Agreement with
Ms. Coombe provides severance benefits of two years' base salary in the event of
involuntary termination and include confidentiality and noncompete provisions
for a period of one year following such termination.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The General Partner knows of no one who beneficially owns in excess of five
percent of the Common Units of the Partnership except as set forth in the table
below.

<TABLE>
<CAPTION>
                                                           Amount and Nature
                                   Name and Address        of Beneficial Ownership   Percent
         Title of Class           of Beneficial Owner      as of February 15, 2000   of Class
     ------------------------   ------------------------   -----------------------   --------
<S>                             <C>                        <C>                       <C>
     Common Units               Enron Corp.                       3,276,811            17.74
     Subordinated Units         1400 Smith Street                 7,000,000(1)         77.78
     General Partner Interest   Houston, Texas  77002                     1(1)(2)     100.00

     Common Units               Koch Pipeline Company               997,800             5.40
     Subordinated Units         4111 East 37th Street N.          2,000,000            22.22
                                Wichita, Kansas  67220
</TABLE>

----------

     (1)  Held by the General Partner, an indirect subsidiary of Enron Corp.
     (2)  The reporting of the General Partner interest shall not be deemed to
          be a concession that such interest represents a security.


                                       40
<PAGE>   41
     The following table sets forth certain information as of February 15, 2001,
regarding the beneficial ownership of (i) the Common Units and (ii) the common
stock of Enron Corp., the parent company of the General Partner, by all
directors of the General Partner, each of the named executive officers and all
directors and executive officers as a group.

<TABLE>
<CAPTION>
                                                                      AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
                                                            -------------------------------------------------------------
                                                             SOLE VOTING     SHARED VOTING      SOLE VOTING
                                                            AND INVESTMENT   AND INVESTMENT    LIMITED OR NO     PERCENT
      TITLE OF CLASS                   NAME                    POWER(1)          POWER        INVESTMENT POWER   OF CLASS
---------------------------   ---------------------------   --------------   --------------   ----------------   --------
<S>                           <C>                           <C>              <C>              <C>                <C>
EOTT Energy Partners, L.P.    Stanley C. Horton                  10,000             -                 -             *
Common Units                  Dana R. Gibbs                       6,000             -                 -             *
                              Lawrence Clayton, Jr.               2,500             -                 -             *
                              Mary Ellen Coombe                  60,000         1,000                 -             *
                              Lori L. Maddox                          -             -                 -             *
                              Molly M. Sample                         -             -                 -             *
                              John H. Duncan                      8,500             -                 -             *
                              Edward O. Gaylord                   5,000             -                 -             *
                              Kenneth L. Lay                          -         5,000                 -             *
                              Dee S. Osborne                          -             -                 -             *
                              Daniel P. Whitty                        -             -                 -             *

                              All directors and executive
                              officers as a group
                              (11 in number)                     92,000         6,000                 -             *

Enron Corp.                   Stanley C. Horton                 357,712         3,608             23,223            *
Common Stock                  Dana R. Gibbs                      67,296           930                  -            *
                              Lawrence Clayton, Jr.                   -             -              5,600            *
                              Mary Ellen Coombe                  53,692             -             27,046            *
                              Lori L. Maddox                     11,055             -                147            *
                              Molly M. Sample                     5,276             -              4,022            *
                              John H. Duncan                    174,253        59,584                  -            *
                              Edward O. Gaylord                       -             -                 42            *
                              Kenneth L. Lay                  5,392,718     2,367,897            170,282          1.05%
                              Dee S. Osborne                          -             -                  -            *
                              Daniel P. Whitty                        -             -                  -            *

                              All directors and executive
                              officers as a group
                              (11 in number)                  6,062,002     2,432,019            230,362          1.15%
</TABLE>

----------

* Less than 1 percent

     (1)  The above table includes Subordinated Units of the Partnership which
          are subject to conversion into Common Units and which are presently
          vested: Ms. Coombe, 60,000 units; and all directors and executive
          officers as a group, 60,000 units. The above table also includes
          shares of common stock of Enron Corp. which are subject to stock
          options exercisable within 60 days as follows: Mr. Duncan, 39,755
          shares, for which he has shared voting and investment power for 32,384
          of such shares; Mr. Lay, 5,285,542 shares, for which he has shared
          voting and investment power for 1,828,210 of such shares; Ms. Coombe,
          53,276 shares; Mr. Gibbs, 66,040 shares; Mr. Horton, 240,322 shares;
          Ms. Maddox, 10,276 shares; Ms. Sample, 5,276 shares and all directors
          and executive officers as a group, 5,700,487 shares.
     (2)  Includes 2,598 shares held by the spouse of Mr. Horton, for which he
          may be deemed to have shared voting and investment power.

     The table also includes shares owned by certain members of the families (or
     family or charitable trusts or foundations) of the directors or executive
     officers, including shares in which pecuniary interest may be disclaimed.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     See Note 9 to the Consolidated Financial Statements for information
regarding certain transactions between EOTT and Enron and its affiliates.


                                       41
<PAGE>   42
                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K

    (a)(1) AND (2)  FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

      See "Index to Financial Statements" set forth on page F-1.

    (a)(3)  EXHIBITS

<TABLE>
<S>       <C>
    3.1   --  Form of Partnership Agreement of EOTT Energy Partners, L.P. (incorporated by reference to Exhibit
              3.1 to Registration Statement, File No. 33-73984)

    3.2   --  Amendment No. 1 dated as of August 8, 1995, to the Amended and Restated Agreement of Limited
              Partnership of EOTT Energy Partners, L.P. (incorporated by reference to Exhibit 3.2 to Annual
              Report on Form 10-K for the Year Ended December 31, 1995)

    3.3   --  Amendment No. 2 dated as of July 16, 1996, to the Amended and Restated Agreement of Limited
              Partnership of EOTT Energy Partners, L.P. (incorporated by reference to Exhibit 3.3 to Quarterly
              Report on Form 10-Q for the Quarter Ended June 30, 1996)

    3.4   --  Amendment No. 3 dated as of February 13, 1997, to the Amended and Restated Agreement of Limited
              Partnership of EOTT Energy Partners, L.P. (incorporated by reference to Exhibit 3.4 to Annual
              Report on Form 10-K for the Year Ended December 31, 1996)

    3.5   --  Amendment No. 4 dated as of November 30, 1998, to the Amended and Restated Agreement of Limited
              Partnership of EOTT Energy Partners, L.P. (incorporated by reference to Exhibit 3.5 to Annual
              Report on Form 10-K for the Year Ended December 31, 1998)

    3.6   --  Amendment No. 5 dated as of December 7, 1998, to the Amended and Restated Agreement of Limited
              Partnership of EOTT Energy Partners, L.P. (incorporated by reference to Exhibit 3.6 to Annual
              Report on Form 10-K for the Year Ended December 31, 1998)

    3.7   --  Amendment No. 6 dated as of September 16, 1999 to the Amended and Restated Agreement of Limited
              Partnership of EOTT Energy Partners, L.P. (incorporated by reference to Exhibit 3.1 to Current
              Report on Form 8-K dated September 29, 1999)

    4.1   --  Form of Indenture for Senior Debt Securities and Subordinated Debt Securities (incorporated by
              reference to Exhibit 4.1 to Registration Statement, File No. 333-82269)

    10.04 --  Form of Corporate Services Agreement between Enron Corp. and EOTT Energy Corp. (incorporated by
              reference to Exhibit 10.08 to Registration Statement, File No. 33-73984)

    10.05 --  Form of Contribution and Closing Agreement between EOTT Energy Corp. and EOTT Energy Partners, L.P.
              (incorporated by reference to Exhibit 10.09 to Registration Statement, File No. 33-73984)

    10.06 --  Form of Ancillary Agreement by and among Enron Corp., EOTT Energy Partners, L.P., EOTT Energy
              Operating Limited Partnership, EOTT Energy Pipeline Limited Partnership, EOTT Energy Canada
              Limited Partnership, and EOTT Energy Corp. (incorporated by reference to Exhibit 10.10 to
              Registration Statement, File No. 33-73984)
</TABLE>


                                       42
<PAGE>   43
<TABLE>
<S>       <C>
    10.07 --  Agreement to Increase and Extend Distribution Support dated August 8, 1995, amending the Ancillary
              Agreement referenced in 10.06 (incorporated by reference to Exhibit 10.07 to Annual Report on Form
              10-K for the Year Ended December 31, 1995)

    10.08 --  Form of Amended and Restated Agreement of Limited Partnership of EOTT Energy Operating Limited
              Partnership (incorporated by reference to Exhibit 10.11 to Registration Statement, File No. 33-73984)

    10.09 --  EOTT Energy Corp. Annual Incentive Plan (incorporated by reference to Exhibit 10.14 to Registration
              Statement, File No. 33-73984)

    10.10 --  EOTT Energy Corp. 1994 Unit Option Plan and the related Option Agreement (incorporated by reference
              to Exhibit 10.15 to Registration Statement, File No. 33-73984)

    10.11 --  EOTT Energy Corp. Severance Pay Plan (incorporated by reference to Exhibit 10.16 to Registration
              Statement, File No. 33-73984)

    10.12 --  Executive Employment Agreement effective March 24, 1994 between EOTT Energy Corp. and executive
              officers with employment agreements (incorporated by reference to Exhibit 10.05 to Registration
              Statement, File No. 33-73984)

    10.19 --  EOTT Energy Corp. Long Term Incentive Plan (incorporated by reference to Exhibit 10.19 to Quarterly
              Report on Form 10-Q for the Quarter Ended September 30, 1997)

    10.20 --  Agreement to Extend Distribution Support dated November 5, 1997, amending the Agreement referenced
              in 10.07 (incorporated by reference to Exhibit 10.20 to Annual Report on Form 10-K for the Year
              Ended December 31, 1997)

    10.22 --  Support Agreement dated September 21, 1998 between EOTT Energy Partners, L.P., EOTT Energy
              Operating Limited Partnership and Enron Corp. (incorporated by reference to Exhibit 10.22 to
              Quarterly Report on Form 10-Q for the Quarter Ended September 30, 1998)

 ***10.23 --  Crude Oil Supply and Terminalling Agreement dated as of December 1, 1998 between Koch Oil Company
              and EOTT Energy Operating Limited Partnership (incorporated by reference to Exhibit 10.23 to Annual
              Report on Form 10-K for the Year Ended December 31, 1998)

    10.24 --  Amended and Restated Credit Agreement as of December 1, 1998 between EOTT Energy Operating Limited
              Partnership, as Borrower, and Enron Corp., as Lender (incorporated by reference to Exhibit 10.24 to
              Annual Report on Form 10-K for the Year Ended December 31, 1998)

    10.26 --  Amendment dated March 17, 1999 to the Amended and Restated Credit Agreement as of December 1, 1998
              between EOTT Energy Operating Limited Partnership, as Borrower, and Enron Corp., as Lender
              (incorporated by reference to Exhibit 10.26 to Annual Report on Form 10-K for the Year Ended
              December 31, 1998)

 ***10.28 --  Amendment dated December 1, 1998 to the Crude Oil Supply and Terminalling Agreement dated as of
              December 1, 1998 between Koch Oil Company and EOTT Energy Operating Limited Partnership (incorporated
              by reference to Exhibit 10.28 to Annual Report on Form 10-K for the Year Ended December 31, 1998)
</TABLE>


                                       43
<PAGE>   44
<TABLE>
<S>       <C>
    10.29 --  Form of Executive Employment Agreement between EOTT Energy Corp. and Dana R. Gibbs (incorporated by
              reference to Exhibit 10.29 to Quarterly Report on Form 10-Q for the Period Ended March 31, 1999)

    10.30 --  Amendment dated August 11, 1999 to the Amended and Restated Credit Agreement as of December 1, 1998
              between EOTT Energy Operating Limited Partnership, as Borrower, and Enron Corp., as Lender
              (incorporated by reference to Exhibit 10.30 to Quarterly Report on Form 10-Q for the Period Ended June
              30, 1999)

    10.32 --  Form of Executive Employment Agreement between EOTT Energy Corp. and Dana R. Gibbs (incorporated by
              reference to Exhibit 10.32 to Quarterly Report on form 10-Q for the Period Ended September 30, 2000)

    10.33 --  Form of Executive Employment Agreement between EOTT Energy Corp. and Lawrence Clayton, Jr.
              (incorporated by reference to Exhibit 10.33 to Quarterly Report on form 10-Q for the Period Ended
              September 30, 2000)

 ***10.34 --  Letter Agreement dated September 14, 2000 amending Crude Oil Supply and Terminalling Agreement
              (incorporated by reference to Exhibit 10.34 to Quarterly Report on form 10-Q for the Period Ended
              September 30, 2000)

*   10.35 --  Form of Executive Employment Agreement between EOTT Energy Corp. and Molly Sample

*   10.36 --  Form of Executive Employment Agreement between EOTT Energy Corp. and Lori Maddox.

**  10.37 --  Letter Agreement dated February 6, 2001 amending Crude Oil Supply and Terminalling Agreement dated
              December 1, 1998.

