<PAGE>   1

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

                                  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
                       THE SECURITIES EXCHANGE ACT OF 1934

  For the fiscal year ended December 31, 1999 Commission File Number: 1-12872
                                       OR
          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                       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.)

        1330 Post Oak Boulevard
               Suite 2700
             Houston, Texas                                         77056
----------------------------------------                     -------------------
(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, 2000, was approximately $177,248,750.

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


<PAGE>   2


                           EOTT ENERGY PARTNERS, L.P.
                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                   Page
                                                                                   ----
<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                29
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                            42

                                    PART IV

Item 14.  Exhibits, Financial Statement Schedule and Reports on Form 8-K            43
</TABLE>


                                       2
<PAGE>   3


                                     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 includes crude oil
gathering and marketing, refined products marketing and a natural gas liquids
business (see Note 20 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 (collectively referred to as the "Predecessor").

     In 1999, EOTT Energy Partners, L.P. formed EOTT Energy Finance Corp. as a
direct wholly-owned subsidiary. This entity was set up for the debt offering to
facilitate certain investors' ability to purchase EOTT's senior notes, more
fully described in Note 8 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 40,000 oil wells
in 18 states and Canada, averaging 428,700 barrels per day during 1999. In
addition, EOTT is engaged in interstate and intrastate crude oil transportation,
crude oil terminalling and storage activities, and crude oil blending. Most of
the crude oil EOTT purchases directly from the oil well ("lease crude oil") is
delivered to refiners and other customers nationwide. EOTT transports crude oil
through pipelines, including approximately 8,300 miles of EOTT pipeline and
gathering systems, and trucking operations, which includes a fleet of 259 owned
or leased trucks.

     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
          6,000 producers and operators, of which approximately 89% of the
          volumes are from independent producers and the remaining 11% are from
          major integrated oil companies. 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 and operators is a key factor in maintaining
          lease crude oil volumes and in obtaining


                                       3
<PAGE>   4


          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 513,700 barrels per day in
          1999, 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 76% of the
          revenues of the Pipeline Operations business segment for the twelve
          months ended December 31, 1999, were generated from tariffs charged 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.

     EOTT operates gathering systems in all major production areas in the lower
48 states. The 18 states in which EOTT gathers have represented, on average,
approximately 97% of the production in the lower 48 states from 1985 to 1997,
according to the most recent data available from the American Petroleum
Institute. These states have had a historical average annual oil production
decline rate of 2.6% over the same period; however, this may not necessarily
represent the decline rates in the particular fields from which we gather crude
oil.

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 for subsequent sale to
refiners and other customers. EOTT's gathering activities are conducted in the
18 states which represent approximately 97% of the crude oil production in the
lower 48 states. 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 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 addition, in December of 1998, the Partnership entered into a
15-year supply contract at market-based prices with Koch Oil Company for less
than 25% of EOTT's lease crude oil volumes.


                                       4
<PAGE>   5


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 and variability in
the crude oil gathering and marketing business. See "Business - Risk Management
Services / Derivatives."

     The North American Crude Oil - East of Rockies operation is organized into
seven operating regions. Of the 428,700 barrels per day of lease crude oil EOTT
purchased in 1999, approximately 408,800 barrels per day or 95% 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 hedge against price
fluctuations 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 (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. It is EOTT's
policy not to hold any inventory for the purpose of speculating on price
changes.

     Market conditions have a direct effect on EOTT's marketing strategy. 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


                                       5
<PAGE>   6


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.

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, avoidance of spills and certain accounting and
administrative services. Accounting and administrative services include
processing division orders (dividing payments among the several 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

     EOTT's pipeline operations provide the vital link between its crude oil
purchasing and marketing activities. EOTT owns and operates approximately 8,300
miles of crude oil gathering and transmission pipelines covering thirteen
states, including approximately 7,400 miles of regulated intrastate and
interstate common carrier pipeline systems. There are approximately 15.1 million
barrels of storage capacity associated with field tanks. By state, the pipeline
assets are as follows:

<TABLE>
<CAPTION>
EOTT COMMON CARRIER PIPELINE MILES BY STATE         EOTT PROPRIETARY PIPELINE MILES BY STATE
-------------------------------------------         ----------------------------------------
                                      MILES                                            MILES
                                     ------                                           ------
<S>                                  <C>            <C>                               <C>
Alabama.................                56          Alabama.................            38
Arkansas................                --          Arkansas................             2
California..............                16          California..............           159
Colorado................               332          Colorado................            --
Kansas..................               795          Kansas..................            --
Louisiana...............               412          Louisiana...............           131
Mississippi.............               293          Mississippi.............           267
Montana.................               118          Montana.................            --
Nebraska................                56          Nebraska................            --
New Mexico..............             1,174          New Mexico..............           158
North Dakota............               489          North Dakota............            --
Oklahoma................             1,389          Oklahoma................            33
Texas...................             2,256          Texas...................            82
                                     -----                                             ---
          Total.........             7,386                    Total.........           870
                                     =====                                             ===
</TABLE>

     Through these 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 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 1999, EOTT's pipeline operations transported
approximately 513,700 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 76% of the revenues from the Pipeline Operations business segment
for the twelve months ended December 31, 1999, were generated from tariffs
charged to the North American Crude Oil - East of Rockies business segment. The
operating income from the Pipeline Operations business segment is


                                       6
<PAGE>   7


generated by the difference between the published tariff and the fixed and
variable costs of operating the pipelines.

     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 is 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; 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 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, either owned by EOTT or
through third parties.

     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. 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 located between Seattle and San Diego.

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


                                       7
<PAGE>   8


effect a substantially balanced position, thereby minimizing or reducing EOTT's
exposure to price fluctuations that may occur after the initial purchase.

     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 position
at all times. It is EOTT's policy not to acquire and hold crude oil, other
petroleum products, futures contracts or other derivative products for the
purpose of speculating on price changes. Nevertheless, 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
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 also integral to EOTT's lease crude oil
purchases. 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. As a result,
EOTT reserves for bad debts; however, beginning with the Partnership's first
full year of operations, 1995, the loss experience has totaled less than $1.0
million per fiscal year. 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.

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.


                                       8
<PAGE>   9


     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 are Scurlock Permian Oil
Corporation (now owned by Plains All American), Equiva (the joint venture of
Shell and Texaco Trading & Transportation Co., Inc.), Amoco Oil Company (now BP
Amoco PLC), Genesis Energy, L.P., Sun Refining & Marketing and TEPPCO Partners,
L.P.

ENVIRONMENTAL MATTERS

     EOTT is subject to federal, state and local laws and regulations relating
to the protection of the environment. 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. 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.

     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 the regular overall evaluation of its current
operations, EOTT is updating the operating permit status of certain of its
properties. EOTT believes that its overall operations are in substantial
compliance with applicable air requirements.

     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 for 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 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. For onshore facilities that have the ability to affect waters
of the United States, recent amendments to OPA require an operator to
demonstrate $10 million in financial responsibility, and $35 million in
financial responsibility for offshore facilities. On August 11, 1998, the U.S.
Minerals Management Service ("MMS") promulgated a final


                                       9
<PAGE>   10


rule implementing the financial responsibility requirements set forth under the
OPA amendments. The financial responsibility may be increased to a maximum of
$150 million if the MMS determines that a greater amount is justified based on
specific risks posed by the operations or if the worst case oil spill discharge
volume possible at the facility may exceed the applicable threshold volumes
specified under the MMS final rule. 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 fully anticipates that EOTT will be able to satisfy the MMS's
requirements for financial responsibility under OPA, as amended, and the final
rule.

     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 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." 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 on them may be subject to CERCLA, RCRA and analogous
state laws, and EOTT potentially could be required to remediate such properties.

     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 this Act. 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.

     In addition to the foregoing, EOTT is subject to state environmental laws
and regulations that address environmental considerations that may be of
particular concern to a state.

     The management of EOTT believes 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 and that
EOTT has used reasonably diligent efforts to comply, in all material respects,
with all applicable environmental laws and regulations. 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, L.P. ("Koch Pipelines") and crude oil systems acquired from
Texas-New Mexico Pipeline 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.

     EOTT has annually amended its tariffs on all of its regulated pipelines as
provided by FERC regulations effective July 1 of 1995, 1996, 1997, 1998 and
1999. 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.

     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. Beginning January 1, 1995,
Order No. 561 enables 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. The FERC, however,
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 Hobbs, Mississippi-Alabama, CITGO, Koch and
Texas-New Mexico Pipelines tariff rates 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 make 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, and in
Oklahoma, Alabama and Mississippi it 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 in these states 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

     After exiting the East of Rockies refined products business, EOTT primarily
markets refined gasoline at the wholesale level in 4 states. EOTT markets both
reformulated and conventional gasoline in ozone nonattainment 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 -
Environmental Matters," the discussion under "Legal Proceedings," the discussion
in "Management's


                                       12
<PAGE>   13


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 - Year 2000, Other
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 integrating recently acquired assets, the
Partnership's success in obtaining additional lease crude oil barrels,
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 1999, EOTT owned and operated 8,300 miles of active crude oil
gathering and transmission pipelines, including the assets acquired from Koch
Pipeline Company, L.P. and Texas-New Mexico Pipeline Company discussed below,
covering thirteen states (Alabama, Arkansas, California, Louisiana, Mississippi,
New Mexico, Oklahoma, Texas, Kansas, Nebraska, Colorado, Montana and North
Dakota), including 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 and North
Dakota. There are approximately 15.1 million barrels of storage capacity
associated with these pipelines and field tanks. EOTT has operated the pipeline
systems with regular and continuous maintenance. Inspections and tests have been
performed at prescribed intervals in an effort to ensure the integrity of the
systems.

     In two separate transactions, on July 1 and December 1, 1998, the
Partnership acquired approximately 4,200 miles of 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 capacity; a fractionation plant with 8,000 bpd of fractionation
capacity; 5 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 Pipeline 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 three 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.


                                       13
<PAGE>   14


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 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,
and it is not possible to determine any potential exposure until further
discovery is done.


                                       14
<PAGE>   15


     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, and it is not possible to determine any potential exposure until
further discovery is done.

     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 and it is not possible to determine any potential exposure
until further discovery is done.

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

     The Partnership believes that it has obtained or has applied for all of the
necessary permits required by federal, state, and local environmental agencies
for the operation of its business. Further, the Partnership believes that there
are no outstanding liabilities or claims relating to environmental matters
individually and in the aggregate, which would have a material adverse impact on
the Partnership's financial position or results of operations.


                                       15
<PAGE>   16


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 1999.




                                       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>
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

1998
     First Quarter ...........     $  19.188     $  17.250     $   0.475
     Second Quarter ..........        18.125        14.375         0.475
     Third Quarter ...........        17.000        11.250         0.475
     Fourth Quarter ..........        20.000        15.500         0.475
</TABLE>

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

     Distributions are shown in the quarter paid to Common Unitholders

     As of February 15, 2000, there were approximately 387 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. Generally, 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
distributions 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.

