Table of Contents

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| x |    | QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(d)OF      THE SECURITIES EXCHANGE ACT OF 1934 |
|---|--------------|--------------------------------------------------------------------------------------------------|

| o |    | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d)OF      THE SECURITIES EXCHANGE ACT OF 1934 |
|---|--------------|---------------------------------------------------------------------------------------------------|

| Kansas                                                                  |    | 48-0290000                                    |
|-------------------------------------------------------------------------|--------------|-----------------------------------------------|
| (State      or other jurisdiction ofincorporation      or organization) |    | (I.R.S.      EmployerIdentification      No.) |

| 500      Dallas Street, Suite 1000, Houston, Texas 77002           |
|--------------------------------------------------------------------|
| (Address      of principal executive offices, including zip  code) |

| (713)      369-9000                                            |
|----------------------------------------------------------------|
| (Registrant’s      telephone number, including areacode) |

|                                                                                         |
|----------------------------------------------------------------------------------------------|
| (Former      name, former address and former fiscal year, if changed since last      report) |

| Large      accelerated filer o | Accelerated      filer o | Non-accelerated      filer þ | Smaller      reporting company o |
|--------------------------------|--------------------------|-----------------------------------|----------------------------------|

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KNIGHT INC. AND SUBSIDIARIES

|    |                                                              | Page    |
|--------------|-------------------------------------------------------------------|---------|
| PART I.      | FINANCIAL    INFORMATION                                          |    |
|         |                                                              |    |
| Item1.       | Financial Statements.      (Unaudited)                            |    |
|    |                                                              |    |
|         | Consolidated Balance      Sheets                                  | 3-4     |
|         | Consolidated Statements of      Operations                        | 5-6     |
|         | Consolidated Statements of Cash      Flows                        | 7-8     |
|         | Notes to Consolidated Financial      Statements                   | 9-64    |
|    |                                                              |    |
| Item2.       | Management’s Discussion and      Analysis of Financial      |    |
|         | Condition and Results of      Operations.                         | 65-103  |
|    |                                                              |    |
| Item3.       | Quantitative and Qualitative      Disclosures About Market Risk.  | 103     |
|    |                                                              |    |
| Item4.       | Controls and      Procedures.                                     | 103     |
|    |                                                              |    |
| PART    II.  | OTHER      INFORMATION                                            |    |
|    |                                                              |    |
| Item1.       | Legal      Proceedings.                                           | 104     |
|    |                                                              |    |
| Item 1A.     | Risk      Factors.                                                | 104-107 |
|    |                                                              |    |
| Item2.       | Unregistered Sales of Equity      Securities and Use of Proceeds. | 107     |
|    |                                                              |    |
| Item3.       | Defaults Upon Senior      Securities.                             | 107     |
|    |                                                              |    |
| Item4.       | Submission of Matters to a Vote      of Security Holders.         | 107     |
|    |                                                              |    |
| Item5.       | Other      Information.                                           | 107     |
|    |                                                              |    |
| Item6.       | Exhibits.                                                         | 108     |
|    |                                                              |    |
| SIGNATURE    | 109                                                               |

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PART I. - FINANCIALINFORMATION

Item 1.  FinancialStatements.