    21.1  --  Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 to Annual Report on Form
              10-K for the year ended December 31,1999)

*   23.1  --  Consent of Arthur Andersen LLP

*   24    --  Power of Attorney
</TABLE>


*   Filed herewith.
**  Filed herewith; however, confidential treatment has been requested with
    respect to certain portions of this exhibit.
*** Certain portions of this exhibit have been treated confidentially.

   (b)   Reports on Form 8-K

         None


                                       44
<PAGE>   45
SIGNATURES

     PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED ON THE 26TH DAY OF
MARCH, 2001.


                                              EOTT ENERGY PARTNERS, L.P.
                                           (A Delaware Limited Partnership)

                                        By:      EOTT ENERGY CORP. as
                                                    General Partner

                                        By:   /s/   DANA R. GIBBS
                                           -------------------------------------
                                                    Dana R. Gibbs
                                           President and Chief Operating Officer


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON
THE DATES INDICATED.

<TABLE>
<CAPTION>
                  Signature                                  Title                                   Date
                  ---------                                  -----                                   ----
<S>                                              <C>                                         <C>
     /s/      STANLEY C. HORTON                  Chairman of the Board and                   March 26, 2001
--------------------------------------------      Chief Executive Officer
              Stanley C. Horton


     /s/        DANA R. GIBBS                    President, Chief Operating                  March 26, 2001
--------------------------------------------        Officer and Director
                Dana R. Gibbs


     /s/    LAWRENCE CLAYTON, JR.                Senior Vice President and                   March 26, 2001
--------------------------------------------      Chief Financial Officer
            Lawrence Clayton, Jr.


     /s/       LORI L. MADDOX                    Vice President and Controller               March 26, 2001
--------------------------------------------      (Chief Accounting Officer)
               Lori L. Maddox


     /s/       DEE S. OSBORNE                    Director                                    March 26, 2001
--------------------------------------------
               Dee S. Osborne


     /s/      DANIEL P. WHITTY                   Director                                    March 26, 2001
--------------------------------------------
              Daniel P. Whitty
</TABLE>


                                       45
<PAGE>   46
<TABLE>
<CAPTION>
                  Signature                                  Title                                   Date
                  ---------                                  -----                                   ----
<S>                                              <C>                                         <C>
     /s/       JOHN H. DUNCAN                    Director                                    March 26, 2001
--------------------------------------------
               John H. Duncan


     /s/       EDWARD O. GAYLORD                 Director                                    March 26, 2001
--------------------------------------------
              Edward O. Gaylord

     /s/       KENNETH L. LAY                    Director                                    March 26, 2001
--------------------------------------------
               Kenneth L. Lay
</TABLE>


                                       46
<PAGE>   47
                           EOTT ENERGY PARTNERS, L.P.
                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                               Page
                                                                                               ----
<S>                                                                                            <C>
Financial Statements
     Report of Independent Public Accountants.................................................  F-2
     Consolidated Statements of Operations -
         Years Ended December 31, 2000, 1999 and 1998.........................................  F-3
     Consolidated Balance Sheets - December 31, 2000 and 1999.................................  F-4
     Consolidated Statements of Cash Flows -
         Years Ended December 31, 2000, 1999 and 1998.........................................  F-5
     Consolidated Statements of Partners' Capital -
         Years Ended December 31, 2000, 1999 and 1998.........................................  F-6
     Notes to Consolidated Financial Statements...............................................  F-7

Supplemental Schedule

     Schedule II - Valuation and Qualifying Accounts and Reserves.............................  S-1
</TABLE>


                                      F-1
<PAGE>   48
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To EOTT Energy Partners, L.P.:

We have audited the accompanying consolidated balance sheets of EOTT Energy
Partners, L.P. (a Delaware limited partnership) as of December 31, 2000 and
1999, and the related consolidated statements of operations, cash flows and
partners' capital for each of the three years in the period ended December 31,
2000. These financial statements and the schedule referred to below are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of EOTT Energy Partners, L.P. as
of December 31, 2000 and 1999, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2000, in
conformity with accounting principles generally accepted in the United States.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The financial statement schedule listed
in the index to financial statements is presented for purposes of complying with
the Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.


                                           ARTHUR ANDERSEN LLP

Houston, Texas
March 2, 2001


                                      F-2
<PAGE>   49
                           EOTT ENERGY PARTNERS, L.P.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In Thousands, Except Per Unit Amounts)


<TABLE>
<CAPTION>
                                                                         YEAR ENDED DECEMBER 31,
                                                            ------------------------------------------------
                                                                2000              1999             1998
                                                            ------------      ------------      ------------
<S>                                                         <C>               <C>               <C>
Revenue ...............................................     $ 11,614,005      $  8,664,401      $  5,294,697

Cost of Sales .........................................       11,374,090         8,452,086         5,162,092
                                                            ------------      ------------      ------------

Gross Margin ..........................................          239,915           212,315           132,605

Expenses
   Operating expenses .................................          161,090           153,194           104,425
   Depreciation and amortization ......................           33,868            33,136            20,951
                                                            ------------      ------------      ------------
     Total ............................................          194,958           186,330           125,376
                                                            ------------      ------------      ------------

Operating Income ......................................           44,957            25,985             7,229

Other Income (Expense)
   Interest income ....................................            1,631               875               674
   Interest and related charges .......................          (30,411)          (29,817)          (10,165)
   Other, net .........................................           (2,344)              742            (1,805)
                                                            ------------      ------------      ------------
     Total ............................................          (31,124)          (28,200)          (11,296)
                                                            ------------      ------------      ------------

Net Income (Loss) Before Cumulative
   Effect of Accounting Change ........................           13,833            (2,215)           (4,067)

Cumulative Effect of Accounting
   Change (Note 3) ....................................               --             1,747                --
                                                            ------------      ------------      ------------
Net Income (Loss) .....................................     $     13,833      $       (468)     $     (4,067)
                                                            ============      ============      ============


Basic Net Income (Loss) Per Unit (Note 5)
   Common .............................................     $       0.49      $      (0.06)     $      (0.17)
                                                            ============      ============      ============
   Subordinated .......................................     $       0.49      $       0.06      $      (0.26)
                                                            ============      ============      ============


Diluted Net Income (Loss) Per Unit (Note 5) ...........     $       0.49      $      (0.02)     $      (0.21)
                                                            ============      ============      ============
Distributions Per Common Unit .........................     $       1.90      $       1.90      $       1.90
                                                            ============      ============      ============
Average Units Outstanding for Diluted Computation .....           27,476            24,877            19,267
                                                            ============      ============      ============
</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      F-3
<PAGE>   50
                           EOTT ENERGY PARTNERS, L.P.
                           CONSOLIDATED BALANCE SHEETS
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,   DECEMBER 31,
                                                                     2000           1999
                                                                 ------------   ------------
<S>                                                              <C>            <C>
                        ASSETS

Current Assets
   Cash and cash equivalents ................................     $   54,230     $   17,525
   Trade and other receivables, net of allowance for doubtful
     accounts of $1,827 and $1,732, respectively ............        920,055        966,422
   Inventories ..............................................         84,653        120,306
   Other ....................................................         23,901         29,191
                                                                  ----------     ----------
     Total current assets ...................................      1,082,839      1,133,444
                                                                  ----------     ----------

Property, Plant and Equipment, at cost ......................        562,393        544,723
   Less: Accumulated depreciation ...........................        168,460        140,228
                                                                  ----------     ----------
     Net property, plant and equipment ......................        393,933        404,495
                                                                  ----------     ----------

Other Assets, net of amortization ...........................         16,221         20,722
                                                                  ----------     ----------

Total Assets ................................................     $1,492,993     $1,558,661
                                                                  ==========     ==========

           LIABILITIES AND PARTNERS' CAPITAL

Current Liabilities
   Trade accounts payable ...................................     $1,121,531     $1,096,088
   Accrued taxes payable ....................................         10,755         11,947
   Repurchase agreements ....................................             --         74,055
   Other ....................................................         20,025         15,432
                                                                  ----------     ----------
     Total current liabilities ..............................      1,152,311      1,197,522
                                                                  ----------     ----------

Long-Term Liabilities
   11% senior notes .........................................        235,000        235,000
   Other ....................................................             --          3,475
                                                                  ----------     ----------
     Total long-term liabilities ............................        235,000        238,475
                                                                  ----------     ----------

Commitments and Contingencies (Note 11)

Additional Partnership Interests (Note 9) ...................          9,318          2,547
                                                                  ----------     ----------

Partners' Capital
   Common Unitholders .......................................         47,581         73,570
   Subordinated Unitholders .................................         41,496         38,855
   General Partner ..........................................          7,287          7,692
                                                                  ----------     ----------
     Total Partners' Capital ................................         96,364        120,117
                                                                  ----------     ----------
Total Liabilities and Partners' Capital .....................     $1,492,993     $1,558,661
                                                                  ==========     ==========
</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      F-4
<PAGE>   51
                            EOTT ENERGY PARTNERS, L.P
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                         YEAR ENDED DECEMBER 31,
                                                                 ---------------------------------------
                                                                   2000           1999           1998
                                                                 ---------      ---------      ---------
<S>                                                              <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Reconciliation of net income (loss) to net cash
   provided by operating activities
     Net income (loss) .....................................     $  13,833      $    (468)     $  (4,067)
     Depreciation ..........................................        32,813         31,164         18,806
     Amortization of intangible assets .....................         1,055          1,972          2,145
     (Gains) losses on disposal of assets ..................          (799)          (636)            66
     Changes in components of working capital -
       Receivables .........................................        46,367       (563,087)        60,648
       Inventories .........................................        35,653         17,239          1,720
       Other current assets ................................         5,290          1,137         (3,737)
       Trade accounts payable ..............................        25,443        578,365        (61,578)
       Accrued taxes payable ...............................        (1,192)         6,755           (270)
       Other current liabilities ...........................         4,593         (5,369)         4,238
     Other assets and liabilities ..........................        (8,870)         2,216            616
                                                                 ---------      ---------      ---------
   Net Cash Provided by Operating Activities ...............       154,186         69,288         18,587
                                                                 ---------      ---------      ---------

CASH FLOWS FROM INVESTING ACTIVITIES
   Proceeds from sale of property, plant and equipment .....         1,630          1,407          7,330
   Acquisitions ............................................            --        (33,000)      (224,397)
   Additions to property, plant and equipment ..............       (14,270)       (21,728)        (8,492)
   Other, net ..............................................            29             --            866
                                                                 ---------      ---------      ---------
   Net Cash Used In Investing Activities ...................       (12,611)       (53,321)      (224,693)
                                                                 ---------      ---------      ---------

CASH FLOWS FROM FINANCING ACTIVITIES
   Decrease in note payable - affiliate ....................            --             --        (39,300)
   Decrease in short-term borrowings - affiliate ...........            --        (28,297)       (41,703)
   Increase (decrease) in bridge loan - affiliate ..........            --        (42,000)        42,000
   Increase (decrease) in term loan - affiliate ............            --       (175,000)       175,000
   Increase (decrease) in repurchase agreements ............       (74,055)        (8,961)        83,016
   Issuance of 11% senior notes ............................            --        235,000             --
   Payment of financing issue expenses .....................            --         (7,558)            --
   Net proceeds from Issuance of Common Units ..............            --         52,920             --
   Contribution from General Partner .......................            --            535            793
   Distributions to Unitholders ............................       (37,586)       (30,380)       (22,842)
   Issuance of Additional Partnership Interests ............         6,771          2,547          9,153
   Other, net ..............................................            --           (281)          (715)
                                                                 ---------      ---------      ---------
   Net Cash Provided by (Used in) Financing Activities .....      (104,870)        (1,475)       205,402
                                                                 ---------      ---------      ---------
Increase (Decrease) in Cash and Cash Equivalents ...........        36,705         14,492           (704)
Cash and Cash Equivalents Beginning of Period ..............        17,525          3,033          3,737
                                                                 ---------      ---------      ---------
Cash and Cash Equivalents End of Period ....................     $  54,230      $  17,525      $   3,033
                                                                 =========      =========      =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
   Cash Paid for Interest ..................................     $  29,925      $  24,742      $   8,908
                                                                 =========      =========      =========
</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      F-5
<PAGE>   52
                           EOTT ENERGY PARTNERS, L.P.
                  CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
                                 (In Thousands)


<TABLE>
<CAPTION>
                                                             COMMON       SPECIAL     SUBORDINATED    GENERAL
                                                           UNITHOLDERS   UNITHOLDERS   UNITHOLDERS    PARTNER
                                                           -----------   -----------  ------------    --------
<S>                                                        <C>           <C>          <C>             <C>
Partners' Capital at December 31, 1997 ................     $  7,490      $ 25,060      $ 28,169      $  1,374

Net loss ..............................................       (1,623)         (490)       (1,854)         (100)
Cash distributions ....................................      (19,000)       (3,478)           --          (364)
Acquisition of Common Units for Treasury ..............          (66)           --            --            --
Issuance of Common Units ..............................       27,671            --            --            --
Issuance of Special Units .............................           --        15,905            --            --
Contribution receivable from Enron ....................           --       (15,905)           --            --
Issuance of Subordinated Units ........................           --            --        12,000            --
Contribution from General Partner .....................           --            --            --           793
                                                            --------      --------      --------      --------
Partners' Capital at December 31, 1998 ................     $ 14,472      $ 21,092      $ 38,315      $  1,703
                                                            --------      --------      --------      --------

Net income (loss) .....................................       (1,636)          618           540            10
Cash distributions ....................................      (28,385)       (1,416)           --          (579)
Issuance of Common Units ..............................       52,920            --            --           535
Contribution of Additional Partnership Interests ......       15,905            --            --         6,023
Conversion of Special Units ...........................       20,294       (20,294)           --            --
                                                            --------      --------      --------      --------
Partners' Capital at December 31, 1999 ................     $ 73,570      $     --      $ 38,855      $  7,692
                                                            --------      --------      --------      --------

Net income ............................................        9,116            --         4,441           276
Cash distributions ....................................      (35,105)           --        (1,800)         (681)
                                                            --------      --------      --------      --------
Partners' Capital at December 31, 2000 ................     $ 47,581      $     --      $ 41,496      $  7,287
                                                            ========      ========      ========      ========
</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      F-6
<PAGE>   53
                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   BASIS OF PRESENTATION

     EOTT Energy Partners, L.P. is a Delaware limited partnership which operates
through its affiliated limited partnerships, EOTT Energy Operating Limited
Partnership, EOTT Energy Canada Limited Partnership and EOTT Energy Pipeline
Limited Partnership. The terms "EOTT" and the "Partnership" herein refer to EOTT
Energy Partners, L.P. and its affiliated limited partnerships. EOTT Energy Corp.
serves as the General Partner of the Partnership and its related operating
limited partnerships. At December 31, 2000, the General Partner owned an
approximate 2% general partner interest in the Partnership and an approximate
25% subordinated limited partner interest. Enron Corp. ("Enron"), through its
ownership of EOTT Common Units, holds an approximate 12% interest in the
Partnership.