     Enron has agreed that it will contribute up to $29 million to the
Partnership 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,
                                                        -------------------------------------------------------------------------
                                                           1999         1998 (1)       1997             1996             1995
                                                        -----------   -----------   -----------      -----------      -----------
<S>                                                     <C>           <C>           <C>              <C>              <C>
INCOME DATA:
Revenue ..............................................  $ 8,664,401   $ 5,294,697   $ 7,646,099      $ 7,469,730      $ 5,088,240
Cost of sales ........................................    8,452,086     5,162,092     7,533,054        7,320,203        4,996,439
                                                        -----------   -----------   -----------      -----------      -----------
Gross margin .........................................      212,315       132,605       113,045          149,527           91,801
Operating expenses ...................................      153,194       104,425        96,158          101,945           72,951
Depreciation and amortization ........................       33,136        20,951        16,518           15,720           10,512
Impairment of assets .................................           --            --         7,961               --               --
                                                        -----------   -----------   -----------      -----------      -----------
Operating income (loss) ..............................       25,985         7,229        (7,592)          31,862            8,338
Interest and related charges .........................      (29,817)      (10,165)       (6,661)          (3,659)          (3,930)
Other income (expense), net ..........................        1,617        (1,131)         (146)             606            1,312
                                                        -----------   -----------   -----------      -----------      -----------
Income (loss) from
   continuing operations(2) ..........................  $    (2,215)  $    (4,067)  $   (14,399)     $    28,809      $     5,720
                                                        ===========   ===========   ===========      ===========      ===========
Basic income (loss) from
   continuing operations per Unit:
     o Common ........................................  $     (0.06)  $     (0.17)  $     (0.75)     $      1.50      $      0.33
                                                        ===========   ===========   ===========      ===========      ===========
     o Subordinated ..................................  $      0.06   $     (0.26)  $     (0.75)     $      1.50      $      0.33
                                                        ===========   ===========   ===========      ===========      ===========
Diluted income (loss) from
   continuing operations per Unit ....................  $     (0.02)  $     (0.21)  $     (0.75)     $      1.50      $      0.33
                                                        ===========   ===========   ===========      ===========      ===========

Cash distributions per Common Unit ...................  $      1.90   $      1.90   $      1.90      $      1.90      $      1.80
                                                        ===========   ===========   ===========      ===========      ===========

BALANCE SHEET DATA (AT END OF PERIOD):
Total assets .........................................  $ 1,558,661   $   965,820   $   782,921      $ 1,026,197      $   696,127
Total debt(3) ........................................      309,055       328,313       109,300           62,728           87,200
Partners' capital(2)(4) ..............................      120,117        75,582        62,093          106,173           75,819
Additional Partnership Interests(5) ..................        2,547        21,928        12,775            9,091            9,091
Capital expenditures (6) .............................       58,729       266,569        22,837            6,723           67,022
Cash distributions ...................................       30,380        22,842        29,681           28,831           12,218

OPERATING DATA:
North American Crude Oil - East of Rockies Operations:
   Total lease volumes (thousand bpd) ................        408.8         285.6         282.4            278.6            250.9
Pipeline Operations:
   Average volumes (thousand bpd) ....................        513.7         188.3         142.3            103.8             55.2
</TABLE>

-------------------
(1)  Includes one month of results of operations associated with the assets
     acquired from Koch on December 1, 1998. See additional discussion in Note 4
     to the Consolidated Financial Statements.
(2)  1997 includes non-recurring charges of (i) $6.5 million impairment of an
     information system development project, (ii) $1.5 million impairment of
     three Ohio products terminals held for sale and (iii) $2.0 million of
     severance costs related to the exit of the East of Rockies refined products
     business and corporate realignment. 1999 includes non-recurring charges of
     $7.8 million of costs related to mid-continent NGL activity and $2.0
     million of severance costs for reduction of workforce. See additional
     discussion in Notes 6 and 7 to the Consolidated Financial Statements.
(3)  Excludes other long-term liabilities.
(4)  The increase in Partners' capital in 1999 is due to the issuance of
     3,500,000 Common Units to the public in September 1999. See additional
     discussion in Note 8 to the Consolidated Financial Statements.
(5)  In February 1999, Enron contributed the $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 13
     to the Consolidated Financial Statements. In May 1999, Enron provided
     Common Unit distribution support related to the first quarter of 1999 in
     exchange for $2.5 million in Additional Partnership Interests. In February
     2000, Enron provided Common Unit distribution support related to the fourth
     quarter of 1999 in exchange for $6.7 million in Additional Partnership
     Interests.
(6)  1995 includes $52.6 million for the purchase of crude gathering and
     pipeline assets in Mississippi and Alabama. 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, 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 20 to our Consolidated Financial Statements for certain
financial information by business segment). In late 1997, EOTT decided to exit
the East of Rockies refined products business. See further discussion in Note 6
to the Consolidated Financial Statements.

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.

     Although EOTT generally maintains a balanced position in terms of overall
volumes, some risks cannot be fully 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. 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. It is EOTT's policy not to acquire and hold crude oil,
futures contracts or other derivative products for the purpose of speculating on
crude oil price changes.

     EOTT's operating results are sensitive to a number of factors including:
grades or types of crude oil, individual refinery demand for specific grades of
crude oil, area market price structures for the different grades


                                       19
<PAGE>   20


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.

     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 sales 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 76% of the revenues of the Pipeline
Operations business segment for the twelve months ended December 31, 1999, were
generated from tariffs charged 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.

RECENT DEVELOPMENTS

     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 the $175
million term loan from Enron, the $42 million bridge loan from Enron and $57.3
million of short-term borrowings outstanding under the working capital facility
from Enron.

     On May 1, 1999, EOTT acquired crude oil transportation and storage assets
in West Texas and New Mexico from Texas-New Mexico Pipeline Co. 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 future
environmental costs and financed the acquisition using short-term borrowings
from Enron.


                                       20
<PAGE>   21


     On December 1, 1998, EOTT purchased crude oil gathering and transportation
assets in key oil producing regions from Koch. The transaction almost tripled
the pipeline mileage and nearly doubled lease crude oil barrels under contract.
The acquisition included approximately 3,900 miles of crude oil pipelines, crude
oil transport trucks, meter stations, vehicles, storage tanks and contracts for
approximately 180,000 lease crude oil barrels per day from production in 11
central and western states including Texas, Oklahoma, Kansas and California. The
total purchase price was approximately $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 $42.0 million bridge loan, a $135.7
million term loan, and $6.8 million from the working capital facility with
Enron. EOTT also increased the existing credit facility with Enron to $1.0
billion in order to provide additional working capital for its expanded
operations.

     On February 12, 1999, EOTT obtained approval of proposals presented at a
special meeting of Unitholders. Approval of these proposals, among other things,
(a) authorized EOTT to issue an additional 10,000,000 Common Units, (b) changed
the terms of the Special Units held by Enron so that they became convertible
into Common Units and (c) resulted in an increase in Enron's cash distribution
support to $29.0 million and an extension of that 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, in exchange for
Common Units as discussed in Note 13 to the Consolidated Financial Statements.

     As previously disclosed, EOTT was engaged in discussions with a third party
relating to a possible acquisition of contracts and transportation assets,
including trucks, crude oil pipelines and storage facilities. Based on the
evaluation of assets, EOTT decided not to pursue the acquisition and has
terminated discussions with the third party. EOTT will continue to pursue
attractive acquisitions which provide incremental cash flow.

     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, 1999, 1998, and 1997, and the financial condition at December 31, 1999 and
1998, reflect the activities of EOTT Energy Partners, L.P. and its subsidiary
partnerships (the "Partnership"). Unless the context otherwise requires, the
term "EOTT" hereafter refers to the Partnership and its affiliated limited
partnerships.

RESULTS OF OPERATIONS

     EOTT reported a net loss of $0.5 million or $0.02 per diluted Unit for
1999, a net loss of $4.1 million or $0.21 per diluted Unit for 1998, and a net
loss of $14.4 million or $0.75 per diluted Unit for 1997. EOTT reported net
income of $9.3 million or $0.37 per diluted Unit in 1999 excluding nonrecurring
charges of $9.8 million or $0.39 per diluted Unit, which consisted primarily of
a $6.2 million charge for the apparent 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 recent workforce reductions. EOTT reported a net loss of
$4.4 million or $0.23 per diluted Unit in 1997 excluding nonrecurring charges of
$10.0 million or $0.52 per diluted Unit, which consisted primarily of a $6.5
million impairment of an information systems development project, a $1.5 million
impairment of three Ohio products terminals held for sale and a $2 million
severance charge associated with the realignment initiatives discussed further
in the Notes to the Consolidated Financial Statements. The adoption of Emerging
Issues Task Force Issue 98-10 in the first quarter of 1999 included a $1.7
million cumulative effect as of January 1, 1999 and approximately $5.6 million
of net unrealized


                                       21
<PAGE>   22


mark-to-market losses (which includes the $6.2 million charge related to the
unauthorized NGL activities) for the twelve months ended December 31, 1999.

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

<TABLE>
<CAPTION>
                                                      Year Ended December 31,
                                                ------------------------------------
                                                  1999          1998          1997
                                                --------      --------      --------
<S>                                             <C>           <C>           <C>
Revenues:
     N. A. Crude Oil - East of Rockies ....     $8,042.8      $4,637.8      $6,072.6
     Pipeline Operations ..................        118.5          31.5          19.4
     West Coast Operations ................        654.0         590.1         811.2
     Corporate and Other(1) ...............           --         110.7         760.2
     Intersegment eliminations ............       (150.9)        (75.4)        (17.3)
                                                --------      --------      --------
       Total ..............................     $8,664.4      $5,294.7      $7,646.1
                                                ========      ========      ========

Gross margin:
     N. A. Crude Oil - East of Rockies  (2)     $   78.2      $   92.0      $   82.6
     Pipeline Operations ..................        115.7          30.9          19.5
     West Coast Operations ................         18.4           9.7           9.3
     Corporate and Other  (1) .............           --            --           1.6
                                                --------      --------      --------
       Total ..............................     $  212.3      $  132.6      $  113.0
                                                ========      ========      ========

Operating Income (Loss):
     N. A. Crude Oil - East of Rockies ....     $   (2.5)     $   28.0      $   19.5
     Pipeline Operations ..................         51.0           4.3           1.8
     West Coast Operations ................         (2.2)          0.2           0.1
     Corporate and Other  (1) .............        (20.3)        (25.3)        (29.0)
                                                --------      --------      --------
       Total ..............................     $   26.0      $    7.2      $   (7.6)
                                                ========      ========      ========
</TABLE>

(1)  1998 and 1997 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.
     Intersegment transportation costs from the Pipeline Operations segment were
     $89.9 million, $24.5 million and $13.7 million for the twelve months ended
     December 31, 1999, 1998 and 1997, respectively.

     The North American Crude Oil - East of Rockies business segment and West
Coast Operations business segment are characterized by generally very thin and
volatile profit margins on purchase and sale transactions, and the 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.

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


                                       22
<PAGE>   23


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
Pipeline 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 Pipeline 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 Pipeline 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 for 1999 were $29.8
million compared to $10.2 million in 1998 due to the higher average debt in 1999
due to the financing of the acquisitions from Koch and Texas-New Mexico Pipeline
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.

TWELVE MONTHS ENDED DECEMBER 31, 1998 COMPARED WITH TWELVE MONTHS ENDED DECEMBER
31, 1997

     North American Crude Oil - East of Rockies. Operating income for the North
American Crude Oil - East of Rockies segment was $28.0 million in 1998 compared
to $19.5 million in 1997. Gross margin increased $9.4 million to $92.0 million
due primarily to renegotiations of uneconomic lease contracts during 1997 and
improved crude grade and basis differentials in 1998. East of Rockies lease
crude oil purchases were up slightly from an annual average of 282,400 bpd for
1997 to an annual average of 285,600 bpd in 1998. Operating expenses of


                                       23
<PAGE>   24


$64.0 million for 1998 were $0.9 million higher than 1997 due primarily to
increased depreciation and amortization related to the acquisitions of assets
from Koch partially offset by a reduction in employee related costs.

     Pipeline Operations. Pipeline Operations had operating income of $4.3
million in 1998 compared to $1.8 million in 1997. Revenues increased $12.1
million to $31.5 million due primarily to increased activity related to the
acquisition of pipelines from Koch. Pipeline delivered volumes were 185,300 bpd
in 1998 compared to 142,000 bpd in 1997. Operating expenses of $26.6 million in
1998 were $8.9 million higher than 1997 due primarily to increased benefits and
employee related costs, increased operating costs and incremental depreciation
and amortization associated with the acquisition of pipelines from Koch.

     West Coast Operations. West Coast Operations had operating income of $0.2
million in 1998 compared to $0.1 million in 1997. Gross margin increased $0.4
million to $9.7 million due primarily to the acquisition of crude oil gathering
and natural gas liquid assets from Koch partially offset by a lower of cost or
market adjustment of certain propane inventories. Operating expenses of $9.5
million in 1998 were $0.3 million higher than 1997 due primarily to higher
benefits and other employee related costs partially offset by reduced operating
costs.

     Corporate and Other. Corporate and other costs of $25.3 million for 1998
were $3.7 million lower compared to 1997 due primarily to a non-recurring $6.5
million non-cash impairment associated with the termination of an information
system development project and $1.5 million impairment of three Ohio products
terminals held for sale due to the exit of the East of Rockies refined products
business in 1997 partially offset by increased legal expenses, system operating
costs, casualty and liability insurance costs, a non-recurring write-off of
certain information system development costs and severance payments made to a
former officer of the General Partner. Interest and related charges for 1998
were $10.2 million compared to $6.7 million in 1997. The increase is due
primarily to higher average short-term debt required to meet working capital
needs, primarily related to higher average crude inventories during 1998 and
debt used to finance the acquisition of assets from Koch in the third and fourth
quarters of 1998. Other income (expense), net, consisting primarily of gains
(losses) on transactions denominated in foreign currency; gains (losses) on the
sale of property, plant and equipment; and litigation settlements decreased $1.0
million to a loss of $1.8 million in 1998 due to an increase in litigation
settlements in 1998.