     In 1999, EOTT Energy Partners, L.P. formed EOTT Energy Finance Corp. as a
direct wholly-owned subsidiary. This entity was set up in connection with the
debt offering to facilitate certain investors' ability to purchase EOTT's senior
notes, more fully described in Note 7.

     The accompanying consolidated financial statements and related notes
present the financial position as of December 31, 2000 and 1999 for the
Partnership, and the results of its operations, cash flows and changes in
partners' capital for the years ended December 31, 2000, 1999 and 1998.

     Early last year, the Partnership identified certain systems integration
issues relating to its new computerized marketing and accounting system, and the
Partnership immediately commenced an extensive review and analysis of the
implementation of the new system. As a result of these efforts, the Partnership
identified and quantified the impacts of the systems integration issues relating
to its new computerized marketing and accounting system and recorded appropriate
financial statement adjustments in the first quarter of 2000. The Partnership
has implemented additional control processes and procedures that it believes are
sufficient to permit the preparation of timely and accurate financial
information, including additional preventative and monitoring controls to ensure
the integrity and reliability of financial information generated by the system
as well as additional system training for users.

     Certain reclassifications have been made to prior period amounts to conform
with the current period presentation.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Principles of Consolidation. The Partnership owns and operates its assets
through operating limited partnerships. The accompanying financial statements
reflect the consolidated accounts of the Partnership and the operating
partnerships after elimination of intercompany transactions.

     Nature of Operations. Through its affiliated limited partnerships, EOTT
Energy Operating Limited Partnership, EOTT Energy Canada Limited Partnership,
and EOTT Energy Pipeline Limited Partnership, EOTT is engaged in the purchasing,
gathering, transporting, trading, storage and resale of crude oil and refined
petroleum products and related activities. EOTT's principal business segments
are its North American Crude Oil - East of Rockies gathering and marketing
operations, Pipeline Operations and West Coast Operations.

     Cash Equivalents. EOTT records as cash equivalents all highly liquid
short-term investments having original maturities of three months or less.


                                      F-7
<PAGE>   54
                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     Inventories. The Partnership accounts for its inventories using the average
cost method. Inventories are summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                  December 31,
                                             ---------------------
                                               2000         1999
                                             --------     --------
<S>                                          <C>          <C>
          Crude oil ....................     $ 77,282     $115,290
          Refined products and NGLs ....        7,371        5,016
                                             --------     --------
          Total                              $ 84,653     $120,306
                                             ========     ========
</TABLE>


     Property, Plant and Equipment ("PP&E"). The components of PP&E, at cost,
are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                December 31,
                                                                           ---------------------
                                                                             2000         1999
                                                                           --------     --------
<S>                                                                        <C>          <C>
          Land .......................................................     $  3,224     $  3,515
          Buildings ..................................................        7,582        8,045
          Tractors and trailers ......................................       13,898       16,053
          Office PP&E, including furniture and fixtures ..............       42,233       38,672
          Operating PP&E, including pipelines, storage tanks, etc ....      495,456      478,438
                                                                           --------     --------
            Total PP&E, at cost ......................................     $562,393     $544,723
                                                                           ========     ========
</TABLE>


     Certain assets included in PP&E, primarily pipelines, are affected by
factors which could affect future cash flows. These factors include competition,
consolidation in the industry, refinery demand for specific grades of crude oil,
area market price structures and continued development drilling in certain areas
of the United States. EOTT continuously monitors these factors and pursues
alternative strategies to maintain or enhance cash flows associated with these
assets; however, no assurances can be given that EOTT can mitigate the effects,
if any, on future cash flows related to any changes in these factors.

     Depreciation and Amortization. Depreciation is provided by applying the
straight-line method to the cost basis of property, plant and equipment, less
estimated salvage value, over the estimated useful lives of the assets. Asset
lives are 15 to 20 years for pipeline and gathering facilities, 5 to 10 years
for transportation equipment, 15 to 20 years for barge and terminalling
facilities and 3 to 20 years for other facilities and equipment.

     Goodwill is amortized over a period of 10 to 15 years, and is recorded net
of its accumulated amortization in Other Assets. Accumulated amortization of
goodwill at December 31, 2000 and 1999 was $30.9 million and $29.8 million,
respectively.

     Pipeline Linefill. Pipeline linefill, which consists of minimum operating
requirements, is recorded at cost. Total minimum operating linefill requirements
held in third party pipelines and EOTT pipelines at December 31, 2000 and 1999
were 3.5 million barrels at a cost of $54.6 million and 3.4 million barrels at a
cost of $46.9 million, respectively. Minimum linefill requirements in third
party pipelines at December 31, 2000 and 1999 were valued at $16.8 million and
$18.4 million, respectively, and classified as Other Current Assets on the
balance sheet. Minimum linefill requirements held in EOTT pipelines at December
31, 2000 and 1999, were valued at $37.8 million and $28.5 million, respectively,
and classified as Property, Plant and Equipment on the balance sheet.


                                      F-8
<PAGE>   55
                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     Foreign Currency Transactions. Canadian operations represent all of the
foreign activities of EOTT. The U.S. dollar is the functional currency. Foreign
currency transactions are initially translated into U.S. dollars. Gains and
losses resulting therefrom are included in the determination of net income
(loss) in the period in which the exchange rate changes.

     Hedging Activities/Revenue Recognition. EOTT enters primarily into futures
and over-the-counter transactions in an effort to minimize the impact of market
fluctuations on inventories and other contractual commitments. Realized and
unrealized changes in the market value of these transactions, which are entered
into and accordingly designated as hedges, are deferred until the gain or loss
on the hedged transaction is recognized in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 80. Any cash flow recognition
resulting from hedging activities is treated in the same manner as the
underlying transaction. Based on the historical correlations between the New
York Mercantile Exchange ("NYMEX") price for West Texas Intermediate crude at
Cushing, Oklahoma and the various marketing hubs at which EOTT markets crude
oil, EOTT management believes the hedging program has been effective in
minimizing the overall price risk. EOTT continuously monitors the basis
differentials between its various trading hubs and Cushing, Oklahoma to further
manage its basis exposure.

     It is EOTT's policy to seek to maintain at all times purchase and sale
positions that are substantially balanced in order to minimize exposure to price
fluctuations; however certain risks cannot be completely hedged such as basis
risks (the risk that price relationships between delivery points, classes of
products or delivery periods will change) and the risk that transportation costs
will change.

     Periodically, EOTT enters into agreements to sell United States dollars for
Canadian dollars to hedge commitments to sell petroleum in the United States
that is purchased in Canada. Any gains or losses resulting from these
commitments are recorded with the purchase and sale of crude oil and are
included in the determination of net income (loss).

     EOTT recognizes revenue on the accrual method, for non-energy trading
activities, based on the right to receive payment for goods and services
delivered to third parties. Changes in the market value of transactions
designated as energy trading activities in accordance with Emerging Issues Task
Force Issue 98-10, discussed in Note 3, are recorded every period as
mark-to-market gains or losses.


     Other Income (Expense), net. The components of other income (expense), net,
are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                      Year Ended December 31,
                                                                 ---------------------------------
                                                                   2000         1999         1998
                                                                 -------      -------      -------
<S>                                                              <C>          <C>          <C>
          Gain (loss) on foreign currency transactions .....     $  (366)     $   485      $(1,055)
          Gain (loss) on disposal of fixed assets ..........         799          636          (66)
          Litigation settlements and provisions ............         (89)         256         (969)
          Discount fees on sale of receivables .............      (2,260)        (732)          --
          Other ............................................        (428)          97          285
                                                                 -------      -------      -------
             Total .........................................     $(2,344)     $   742      $(1,805)
                                                                 =======      =======      =======
</TABLE>


                                      F-9
<PAGE>   56
                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     Environmental. Expenditures for ongoing compliance with environmental
regulations that relate to current operations are expensed or capitalized as
appropriate. Estimated liabilities are recorded when environmental assessments
indicate that remedial efforts are probable and the costs can be reasonably
estimated. Estimates of the liability and insurance recovery, if any, are based
upon currently available facts, existing technology and presently enacted laws
and regulations. These estimated liabilities and recoveries from insurance are
subject to revision in future periods based on actual costs or new information
and are included in the balance sheet at undiscounted amounts.

     Use of Estimates. The preparation of these financial statements required
the use of certain estimates by management in determining the entity's assets,
liabilities, revenue and expenses. Actual results may differ from these
estimates.

3.   CHANGE IN ACCOUNTING PRINCIPLE

     Emerging Issues Task Force ("EITF") Issue 98-10, "Accounting for Contracts
Involved in Energy Trading and Risk Management Activities" was adopted January
1, 1999. The cumulative effect of adopting Issue 98-10 effective January 1, 1999
was $1.7 million and is reflected as an increase in net income in the
Consolidated Statement of Operations.

4.   ACQUISITION OF ASSETS

     On May 1, 1999, EOTT acquired crude oil transportation and storage assets
in West Texas and New Mexico from Texas-New Mexico Pipe Line Company, which
included approximately 1,800 miles of common carrier crude oil pipelines. EOTT
paid $33 million in cash and recorded a $4 million liability related to assumed
environmental obligations and financed the total acquisition cost using
short-term borrowings from Enron.

     On July 1, 1998, the Partnership acquired crude oil gathering and
transportation assets in West Texas and New Mexico from Koch Pipeline Company,
L.P., a subsidiary of Koch Industries, Inc., and Koch Oil Company, a division of
Koch Industries, Inc. (collectively "Koch"). The asset purchase included
approximately 300 miles of common carrier pipelines, associated storage
facilities for approximately 500,000 barrels and lease purchase contracts for up
to 40,000 barrels of lease crude oil per day. The purchase price was
approximately $28.5 million and was financed with short-term borrowings from
Enron.

     On December 1, 1998, the Partnership acquired certain additional crude oil
gathering and transportation assets in key oil producing regions from Koch. The
asset purchase included approximately 3,900 miles of active crude oil pipelines,
crude oil transport trucks, meter stations, vehicles, storage tanks and lease
purchase contracts for approximately 180,000 barrels of lease crude oil per day
from production in 11 central and western states including Texas, Oklahoma,
Kansas and California (the "Assets"). The total purchase price of the Assets was
$235.6 million and included consideration given to Koch of $184.5 million in
cash, 2,000,000 Common Units and 2,000,000 Subordinated Units. EOTT financed the
cash portion of the purchase price through borrowings from Enron, consisting of
a $42 million bridge loan, $135.7 million of term debt, and $6.8 million from
the Partnership's existing credit facility with Enron. EOTT also increased its
existing credit facility with Enron to $1 billion in order to provide increased
credit support for the Partnership because of its increased size following the
Koch acquisitions.


                                      F-10
<PAGE>   57
                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


5.   EARNINGS PER UNIT

     Basic earnings per unit includes the weighted average impact of outstanding
units of EOTT (i.e., it excludes unit equivalents). Diluted earnings per unit
considers the impact of all potentially dilutive securities. Net income (loss)
shown in the table below excludes the approximate two percent interest of the
General Partner. Earnings (loss) per unit are calculated as follows (in
millions, except per unit amounts):

<TABLE>
<CAPTION>
                                 2000                             1999                             1998
                    -----------------------------    -----------------------------    -----------------------------
                                  Wtd.                  Net       Wtd.                             Wtd.
                       Net      Average    Per         Income    Average    Per         Net       Average    Per
                     Income      Units     Unit        (Loss)     Units     Unit        Loss       Units     Unit
                    ---------  ---------  -------    ---------  ---------  -------    ---------  ---------  -------
<S>                 <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>         <C>
Basic: (1)
   Common           $   9,116     18,476  $  0.49    $ (1,018)     15,877  $(0.06)    $ (2,113)     12,097  $(0.17)
   Subordinated     $   4,441      9,000  $  0.49    $    540       9,000  $ 0.06     $ (1,854)      7,170  $(0.26)
Diluted (2)         $  13,557     27,476  $  0.49    $   (478)     24,877  $(0.02)    $ (3,967)     19,267  $(0.21)
</TABLE>


     (1)  Net income (loss), excluding the two percent General Partner interest,
          has been apportioned to each class of Unitholder based on the
          ownership of total Units outstanding in accordance with the
          Partnership Agreement, which is also reflected on the Statement of
          Partners' Capital, and Special Units were considered Common Units. Due
          to a negative capital account balance for the Common Unitholders
          during the second and third quarters of 1998, the loss allocated to
          the Common Unitholders attributable to these periods was reallocated
          to the remaining Unitholders based on their ownership percentage. The
          allocated loss was recouped by the Unitholders allocated the
          additional losses in the first quarter of 1999.
     (2)  The diluted earnings (loss) per unit calculation assumes the
          conversion of Subordinated Units into Common Units. The
          disproportionate income (loss) allocation between the Unitholders has
          no effect on the diluted computation.

     Per unit information related to the net income before cumulative effect of
accounting change and cumulative effect of the change in accounting principle
for the year ended December 31, 1999 is as follows:

<TABLE>
<CAPTION>
                                                                                 Year Ended December 31, 1999
                                                                           ----------------------------------------
                                                                                     Basic
                                                                           --------------------------
                                                                            Common       Subordinated      Diluted
                                                                           --------      ------------      --------
<S>                                                                        <C>             <C>             <C>
                    Net Loss Before Cumulative Effect
                       of Accounting Change .....................          $  (0.13)       $  (0.01)       $  (0.09)
                    Cumulative Effect of Accounting Change ......              0.07            0.07            0.07
                                                                           --------        --------        --------
                    Net Income (Loss) ...........................          $  (0.06)       $   0.06        $  (0.02)
                                                                           ========        ========        ========
</TABLE>


     As further discussed in Note 7, EOTT issued 3,500,000 Common Units to the
public on September 29, 1999.

6.   NONRECURRING ITEMS

     During 2000, EOTT filed an insurance claim to recover the losses related to
the theft of NGL product and received $2.5 million. In addition, EOTT recorded
additional charges of $1.9 million primarily related to severance charges for a
former officer and the closing of the remaining contract for mid-continent NGL
activities.

     In the fourth quarter of 1999, EOTT recorded $9.8 million of nonrecurring
items which include $7.8 million related to mid-continent NGL activities and a
$2.0 million severance charge. The $7.8 million charge related to mid-continent
NGL activities includes a $6.2 million charge for the theft of NGL product,
concealment of commercial activities and other unauthorized actions by a former
employee. The remaining charges relate to


                                      F-11
<PAGE>   58
                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


incremental costs to liquidate contracts prior to their maturity in order to
wind down the mid-continent NGL activities.

     In a continual effort to reduce the Partnership's cost structure, the
Partnership increased the utilization of technology and implemented a new
marketing and accounting system during 1999. As a result, marketing, field and
administrative personnel were reduced and a severance charge of $2.0 million was
recorded pursuant to the existing EOTT Energy Corp. Severance Plan.

7.   CREDIT RESOURCES AND LIQUIDITY

     The Partnership has a credit facility with Enron to provide credit support
in the form of guarantees, letters of credit and working capital loans through
December 31, 2001. The total amount of the Enron facility is $1.0 billion, and
it contains sublimits of $100 million for working capital loans and $900 million
for guarantees and letters of credit. Letter of credit fees are based on actual
charges by the banks which range from .20% - .375% per annum. Interest on
outstanding loans is charged at LIBOR plus 250 basis points per annum. Prior to
the maturity of the Enron facility, EOTT expects to replace the portion of this
facility used for guarantees and letters of credit with a facility for
approximately $300 million with third party financial institutions. The
Partnership's need for working capital loans is expected to be met utilizing
the commodity repurchase agreements or sales of certain receivables.

     The Enron facility is subject to defined borrowing base limitations
relating to the Partnership's activities and to the maintenance and protection
of the collateral. The Enron facility permits distributions to Unitholders
subject to certain limitations based on the Partnership's earnings and other
factors. These covenants and restrictions are not expected to materially affect
the Partnership's ability to operate its ongoing business. The Enron facility is
secured by a first priority lien on and security interest in all receivables and
inventory of the Partnership. The borrowing base is the sum of cash and cash
equivalents, specified percentages of eligible receivables, inventory, and
products contracted for or delivered but not billed. The Enron facility is
non-recourse to the General Partner. The Partnership is restricted from entering
into additional financing arrangements without the prior approval of Enron.

     On September 29, 1999, EOTT issued 3,500,000 Common Units to the public,
with net proceeds to EOTT of $52.9 million. On October 1, 1999, EOTT issued to
the public $235 million of 11% senior notes. The senior notes are due October 1,
2009, and interest is paid semiannually on April 1 and October 1. The senior
notes are fully and unconditionally guaranteed by all of EOTT's operating
limited partnerships. On or after October 1, 2004, EOTT may redeem the notes,
and prior to October 1, 2002, EOTT may redeem up to 35% of the notes with
proceeds of public or private sales of equity at specified redemption prices.
Provisions of the senior notes could limit additional borrowings, sale and lease
back transactions, affiliate transactions, distributions to Unitholders or
merger, consolidation or sale of assets if certain financial performance ratios
are not met. The net proceeds from the issuance of the 11% senior notes and the
issuance of the Common Units were used to repay loans and short-term borrowings
from Enron.

     At December 31, 2000, EOTT had $103.3 million in letters of credit
outstanding under the Enron facility. In addition, guarantees outstanding
totaled $ 537.5 million of which $458.8 million were used. At December 31, 1999,
EOTT had $143.5 million in letters of credit outstanding under the Enron
facility. In addition, guarantees outstanding totaled $427.0 million of which
$378.5 million were used.

     The General Partner believes that the Enron facility, commodity repurchase
agreements, sales of certain receivables and any new facility to replace the
Enron facility will be sufficient to support the Partnership's crude oil
purchasing activities and working capital and liquidity requirements. No
assurance, however, can be given that the General Partner will not be required
to reduce or restrict the Partnership's gathering and marketing activities
because of limitations on its ability to obtain credit support and financing for
its working capital needs.


                                      F-12
<PAGE>   59
                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The Partnership's ability to obtain letters of credit to support its
purchases of crude oil or other petroleum products is fundamental to the
Partnership's gathering and marketing activities. Additionally, EOTT has a
significant need for working capital due to the large dollar volume of marketing
transactions in which it engages. Any significant decrease in the Partnership's
financial strength, regardless of the reason for such decrease, may increase the
number of transactions requiring letters of credit or other financial support,
may make it more difficult for the Partnership to obtain such letters of credit,
and/or may increase the cost of obtaining them. This could in turn adversely
affect the Partnership's ability to maintain or increase the level of its
purchasing and marketing activities or otherwise adversely affect the
Partnership's profitability and Available Cash as defined in EOTT's Partnership
Agreement and amendments thereto.

     The Partnership Agreement authorizes EOTT to cause the Partnership to issue
additional limited partner interests, the proceeds from which could be used to
provide additional funds for acquisitions or other Partnership needs.

     EOTT has an agreement with a third party which provides for the financing
of purchases of crude oil inventory utilizing forward commodity repurchase
agreements. At December 31, 2000, there were no repurchase agreements
outstanding. At December 31, 1999, EOTT had outstanding repurchase agreements of
approximately $74.1 million. Pursuant to the agreements, which had terms of
thirty days, EOTT repurchased the crude oil inventory on January 21, 2000 for
approximately $74.5 million.

     EOTT has entered into an agreement with a third party which provides for
the sale of up to an aggregate amount of $100 million of certain trade
receivables outstanding at any one time. As of December 31, 2000 and 1999, $45
million and $50 million, respectively, of receivables had been sold under this
agreement. Discount fees related to the sales are reflected in other, net
expenses. EOTT has accounted for these transactions as a sale under the
provisions of Statement of Financial Accounting Standards ("SFAS") No. 125,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishment
of Liabilities," and the related cash received is reflected as cash provided by
operating activities in the Consolidated Statements of Cash Flows.

     The Partnership will distribute 100% of its Available Cash within 45 days
after the end of each quarter to Unitholders of record and to the General
Partner. Available Cash consists generally of all of the cash receipts of the
Partnership adjusted for its cash disbursements and net changes to reserves. The
full definition of Available Cash is set forth in the Partnership Agreement and
amendments thereto, forms of which have been filed as exhibits to this Annual
Report on Form 10-K. Distributions of Available Cash to the Subordinated
Unitholders are subject to the prior rights of the Common Unitholders to receive
the Minimum Quarterly Distribution ("MQD") for each quarter during the
Subordination Period, and to receive any arrearages in the distribution of the
MQD on the Common Units for prior quarters during the Subordination Period.

     MQD is $0.475 per Unit. Enron has committed to provide total cash
distribution support in an amount necessary to pay MQDs, with respect to
quarters ending on or before December 31, 2001, in an amount up to an aggregate
of $29 million ($19.7 million of which remains available) in exchange for
Additional Partnership Interests ("APIs"). See further discussion in Note 9
regarding Enron's distribution support.


                                      F-13
<PAGE>   60
                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


8.   PARTNERS' CAPITAL

     The following is a reconciliation of Units outstanding for the years ended
December 31, 2000, 1999 and 1998:

<TABLE>
<CAPTION>
                                                                   Common           Special       Subordinated
                                                                    Units            Units            Units
                                                                 -----------      -----------     ------------
<S>                                                              <C>              <C>             <C>
          Units Outstanding at December 31, 1997 ...........      10,000,000        1,830,011        7,000,000
                                                                 ===========      ===========      ===========

          Acquisition of Common Units for Treasury .........          (4,000)              --               --
          Issuance of Common Units to Koch .................       2,000,000               --               --
          Issuance of Special Units to Enron ...............              --        1,150,000               --
          Issuance of Subordinated Units to Koch ...........              --               --        2,000,000
                                                                 -----------      -----------      -----------
          Units Outstanding at December 31, 1998 ...........      11,996,000        2,980,011        9,000,000
                                                                 ===========      ===========      ===========

          Conversion of Special Units into Common Units ....       2,980,011       (2,980,011)              --
          Issuance of Common Units .........................       3,500,000               --               --
                                                                 -----------      -----------      -----------
          Units Outstanding at December 31, 1999 ...........      18,476,011               --        9,000,000
                                                                 ===========      ===========      ===========

          Units Outstanding at December 31, 2000 ...........      18,476,011               --        9,000,000
                                                                 ===========      ===========      ===========
</TABLE>


     The Partnership issued 2,000,000 Common Units and 2,000,000 Subordinated
Units to Koch in connection with the acquisition of pipeline and gathering
assets in December 1998. In addition, pursuant to a Support Agreement discussed
in Note 9, the Partnership issued 1,150,000 Special Units to Enron in exchange
for Enron's commitment to contribute $21.9 million in APIs outstanding at
December 31, 1998.

     On February 12, 1999, the Partnership obtained approval of proposals
presented at a Special Meeting of Unitholders. Approval of these proposals,
among other things, (a) authorized the Partnership to issue an additional 10
million Common Units to raise cash to reduce indebtedness, for acquisitions and
other Partnership purposes, (b) changed the terms of the Special Units so that
they became convertible into Common Units and (c) resulted in an increase in
Enron's distribution support to $29 million and an extension of the support
through the fourth quarter of 2001. As a result of the approval of the
proposals, Enron contributed the $21.9 million in APIs outstanding at December
31, 1998.

     On September 29, 1999, EOTT issued 3,500,000 Common Units to the public for
net proceeds of $52.9 million. The net proceeds were used to repay loans to
Enron.


                                      F-14
<PAGE>   61
                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


9.   TRANSACTIONS WITH ENRON AND RELATED PARTIES

     Revenue and Cost of Sales. A summary of revenue and cost of sales with
Enron and its affiliates follows (in thousands):

<TABLE>
<CAPTION>
                                                                          Year Ended December 31,
                                                                ------------------------------------------
                                                                    2000           1999           1998
                                                                -----------     ----------     -----------
<S>                                                             <C>             <C>            <C>
           Sales to affiliates............................      $    49,673     $   18,859     $    10,648
           Purchases from affiliates......................      $    57,162     $  279,167     $   232,486
</TABLE>


     Sales to affiliates in 2000, 1999 and 1998 consist primarily of sales of
crude oil to Enron Reserve Acquisition Corp. Purchases from affiliates consist
primarily of crude oil and condensate purchases from Enron Reserve Acquisition
Corp. and Enron North America Corp. These transactions in the opinion of
management are no more or less favorable than can be obtained from unaffiliated
third parties.