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, when necessary,
accessing 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 $69.3 million in 1999
compared to $18.6 million in 1998. The increase in operating cash flow is
primarily due to the sale of a $50.0 million receivable from Koch.


                                       24
<PAGE>   25


Cash Flows From Investing Activities

     Net cash used in investing activities totaled $53.3 million in 1999
compared to $224.7 million in 1998, primarily due to the asset acquisition from
Texas-New Mexico Pipeline Company in 1999 and the asset acquisitions from Koch
in 1998. Cash additions to property, plant, and equipment of $54.7 million in
1999 primarily include $33.0 million representing cash consideration for the
asset acquisition from Texas-New Mexico Pipeline Company, $8.8 million for
pipeline connections and improvements, and $7.2 million for computer hardware
and software. Proceeds from asset sales were $1.4 million in 1999 compared to
$7.3 million in 1998.

     The General Partner estimates that capital expenditures necessary to
maintain the existing asset base at current operating levels will be
approximately $9 - $11 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 $1.5 million in 1999 compared
to net cash provided by financing activities of $205.4 million in 1998. 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. The 1998 amount primarily represents short-term
borrowings to fund working capital needs and borrowings from Enron to finance
the asset acquisitions from Koch, reduced by distributions paid to Unitholders
of record for the period October 1, 1997 through September 30, 1998.

     Cash distributions paid to Unitholders were $30.4 million and $22.8 million
for 1999 and 1998, respectively. Due to the losses incurred during 1997, the
1997 third quarter distribution to all Common and Special Unitholders was paid
utilizing $3.7 million in cash support from Enron. The 1997 fourth quarter
distribution was paid in February 1998 using $3.8 million in cash support from
Enron. The 1998 first and second quarter distributions were paid using $5.3
million in cash support from Enron. The 1999 first quarter distribution was paid
using $2.5 million in cash support from Enron. Pursuant to the Support Agreement
as discussed in Note 13 to the Consolidated Financial Statements, all APIs
outstanding at December 31, 1998 were contributed to the Partnership in February
1999.

Acquisition of Assets

     On July 1, 1998, the Partnership acquired crude oil gathering and
transportation assets in West Texas and New Mexico from Koch. The asset purchase
included approximately 300 miles of common carrier pipelines, associated storage
facilities for approximately 500,000 barrels and lease crude oil purchase
contracts for up to 40,000 barrels of 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 (the "Assets"), in key oil producing regions
from Koch. The total purchase price of the Assets was $235.6 million, which
included consideration of $184.5 million in cash, 2,000,000 Common Units,
2,000,000 Subordinated Units and $11.4 million in transaction costs. EOTT
financed the majority of the cash purchase price through short-term borrowings
from Enron. See additional discussion regarding Enron financing in Note 4 to the
Consolidated Financial Statements.


                                       25
<PAGE>   26


     On May 1, 1999, EOTT acquired crude oil transportation and storage assets
in West Texas and New Mexico from Texas-New Mexico Pipeline 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

     On December 1, 1998, Enron increased its existing credit facility with the
Partnership to provide additional 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.

     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 and the General Partner's assets. The
Partnership is restricted from entering into additional financing arrangements
without the prior approval of Enron.

     At December 31, 1998, EOTT had a term loan of $175 million outstanding with
Enron under a financing arrangement to fund a portion of the cash consideration
paid to Koch for the assets purchased in 1998 and to refinance indebtedness
incurred in prior acquisitions. The term loan had a scheduled maturity of
December 31, 1999. The interest rate on the term loan was LIBOR plus 300 basis
points. As discussed further below, the term loan was repaid in the fourth
quarter of 1999 utilizing a portion of the net proceeds from the issuance of the
11% senior notes.

     In addition, at December 31, 1998, EOTT had $42 million of debt outstanding
with Enron under a $100 million bridge loan to finance a portion of the cash
consideration for the acquisition of assets from Koch. The interest rate on the
bridge loan was initially LIBOR plus 400 basis points. At the end of each
three-month period, the spread on the bridge loan increased by 25 basis points.
The bridge loan was unsecured, and its maturity date was December 31, 1999. As
discussed below, the bridge loan was repaid utilizing a portion of the net
proceeds from the issuance of 3,500,000 Common Units.

     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 the $175 million term loan from
Enron, the $42 million bridge loan from Enron and $57.3 million of short-term
borrowings outstanding under the working capital facility from Enron.


                                       26
<PAGE>   27


     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.

     At December 31, 1998, EOTT had $44.4 million in letters of credit and $28.3
million in loans outstanding under the Enron facility at an average annual
interest rate of approximately 6.1%. The amount outstanding at December 31, 1998
under the Term Loan was $175.0 million with an average annual interest rate of
8.5% and under the Bridge Loan was $42.0 million with an average annual interest
rate of 9.5%. In addition, guarantees outstanding totaled $366.4 million of
which $290.9 million were used.

     The General Partner believes that the Enron facility and commodity
repurchase agreements discussed below 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.

     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.

     At December 31, 1999, EOTT has outstanding forward commodity 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. At December 31, 1998, EOTT had outstanding
forward commodity repurchase agreements of approximately $83.0 million. Pursuant
to the agreements, which had terms of thirty days, EOTT repurchased the crude
oil inventory on January 20, 1999 for approximately $83.4 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, 1999, $50 million 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 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.

     Generally, 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 distributions 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


                                       27
<PAGE>   28


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 as of February 14,
2000) in exchange for Additional Partnership Interests. See further discussion
in Note 13 to the Consolidated Financial Statements regarding Enron's
distribution support.

Summarized Financial Information of the General Partner

     EOTT Energy Corp., an indirect wholly owned subsidiary of Enron Corp.,
serves as the General Partner of the Partnership. Summary financial information
for 1999 and 1998 is shown below, in thousands:

<TABLE>
<CAPTION>
                                          Year Ended December 31,
                                          ----------------------
                                            1999          1998
                                          --------      --------
<S>                                       <C>           <C>
Balance Sheet Data (at end of period)
  Total assets ......................     $ 52,904      $ 43,099
  Total liabilities .................     $  3,841      $  1,212
  Shareholder's equity ..............     $ 49,063      $ 41,887

Income Statement Data:
  Net income (loss) .................     $   (539)     $ (4,005)
</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.

YEAR 2000

     A Year 2000 problem was anticipated which could have resulted from the use
in computer hardware and software of two digits rather than four digits to
define the applicable year. The use of two digits was a common practice for
decades when computer storage and processing was much more expensive than today.
When computer systems must process dates both before and after January 1, 2000,
two-digit year "fields" may create processing ambiguities that can cause errors
and system failures. For example, computer programs that have date-sensitive
features may recognize a date represented by "00" as the year 1900, instead of
2000.

     The Year 2000 problem has caused no material disruption to EOTT's
mission-critical facilities or operations, and resulted in no material costs.
EOTT will remain vigilant for Year 2000 related problems that may yet occur, due
to hidden defects in computer hardware or software at EOTT or EOTT's
mission-critical external entities. EOTT anticipates that the Year 2000 problem
will not create material disruptions to its mission-critical facilities or
operations, and will not create material costs.


                                       28
<PAGE>   29


OTHER MATTERS

Recent Accounting Pronouncements

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities". The Statement establishes accounting and
reporting standards requiring that every derivative instrument (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. SFAS No. 133, as amended, is
effective for fiscal years beginning after June 15, 2000. The standard cannot be
applied retroactively but early adoption is permitted. EOTT has not yet
determined the impact of adopting SFAS No. 133; however, this standard could
increase volatility in earnings and partners' capital, through other
comprehensive income.

OUTLOOK

     EOTT will continue to focus on increasing cash flow from operations through
the effective management of existing operations including continued focus on
asset utilization through integration and enhanced products and services to our
customers and focus on the improvement of the lease gathering margins through
control of operating costs as well as the pursuit of acquisitions and capital
projects that provide accretive cash flows through synergies and increased asset
utilization. EOTT plans to increase its producer base by maintaining its
reputation for high-quality responsive customer service and providing services
to producers. By leveraging and enhancing its multi-region presence, EOTT plans
to increase marketing and trading opportunities both domestically and in Canada.

     EOTT engages and will continue to engage in futures and over-the-counter
transactions principally for the purpose of hedging or enhancing the value of
the Partnership's physical business. Management believes that the hedging
program is effective and does not have a material adverse impact on the
Partnership's results of operations.

     Historically, the crude oil gathering and marketing business has been very
competitive with thin and volatile profit margins. The volatility of the market
and the amount of crude oil purchased cannot be projected with any level of
certainty. The Partnership intends to continue to pay MQDs to all its Common
Unitholders; however, due to the volatility of the market, it is possible that
distribution support from Enron may be needed to pay MQDs 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 still remains available as
of February 14, 2000) and extended it through the fourth quarter of 2001, which
will further assure Common Unitholders of continued reliable distributions.

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.


                                       29
<PAGE>   30


     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.

     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 AND FOREIGN CURRENCY 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 and
foreign currency risk (in millions):

<TABLE>
<CAPTION>
                                 Year Ended December 31,
                                 -----------------------
                                     1999       1998
                                     ----       ----
<S>                                <C>         <C>
Commodity price  (1) .........     $ (1.5)     $  3.8
Foreign currency exchange rate     $   --      $   --
</TABLE>

(1)  The above value at risk amount represents 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: however, the
borrowings under the facility are for working capital and are classified as
short-term obligations. If the borrowings were held to maturity, the average
interest rates would be LIBOR plus 250 basis points. At December 31, 1999, 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 the carrying value.

Accounting Policies

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


                                       30
<PAGE>   31


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 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 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 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 its
          Name                 Age   its Subsidiaries                Position
          ----                 ---   ----------------                --------
<S>                            <C>   <C>                  <C>
Edward O. Gaylord..........    68           --            Director and Chairman of the Board
Michael D. Burke ..........    55            2            Director, Chief Executive Officer and President
John H. Duncan ............    71           --            Director
Dee S. Osborne ............    69           --            Director
Daniel P. Whitty ..........    68           --            Director
Kenneth L. Lay ............    57           21            Director
Stanley C. Horton..........    49           26            Director
Dana R. Gibbs..............    40            7            Executive Vice President
Mary Ellen Coombe .........    49           19            Vice President, Human Resources and Administration
O. Horton Cunningham.......    51           --            Vice President Operations Governance
Stephen W. Duffy ..........    46           11            Vice President and General Counsel
David R. Hultsman..........    55            1            Vice President, Business Transformation
Lori L. Maddox.............    35            3            Controller
Susan Ralph................    50            8            Treasurer
</TABLE>


     Edward O. Gaylord has served as a member of the Board of Directors since
January 1993. Mr. Gaylord was elected Chairman of the Board of EOTT Energy Corp.
in February 1993. 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


                                       32
<PAGE>   33


Company, Seneca Foods Corporation, Federal Reserve Bank of Dallas - Houston
Branch, and the General Partner of Kinder Morgan Energy Partners, L.P.

     Michael D. Burke joined EOTT Energy Corp. as President and Chief Executive
Officer in May 1998. He was also elected to the Board of Directors in May 1998.
Prior to joining EOTT Energy Corp., Mr. Burke served as President and Chief
Executive Officer of M.D. Burke & Co., a venture capital and management
consulting firm. Mr. Burke was previously associated with Tesoro Petroleum
Corporation as President and Chief Executive Officer from 1992 to 1995. From
1980 to 1992, Mr. Burke held a number of senior executive positions with Texas
Eastern Corp., including Group Vice President - Products and President/Chief
Executive Officer of TEPPCO Partners, L.P.

     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 Azurix Corp. and 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, Chairman of Digital
and Wireless Communications, L.L.C. and Vice Chairman of Jacintoport Terminal
Company. He is a director of Ocean Energy, Inc. and Trustee of Scott & White
Memorial Hospital.

     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 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. 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 fourteen years. Mr. Lay is also a director of Eli Lily and
Company, Compaq Computer Corporation, Azurix Corp. and Trust Company of the
West.

     Stanley C. Horton was elected to the EOTT Energy Corp. Board of Directors
in May 1998. Mr. Horton is the Chairman and Chief Executive Officer of Enron Gas
Pipeline Group and has held that position since January 1997. From February 1996
to January 1997, he was Co-Chairman and Chief Operating Officer of Enron
Operations Corp. From June 1993 to February 1996, he was President and Chief
Operating Officer of Enron Pipeline and Liquids Group. Mr. Horton was appointed
to the Partnership Policy Committee of Northern Border Partners, L.P. in
December 1998. Mr. Horton serves on the Board of Directors of the Interstate
Natural Gas Association. He also serves as Second Vice Chairman and Treasurer of
Gas Industry Standards Board and as Vice Chairman of Gas Research Institute.