     Other related party balances related to purchases and sales of goods and
services have been classified as trade and other receivables or trade accounts
payable. Related party receivables at December 31, 2000 and 1999 were $2.0
million and $2.3 million, respectively. Related party payables at December 31,
2000 and 1999 were $19.7 million and $0.8 million, respectively. The payables
primarily represent amounts owed by EOTT on the purchase of crude oil and other
products from Enron affiliates.

     Operations and General and Administrative Services. As is commonly the case
with publicly traded partnerships, EOTT does not directly employ any persons
responsible for managing or operating the Partnership or for providing services
relating to day-to-day business affairs. The General Partner provides such
services or obtains such services from third parties and is reimbursed for
substantially all of its direct and indirect costs and expenses. The General
Partner, under a corporate services agreement, provides services to the
Partnership including liability and casualty insurance and certain data
processing services. The General Partner is reimbursed by the Partnership for
these direct and indirect costs. Those costs were $3.6 million, $3.8 million and
$3.3 million for the years ended December 31, 2000, 1999 and 1998, respectively
and are included in operating expense. Management believes that the charges were
reasonable.

     The General Partner recently entered into an agreement with Enron Pipeline
Services Company ("EPSC"), a wholly owned subsidiary of Enron Corp., to provide
certain operating and administrative services to the General Partner, effective
October 1, 2000. These services were previously performed directly by the
General Partner. The agreement provides that the General Partner will reimburse
EPSC for its costs and expenses in rendering the services. The General Partner
will in turn be reimbursed by the Partnership. The arrangement is not expected
to increase the costs and expenses borne by the Partnership. The costs
reimbursed for the three months ended December 31, 2000 were $6.3 million.

     Support Agreement. Pursuant to a Support Agreement dated September 21,
1998, (a) Enron made loans to the Partnership to fund the cash portion of the
consideration paid to Koch Pipeline Company L.P. and Koch Oil Company
(collectively "Koch") for the acquisitions of gathering and marketing assets,
(b) Enron increased and extended the Partnership's credit facility with Enron to
$1 billion through December 31, 2001, (c) the Partnership issued 1,150,000
Special Units to Enron, and (d) Enron agreed to contribute $21.9 million in APIs
to the Partnership and extend its cash distribution support through the fourth
quarter of 2001, subject to Unitholder approval. The Partnership obtained
Unitholder approval of these proposals on February 12, 1999.

     Special Units. The Special Units ranked pari passu with the Common Units in
all distributions and upon liquidation and were voted as a class with the Common
Units. In connection with the Support Agreement, the


                                      F-15
<PAGE>   62
                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Partnership issued 1,150,000 Special Units to Enron in December 1998 and, as
discussed further below, Enron contributed $21.9 million in APIs to the
Partnership in February 1999. The Special Units were converted into Common Units
in March 1999 on a one-for-one basis.

     Additional Partnership Interests. As discussed in Note 8, Enron increased
its cash distribution support to $29 million and extended it through the fourth
quarter of 2001 and contributed the $21.9 million in APIs outstanding at
December 31, 1998 pursuant to its commitment made in connection with the Support
Agreement. On May 14, 1999 and February 14, 2000, Enron paid $2.5 million and
$6.8 million, respectively, in support of EOTT's first and fourth quarter 1999
distributions to its Common Unitholders and received APIs. APIs have no voting
rights and are non-distribution bearing; however, APIs will be entitled to be
redeemed if, with respect to any quarter, the MQD and any Common Unit Arrearages
have been paid, but only to the extent that Available Cash with respect to such
quarter exceeds the amount necessary to pay the MQD on all Units and any Common
Unit Arrearages.

10.  EMPLOYEE BENEFIT AND RETIREMENT PLANS

     Employees of the General Partner are covered by various retirement, stock
purchase and other benefit plans of Enron. In April 1993, the General Partner
adopted non-qualified benefit plans providing medical, dental, life, accidental
death and dismemberment and long-term disability coverage to employees, with all
related premiums and costs being incurred by the General Partner. Total benefit
costs for 2000 were $9.4 million, including $5.8 million in costs attributable
to health and welfare benefit plans. Total benefit costs for 1999 were $9.4
million, including $5.7 million in costs attributable to health and welfare
benefit plans. Total benefit costs for 1998 were $6.4 million, including $3.9
million in costs attributable to health and welfare benefit plans.

     Additionally, the General Partner maintains a variable pay plan based on
earnings before interest, income taxes, depreciation and amortization of which
$3.8 million and $3.0 million was recorded in 2000 and 1999, respectively, and
none was recognized in 1998.

     The General Partner's employees continue benefit accrual under the Enron
Cash Balance Pension Plan ("Cash Balance Plan"). All accrued benefits under the
Cash Balance Plan will be preserved in the Cash Balance Plan until the General
Partner adopts separate plans or participating employees are eligible for
distribution under the plan. The General Partner's employees continue to
participate in the Enron Employee Stock Ownership Plan and continue to be
eligible for participation in the Enron Corp. Savings Plan.

     As of September 30, 2000, the most recent valuation date, the plan net
assets, including contributions to the trust during the fourth quarter of 2000,
of the Enron noncontributory defined benefit plan, in which the employees of the
General Partner participate, were less than the actuarial present value of
projected plan benefit obligations by approximately $28.0 million. As of
September 30, 1999, the plan assets, including contributions to the trust during
the fourth quarter of 1999, of the Enron noncontributory defined benefit plan,
in which the employees of the General Partner participate, were less than the
actuarial present value of projected plan benefit obligations by approximately
$25.0 million. The assumed discount rate, rate of return on plan assets and rate
of increases in wages used in determining the actuarial present value of
projected benefits were 7.75%, 10.5%, and 4.0% in both 2000 and 1999.

     The General Partner provides certain postretirement medical, life insurance
and dental benefits to eligible employees who retire after January 1, 1994.
Benefits are provided under the provisions of contributory defined dollar
benefit plans for eligible employees and their dependents. EOTT accrues these
postretirement benefit costs over the service lives of employees expected to be
eligible to receive such benefits. Enron retains liability


                                      F-16
<PAGE>   63
                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


for former employees of the General Partner who retired prior to January 1,
1994. The accumulated postretirement benefit obligation ("APBO") existing at
December 31, 2000 and 1999 totaled $0.9 million and $1.1 million, respectively.
The measurement of the APBO assumes a 7.75% and 7.75% discount rate in 2000 and
1999, respectively. EOTT does not currently intend to prefund its obligations
under the Enron postretirement benefit plan.

     The following table sets forth information related to changes in the
benefit obligations, changes in plan assets, a reconciliation of the funded
status of the plans and components of the expense recognized related to
postretirement benefits provided by EOTT (in thousands):

<TABLE>
<CAPTION>
                                                                   2000        1999
                                                                 -------      -------
<S>                                                              <C>          <C>
     CHANGE IN BENEFIT OBLIGATION
         Benefit obligation at January 1 ...................     $ 1,070      $ 1,109
         Service cost ......................................         137          178
         Interest cost .....................................          79           82
         Plan participants' contributions ..................          73           --
         Plan amendments ...................................          --           --
         Actuarial loss (gain) .............................        (130)        (236)
         Effect of curtailments and settlements ............        (198)          --
         Benefits paid .....................................        (107)         (63)
                                                                 -------      -------
           Benefit obligation at December 31 ...............     $   924      $ 1,070
                                                                 =======      =======

     CHANGE IN PLAN ASSETS
         Fair value of plan assets at January 1 ............     $    --      $    --
         Company contributions .............................          34           63
         Plan participants' contributions ..................          73           --
         Benefits paid .....................................        (107)         (63)
                                                                 -------      -------
           Fair value of plan assets at December 31 ........     $    --      $    --
                                                                 =======      =======

     RECONCILIATION OF FUNDED STATUS TO BALANCE SHEET
         Funded status at December 31 ......................     $  (924)     $(1,070)
         Unrecognized prior service cost ...................         276          433
         Unrecognized actuarial gain .......................        (540)        (581)
                                                                 -------      -------
         Accrued benefit cost at December 31 ...............     $(1,188)     $(1,218)
                                                                 =======      =======
</TABLE>

<TABLE>
<CAPTION>
                                                                      2000       1999       1998
                                                                      -----      -----      -----
<S>                                                                   <C>        <C>        <C>
     COMPONENTS OF NET PERIODIC BENEFIT COST
         Service cost ...........................................     $ 137      $ 178      $ 114
         Interest cost ..........................................        79         82         73
         Amortization of prior service cost .....................        33         36         36
         Recognized net actuarial gain ..........................       (38)       (19)       (22)
                                                                      -----      -----      -----
           Total net periodic postretirement benefit cost .......     $ 211      $ 277      $ 201
                                                                      =====      =====      =====
</TABLE>


                                      F-17
<PAGE>   64
                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The General Partner provides unemployment, severance and disability-related
benefits or continuation of benefits such as health care and life insurance and
other postemployment benefits. SFAS No. 112 requires the cost of those benefits
to be accrued over the service lives of the employees expected to receive such
benefits. At December 31, 2000 and 1999, the liability accrued was $0.9 million
and $1.1 million, respectively.

     EOTT Energy Corp. Unit Option Plan. In February 1994, the Board of
Directors of the General Partner adopted the 1994 EOTT Energy Corp. Unit Option
Plan (the "Unit Option Plan"), which is a variable compensatory plan. To date,
no compensation expense has been recognized under the Unit Option Plan. Under
the Unit Option Plan, selected employees of the General Partner were granted
options to purchase Subordinated Units at a price of $15.00 per Unit as
determined by the Compensation Committee of the Board of Directors of the
General Partner. Options granted under the Unit Option Plan vested to the
employees over a five-year service period and will expire on the tenth
anniversary of the date of grant. No options are vested or exercisable prior to
the third anniversary of the grant.

     The following table sets forth the Unit Option Plan activity for the years
ended December 31, 2000, 1999 and 1998:

<TABLE>
<CAPTION>
                                                     Number of Unit Options
                                             -------------------------------------
                                                2000         1999          1998
                                             ---------     ---------     ---------
<S>                                          <C>           <C>           <C>
Outstanding at January 1 ...............       925,000     1,030,000     1,155,000
       Granted .........................            --            --       400,000
       Exercised .......................            --            --            --
       Forfeited .......................       465,000       105,000       525,000
                                             ---------     ---------     ---------

Outstanding at December 31 .............       460,000       925,000     1,030,000
                                             =========     =========     =========

Available for grant at December 31 .....            --            --            --
                                             =========     =========     =========
</TABLE>


     In February 1997, the Board of Directors of the General Partner decided
that it would not grant any additional options under the Unit Option Plan. In
May 1998, options forfeited by a former officer were approved for reissuance by
the Board of Directors to the then current President and Chief Executive
Officer. In addition, in February 1997, the Unit Option Plan was amended to
provide that, if the General Partner and the option holder agree, any option may
be exercised on a "net" basis with no cash payment (other than for withholding
taxes), so that upon exercise the holder will receive a number of Units with a
fair market value equal to the difference between the fair market value of the
Units covered by the option and the exercise price of the option. As a result,
the General Partner anticipates that the actual number of Units to be issued on
exercise of options will be substantially less than the number of Units covered
by outstanding options.

     In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation." This standard establishes a fair value based method of accounting
for stock based compensation plans awarded after December 31, 1995 and
encourages companies to adopt the fair value based method in SFAS No. 123 in
place of the existing accounting method which requires expense recognition only
in situations where stock based compensation plans award intrinsic value to
recipients at the date of grant. Companies that do not follow SFAS No. 123 for
accounting purposes must make annual pro forma disclosure of its effects. EOTT
elected not to adopt the fair value method for accounting purposes. If EOTT had
elected to recognize compensation cost based on the fair value of the


                                      F-18
<PAGE>   65
                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


options granted at grant date as prescribed by SFAS No. 123, net income (loss)
and net income (loss) per diluted Unit would have been changed to the following
pro forma amounts (in thousands):

<TABLE>
<CAPTION>
                                                                         2000           1999            1998
                                                                      ----------     ----------      ----------
<S>                                                                   <C>            <C>             <C>
          Net Income (Loss) - as reported .......................     $   13,833     $     (468)     $   (4,067)
          Net Income (Loss) - pro forma .........................     $   14,158     $     (650)     $   (4,140)

          Diluted Net Income (Loss) per Unit - as reported ......     $     0.49     $    (0.02)     $    (0.21)
          Diluted Net Income (Loss) per Unit - pro forma ........     $     0.51     $    (0.03)     $    (0.21)
</TABLE>


     The fair value of each option grant for 1998 is estimated on the date of
grant using the Cox-Ross-Rubenstein binomial method with the following
assumptions: (1) distribution of $1.90 per Common Unit, (2) expected unit price
volatility of 21.86%, (3) risk-free interest rate of 5.97% and (4) expected life
of option of 2 years. The weighted average fair value of options granted during
1998 was $2.119 per unit. No options were granted in 2000 or 1999.