     Dana R. Gibbs joined EOTT Energy Corp. as Executive Vice President in April
1999. 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.

     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 over the
past nineteen years.


                                       33
<PAGE>   34


     O. Horton (Cutty) Cunningham joined EOTT Energy Corp. as Vice President
Operations Governance in February 2000. From August 1987 to February 2000, Mr.
Cunningham served as Vice President Technical Services, Vice President
Operations, Director Engineering and Compliance, and Manager Health, Safety and
Environmental Affairs of Texas Eastern Products Pipeline Company, Limited
Partnership.

     Stephen W. Duffy has served as Vice President and General Counsel of EOTT
Energy Corp. since December 1992. Mr. Duffy has served in various legal
positions within Enron over a period of eleven years.

     David R. Hultsman joined EOTT Energy Corp. as Vice President, Business
Transformation in May 1999. From June 1997 to July 1998, he was Senior Director
Enterprise Operations to Boston Chicken Inc. and Einstein Bagels, Inc. From
November 1996 to May 1997 he was Vice President Information Services with West
Teleservices. Mr. Hultsman was Director, Columbia/HCA National Call Center
January through November 1996 and served as Vice President and President of
Information Systems, TESORO Petroleum Corp. in 1995.

     Lori L. Maddox has served as Controller 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.

     Susan C. Ralph joined Enron Corp. in October 1991 and has served as
Treasurer of EOTT Energy Corp. since 1996. Prior to joining EOTT Energy Corp.,
Ms. Ralph served as Vice President and Director of Gorges Foodservices, Inc. and
has held various positions in the commercial banking industry.

     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 $15,000 for serving as a director. In
addition, non-employee directors will be paid a fee of $1,000 for each
director's meeting attended and $1,000 for each committee meeting attended. The
Chairman of the Board receives an additional annual fee of $5,000 for serving as
Chairman in addition to the other fees described in this paragraph.

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 1999 its reporting persons complied with all applicable
filing requirements in a timely manner, except Michael D. Burke did not timely
file one report containing one transaction on Form 5 and Dana R. Gibbs did not
timely file his Initial Statements of Beneficial Ownership of Securities on Form
3.


                                       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     All Other
                                        Salary      Bonus  Compensation    Stock Awards   Options/SARs  Compensation
Name and Principal Position      Year    ($)         ($)      ($) (1)        ($) (2)       (#'s) (3)      ($) (4)
---------------------------      ----  --------    ------- ------------    ------------    -----------   ----------
<S>                              <C>   <C>         <C>     <C>             <C>             <C>           <C>
Michael D. Burke                 1999   340,008         --         --             --         47,200          2,104
Chief Executive Officer          1998   212,504     30,000         --             --        500,000            800
and President                    1997        --         --         --             --             --             --

Mary Ellen Coombe                1999   160,000     40,000         --             --             --          6,838
Vice President, Human            1998   160,000     15,100         --             --             --          3,308
Resource and Administration      1997   160,000         --         --             --         32,000          1,129

Stephen W. Duffy                 1999   168,333     30,000         --             --             --          6,282
Vice President and               1998   160,000     25,100         --             --             --          3,308
General Counsel                  1997   160,000         --         --             --         32,000          1,129


Lori L.Maddox                    1999   150,000     35,000         --             --             --         53,063
Controller/CAO                   1998   146,666     10,100         --             --          6,000            500
                                 1997   110,000         --         --             --          3,000             --

Susan Ralph                      1999   135,000     40,000         --             --             --         38,102
Treasurer                        1998   109,167      5,100         --             --          6,000          1,887
                                 1997   100,000         --         --             --          3,000             --
</TABLE>


(1)  No Named Officer had "Perquisites and Other Personal Benefits" with a value
     greater than the lesser of $50,000 or 10% of reported salary and bonus.

(2)  Restricted stock awards have not been granted to the Named Officers during
     the reporting period.

(3)  The amounts shown include options granted in 1999, 1998 and 1997 for Enron
     Corp. Common Stock and EOTT Subordinated Units as follows: Mr. Burke,
     47,200 Enron stock options for 1999, 100,000 Enron stock options, and
     400,000 EOTT unit options for 1998; Ms. Coombe and Mr. Duffy, 32,000 Enron
     stock options for 1997; Ms. Maddox, and Ms. Ralph 6,000 Enron stock options
     for 1998, and 3,000 Enron stock options for 1997.

(4)  The amounts include the value of Enron Corp. Common Stock allocated to
     employees' special subaccounts under Enron's Employee Stock Ownership Plan,
     and matching contributions to employees' Enron Corp. Savings Plan accounts.
     Under Retention agreements, Ms. Maddox and Ms. Ralph received onetime
     retention payments in February 1999 of $50,000 and $35,000 respectively.


                                       35
<PAGE>   36


Stock Option Grants During 1999

     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
1999 under the EOTT Energy Corp. Unit Option Plan. Stock options were granted
during 1999 under Enron's 1994 Stock Plan ("1994 Plan"). No SAR units were
granted during 1999, and none are outstanding.

<TABLE>
<CAPTION>
                                                         INDIVIDUAL GRANTS
                                        ----------------------------------------------------
                                                       % OF TOTAL
                                         OPTIONS/     OPTIONS/SARS    EXERCISE
                                          SARS         GRANTED TO     OR BASE
                                         GRANTED      EMPLOYEES IN     PRICE     EXPIRATION
NAME                                       (2)         FISCAL YEAR     ($/SH)       DATE
----                                    --------      -------------  ---------   ----------
<S>                      <C>           <C>            <C>            <C>         <C>
Michael D. Burke         EOTT                  --           --             --           --
                         Enron Corp.       47,200         0.14%      $32.6875      1/25/06

Mary E. Coombe           EOTT                  --           --             --           --
                         Enron Corp.           --           --             --           --

Stephen W. Duffy         EOTT                  --           --             --           --
                         Enron Corp.           --           --             --           --

Lori L. Maddox           EOTT                  --           --             --           --
                         Enron Corp.           --           --             --           --

Susan Ralph              EOTT                  --           --             --           --
                         Enron Corp.           --           --             --           --

All Employee and         EOTT                  --           --             --          N/A
 Director Optionees      Enron Corp.   34,446,667(4)       100%      $38.1638(5)       N/A

All Stock / Unitholders  EOTT                  --           --             --           --
                         Enron Corp.          N/A          N/A            N/A          N/A

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
</TABLE>

<TABLE>
<CAPTION>
                                             POTENTIAL REALIZABLE VALUE AT
                                               ASSUMED ANNUAL RATES OF
                                               STOCK PRICE APPRECIATION
                                                  FOR OPTION TERM(1)
                                       ------------------------------------------
NAME                                   0%(3)          5%                10%
----                                   -----   ---------------    ---------------
<S>                      <C>           <C>     <C>                <C>
Michael D. Burke         EOTT          $ --    $            --    $            --
                         Enron Corp.   $ --    $       628,095    $     1,463,729

Mary E. Coombe           EOTT          $ --    $            --    $            --
                         Enron Corp.   $ --    $            --    $            --

Stephen W. Duffy         EOTT          $ --    $            --    $            --
                         Enron Corp.   $ --    $            --    $            --

Lori L. Maddox           EOTT          $ --    $            --    $            --
                         Enron Corp.   $ --    $            --    $            --

Susan Ralph              EOTT          $ --    $            --    $            --
                         Enron Corp.   $ --    $            --    $            --

All Employee and         EOTT          $ --    $            --    $            --
 Director Optionees      Enron Corp.   $ --    $ 2,141,370,466(6) $ 3,409,774,586(6)

All Stock / Unitholders  EOTT          $ --    $            --    $            --
                         Enron Corp.   $ --    $44,480,621,930(6) $70,827,956,490(6)

Optionee Gain as % of    EOTT            --                 --                 --
  all Unitholders Gain   Enron Corp.     --               4.81%              4.81%
</TABLE>


(1)  The dollar amounts under these columns represent the potential realizable
     value of each grant of Enron Corp. stock options assuming that the market
     price of 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 Common
     Stock.

     The dollar amounts under these columns represent the potential realizable
     value of each grant of EOTT Energy Corp. unit options assuming the
     Subordinated Unit option converts to a Common Unit option and the market
     price of a Common Unit appreciates in value from the date of grant at the
     5% and 10% annual rates prescribed by the SEC. The dollar amounts shown are
     not intended to forecast possible future appreciation, if any, of the price
     of Common Units.

(2)  Represents Enron Corp. stock options awarded during 1999 under Enron's 1994
     Stock Plan. Mr. Burke was awarded stock options with a 7-year term, which
     vested 20% at grant and 20% on January 25, 2000, and will vest 20% on each
     January 25, 2001, 2002 and 2003.

(3)  An appreciation in stock price, which will benefit all stockholders, is
     required for optionees to receive any gain. A stock price appreciation of
     zero percent would render the option without value to the optionees.

(4)  Includes shares issued on December 31, 1999 under the All Employee Stock
     Option Program to employees hired during 1999.

(5)  Weighted average exercise price of all Enron stock options granted to
     employees in 1999.

(6)  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
     ($38.1638) and the number of shares of Common Stock issued and outstanding
     on December 31, 1999.


                                       36
<PAGE>   37


AGGREGATED OPTIONS/SAR EXERCISES DURING 1999 AND OPTION/SAR VALUES AT DECEMBER
     31, 1999

     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
                                                            Options/SARs at            December 31, 1999
                               Shares                       December 31, 1999              ($) (1) (2)
                              Acquired       Value      --------------------------  ---------------------------
                                on         Realized
       Name                   Exercise        ($)       Exercisable  Unexercisable  Exercisable   Unexercisable
-----------------             ---------   -----------   -----------  -------------  -----------   -------------
<S>               <C>         <C>         <C>           <C>          <C>            <C>           <C>
M. Burke          EOTT            --      $      --             --      400,000      $       --    $       --
                  Enron Corp.     --             --         59,440       87,760       1,044,705     1,375,695
                                                                                                   ----------
                  Subtotal                                                                         $1,375,695

M.E. Coombe       EOTT            --      $      --             --       60,000      $       --    $       --
                  Enron Corp.     --             --         60,800        8,000      $1,939,925       192,000
                                                                                                   ----------
                  Subtotal                                                                         $  192,000

S. Duffy          EOTT            --      $      --             --       60,000      $       --    $       --
                  Enron Corp.  4,000      $  50,000         20,000        8,000      $  480,000       192,000
                                                                                                   ----------
                  Subtotal                                                                         $  192,000

L. Maddox         EOTT            --      $      --             --           --      $       --    $       --
                  Enron Corp.     --             --          5,250        3,750         124,219        88,218
                                                                                                   ----------
                  Subtotal                                                                         $   88,218

S. Ralph          EOTT            --      $      --             --           --      $       --    $       --
                  Enron Corp.     --             --          5,250        3,750      $  124,219        88,218
                                                                                                   ----------
                  Subtotal                                                                         $   88,218
</TABLE>

(1)  The dollar value in this column for EOTT options was calculated by assuming
     the Subordinate 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 1999 was $13.00 and the
     Subordinated Unit grant price is $15.00.

(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 option as of December 31, 1999 ($44.3750) and the grant
     price.


                                       37
<PAGE>   38


LONG TERM INCENTIVE PLAN AWARDS IN 1999

     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 1999
pursuant to the Named Officers reflected in the Summary Compensation Table.


<TABLE>
<CAPTION>
                                                                          Future Estimated
                                            Performance                    Payments Under
                            Number           or Other                 Non-Stock Based Plans (1)
                          of Shares,       Period Until    --------------------------------------------
                           Units or         Maturation
     Name                   Rights            Payout        Threshold $       Target $        Maximum $
--------------            ----------     ----------------  -------------    -----------    ------------
<S>            <C>        <C>            <C>               <C>              <C>            <C>
M. Burke       EOTT        300,000            5  Years        $   --         $ 2,586,000       $ 5,040,000

M.E. Coombe    EOTT         50,000            5  Years        $   --         $   431,000       $   840,000

S. Duffy       EOTT         50,000            5  Years        $   --         $   431,000       $   840,000

L. Maddox      EOTT         30,400            5  Years        $   --         $   262,048       $   510,720

S. Ralph       EOTT         30,400            5  Years        $   --         $   262,048       $   510,720
</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 5 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 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 members 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 10-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


                                       38
<PAGE>   39


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
assure payments to certain employees of that retirement income that would be
provided under the Cash Balance Plan except for the dollar limitation on accrued
benefits imposed by the Internal Revenue Code of 1986, as amended.

     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>
M. Burke ......           1.6                10.8           $340,008            $ 31,072
M.E. Coombe ...          19.3                35.2           $160,000            $ 75,108
S. Duffy ......          12.9                31.4           $168,333            $ 68,834
L. Maddox .....           3.3                33.0           $150,000            $ 99,113
S. Ralph ......           8.4                23.3           $135,000            $ 32,439
</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, Ms. Coombe, and Mr. Duffy include an
involuntary termination provision pursuant to which the executive officer will
receive severance pay equal to up to two years base salary. 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


                                       39
<PAGE>   40


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, the confidential information and
noncompete provisions will continue for one year.

Employment Agreements

     Mr. Burke entered into an Employment Agreement with EOTT Energy Corp. in
May 1998. The Agreement has a term through December 31, 2001 for an annual base
salary of $340,000. In addition, the Agreement provides for 90,828 units under
the EOTT Energy Long Term Incentive Plan, options to purchase 400,000
Subordinated Units under the EOTT Energy Unit Option Plan and options to
purchase 50,000 shares of Enron Corp. Common Stock under the Enron Corp. Stock
Plan. The Agreement contains involuntary termination provisions which include
severance benefits equal to one year's base pay plus a payment of a pro-rata
amount of bonus opportunity for the year of termination based on the higher of
the target bonus amount for the termination year or the amount of bonus paid for
the preceding year payable within 30 days of termination. In addition, an amount
equal to one year's base salary is payable one year following the involuntary
termination date. Upon Change of Control termination prior to the expiration of
term, the severance benefits include an amount equal to the sum of annualized
monthly base pay plus a bonus factor multiplied by 2.99. The bonus factor shall
be the greater of the target bonus for the year in which Change of Control
termination occurs or the actual amount of the previous year's annual bonus. The
Agreement provides for post-employment non-competition obligations for twelve
months after the date of Involuntary Termination or Change of Control
Termination.

     Mr. Gibbs entered into an Employment Agreement with EOTT Energy Corp. on
April 1, 1999 for a term of three years. The Agreement provides for an annual
base salary of not less than $200,000 and an annual incentive plan target of 50%
with a maximum pay-out of 100% of annual base salary. The Agreement further
provides a retention bonus of $100,000 payable in January 2000 and January 2001.
Per the Agreement, Mr. Gibbs received a grant of 53,475 PAR Units under the EOTT
Energy Long Term Incentive Plan. The Agreement provides for post employment
non-compete obligations in the event of 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            1,700,000                       9.20
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, 2000,
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.   Michael D. Burke               78,900            --                   --            *
Common Units                 Mary Ellen Coombe              60,000            --                   --            *
                             O. Horton Cunningham               --            --                   --            *
                             Stephen W. Duffy               60,000            --                   --            *
                             John H. Duncan                  8,500            --                   --            *
                             Edward O. Gaylord               5,000            --                   --            *
                             Dana R. Gibbs                   6,000            --                   --            *
                             Stanley C. Horton              10,000            --                   --            *
                             Kenneth L. Lay                     --         5,000                   --            *
                             Lori L. Maddox                     --            --                   --            *
                             Dee S. Osborne                     --            --                   --            *
                             Susan C. Ralph                    300           500                   --            *
                             Daniel P. Whitty                   --            --                   --            *

                             All directors and executive
                             officers as a group
                             (13 in number)                228,700         5,500                   --        1.26%


Enron Corp.                  Michael D. Burke               68,895            --                   83            *
Common Stock                 Mary Ellen Coombe              69,309            --               26,884            *
                             Stephen W. Duffy               28,405            --                   --            *
                             John H. Duncan                168,962        58,000                  180            *
                             Edward O. Gaylord                  --            --                   42            *
                             Dana R. Gibbs                  75,855            --                  884            *
                             Stanley C. Horton             494,360         3,607               37,898(2)         *
                             Kenneth L. Lay              5,351,124     2,396,912              267,486        1.10%
                             Lori L. Maddox                  7,513            --                   92            *
                             Susan C. Ralph                  2,263            --                1,234            *

                             All directors and executive
                             officers as a group
                             (13 in number)              6,266,686     2,458,519              334,783(2)     1.24%
</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 subject to unit
     options exercisable within 60 days as follows: Ms. Coombe, 60,000 units;
     Mr. Duffy, 60,000 units; and all directors and executive officers as a
     group, 120,000 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, 41,088 shares, for which he has shared voting
     and investment power for 38,160 of such shares; Mr. Burke, 68,893 shares;
     Mr. Lay, 5,534,145 shares, for which he has shared voting and investment
     power for 1,615,330 of such shares; Ms. Coombe, 68,893; Mr. Duffy, 28,013;
     Mr. Gibbs, 74,599; Mr. Horton, 396,998; Ms. Maddox, 7,513; Ms. Ralph, 2,263
     shares and all directors and executive officers as a group, 6,222,405
     shares.

(2)  Includes 2,591 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.


                                       41
<PAGE>   42


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     See Note 13 to the Consolidated Financial Statements for information
regarding certain transactions between EOTT and Enron and its affiliates.








                                       42
<PAGE>   43


                                     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

     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)


                                       43
<PAGE>   44


     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)

     10.13 --  Credit Agreement dated as of June 30, 1995 between EOTT Energy
               Operating Limited Partnership, as Borrower, and Enron Corp., as
               Lender (incorporated by reference to Exhibit 10.13 to Annual
               Report on Form 10-K for the Year Ended December 31, 1995)

     10.14 --  Credit Agreement dated as of January 3, 1996 between EOTT Energy
               Operating Limited Partnership, as Borrower, and Enron Corp., as
               Lender (incorporated by reference to Exhibit 10.14 to Annual
               Report on Form 10-K for the Year Ended December 31, 1995)

     10.15 --  Amendment dated December 19, 1996 to the Credit Agreement dated
               as of June 30, 1995 between EOTT Energy Operating Limited
               Partnership as Borrower, and Enron Corp., as Lender (incorporated
               by reference to Exhibit 10.15 to Annual Report on Form 10-K for
               the Year Ended December 31, 1996)

     10.16 --  Amendment dated February 25, 1997 to the Credit Agreement dated
               as of June 30, 1995 between EOTT Energy Operating Limited
               Partnership as Borrower, and Enron Corp., as Lender (incorporated
               by reference to Exhibit 10.16 to Annual Report on Form 10-K for
               the Year Ended December 31, 1996)

     10.17 --  Amendment dated February 25, 1997 to the Credit Agreement dated
               as of January 3, 1996 between EOTT Energy Operating Limited
               Partnership as Borrower, and Enron Corp., as Lender (incorporated
               by reference to Exhibit 10.17 to Annual Report on Form 10-K for
               the Year Ended December 31, 1996)

     10.18 --  Amendment dated as of February 13, 1997, to the EOTT Energy Corp.
               1994 Unit Option Plan (incorporated by reference to Exhibit 10.18
               to Annual Report on Form 10-K for the Year Ended December 31,
               1996)


                                       44
<PAGE>   45


     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)

     10.21 --  Form of Executive Employment Agreement between EOTT Energy Corp.
               and Michael D. Burke (incorporated by reference to Exhibit 10.21
               to Quarterly Report on Form 10-Q for the Quarter Ended June 30,
               1998)

     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)

     10.25 --  Amended and Restated Term 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
               10.25 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)

     10.27 --  Amendment dated March 17, 1999 to the Amended and Restated Term
               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 10.27 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)


                                       45
<PAGE>   46


     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)

     10.31 --  Amendment dated August 11, 1999 to the Amended and Restated Term
               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 10.31 to Quarterly
               Report on Form 10-Q for the Period Ended June 30, 1999)

*    21.1  --  Subsidiaries of the Registrant

*    23.1  --  Consent of Arthur Andersen LLP

*    24    --  Power of Attorney

*    27.1  --  Financial Data Schedule


*    Filed herewith.



     (b)  Reports on Form 8-K


          September 8, 1999   RE:  Item 5 - Possible acquisition of contracts
                                            and transportation assets.

          September 29, 1999  RE:  Item 7 - Filing of certain exhibits.

          October 1, 1999     RE:  Item 7 - Filing of certain exhibits.


                                       46
<PAGE>   47


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 28TH DAY OF
MARCH, 2000.

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

                                    By:        EOTT ENERGY CORP. as
                                                 General Partner



                                    By:   /s/ MICHAEL D. BURKE
                                         -----------------------------
                                              Michael D. Burke
                                         Chief Executive Officer and President


     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/      MICHAEL D. BURKE                   Director, Chief Executive                   March 28, 2000
--------------------------------------------     Officer and President
              Michael D. Burke                   (Principal Executive Officer)


     /s/       LORI L. MADDOX                    Controller                                  March 28, 2000
--------------------------------------------     (Principal Accounting Officer)
               Lori L. Maddox


     /s/      EDWARD O. GAYLORD                  Chairman of the Board and                   March 28, 2000
--------------------------------------------     Director
              Edward O. Gaylord


     /s/       DEE S. OSBORNE                    Director                                    March 28, 2000
--------------------------------------------
               Dee S. Osborne


     /s/      DANIEL P. WHITTY                   Director                                    March 28, 2000
--------------------------------------------
              Daniel P. Whitty
</TABLE>


                                       47
<PAGE>   48


<TABLE>
<CAPTION>
                  Signature                                  Title                                   Date
                  ---------                                  -----                                   ----
<S>                                              <C>                                        <C>
     /s/       JOHN H. DUNCAN                    Director                                    March 28, 2000
--------------------------------------------
               John H. Duncan


     /s/      STANLEY C. HORTON                  Director                                    March 28, 2000
--------------------------------------------
              Stanley C. Horton


     /s/       KENNETH L. LAY                    Director                                    March 28, 2000
--------------------------------------------
               Kenneth L. Lay
</TABLE>


                                       48
<PAGE>   49


                           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, 1999, 1998 and 1997.........................................  F-3

     Consolidated Balance Sheets - December 31, 1999 and 1998.................................  F-4

     Consolidated Statements of Cash Flows -
         Years Ended December 31, 1999, 1998 and 1997.........................................  F-5

     Consolidated Statements of Partners' Capital -
         Years Ended December 31, 1999, 1998 and 1997.........................................  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>   50


                    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, 1999 and
1998, and the related consolidated statements of operations, cash flows and
partners' capital for each of the three years in the period ended December 31,
1999. 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, 1999 and 1998, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1999, 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 3, 2000


                                      F-2
<PAGE>   51


                           EOTT ENERGY PARTNERS, L.P.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In Thousands, Except Per Unit Amounts)


<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31,
                                                          -----------------------------------------
                                                              1999           1998           1997
                                                          -----------    -----------    -----------
<S>                                                       <C>            <C>            <C>
Revenue ...............................................   $ 8,664,401    $ 5,294,697    $ 7,646,099

Cost of Sales .........................................     8,452,086      5,162,092      7,533,054
                                                          -----------    -----------    -----------

Gross Margin ..........................................       212,315        132,605        113,045

Expenses
   Operating expenses .................................       153,194        104,425         96,158
   Depreciation and amortization ......................        33,136         20,951         16,518
   Impairment of assets ...............................            --             --          7,961
                                                          -----------    -----------    -----------
     Total ............................................       186,330        125,376        120,637
                                                          -----------    -----------    -----------

Operating Income (Loss) ...............................        25,985          7,229         (7,592)

Other Income (Expense)
   Interest income ....................................           875            674            620
   Interest and related charges .......................       (29,817)       (10,165)        (6,661)
   Other, net .........................................           742         (1,805)          (766)
                                                          -----------    -----------    -----------
     Total ............................................       (28,200)       (11,296)        (6,807)
                                                          -----------    -----------    -----------

Net Loss Before Cumulative
   Effect of Accounting Change ........................        (2,215)        (4,067)       (14,399)

Cumulative Effect of Accounting
   Change (Note 3) ....................................         1,747             --             --
                                                          -----------    -----------    -----------

Net Loss ..............................................   $      (468)   $    (4,067)   $   (14,399)
                                                          ===========    ===========    ===========


Basic Net Income (Loss) Per Unit (Note 5)
   Common .............................................   $     (0.06)   $     (0.17)   $     (0.75)
                                                          ===========    ===========    ===========
   Subordinated .......................................   $      0.06    $     (0.26)   $     (0.75)
                                                          ===========    ===========    ===========


Diluted Net Income (Loss) Per Unit (Note 5) ...........   $     (0.02)   $     (0.21)   $     (0.75)
                                                          ===========    ===========    ===========

Distributions Per Common Unit .........................   $      1.90    $      1.90    $      1.90
                                                          ===========    ===========    ===========