     EOTT Energy Corp. Long-Term Incentive Plan. In October 1997, the Board of
Directors adopted the EOTT Energy Corp. Long Term Incentive Plan ("Plan"), which
is a variable compensatory plan. Under the Plan, selected key employees are
awarded Phantom Appreciation Rights ("PAR"). Each PAR is a right to receive cash
based on the performance of the Partnership prior to the time the PAR is
redeemed. Performance of the Partnership is measured primarily by calculating
the change in the average of Earnings Before Interest on Debt related to
acquisitions, Depreciation and Amortization ("EBIDA"), for each of the three
consecutive fiscal years immediately preceding the grant date of the PAR and the
exercise date of the PAR. The Plan has a five-year term beginning January 1,
1997, and PAR awards vest in 25% increments in the four-year period following
the grant year.

     The following table sets forth the Long-Term Incentive Plan activity for
the years ended December 31, 2000, 1999 and 1998:

<TABLE>
<CAPTION>
                                                                   Number of PAR
                                                       -------------------------------------
                                                         2000          1999          1998
                                                       ---------     ---------     ---------
<S>                                                    <C>             <C>           <C>
          Outstanding at January 1 ...............     1,476,403       637,928       358,600
              Granted ............................        30,000       967,375       467,828
              Exercised ..........................            --            --            --
              Forfeited ..........................       566,428       128,900       188,500
                                                       ---------     ---------     ---------

          Outstanding at December 31 .............       939,975     1,476,403       637,928
                                                       =========     =========     =========

          Available for grant at December 31 .....     1,807,626     1,011,297     1,288,772
                                                       =========     =========     =========
</TABLE>

         Note: Over the life of the plan, available for grant cannot exceed an
         amount equal to 10% of the weighted average Units outstanding for the
         year (2,747,601 as of December 31, 2000, 2,487,700 as of December 31,
         1999 and 1,926,700 as of December 31, 1998).


                                      F-19
<PAGE>   66
                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


11.  COMMITMENTS AND CONTINGENCIES

         Operating Leases. EOTT leases certain real property, equipment, and
operating facilities under various operating leases. Future non-cancelable
commitments related to these items at December 31, 2000, are as follows (in
thousands): years ending December 31, 2001 - $7,315; 2002 - $5,320; 2003 -
$4,924; 2004 - $3,778; 2005 - $3,323; thereafter - $2,886.

     Total lease expense incurred was $9.1 million, $10.4 million and $10.9
million for the years ended December 31, 2000, 1999 and 1998, respectively.

      Litigation. EOTT is, in the ordinary course of business, a defendant in
various lawsuits, some of which are covered in whole or in part by insurance.
The Partnership believes that the ultimate resolution of litigation,
individually and in the aggregate, will not have a materially adverse impact on
the Partnership's financial position or results of operations. Various legal
actions have arisen in the ordinary course of business, the most significant of
which are discussed below.

     State of Texas Royalty Suit. EOTT was served on November 9, 1995 with a
petition styled The State of Texas, et al. vs. Amerada Hess Corporation, et al.
The matter was filed in District Court in Lee County, Texas and involves several
major and independent oil companies and marketers as defendants. The plaintiffs
are attempting to put together a class action lawsuit alleging that the
defendants acted in concert to buy oil owned by members of the plaintiff class
in Lee County, Texas, and elsewhere in Texas, at "posted" prices, which the
plaintiffs allege were lower than true market prices. There is not sufficient
information in the petition to fully quantify the allegations set forth in the
petition, but the General Partner believes that any such claims against the
Partnership will prove to be without merit.

     The State of Texas, et al. vs. Amerada Hess Corporation, et al., Cause No.
97-12040; In the 53rd Judicial District Court of Travis County, Texas (Common
Purchaser Act Suit). This case was filed on October 23, 1997 in Austin by the
Texas Attorney General's office and involves several major and independent oil
companies and marketers as defendants. EOTT was served on November 18, 1997. The
petition states that the State of Texas brought this action in its sovereign
capacity to collect statutory penalties recoverable under the Texas Common
Purchaser Act, arising from defendants' alleged willful breach of statutory
duties owed to royalty, overriding royalty and working interest owners of crude
oil sold to defendants, as well as alleged breach of defendants' common law and
contractual duties. The plaintiffs also allege that the defendants have engaged
in discriminatory pricing of crude oil. This case appears to be similar to the
State of Texas Royalty Suit filed by the State of Texas on November 9, 1995.
EOTT and several of the defendants reached a settlement with the State in the
Common Purchaser Act Suit in a Settlement Agreement dated August 5, 1999.
Settlement amounts for each defendant were confidential. This settlement
disposed of any claims the State may have in the State of Texas Royalty Suit,
discussed above, but did not dismiss that case. Also, any severance tax claims
the State may have were specifically excluded from this settlement. However, no
severance tax claims were asserted in the petition filed by the plaintiffs.

     McMahon Foundation and J. Tom Poyner vs. Amerada Hess Corporation, et al.
(Including EOTT Energy Operating Limited Partnership), Civil Action No.
H-96-1155; United States District Court, Southern District of Texas, Houston
Division (Texas Federal Anti-Trust Suit). This suit was filed on April 10, 1996
as a class action complaint for violation of the federal antitrust laws and
involves several major and independent oil companies and marketers as
defendants. The relevant area is the entire continental United States, except
for Alaska, New York, Ohio, Pennsylvania, West Virginia and the Wilmington Field
at Long Beach, California. The plaintiffs claim that there is a combination and
conspiracy among the defendant oil companies to fix, depress, stabilize and
maintain at artificially low levels the price paid for the first purchase of
lease production oil sold


                                      F-20
<PAGE>   67
                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


from leases in which the class members own interests. This was allegedly
accomplished by agreement of the defendants to routinely pay for first purchases
at posted prices rather than competitive market prices and maintain them in a
range below competitive market prices through an undisclosed scheme of using
posted prices in buy/sell transactions among themselves to create the illusion
that posted prices are genuine market prices. The plaintiffs allege violations
from October of 1986 forward. No money amounts were claimed. See summary
paragraph below for current status.

     Randolph Energy, Inc., et al. vs. Amerada Hess Corporation, et al., Civil
Action No. 2:97CV273PG; In the United States District Court for the Southern
District of Mississippi, Jackson Division (Mississippi Federal Anti-Trust Suit).
EOTT received the summons in this matter on August 18, 1997. The case was filed
on August 5, 1997 and is a class action complaint for alleged violation of the
federal antitrust laws which involves several major and independent oil
companies and marketers as defendants. The plaintiffs claim that this litigation
arises out of a combination and conspiracy of the defendant oil companies to
fix, depress, stabilize and maintain at artificially low levels the prices paid
for the first purchase of lease production oil sold from leases in which the
class members own interests. The issues appear to be a duplication of the issues
in the Texas Federal Anti-Trust Suit previously discussed. No money amounts were
claimed. See summary paragraph below for current status.

     Cameron Parish School Board, et al. vs. Texaco, Inc., et al.; Civil Action
No. C-98-111; In the United States District Court for the Western District of
Louisiana, Lake Charles Division (Louisiana Federal Anti-Trust Suit). This case
was originally filed as a state law claim in Louisiana. When the case was
removed to federal court, the anti-trust claims were added, similar to the
claims made in the Texas Federal Anti-Trust Suit and the Mississippi Federal
Anti-Trust Suit. The plaintiffs claim that this litigation arises out of a
combination and conspiracy of the defendant oil companies to fix, depress,
stabilize and maintain at artificially low levels the prices paid for the first
purchase of lease production oil sold from leases in which the class members own
interests. The issues appear to be a duplication of the issues in the Texas
Federal Anti-Trust Suit and the Mississippi Federal Anti-Trust Suit, both
previously discussed. On October 22, 1998, the judge granted the Plaintiffs'
motion to amend the petition and add additional defendants. The Partnership and
the General Partner were added to the case as defendants at that time. No money
amounts were claimed. See summary paragraph below for current status.

     Summary. The Texas Federal Anti-Trust Suit, the Mississippi Federal
Anti-Trust Suit and the Louisiana Federal Anti-Trust Suit, along with several
other suits to which EOTT is not a party, were consolidated and transferred to
the Southern District of Texas by Transfer Order dated January 14, 1998. The
Judicial Panel on Multidistrict Litigation made this recommendation due to
similarity of issues in the cases. EOTT and the General Partner, along with a
number of other defendants, have entered into a class-wide settlement with the
defendants which was approved by the Court on April 7, 1999, with a Final
Judgment entered on August 11, 1999. Several appeals have been filed concerning
the settlement. Consequently, the settlement has not been funded, nor has the
case been dismissed.

     Assessment for Crude Oil Production Tax from the Comptroller of Public
Accounts, State of Texas. The Partnership received a letter from the
Comptroller's Office dated October 9, 1998 assessing the Partnership for
severance taxes the Comptroller's Office alleges are due on a difference the
Comptroller's Office believes exists between the market value of crude oil and
the value reported on the Partnership's crude oil tax report for the period of
September 1, 1994 through December 31, 1997. The letter states that the action,
based on a desk audit of the Partnership's crude oil production reports, is
partly to preserve the statute of limitations where crude oil severance tax may
not have been paid on the true market price of the crude oil. The letter further
states that the Comptroller's position is similar to claims made in several
lawsuits, including the Texas Federal Anti-Trust Suit, in which the Partnership
is a defendant. The amount of the assessment, including penalty and interest, is


                                      F-21
<PAGE>   68
                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


approximately $1.1 million. While the claim is still being reviewed, the General
Partner believes the Partnership should be without liability in this or related
matters.

     Export License with United States Department of Commerce. EOTT has applied
for and maintained Export Licenses through the U.S. Department of Commerce
("DOC") since 1994. These licenses authorized EOTT to export crude oil to
Canada. Each license provided an applicable license quantity and value of
merchandise as authorized by the DOC to be exported. The licenses generally
covered either a one or two year period. In early 1999, as it was preparing a
new license application, EOTT discovered that it had exported more barrels and
value than had been authorized by the DOC under EOTT's current (and prior)
license. Pursuant to Section 764.5 of the Export Administration Regulations,
EOTT filed a Voluntary Disclosure with the DOC on February 5, 1999, giving the
DOC notice of these license overruns. The next formal stage of the Voluntary
Disclosure process will be for the DOC to issue a Charging Letter to EOTT
regarding a proposed fine for the export license overruns. To date, EOTT does
not have any information as to when or in what amount the Charging Letter will
be issued.

     John H. Roam, et al. vs. Texas-New Mexico Pipe Line Company and EOTT Energy
Pipeline Limited Partnership, Cause No. CV43296, In the District Court of
Midland County, Texas, 238th Judicial District (Kniffen Estates Suit). The
Kniffen Estates Suit was filed on March 2, 2001 by certain residents of the
Kniffen Estates, a residential subdivision located outside of Midland, Texas.
The allegations in the petition state that free crude oil products were
discovered in water wells in the Kniffen Estates area, on or about October 3,
2000. The plaintiffs claim that the crude oil products are from a 1992 release
from a pipeline then owned by the Texas-New Mexico Pipe Line Company ("Tex-New
Mex"). EOTT purchased that pipeline from Tex-New Mex in 1999. The plaintiffs
have alleged that Tex-New Mex was negligent, grossly negligent and malicious in
failing to accurately report and remediate the spill. With respect to EOTT, the
plaintiffs are seeking damages arising from any contamination of the soil or
groundwater since EOTT acquired the pipeline in question. No specific amount of
money damages was claimed, and it is not possible to determine any potential
exposure to EOTT at this stage of the matter. In response to the Kniffen Estates
Suit, EOTT filed a cross-claim against Tex-New Mex. In the cross-claim, EOTT
claims that, in relation to the matters alleged by the plaintiffs, Tex-New Mex
breached the Purchase and Sale Agreement between the parties dated May 1, 1999,
by failing to disclose the 1992 release and by failing to undertake the defense
and handling of the toxic tort claims, fair market value claims, and remediation
claims arising from the release. Additionally, EOTT is asserting claims of gross
negligence, fraud and specific performance. Due to the early stages of the
proceedings, it is not possible to speculate on the possible outcome of this
matter.

     Environmental. EOTT is subject to extensive federal, state and local laws
and regulations covering the discharge of materials into the environment, or
otherwise relating to the protection of the environment, and which require
expenditures for remediation at various operating facilities and waste disposal
sites, as well as expenditures in connection with the construction of new
facilities. EOTT believes that its operations and facilities are in general
compliance with applicable environmental regulations. Environmental laws and
regulations have changed substantially and rapidly over the last 20 years, and
EOTT anticipates that there will be continuing changes. The clear trend in
environmental regulation is to place more restrictions and limitations on
activities that may impact the environment, such as emissions of pollutants,
generation and disposal of wastes and use and handling of chemical substances.
Increasingly strict environmental restrictions and limitations have resulted in
increased operating costs for EOTT and other businesses throughout the United
States, and it is possible that the costs of compliance with environmental laws
and regulations will continue to increase. EOTT will attempt to anticipate
future regulatory requirements that might be imposed and to plan accordingly in
order to remain in compliance with changing environmental laws and regulations
and to minimize the costs of such compliance.