Average Units Outstanding for Diluted Computation .....        24,877         19,267         18,830
                                                          ===========    ===========    ===========
</TABLE>


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


                                      F-3
<PAGE>   52


                           EOTT ENERGY PARTNERS, L.P.
                           CONSOLIDATED BALANCE SHEETS
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                               DECEMBER 31, DECEMBER 31,
                                                                   1999          1998
                                                               -----------  -----------
                        ASSETS
<S>                                                             <C>          <C>
Current Assets
   Cash and cash equivalents ................................   $   17,525   $    3,033
   Trade and other receivables, net of allowance for doubtful
     accounts of $1,732 and $1,860, respectively ............      966,422      403,335
   Inventories ..............................................      120,306      137,545
   Other ....................................................       29,191       30,328
                                                                ----------   ----------
     Total current assets ...................................    1,133,444      574,241
                                                                ----------   ----------

Property, Plant and Equipment, at cost ......................      544,723      497,807
   Less: Accumulated depreciation ...........................      140,228      112,568
                                                                ----------   ----------
     Net property, plant and equipment ......................      404,495      385,239
                                                                ----------   ----------

Other Assets, net of amortization ...........................       20,722        6,340
                                                                ----------   ----------

Total Assets ................................................   $1,558,661   $  965,820
                                                                ==========   ==========

           LIABILITIES AND PARTNERS' CAPITAL

Current Liabilities
   Trade accounts payable ...................................   $1,103,187   $  524,822
   Accrued taxes payable ....................................       11,947        5,192
   Short-term borrowings - affiliate ........................           --       28,297
   Bridge loan - affiliate ..................................           --       42,000
   Term loan - affiliate ....................................           --      175,000
   Repurchase agreements ....................................       74,055       83,016
   Other ....................................................        8,333        9,983
                                                                ----------   ----------
     Total current liabilities ..............................    1,197,522      868,310
                                                                ----------   ----------

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

Commitments and Contingencies (Notes 15 and 16)

Additional Partnership Interests (Note 13) ..................        2,547       21,928

Partners' Capital
   Common Unitholders .......................................       73,570       14,472
   Special Unitholders ......................................           --       21,092
   Subordinated Unitholders .................................       38,855       38,315
   General Partner ..........................................        7,692        1,703
                                                                ----------   ----------
     Total Partners' Capital ................................      120,117       75,582
                                                                ----------   ----------

Total Liabilities and Partners' Capital .....................   $1,558,661   $  965,820
                                                                ==========   ==========
</TABLE>


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


                                      F-4
<PAGE>   53


                           EOTT ENERGY PARTNERS, L.P.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31,
                                                              -----------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES                             1999         1998         1997
                                                              ---------    ---------    ---------
<S>                                                           <C>          <C>          <C>
   Reconciliation of net loss to net cash
   provided by (used in) operating activities
     Net loss .............................................   $    (468)   $  (4,067)   $ (14,399)
     Depreciation .........................................      31,164       18,806       14,487
     Impairment of assets .................................          --           --        7,961
     Amortization of intangible assets ....................       1,972        2,145        2,031
     (Gains) losses on disposal of assets .................        (636)          66         (503)
     Changes in components of working capital -
       Receivables ........................................    (563,087)      60,648      240,801
       Inventories ........................................      17,239        1,720       (4,339)
       Other current assets ...............................       1,137       (3,737)       1,893
       Trade accounts payable .............................     578,365      (61,578)    (231,776)
       Accrued taxes payable ..............................       6,755         (270)      (3,003)
       Other current liabilities ..........................      (5,369)       4,238      (14,057)
     Other assets and liabilities .........................       2,216          616          886
                                                              ---------    ---------    ---------
   Net Cash Provided by (Used In) Operating Activities ....      69,288       18,587          (18)
                                                              ---------    ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES
   Proceeds from sale of property, plant
     and equipment ........................................       1,407        7,330        1,243
   Acquisitions ...........................................     (33,000)    (224,397)     (12,000)
   Additions to property, plant and equipment .............     (21,728)      (8,492)     (10,837)
   Other, net .............................................          --          866          129
                                                              ---------    ---------    ---------
   Net Cash Used In Investing Activities ..................     (53,321)    (224,693)     (21,465)
                                                              ---------    ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES
   Increase (decrease) in note payable - affiliate ........          --      (39,300)      15,072
   Increase (decrease) in short-term
     borrowings - affiliate................................     (28,297)     (41,703)      31,500
   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 ...........      (8,961)      83,016           --
   Acquisition of treasury units ..........................          --          (66)          --
   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 ...........................     (30,380)     (22,842)     (29,681)
   Issuance of Additional Partnership Interests ...........       2,547        9,153        3,684
   Other, net .............................................        (281)        (649)        (616)
                                                              ---------    ---------    ---------
   Net Cash Provided by (Used in) Financing Activities ....      (1,475)     205,402       19,959
                                                              ---------    ---------    ---------
Increase (Decrease) in Cash and Cash Equivalents ..........      14,492         (704)      (1,524)
Cash and Cash Equivalents Beginning of Period .............       3,033        3,737        5,261
                                                              ---------    ---------    ---------
Cash and Cash Equivalents End of Period ...................   $  17,525    $   3,033    $   3,737
                                                              =========    =========    =========
</TABLE>


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


                                      F-5
<PAGE>   54


                           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, 1996 .........   $   33,984    $   29,908    $   40,065    $    2,216

Net loss .......................................       (7,494)       (1,371)       (5,246)         (288)
Cash distributions .............................      (19,000)       (3,477)       (6,650)         (554)
                                                   ----------    ----------    ----------    ----------

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
                                                   ==========    ==========    ==========    ==========
</TABLE>


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


                                      F-6
<PAGE>   55


                           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, 1999 the General Partner owned an
approximate 2% general partner interest in the Partnership and an approximate
25% subordinated limited partner interest. 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 for the debt offering to
facilitate certain investors' ability to purchase EOTT's senior notes, more
fully described in Note 8.

     The accompanying consolidated financial statements and related notes
present the financial position as of December 31, 1999 and 1998 for the
Partnership, and the results of its operations, cash flows and changes in
partners' capital for the years ended December 31, 1999, 1998 and 1997.

     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 combined 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. In late 1997, EOTT
exited the East of Rockies refined products business which is discussed further
in Note 6.

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

     Inventories. The Partnership accounts for its inventories using the average
cost method.

     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, 1999 and 1998 was $29.8 million and $27.9 million,
respectively.


                                      F-7
<PAGE>   56


                           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 based on the right to receive
payment for goods and services delivered to third parties.

     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

     In December 1998, the Emerging Issues Task Force ("EITF") reached a
consensus on Issue 98-10, "Accounting for Contracts Involved in Energy Trading
and Risk Management Activities." The Issue 98-10 is effective for fiscal years
beginning after December 15, 1998, and requires energy trading contracts (as
defined) to be recorded at fair value on the balance sheet, with the change in
fair value included in earnings. The consensus requires the effect of initial
application of Issue 98-10 to be recorded as a cumulative effect of a change in
accounting principle effective January 1, 1999, for calendar year companies. 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. For the year ended December 31, 1999, EOTT had a net
mark-to-market loss of $5.6 million (which includes a $6.2 million charge
related to the unauthorized NGL activities).


                                      F-8
<PAGE>   57


                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


4. ACQUISITION OF ASSETS

     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 lease barrels of crude oil per day
from production in 11 central and western states including Texas, Oklahoma,
Kansas and California (the "Assets"). The transaction almost tripled EOTT's
pipeline mileage and almost doubled crude oil lease barrels under contract. The
total purchase price of the Assets was $235.6 million, which includes
consideration of $184.5 million in cash, 2,000,000 Common Units, 2,000,000
Subordinated Units and $11.4 million in transaction costs. EOTT financed the
majority 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. See additional discussion regarding Enron financing in Note
8.

     Since the Assets were historically used to support Koch's integrated
revenue producing activities, EOTT does not believe that the historical
operational results of the Assets provide a meaningful basis for evaluating the
results of operations that the Assets acquired would have realized had they been
part of EOTT. Therefore, summarized pro forma results of the Partnership as
though the acquisition of Assets had occurred at January 1, 1998 have not been
provided.

     On May 1, 1999, EOTT acquired crude oil transportation and storage assets
in West Texas and New Mexico from Texas-New Mexico Pipeline 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 future
environmental costs and financed the total acquisition cost using short-term
borrowings from Enron.

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):


                                      F-9
<PAGE>   58


                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                 1999                            1998                             1997
                    -----------------------------    -----------------------------    -----------------------------
                       Net        Wtd.                             Wtd.                             Wtd.
                      Income     Average   Per          Net       Average   Per         Net       Average    Per
                      (Loss)      Units    Unit         Loss       Units    Unit        Loss       Units     Unit
                    ---------  ---------  -------    ---------  ---------  -------    ---------  ---------  -------
<S>                 <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Basic: (1)
   Common           $ (1,018)     15,877  $(0.06)    $ (2,113)     12,097  $(0.17)    $ (8,865)     11,830  $(0.75)
   Subordinated     $    540       9,000  $ 0.06     $ (1,854)      7,170  $(0.26)    $ (5,246)      7,000  $(0.75)
Diluted (2)         $   (478)     24,877  $(0.02)    $ (3,967)     19,267  $(0.21)    $(14,111)     18,830  $(0.75)
</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
     are 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 8, EOTT issued 3,500,000 Common Units to the
public on September 29, 1999.

6. NONRECURRING ITEMS

     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 apparent theft of NGL
product, concealment of commercial activities and other unauthorized actions by
a former employee. EOTT is pursuing legal action against the former employee and
has filed an insurance claim to recover any losses related to the apparent theft
of NGL product which may be covered by insurance. The remaining charges relate
to incremental costs to liquidate contracts prior to their maturity in order
to wind down the mid-continent NGL activities.

     In addition, 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.

     In late 1997, EOTT decided to refocus on the core crude business, which
provides substantially all of the gross margin for the Partnership, as well as
improve overall operating efficiencies. As a result, EOTT announced the
following two initiatives. The decision was made to exit the marginal East of
Rockies refined


                                      F-10
<PAGE>   59


                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


products business and sell its three products terminals in Ohio. In connection
with this decision, nonrecurring charges were recorded at December 31, 1997,
which included severance costs of $0.9 million and a $1.5 million impairment of
the Ohio products terminals. In addition, EOTT streamlined business processes
throughout the organization and realigned reporting responsibilities to improve
the Partnership's overall cost structure. As a result, marketing and
administrative personnel were reduced by approximately 20 percent and a
nonrecurring severance charge of $1.1 million was recorded at December 31, 1997
pursuant to the existing EOTT Energy Corp. Severance Plan. The realignment
initiatives have been completed and the reserves were adequate to complete the
initiatives.

7. IMPAIRMENT OF ASSETS

     As a result of the decision to exit the East of Rockies refined products
business discussed in Note 6, the Partnership's three Ohio products terminals
are being held for sale. At December 31, 1997, a $1.5 million impairment charge
was recorded.

     During the fourth quarter of 1997, EOTT terminated an information system
development project due to the lack of third party vendor support and
foreseeable operating platform obsolescence. As a result, the Partnership
recorded a $6.5 million impairment charge.

8. CREDIT RESOURCES AND LIQUIDITY

     On December 1, 1998, Enron increased its existing credit facility with the
Partnership to provide additional 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.

     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 and the General Partner's assets. The
Partnership is restricted from entering into additional financing arrangements
without the prior approval of Enron.

     At December 31, 1998, EOTT had a term loan of $175 million outstanding with
Enron under a financing arrangement to fund a portion of the cash consideration
paid to Koch for the assets purchased in 1998 and to refinance indebtedness
incurred in prior acquisitions. The term loan had a scheduled maturity of
December 31, 1999. The interest rate on the term loan was LIBOR plus 300 basis
points. As discussed further below, the term loan was repaid in the fourth
quarter of 1999 utilizing a portion of the net proceeds from the issuance of the
11% senior notes.

     In addition, at December 31, 1998, EOTT had $42 million of debt outstanding
with Enron under a $100 million bridge loan to finance a portion of the cash
consideration for the acquisition of assets from Koch. The interest rate on the
bridge loan was initially LIBOR plus 400 basis points. At the end of each
three-month period, the spread on the bridge loan increased by 25 basis points.
The bridge loan was unsecured, and its maturity date was December 31, 1999. As
discussed below, the bridge loan was repaid utilizing a portion of the net
proceeds from the issuance of 3,500,000 Common Units.


                                      F-11
<PAGE>   60


                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     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 the $175 million term loan from
Enron, the $42 million bridge loan from Enron and $57.3 million of short-term
borrowings outstanding under the working capital facility from Enron.

     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.

     At December 31, 1998, EOTT had $44.4 million in letters of credit and $28.3
million in loans outstanding under the Enron facility at an average annual
interest rate of approximately 6.1%. The amount outstanding at December 31, 1998
under the Term Loan was $175.0 million with an average annual interest rate of
8.5% and under the Bridge Loan was $42.0 million with an average annual interest
rate of 9.5%. In addition, guarantees outstanding totaled $366.4 million of
which $290.9 million were used.

     The General Partner believes that the Enron facility and commodity
repurchase agreements discussed below 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.

     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.

     At December 31, 1999, EOTT has outstanding forward commodity 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. At December 31, 1998, EOTT had outstanding
forward commodity repurchase agreements of approximately $83.0 million. Pursuant
to the agreements, which had terms of thirty days, EOTT repurchased the crude
oil inventory on January 20, 1999 for approximately $83.4 million.


                                      F-12
<PAGE>   61


                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     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, 1999, $50 million 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 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.

     Generally, 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 distributions 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 as of February 14,
2000) in exchange for Additional Partnership Interests ("APIs"). See further
discussion in Note 13 regarding Enron's distribution support.

9. INVENTORIES

     Inventories are summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                                   December 31,
                                                               -------------------
                                                                 1999       1998
                                                               --------   --------
<S>                                                            <C>        <C>
Crude oil ..................................................   $115,746   $135,872
Refined products ...........................................      4,560      1,673
                                                               --------   --------
   Total ...................................................   $120,306   $137,545
                                                               ========   ========
</TABLE>

10. PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
                                                                    December 31,
                                                               -------------------
Property, Plant and Equipment ("PP&E"), at cost                  1999        1998
                                                               --------   --------
<S>                                                            <C>        <C>
Land .......................................................   $  3,515   $  3,278
Buildings ..................................................      8,045      7,505
Tractors and trailers ......................................     16,053     20,492
Office PP&E, including furniture and fixtures ..............     38,672     34,023
Operating PP&E, including pipelines, storage tanks, etc ....    478,438    432,509
                                                               --------   --------
  Total PP&E, at cost ......................................   $544,723   $497,807
                                                               ========   ========
</TABLE>

     Certain assets included in PP&E, primarily pipelines, are affected by
factors, which could affect future cash flows, such as competition,
consolidation in the industry, refinery demand for specific grades of crude oil,
area


                                      F-13
<PAGE>   62


                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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.

11. SUPPLEMENTAL CASH FLOW INFORMATION

     Cash paid for interest was $24.7 million, $8.9 million and $6.2 million for
the years ended December 31, 1999, 1998 and 1997, respectively.

     On December 1, 1998, EOTT issued 2,000,000 Common Units and 2,000,000
Subordinated Units to Koch Pipeline as a portion of the consideration paid for
the Assets. See further discussion of the acquisition of Assets in Note 4.

12. PARTNERS' CAPITAL

     The following is a reconciliation of Units outstanding for the years ended
December 31, 1999, 1998 and 1997:

<TABLE>
<CAPTION>
                                                   Common        Special      Subordinated
                                                   Units          Units          Units
                                                -----------    -----------    -----------
<S>                                             <C>            <C>            <C>
Units Outstanding at December 31, 1996 ......    10,000,000      1,830,011      7,000,000
                                                ===========    ===========    ===========


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
                                                ===========    ===========    ===========
</TABLE>

     As discussed further in Note 4, the Partnership issued 2,000,000 Common
Units and 2,000,000 Subordinated Units to Koch in connection with the
acquisition of Assets. In addition, pursuant to a Support Agreement discussed in
Note 13, 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


                                      F-14
<PAGE>   63


                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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. See further discussion in Note 8.

13. 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,
                                 ------------------------------
                                   1999       1998       1997
                                 --------   --------   --------
<S>                              <C>        <C>        <C>
Sales to affiliates ..........   $ 18,859   $ 10,648   $ 44,025
Purchases from affiliates ....   $279,167   $232,486   $ 71,895
</TABLE>

     Revenue in 1999, 1998 and 1997 consists primarily of sales of crude oil to
Enron Reserve Acquisition Corp. and natural gas liquids to Enron Gas Liquids,
Inc. Cost of sales consists primarily of crude oil and condensate purchases from
Enron North America Corp. and Enron Reserve Acquisition 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, 1999 and 1998 were $2.3
million and $0.2 million, respectively. Related party payables at December 31,
1999 and 1998 were $0.8 million and $1.6 million, respectively. The payables
primarily represent amounts owed by EOTT on the purchase of crude oil and other
products from Enron affiliates.

     General and Administrative. 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, 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 $3.8 million,
$3.3 million and $3.6 million for the years ended December 31, 1999, 1998 and
1997, respectively and are included in operating expenses. Management believes
that the charges were reasonable.

     Financing of Acquisitions. As discussed further in Note 4, on July 1, 1998
and December 1, 1998, the Partnership acquired crude oil gathering and
transportation assets from Koch which was financed primarily with borrowings
from Enron. In addition, the Partnership acquired crude oil transportation and
storage assets from Texas-New Mexico Pipeline Company which was financed using
short-term borrowings from Enron. See further discussion in Note 8 regarding the
repayment of borrowings from Enron.

     Support Agreement. Pursuant to a Support Agreement dated September 21, 1998
(a) Enron agreed to make loans to the Partnership to fund the cash portion of
the consideration paid to Koch for the Assets at closing as discussed in Note 4
and to refinance indebtedness incurred in the prior acquisition of assets from
Koch on July 1, 1998, (b) Enron agreed to increase and extend the Partnership's
credit facility with Enron to $1 billion through December 31, 2001, (c) the
Partnership agreed to issue 1,150,000 Special Units to Enron, (d) Enron agreed
to contribute $21.9 million in APIs to the Partnership on the earlier of the
date of Unitholder approval of certain proposals, discussed further in Note 12,
or May 17, 1999, (e) Enron agreed that if certain proposals were approved by the
Unitholders it would extend its cash distribution support through the fourth
quarter of 2001, and (f) the Partnership agreed that, if any additional APIs
were


                                      F-15
<PAGE>   64


                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


issued prior to approval of certain proposals by the Unitholders, it would issue
additional Common Units at $19.00 per share in exchange for such additional
APIs. The Partnership obtained Unitholder approval of these proposals on
February 12, 1999. Pursuant to the Support Agreement, in December 1998 EOTT
borrowed from Enron a $42 million bridge loan and a $175 million term loan,
which were repaid in October 1999, and entered into a $1 billion credit facility
with Enron, to replace its existing $600 million credit facility.

     Special Units. Effective July 16, 1996, EOTT created a new class of limited
partner interest designated as 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 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 pursuant to the Support Agreement
following the favorable vote of Unitholders in February 1999.

     Additional Partnership Interests. As of December 31, 1998, Enron had paid
$21.9 million in distribution support. In exchange for the distribution support,
Enron received APIs in the Partnership. 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.
As discussed in Note 12, certain Unitholder approvals were obtained on February
12, 1999 and as a result, 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.

14. 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 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. Total benefit costs for 1997 were $4.2 million including $3.3
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
$3.0 million was recorded in 1999 and none was recognized in 1998 and 1997.

     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, 1999, the most recent valuation date, the plan net
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. As of
September 30, 1998, the plan assets, including contributions


                                      F-16
<PAGE>   65


                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


to the trust during the fourth quarter of 1998, 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 1999,
respectively, and 6.75%, 10.5%, and 4.0% in 1998, respectively.

     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 for former employees
of the General Partner who retired prior to January 1, 1994. The accumulated
postretirement benefit obligation ("APBO") existing at December 31, 1999 and
1998 totaled $1.1 million and $1.1 million, respectively. The measurement of the
APBO assumes a 7.75% and 6.75% discount rate in 1999 and 1998, 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>
                                                            1999       1998
                                                          -------    -------
<S>                                                       <C>        <C>
CHANGE IN BENEFIT OBLIGATION
    Benefit obligation at January 1 ...................   $ 1,109    $   745
    Service cost ......................................       178        114
    Interest cost .....................................        82         73
    Plan amendments ...................................        --        147
    Actuarial loss (gain) .............................      (236)        83
    Benefits paid .....................................       (63)       (53)
                                                          -------    -------
      Benefit obligation at December 31 ...............   $ 1,070    $ 1,109
                                                          =======    =======

CHANGE IN PLAN ASSETS
    Fair value of plan assets at January 1 ............   $    --    $    --
    Company contributions .............................        63         53
    Plan participants' contributions ..................        --         --
    Benefits paid .....................................       (63)       (53)
                                                          -------    -------
      Fair value of plan assets at December 31 ........   $    --    $    --
                                                          =======    =======

RECONCILIATION OF FUNDED STATUS TO BALANCE SHEET
    Funded status at December 31 ......................   $(1,070)   $(1,109)
    Unrecognized prior service cost ...................       433        469
    Unrecognized actuarial gain .......................      (581)      (364)
                                                          -------    -------
      Accrued benefit cost at December 31 .............   $(1,218)   $(1,004)
                                                          =======    =======
</TABLE>


                                      F-17
<PAGE>   66


                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                                              1999     1998     1997
                                                              -----    -----    -----
<S>                                                           <C>      <C>      <C>
COMPONENTS OF NET PERIODIC BENEFIT COST
    Service cost ..........................................   $ 178    $ 114    $  76
    Interest cost .........................................      82       73       51
    Amortization of prior service cost ....................      36       36       27
    Recognized net actuarial gain .........................     (19)     (22)     (14)
                                                              -----    -----    -----
      Total net periodic postretirement benefit cost ......   $ 277    $ 201    $ 140
                                                              =====    =====    =====
</TABLE>

     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, 1999 and 1998, the liability accrued was $1.1 million
and $0.7 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 vest 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, 1999, 1998 and 1997:

<TABLE>
<CAPTION>
                                                 Number of Unit Options
                                           ---------------------------------
                                              1999       1998        1997
                                           ---------   ---------   ---------
<S>                                        <C>         <C>         <C>
Outstanding at January 1 ...............   1,030,000   1,155,000   1,155,000
       Granted .........................          --     400,000          --
       Exercised .......................          --          --          --
       Forfeited .......................     105,000     525,000          --
                                           ---------   ---------   ---------

Outstanding at December 31 .............     925,000   1,030,000   1,155,000
                                           =========   =========   =========

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 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


                                      F-18
<PAGE>   67


                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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

<TABLE>
<CAPTION>
                                                             1999           1998          1997
                                                          -----------   -----------   -----------
<S>                                                       <C>           <C>           <C>
Net Income (Loss) - as reported .......................   $     (468)   $   (4,067)   $  (14,399)
Net Income (Loss) - pro forma .........................   $     (650)   $   (4,140)   $  (14,491)

Diluted Net Income (Loss) per Unit - as reported ......   $    (0.02)   $    (0.21)   $    (0.75)
Diluted Net Income (Loss) per Unit - pro forma ........   $    (0.03)   $    (0.21)   $    (0.75)
</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 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, 1999, 1998 and 1997:

<TABLE>
<CAPTION>
                                                     Number of PAR
                                           ---------------------------------
                                              1999        1998        1997
                                           ---------   ---------   ---------
<S>                                          <C>         <C>       <C>
Outstanding at January 1 ...............     637,928     358,600          --
    Granted ............................     967,375     467,828     376,600
    Exercised ..........................          --          --          --
    Forfeited ..........................     128,900     188,500      18,000
                                           ---------   ---------   ---------

Outstanding at December 31 .............   1,476,403     637,928     358,600
                                           =========   =========   =========

Available for grant at December 31 .....   1,271,198   1,245,072   1,524,400
                                           =========   =========   =========
</TABLE>

Note: Available for grant based on 10% of total MLP units is 2,747,601 as of
December 31, 1999.


                                      F-19
<PAGE>   68


                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


15. LITIGATION AND OTHER CONTINGENCIES

     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 is responsible for all litigation and other claims relating to the
business acquired from the Predecessor, although the Partnership will be
entitled to the benefit of certain insurance maintained by Enron covering
occurrences prior to the closing of the initial public offering. 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 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,
and it is not possible to determine any potential exposure until further
discovery is done.


                                      F-20
<PAGE>   69


                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     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, and it is not possible to determine any potential exposure until
further discovery is done.

     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 and it is not possible to determine any potential exposure
until further discovery is done.

     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
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.