                                      F-22
<PAGE>   69
                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     EOTT may experience future releases of crude oil into the environment or
discover releases that were previously unidentified. While an inspection program
is maintained on EOTT's pipelines to prevent and detect such releases, damages
and liabilities incurred due to any future environmental releases could affect
EOTT's business. The management of EOTT believes that its operations and
facilities are in general compliance with applicable environmental laws and
regulations and that there are no outstanding potential liabilities or claims
relating to safety and environmental matters the resolution of which,
individually or in the aggregate, would have a materially adverse effect on
EOTT's financial position or results of operations. No assurance can be given,
however, as to the amount or timing of future expenditures for environmental
remediation or compliance, and actual future expenditures may be different from
the amounts currently anticipated. In the event of future increases in costs,
EOTT may be unable to pass on those increases to its customers.

     12. FAIR VALUE OF FINANCIAL INSTRUMENTS

     Fair Value. Fair value represents the amount at which the instrument could
be exchanged in a current transaction between willing parties. The estimated
fair value amounts have been determined by EOTT using available market data and
valuation methodologies. Judgment is required in interpreting market data and
the use of different market assumptions or estimation methodologies may affect
the estimated fair value amounts.

     EOTT estimates that the fair value of its long-term 11% senior notes was
$253.7 million and $235.0 million at December 31, 2000 and 1999, respectively.
EOTT believes that the carrying amounts of other financial instruments are a
reasonable estimate of their fair value, unless otherwise noted.

     Credit Risk. In the normal course of business, EOTT extends credit to
various companies in the energy industry. Within this industry, certain elements
of credit risk exist and may, to varying degrees, exceed amounts recognized in
the accompanying consolidated financial statements, which may be affected by
changes in economic or other external conditions and may accordingly impact
EOTT's overall exposure to credit risk. EOTT's exposure to credit loss in the
event of nonperformance is limited to the book value of the trade commitments
included in the accompanying Consolidated Balance Sheets. EOTT manages its
exposure to credit risk through credit analysis, credit approvals, credit limits
and monitoring procedures. Further, the General Partner believes that its
portfolio of receivables is well diversified and that the allowance for doubtful
accounts is adequate to absorb any potential losses. EOTT requires collateral in
the form of letters of credit for certain of its receivables.

     Market Risk. EOTT trading and non-trading transactions give rise to market
risk, which represents the potential loss that can be caused by a change in the
market value of a particular commitment. EOTT closely monitors and manages its
exposure to market risk to ensure compliance with EOTT's stated risk management
policies which are regularly assessed to ensure their appropriateness given
EOTT's objectives, strategies and current market conditions.

     EOTT enters into forward, futures and other contracts to hedge the impact
of market fluctuations on assets, lease crude oil purchases or other contractual
commitments. However, EOTT does not consider its commodity futures and forward
contracts to be financial instruments since these contracts require or permit
settlement by the delivery of the underlying commodity, and thus are not subject
to the provisions of SFAS No. 119. Changes in the market value of transactions
that are designated as hedges are deferred until the gain or loss is recognized
on the hedged transaction at which time such gains and losses are recognized
through cost of sales. Changes in the market value of transactions designated as
energy trading activities are recorded every period as mark-to-market gains
or losses.


                                      F-23
<PAGE>   70
                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     EOTT routinely enters into foreign currency futures contracts to hedge
foreign currency exposure from commercial transactions relating to current month
crude purchases and sales as well as fixed price swaps. These contracts
generally mature in one year or less. At December 31, 2000 and 1999, foreign
currency contracts with a notional principal amount of $10.0 million and $22.6
million, respectively, were outstanding, having exchange rates which
approximated current market exchange rates.

13.  NEW ACCOUNTING STANDARDS

     Beginning with the quarterly period ending March 31, 2001, EOTT will begin
reporting derivative activities consistent with Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments
and Hedging Activities". SFAS No. 133, which has been adopted as of January 1,
2001, requires that derivative instruments (including certain derivative
instruments embedded in other contracts) be recorded in the balance sheet as
either an asset or liability measured at its fair value. The Statement requires
that changes in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. Special accounting for
qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement, and requires that a company
must formally document, designate, and assess the effectiveness of transactions
that receive hedge accounting. Under SFAS No. 133, EOTT is required to
"mark-to-market" all of its derivative instruments at each period end. This
contrasts with pre-2001 accounting principles which generally only required
transactions designated as energy trading activities to be marked-to-market.
Changes in the market value of EOTT's derivative instruments resulting from the
mark-to-market process will represent unrealized gains and losses. Such
unrealized gains or losses will change, based on prevailing market prices at
each subsequent balance sheet date, until the transaction date occurs. In
general, SFAS No. 133 could result in fluctuations in net income in periods of
price volatility. SFAS No. 133 requires that as of the date of the initial
adoption, the difference between the market value of derivative instruments and
the previous carrying amount of those derivatives be recorded in net income or
other comprehensive income, as appropriate, as the cumulative effect of a change
in accounting principle. As previously discussed, this impact will be reflected
in EOTT's first quarter 2001 financial statements. The adoption of SFAS No. 133
will result in a benefit of approximately one million to net income which will
be reflected as a cumulative effect of a change in accounting principle.

14.  BUSINESS SEGMENT INFORMATION

     EOTT has three reportable segments, which management reviews in order to
make decisions about resources to be allocated and assess its performance: North
American Crude Oil - East of Rockies, Pipeline Operations and West Coast
Operations. The North American Crude Oil - East of Rockies segment is organized
into five operating regions and primarily purchases, gathers, transports and
markets crude oil. For segment reporting purposes, these five operating regions
have been aggregated as one reportable segment due to similarities in their
operations as allowed by SFAS No. 131. The Pipeline Operations segment operates
approximately 7,400 miles of active common carrier pipelines in 13 states. The
West Coast Operations include crude oil gathering and marketing, refined
products marketing and a natural gas liquids business.

     The accounting policies of the segments are the same as those described in
the summary of significant accounting policies as discussed in Note 2. EOTT
evaluates performance based on operating income (loss).

     EOTT accounts for intersegment revenue and transfers between North American
Crude Oil - East of Rockies and West Coast Operations as if the sales or
transfers were to third parties, that is, at current market prices. Intersegment
revenues for Pipeline Operations are based on published pipeline tariffs.


                                      F-24
<PAGE>   71
                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


FINANCIAL INFORMATION BY BUSINESS SEGMENT
 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                               NORTH
                                              AMERICAN                        WEST           CORPORATE
                                             CRUDE OIL      PIPELINE          COAST             AND
                                               - EOR       OPERATIONS     OPERATIONS(a)      OTHER (a)     CONSOLIDATED
                                            ------------   -----------    -------------     ------------   ------------
<S>                                         <C>            <C>            <C>               <C>            <C>
YEAR ENDED DECEMBER 31, 2000

Revenue from external customers.........    $ 10,699,692   $    20,988    $   893,325       $        -     $11,614,005

Intersegment revenue  (f)...............          10,477       119,305             -           (129,782)            -
                                            ------------   -----------    -----------       ------------   -----------
   Total revenue........................      10,710,169       140,293        893,325          (129,782)    11,614,005
                                            ------------   -----------    -----------       ------------   -----------
Gross margin............................          81,350       136,703         21,862                -         239,915
                                            ------------   -----------    -----------       -----------    -----------
Operating income (loss).................           1,867        66,236           (384)          (22,762)        44,957

Other expense...........................            -              -              -             (31,124)       (31,124)
                                            ------------   -----------    -----------       ------------   ------------
Net income (loss).......................           1,867        66,236           (384)          (53,886)        13,833
                                            ------------   -----------    ------------      ------------   -----------
Long-lived assets.......................          79,416       269,343         31,693            13,481        393,933
                                            ------------   -----------    -----------       -----------    -----------
Total assets............................         999,973       288,956        124,427            79,637      1,492,993
                                            ------------   -----------    -----------       -----------    -----------
Additions to long-lived assets..........             838         4,328          2,406             6,698         14,270
                                            ------------   -----------    -----------       -----------    -----------
Depreciation and amortization...........           7,515        21,153          2,689             2,511         33,868
                                            ------------   -----------    -----------       -----------    -----------

-----------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                               NORTH
                                              AMERICAN                        WEST          CORPORATE
                                             CRUDE OIL      PIPELINE          COAST            AND
                                            - EOR(b)(c)    OPERATIONS(b)  OPERATIONS(b)(d)   OTHER (c)     CONSOLIDATED
                                            ------------   -------------  ----------------  ------------   ------------
<S>                                         <C>            <C>            <C>               <C>            <C>
YEAR ENDED DECEMBER 31, 1999

Revenue from external customers.........    $  7,999,092    $    28,647    $   636,676      $       (14)   $ 8,664,401

Intersegment revenue  (f)...............          43,653         89,890         17,360         (150,903)           -
                                            ------------    -----------    -----------      ------------   -----------

   Total revenue........................       8,042,745        118,537        654,036         (150,917)     8,664,401
                                            ------------    -----------    -----------      ------------   -----------

Gross margin............................          78,195        115,650         18,518              (48)       212,315
                                            ------------    -----------    -----------      ------------   -----------

Operating income (loss).................          (2,499)        50,963         (2,197)         (20,282)        25,985

Other expense...........................           -               -             -              (28,200)       (28,200)
                                            ------------    -----------    -----------      -----------    -----------

Net income (loss) before cumulative
    effect of accounting change.........          (2,499)        50,963         (2,197)         (48,482)        (2,215)
                                            -------------   -----------    ------------     ------------   ------------

Long-lived assets.......................          77,247        285,180         32,605            9,463        404,495
                                            ------------    -----------    -----------      -----------    -----------

Total assets............................       1,084,613        306,321        129,461           38,266      1,558,661
                                            ------------    -----------    -----------      -----------    -----------

Additions to long-lived assets..........           1,194         49,544          1,353            6,638         58,729
                                            ------------    -----------    -----------      -----------    -----------

Depreciation and amortization...........           8,704         20,012          2,669            1,751         33,136
                                            ------------    -----------    -----------      -----------    -----------
</TABLE>


                                      F-25
<PAGE>   72
                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                               NORTH
                                              AMERICAN                         WEST          CORPORATE
                                             CRUDE OIL       PIPELINE          COAST            AND
                                               - EOR        OPERATIONS       OPERATIONS       OTHER(e)     CONSOLIDATED
                                            ------------   -------------  ----------------  ------------   ------------
<S>                                         <C>            <C>            <C>               <C>            <C>
YEAR ENDED DECEMBER 31, 1998

Revenue from external customers.........    $  4,590,810    $     7,036   $   586,169       $   110,682    $ 5,294,697

Intersegment revenue (e)................          47,008         24,516         3,900           (75,424)           -
                                            ------------    -----------   -----------       -----------    -----------

   Total revenue........................       4,637,818         31,552       590,069            35,258      5,294,697
                                            ------------    -----------   -----------       -----------    -----------

Gross margin............................          92,071         30,856         9,698               (20)       132,605
                                            ------------    -----------   -----------       -----------    -----------

Operating income (loss).................          28,050          4,285           199           (25,305)         7,229

Other expense...........................             -              -             -             (11,296)       (11,296)
                                            ------------    -----------   -----------       -----------    -----------

Net income (loss).......................          28,050          4,285           199           (36,601)        (4,067)
                                            ------------    -----------   -----------       -----------    -----------

Long-lived assets.......................          83,866        270,739        25,335             5,299        385,239
                                            ------------    -----------   -----------       -----------    -----------

Total assets............................         608,655        279,315        60,677            17,173        965,820
                                            ------------    -----------   -----------       -----------    -----------

Additions to long-lived assets..........          18,398        222,121        23,275             2,775        266,569
                                            ------------    -----------   -----------       -----------    -----------

Depreciation and amortization...........           9,263          9,287           470             1,931         20,951
                                            ------------    -----------   -----------       -----------    -----------
</TABLE>

--------------------------------------------------------------------------------

     (a)  2000 includes nonrecurring income of $1.3 million related to
          mid-continent NGL activities recorded in West Coast Operations and
          nonrecurring severance charges of $0.7 million recorded in Corporate
          and Other.
     (b)  1999 includes twelve months of results of operations associated with
          the assets acquired from Koch and eight months of results of
          operations associated with the assets acquired from Texas-New Mexico
          Pipe Line.
     (c)  1999 includes nonrecurring severance charges of $2.0 million of which
          $1.8 million is recorded in North American Crude Oil - EOR and $0.2
          million is recorded in Corporate.
     (d)  1999 includes nonrecurring charges of $7.8 million of costs related to
          mid-continent NGL activities.
     (e)  Corporate and Other also includes intersegment eliminations and the
          East of Rockies products business in 1998.
     (f)  Intersegment sales for North American Crude Oil - EOR and West Coast
          Operations are made at prices comparable to those received from
          external customers. Intersegment sales for Pipeline Operations are
          based on published pipeline tariffs.