     General Matters. EOTT believes that it has obtained or has applied for all
of the necessary permits required by federal, state, and local environmental
agencies for the operation of its business. Further, the Partnership believes
that there are no outstanding liabilities or claims relating to environmental
matters,


                                      F-21
<PAGE>   70


                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


individually and in the aggregate, which would have a material adverse impact on
the Partnership's financial position or results of operations.

16. COMMITMENTS

     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, 1999, are summarized below
(in thousands):


<TABLE>
<S>                                                                               <C>
         2000...................................................................  $     5,245
         2001...................................................................        4,748
         2002...................................................................        3,459
         2003...................................................................        3,001
         2004...................................................................        2,121
         Later years............................................................        3,991
</TABLE>

     Total lease expense incurred was $10.4 million, $10.9 million and $10.3
million for the years ended December 31, 1999, 1998 and 1997, respectively.

17. OTHER INCOME (EXPENSE), NET

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


<TABLE>
<CAPTION>
                                                         Year Ended December 31,
                                                     -----------------------------
                                                       1999      1998        1997
                                                     -------    -------    -------
<S>                                                  <C>        <C>        <C>
Gain (loss) on foreign currency transactions .....   $   485    $(1,055)   $(1,488)
Gain (loss) on disposal of fixed assets ..........       636        (66)       503
Rental income ....................................        36         60         90
Litigation settlements and provisions ............       256       (969)       130
Discount fees on sale of receivables .............      (732)        --         --
Other ............................................        61        225         (1)
                                                     -------    -------    -------
   Total .........................................   $   742    $(1,805)   $  (766)
                                                     =======    =======    =======
</TABLE>

18. FAIR VALUE OF FINANCIAL INSTRUMENTS

     The following disclosures on the estimated fair value of financial
instruments are presented in accordance with the requirements of SFAS No. 107,
"Disclosures About Fair Value of Financial Instruments" and SFAS No. 119,
"Disclosures About Derivative Financial Instruments and Fair Value of Financial
Instruments." Fair value as defined in SFAS No. 107 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.

     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.


                                      F-22
<PAGE>   71


                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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.

     The following table presents the carrying amounts and estimated fair values
of the Partnership's financial instruments at December 31, 1999 and 1998 (in
millions):

<TABLE>
<CAPTION>
                                            1999                     1998
                                 ------------------------  -----------------------
                                   Carrying      Fair        Carrying      Fair
                                    Amount       Value        Amount       Value
                                 -----------  -----------  -----------  ----------
<S>                              <C>          <C>          <C>          <C>
Financial assets
  Cash and cash equivalents...   $     17.5   $     17.5   $      3.0   $      3.0
  Foreign currency contracts..           --         22.6           --         12.2

Financial liabilities
  Short-term borrowings ......   $       --   $       --   $     28.3   $     28.3
  Bridge loan ................           --           --         42.0         42.0
  Term loan ..................           --           --        175.0        175.0
  Repurchase agreements ......         74.1         74.1         83.0         83.0
  Foreign currency contracts..           --         22.6           --         12.2
  Senior notes ...............        235.0        235.0           --           --
</TABLE>

     The following methods and assumptions were used to estimate the fair value
of financial instruments:

     Cash and cash equivalents, short-term borrowings, bridge loan, term loan
and repurchase agreements. Fair value for these current assets and liabilities
was considered to be the same as the carrying amounts because of their liquidity
and market-based interest where applicable.

     Foreign currency contracts. Quoted market prices are used in determining
the fair value of financial instruments held or issued. If quoted prices are not
available, fair values are estimated on the basis of pricing models or quoted
prices for financial instruments with similar characteristics.

     Senior notes. These notes represent long-term borrowings on which the
carrying amounts approximate fair value because the effective annual interest
rates of these instruments reflect interest rates at December 31, 1999.

OTHER THAN TRADING ACTIVITIES

     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 these
transactions 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.


                                      F-23
<PAGE>   72


                           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, 1999 and 1998, foreign
currency contracts with a notional principal amount of $22.6 million and $11.7
million, respectively, were outstanding, having exchange rates which
approximated current market exchange rates.

TRADING ACTIVITIES

     Prior to 1998, EOTT offered limited price risk management products to the
energy sector which were not material to EOTT's financial position or results of
operations. These products included swap agreements which required payments to
(or receipt of payments from) counterparties based on the differential between a
fixed and variable price for the commodities specified, options and other
contractual arrangements. EOTT accounted for these activities using the
mark-to-market method of accounting and recorded the gain or loss as a cost of
sales in the period of the change in the market with an offsetting entry to
trade accounts receivable or payable as appropriate. In connection with the
realignment initiatives discussed in Note 6, EOTT ceased providing price risk
management products to its customers. See discussion regarding adoption of
Emerging Issues Task Force Issue 98-10 in Note 3.

19. NEW ACCOUNTING STANDARDS

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". The Statement
establishes accounting and reporting standards requiring that every derivative
instrument (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. SFAS No. 133, as amended, is effective for fiscal years
beginning after June 15, 2000. The standard cannot be applied retroactively but
early adoption is permitted. EOTT has not yet determined the impact of adopting
SFAS No. 133; however, this standard could increase volatility in earnings and
partners' capital, through other comprehensive income.

20. 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 primarily
purchases, gathers, transports and markets crude oil. The Pipeline Operations
segment operates approximately 8,300 active miles of common carrier pipelines
operated 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>   73


                           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(a)(b)     OPERATIONS(a)  OPERATIONS(a)(c)    OTHER (b)(d)  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  (e) .........        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
                                      -----------      -----------     -----------      -----------    -----------
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>


                                      F-25
<PAGE>   74


                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                          NORTH
                                         AMERICAN                           WEST           CORPORATE
                                         CRUDE OIL       PIPELINE           COAST             AND
                                       - EOR (a)(b)    OPERATIONS (a)  OPERATIONS(a)(c)   OTHER (b)(d)      CONSOLIDATED
                                      --------------   --------------   --------------   --------------    --------------
<S>                                   <C>              <C>              <C>              <C>               <C>
YEAR ENDED DECEMBER 31, 1997

Revenue from external customers ...   $    6,070,799   $        5,687   $      809,466   $      760,147    $    7,646,099

Intersegment revenue (e) ..........            1,795           13,717            1,783          (17,295)               --
                                      --------------   --------------   --------------   --------------    --------------

   Total revenue ..................        6,072,594           19,404          811,249          742,852         7,646,099
                                      --------------   --------------   --------------   --------------    --------------

Gross margin ......................           82,562           19,539            9,342            1,602           113,045
                                      --------------   --------------   --------------   --------------    --------------

Operating income (loss) ...........           19,506            1,821               58          (28,977)           (7,592)

Other expense .....................               --               --               --           (6,807)           (6,807)
                                      --------------   --------------   --------------   --------------    --------------

Net income (loss) .................           19,506            1,821               58          (35,784)          (14,399)
                                      --------------   --------------   --------------   --------------    --------------

Long-lived assets .................           61,032           76,276            2,486            6,426           146,220
                                      --------------   --------------   --------------   --------------    --------------

Total assets ......................          604,663           80,528           63,279           34,451           782,921
                                      --------------   --------------   --------------   --------------    --------------

Additions to long-lived assets ....            4,923           13,349              234            4,331            22,837
                                      --------------   --------------   --------------   --------------    --------------

Depreciation and amortization .....            7,807            6,030              500            2,181            16,518
                                      --------------   --------------   --------------   --------------    --------------
</TABLE>


(a)  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 Pipeline.
(b)  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.
(c)  1999 includes nonrecurring charges of $7.8 million of costs related to
     mid-continent NGL activities.
(d)  Corporate and Other also includes intersegment eliminations and the East of
     Rockies products business in 1998 and 1997.
(e)  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>   75


                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


21. SUBSEQUENT EVENTS

     On January 21, 2000, the Board of Directors of EOTT Energy Corp., as
General Partner, declared the Partnership's regular quarterly cash distribution
of $0.475 per Unit for the period October 1, 1999 through December 31, 1999. The
total distribution of approximately $8.9 million was paid on February 14, 2000
to the General Partner and all Common Unitholders of record as of the close of
business on January 31, 2000. The fourth quarter distribution was paid utilizing
$2.1 million of Available Cash from the Partnership and $6.8 million of cash
provided by Enron pursuant to Enron's distribution support obligation. After
payment of the fourth quarter distribution in February 2000, the remaining
distribution support available from Enron is $19.7 million.


                                      F-27
<PAGE>   76


                           EOTT ENERGY PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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

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

1998

   Revenues .................................   $   1,339,404    $   1,231,875    $   1,295,652    $   1,427,766    $   5,294,697

   Gross margin .............................          27,547           29,156           33,736           42,166          132,605

   Operating income (loss) ..................            (357)           1,157            1,153            5,276            7,229

   Net income (loss) ........................          (1,723)          (1,274)          (1,806)             736           (4,067)

   Basic net income (loss) per Unit
     Common .................................           (0.09)           (0.06)           (0.03)            0.01            (0.17)
     Subordinated ...........................           (0.09)           (0.07)           (0.20)            0.08            (0.26)

   Diluted net income (loss) per Unit .......           (0.09)           (0.07)           (0.09)            0.03            (0.21)

   Cash distributions per Common Unit (3) ...           0.475            0.475            0.475            0.475             1.90
</TABLE>


(1)  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.
(2)  Fourth quarter 1998 amounts include the acquisition of the Assets from Koch
     on December 1, 1998. See Note 4 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>   77


                                                                     SCHEDULE II

                           EOTT ENERGY PARTNERS, L.P.
                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
                                 (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, 1997
   Allowance for Doubtful Accounts...    $    2,266   $       --   $     (606)   $    1,660



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
</TABLE>


                                      S-1
<PAGE>   78


                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit
Number                                      Description
------         ----------------------------------------------------------------
<S>       <C>  <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>   79


<TABLE>
<S>       <C>  <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)

    10.13 --   Credit Agreement dated as of June 30, 1995 between EOTT Energy
               Operating Limited Partnership, as Borrower, and Enron Corp., as
               Lender (incorporated by reference to Exhibit 10.13 to Annual
               Report on Form 10-K for the Year Ended December 31, 1995)

    10.14 --   Credit Agreement dated as of January 3, 1996 between EOTT Energy
               Operating Limited Partnership, as Borrower, and Enron Corp., as
               Lender (incorporated by reference to Exhibit 10.14 to Annual
               Report on Form 10-K for the Year Ended December 31, 1995)

    10.15 --   Amendment dated December 19, 1996 to the Credit Agreement dated
               as of June 30, 1995 between EOTT Energy Operating Limited
               Partnership as Borrower, and Enron Corp., as Lender (incorporated
               by reference to Exhibit 10.15 to Annual Report on Form 10-K for
               the Year Ended December 31, 1996)
</TABLE>


<PAGE>   80


<TABLE>
<S>       <C>  <C>
    10.16 --   Amendment dated February 25, 1997 to the Credit Agreement dated
               as of June 30, 1995 between EOTT Energy Operating Limited
               Partnership as Borrower, and Enron Corp., as Lender (incorporated
               by reference to Exhibit 10.16 to Annual Report on Form 10-K for
               the Year Ended December 31, 1996)

    10.17 --   Amendment dated February 25, 1997 to the Credit Agreement dated
               as of January 3, 1996 between EOTT Energy Operating Limited
               Partnership as Borrower, and Enron Corp., as Lender (incorporated
               by reference to Exhibit 10.17 to Annual Report on Form 10-K for
               the Year Ended December 31, 1996)

    10.18 --   Amendment dated as of February 13, 1997, to the EOTT Energy Corp.
               1994 Unit Option Plan (incorporated by reference to Exhibit 10.18
               to Annual Report on Form 10-K for the Year Ended December 31,
               1996)

    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)

    10.21 --   Form of Executive Employment Agreement between EOTT Energy Corp.
               and Michael D. Burke (incorporated by reference to Exhibit 10.21
               to Quarterly Report on Form 10-Q for the Quarter Ended June 30,
               1998)

    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)

    10.25 --   Amended and Restated Term 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
               10.25 to Annual Report on Form 10-K for the Year Ended December
               31, 1998)
</TABLE>


<PAGE>   81


<TABLE>
<S>       <C>  <C>
    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)

    10.27 --   Amendment dated March 17, 1999 to the Amended and Restated Term
               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 10.27 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)

    10.31 --   Amendment dated August 11, 1999 to the Amended and Restated Term
               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 10.31 to Quarterly
               Report on Form 10-Q for the Period Ended June 30, 1999)

*   21.1  --   Subsidiaries of the Registrant

*   23.1  --   Consent of Arthur Andersen LLP

*   24    --   Power of Attorney

*   27.1  --   Financial Data Schedule
</TABLE>

-----------
*    Filed herewith.