                                      F-26
<PAGE>   73
                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


15.  SUBSEQUENT EVENTS

     On January 19, 2001, the Board of Directors of EOTT Energy Corp., as
General Partner, declared the Partnership's regular quarterly cash distribution
of $0.475 per Common Unit for the period October 1, 2000 through December 31,
2000. In addition, a cash distribution of $0.20 per Unit ($1.8 million) was
declared for all Subordinated Units for the period October 1, 2000 through
December 31, 2000. The total distribution of approximately $10.8 million was
paid on February 14, 2001 to the General Partner and all Common Subordinated
Unitholders of record as of the close of business on January 31, 2000. The
fourth quarter 2000 distribution was paid utilizing Available Cash from the
Partnership.


                                      F-27
<PAGE>   74
                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


16.  QUARTERLY FINANCIAL DATA (UNAUDITED)
     (In Thousands, Except Per Unit Amounts)

<TABLE>
<CAPTION>
                                                         FIRST          SECOND         THIRD          FOURTH
                                                        QUARTER       QUARTER(1)     QUARTER(1)     QUARTER(2)        TOTAL
                                                       ----------     ----------     ----------     ----------     -----------
<S>                                                    <C>            <C>            <C>            <C>            <C>
2000

     Revenues ....................................     $2,681,696     $2,514,934     $3,143,529     $3,273,846     $11,614,005

     Gross margin ................................         56,464         62,599         58,895         61,957         239,915

     Operating income ............................         10,572         12,965         10,255         11,165          44,957

     Net income ..................................          2,221          4,888          3,011          3,713          13,833

     Basic net income per Unit
       Common ....................................           0.08           0.17           0.11           0.13            0.49
       Subordinated ..............................           0.08           0.17           0.11           0.13            0.49

     Diluted net income per Unit .................           0.08           0.17           0.11           0.13            0.49

     Cash distributions per Common Unit (3) ......          0.475          0.475          0.475          0.475           1.900


------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
<S>                                                    <C>            <C>            <C>            <C>            <C>
1999

     Revenues ..................................       $1,433,157     $2,259,303     $2,315,464     $2,656,477     $ 8,664,401

     Gross margin ..............................           52,796         55,697         57,060         46,762         212,315

     Operating income ..........................            8,473          8,715          8,110            687          25,985

     Net income (loss) before cumulative
       effect of accounting change .............            2,534          2,182            550         (7,481)         (2,215)

     Basic net income (loss) before cumulative
       effect of accounting change per Unit
         Common ................................             0.08           0.09           0.02          (0.27)          (0.13)
         Subordinated ..........................             0.15           0.09           0.02          (0.27)          (0.01)

     Diluted net income (loss) before cumulative
       effect of accounting change per Unit ....             0.10           0.09           0.02          (0.27)          (0.09)

     Cash distributions per Common Unit (3) ....            0.475          0.475          0.475          0.475           1.900

------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Second quarter 2000 amounts include nonrecurring items of $1.5 million
     related to insurance proceeds received for the theft of NGL product offset
     by other costs primarily related to severance charges associated with a
     former officer. Third quarter 2000 amounts include a nonrecurring charge of
     $0.9 million in connection with the closing of the remaining contract
     related to the mid-continent NGL activities. See Note 6 to the Consolidated
     Financial Statements.
(2)  Fourth quarter 1999 amounts include nonrecurring items of $9.8 million
     related to the mid-continent NGL activities and severance costs associated
     with the reduction of work force. See Note 6 to the Consolidated Financial
     Statements.
(3)  Cash distributions are shown in the quarter paid and are based on the prior
     quarter's earnings.


                                      F-28
<PAGE>   75
                                                                     SCHEDULE II


                           EOTT ENERGY PARTNERS, L.P.
                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
                                 (In Thousands)

================================================================================

<TABLE>
<CAPTION>
                                            Balance at  Charged to                Balance
                                            Beginning   Costs and   Deductions    at End
                                            of Period    Expenses   and Other    of Period
                                            ----------  ----------  ----------   ---------
<S>                                         <C>         <C>         <C>          <C>
Year ended December 31, 1998
   Allowance for Doubtful Accounts .....     $ 1,660     $   700     $  (500)     $ 1,860
   Litigation Provisions ...............     $    --     $ 1,400     $    --      $ 1,400
   Safety and Environmental ............     $    --     $    --     $ 1,000      $ 1,000

Year ended December 31, 1999
   Allowance for Doubtful Accounts .....     $ 1,860     $    --     $  (128)     $ 1,732
   Litigation Provisions ...............     $ 1,400     $    --     $  (400)     $ 1,000
   Safety and Environmental ............     $ 1,000     $    --     $ 1,998      $ 2,998

Year ended December 31, 2000
   Allowance for Doubtful Accounts .....     $ 1,732     $    --     $    95      $ 1,827
   Litigation Provisions ...............     $ 1,000     $    --     $    --      $ 1,000
   Safety and Environmental ............     $ 2,998     $ 2,000     $(2,038)     $ 2,960
</TABLE>

----------


                                      S-1

<PAGE>   76
                                INDEX TO EXHIBITS


<TABLE>
<CAPTION>
   Exhibit
   Number                                      Description
   ------                                      -----------
<S>       <C>
    3.1   --  Form of Partnership Agreement of EOTT Energy Partners, L.P. (incorporated by reference to Exhibit
              3.1 to Registration Statement, File No. 33-73984)

    3.2   --  Amendment No. 1 dated as of August 8, 1995, to the Amended and Restated Agreement of Limited
              Partnership of EOTT Energy Partners, L.P. (incorporated by reference to Exhibit 3.2 to Annual
              Report on Form 10-K for the Year Ended December 31, 1995)

    3.3   --  Amendment No. 2 dated as of July 16, 1996, to the Amended and Restated Agreement of Limited
              Partnership of EOTT Energy Partners, L.P. (incorporated by reference to Exhibit 3.3 to Quarterly
              Report on Form 10-Q for the Quarter Ended June 30, 1996)

    3.4   --  Amendment No. 3 dated as of February 13, 1997, to the Amended and Restated Agreement of Limited
              Partnership of EOTT Energy Partners, L.P. (incorporated by reference to Exhibit 3.4 to Annual
              Report on Form 10-K for the Year Ended December 31, 1996)

    3.5   --  Amendment No. 4 dated as of November 30, 1998, to the Amended and Restated Agreement of Limited
              Partnership of EOTT Energy Partners, L.P. (incorporated by reference to Exhibit 3.5 to Annual
              Report on Form 10-K for the Year Ended December 31, 1998)

    3.6   --  Amendment No. 5 dated as of December 7, 1998, to the Amended and Restated Agreement of Limited
              Partnership of EOTT Energy Partners, L.P. (incorporated by reference to Exhibit 3.6 to Annual
              Report on Form 10-K for the Year Ended December 31, 1998)

    3.7   --  Amendment No. 6 dated as of September 16, 1999 to the Amended and Restated Agreement of Limited
              Partnership of EOTT Energy Partners, L.P. (incorporated by reference to Exhibit 3.1 to Current
              Report on Form 8-K dated September 29, 1999)

    4.1   --  Form of Indenture for Senior Debt Securities and Subordinated Debt Securities (incorporated by
              reference to Exhibit 4.1 to Registration Statement, File No. 333-82269)

    10.04 --  Form of Corporate Services Agreement between Enron Corp. and EOTT Energy Corp. (incorporated by
              reference to Exhibit 10.08 to Registration Statement, File No. 33-73984)
</TABLE>

<PAGE>   77
<TABLE>
<S>       <C>
    10.05 --  Form of Contribution and Closing Agreement between EOTT Energy Corp. and EOTT Energy Partners, L.P.
              (incorporated by reference to Exhibit 10.09 to Registration Statement, File No. 33-73984)

    10.06 --  Form of Ancillary Agreement by and among Enron Corp., EOTT Energy Partners, L.P., EOTT Energy
              Operating Limited Partnership, EOTT Energy Pipeline Limited Partnership, EOTT Energy Canada
              Limited Partnership, and EOTT Energy Corp. (incorporated by reference to Exhibit 10.10 to
              Registration Statement, File No. 33-73984)

    10.07 --  Agreement to Increase and Extend Distribution Support dated August 8, 1995, amending the Ancillary
              Agreement referenced in 10.06 (incorporated by reference to Exhibit 10.07 to Annual Report on Form
              10-K for the Year Ended December 31, 1995)

    10.08 --  Form of Amended and Restated Agreement of Limited Partnership of EOTT Energy Operating Limited
              Partnership (incorporated by reference to Exhibit 10.11 to Registration Statement, File No. 33-73984)

    10.09 --  EOTT Energy Corp. Annual Incentive Plan (incorporated by reference to Exhibit 10.14 to Registration
              Statement, File No. 33-73984)

    10.10 --  EOTT Energy Corp. 1994 Unit Option Plan and the related Option Agreement (incorporated by reference
              to Exhibit 10.15 to Registration Statement, File No. 33-73984)

    10.11 --  EOTT Energy Corp. Severance Pay Plan (incorporated by reference to Exhibit 10.16 to Registration
              Statement, File No. 33-73984)

    10.12 --  Executive Employment Agreement effective March 24, 1994 between EOTT Energy Corp. and executive
              officers with employment agreements (incorporated by reference to Exhibit 10.05 to Registration
              Statement, File No. 33-73984)

    10.19 --  EOTT Energy Corp. Long Term Incentive Plan (incorporated by reference to Exhibit 10.19 to Quarterly
              Report on Form 10-Q for the Quarter Ended September 30, 1997)

    10.20 --  Agreement to Extend Distribution Support dated November 5, 1997, amending the Agreement referenced
              in 10.07 (incorporated by reference to Exhibit 10.20 to Annual Report on Form 10-K for the Year
              Ended December 31, 1997)

    10.22 --  Support Agreement dated September 21, 1998 between EOTT Energy Partners, L.P., EOTT Energy
              Operating Limited Partnership and Enron Corp. (incorporated by reference to Exhibit 10.22 to
              Quarterly Report on Form 10-Q for the Quarter Ended September 30, 1998)
</TABLE>

<PAGE>   78
<TABLE>
<S>       <C>
 ***10.23 --  Crude Oil Supply and Terminalling Agreement dated as of December 1, 1998 between Koch Oil Company
              and EOTT Energy Operating Limited Partnership (incorporated by reference to Exhibit 10.23 to Annual
              Report on Form 10-K for the Year Ended December 31, 1998)

    10.24 --  Amended and Restated Credit Agreement as of December 1, 1998 between EOTT Energy Operating Limited
              Partnership, as Borrower, and Enron Corp., as Lender (incorporated by reference to Exhibit 10.24 to
              Annual Report on Form 10-K for the Year Ended December 31, 1998)

    10.26 --  Amendment dated March 17, 1999 to the Amended and Restated Credit Agreement as of December 1, 1998
              between EOTT Energy Operating Limited Partnership, as Borrower, and Enron Corp., as Lender
              (incorporated by reference to Exhibit 10.26 to Annual Report on Form 10-K for the Year Ended
              December 31, 1998)

 ***10.28 --  Amendment dated December 1, 1998 to the Crude Oil Supply and Terminalling Agreement dated as of
              December 1, 1998 between Koch Oil Company and EOTT Energy Operating Limited Partnership (incorporated
              by reference to Exhibit 10.28 to Annual Report on Form 10-K for the Year Ended December 31, 1998)

    10.29 --  Form of Executive Employment Agreement between EOTT Energy Corp. and Dana R. Gibbs (incorporated by
              reference to Exhibit 10.29 to Quarterly Report on Form 10-Q for the Period Ended March 31, 1999)

    10.30 --  Amendment dated August 11, 1999 to the Amended and Restated Credit Agreement as of December 1, 1998
              between EOTT Energy Operating Limited Partnership, as Borrower, and Enron Corp., as Lender
              (incorporated by reference to Exhibit 10.30 to Quarterly Report on Form 10-Q for the Period Ended June
              30, 1999)

    10.32 --  Form of Executive Employment Agreement between EOTT Energy Corp. and Dana R. Gibbs (incorporated by
              reference to Exhibit 10.32 to Quarterly Report on form 10-Q for the Period Ended September 30, 2000)

    10.33 --  Form of Executive Employment Agreement between EOTT Energy Corp. and Lawrence Clayton, Jr.
              (incorporated by reference to Exhibit 10.33 to Quarterly Report on form 10-Q for the Period Ended
              September 30, 2000)

 ***10.34 --  Letter Agreement dated September 14, 2000 amending Crude Oil Supply and Terminalling Agreement
              (incorporated by reference to Exhibit 10.34 to Quarterly Report on form 10-Q for the Period Ended
              September 30, 2000)

*   10.35 --  Form of Executive Employment Agreement between EOTT Energy Corp. and Molly Sample
</TABLE>

<PAGE>   79
<TABLE>
<S>       <C>
*   10.36 --  Form of Executive Employment Agreement between EOTT Energy Corp. and Lori Maddox.

**  10.37 --  Letter Agreement dated February 6, 2001 amending Crude Oil Supply and Terminalling Agreement dated
              December 1, 1998.

    21.1  --  Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 to Annual Report on Form
              10-K for the year ended December 31,1999)

*   23.1  --  Consent of Arthur Andersen LLP

*   24    --  Power of Attorney
</TABLE>

----------

*   Filed herewith.
**  Filed herewith; however, confidential treatment has been requested with
    respect to certain portions of this exhibit.
*** Certain portions of this exhibit have been treated confidentially.