KNIGHT INC. ANDSUBSIDIARIES

|                                                      | September      30,2008 |     | December      31,2007 |
|-----------------------------------------------------------|------------------------|----------|-----------------------|
| ASSETS                                                    |                   |     |                  |   |   |   |   |
| Current      Assets                                       |                   |     |                  |   |   |   |   |
| Cash      and Cash Equivalents                            | $                      | 126.6    |                  |   | $ | 148.6 |   |
| Restricted      Deposits                                  |                   | 27.6     |                  |   |   | 67.9 |   |
| Accounts,      Notes and Interest Receivable, Net         |                   | 981.4    |                  |   |   | 975.2 |   |
| Inventories                                               |                   | 44.2     |                  |   |   | 37.8 |   |
| Gas      Imbalances                                       |                   | 6.3      |                  |   |   | 26.9 |   |
| Assets      Held for Sale                                 |                   | -        |                  |   |   | 3,353.3 |   |
| Fair      Value of Derivative Instruments                 |                   | 37.8     |                  |   |   | 37.1 |   |
| Other                                                     |                   | 42.1     |                  |   |   | 36.8 |   |
|                                                      |                   | 1,266.0  |                  |   |   | 4,683.6 |   |
|                                            |                   |     |                  |   |   |   |   |
| Property,      Plant and Equipment, Net                   |                   |     |                  |   |   |   |   |
| Property,      Plant and Equipment                        |                   | 16,648.9 |                  |   |   | 15,080.9 |   |
| Accumulated      Depreciation, Depletion and Amortization |                   | (744.6   | )                     |   |   | (277.0 | ) |
|                                                      |                   | 15,904.3 |                  |   |   | 14,803.9 |   |
|                                                      |                   |     |                  |   |   |   |   |
| Notes      Receivable – Related Parties             |                   | 192.8    |                  |   |   | 87.9 |   |
| Investments                                               |                   | 1,824.9  |                  |   |   | 1,996.2 |   |
| Goodwill                                                  |                   | 4,775.7  |                  |   |   | 8,174.0 |   |
| Other      Intangibles, Net                               |                   | 256.2    |                  |   |   | 321.1 |   |
| Assets      Held for Sale, Non-current                    |                   | -        |                  |   |   | 5,634.6 |   |
| Fair      Value of Derivative Instruments, Non-current    |                   | 260.0    |                  |   |   | 142.4 |   |
| Deferred      Charges and Other Assets                    |                   | 228.8    |                  |   |   | 257.3 |   |
| Total      Assets                                         | $                      | 24,708.7 |                  |   | $ | 36,101.0 |   |

----

|                                                                                                    | September      30,2008 |     | December      31,2007 |
|---------------------------------------------------------------------------------------------------------|------------------------|----------|-----------------------|
| LIABILITIES      AND STOCKHOLDER’S EQUITY                                                         |                   |     |                  |   |   |   |   |
| Current      Liabilities                                                                                |                   |     |                  |   |   |   |   |
| Current      Maturities of Long-term Debt                                                               | $                      | 289.7    |                  |   | $ | 79.8 |   |
| Notes      Payable                                                                                      |                   | 270.0    |                  |   |   | 888.1 |   |
| Cash      Book Overdrafts                                                                               |                   | 74.2     |                  |   |   | 30.7 |   |
| Accounts      Payable                                                                                   |                   | 841.0    |                  |   |   | 943.7 |   |
| Accrued      Interest                                                                                   |                   | 95.9     |                  |   |   | 242.7 |   |
| Accrued      Taxes                                                                                      |                   | 252.7    |                  |   |   | 728.2 |   |
| Gas      Imbalances                                                                                     |                   | 19.9     |                  |   |   | 23.7 |   |
| Liabilities      Held for Sale                                                                          |                   | -        |                  |   |   | 168.2 |   |
| Fair      Value of Derivative Instruments                                                               |                   | 611.6    |                  |   |   | 594.7 |   |
| Other                                                                                                   |                   | 274.0    |                  |   |   | 240.0 |   |
|                                                                                                    |                   | 2,729.0  |                  |   |   | 3,939.8 |   |
|                                                                                               |                   |     |                  |   |   |   |   |
| Long-term      Debt                                                                                     |                   |     |                  |   |   |   |   |
| Outstanding      Notes and Debentures                                                                   |                   | 10,800.6 |                  |   |   | 14,714.6 |   |
| Deferrable      Interest Debentures Issued to Subsidiary Trusts                                         |                   | 35.7     |                  |   |   | 283.1 |   |
| Preferred      Interest in General Partner of Kinder Morgan Energy    Partners                          |                   | 100.0    |                  |   |   | 100.0 |   |
| Value      of Interest Rate Swaps                                                                       |                   | 233.8    |                  |   |   | 199.7 |   |
|                                                                                               |                   | 11,170.1 |                  |   |   | 15,297.4 |   |
|                                                                                               |                   |     |                  |   |   |   |   |
| Deferred      Income Taxes, Non-current                                                                 |                   | 1,714.6  |                  |   |   | 1,849.4 |   |
| Liabilities      Held for Sale, Non-current                                                             |                   | -        |                  |   |   | 2,424.1 |   |
| Fair      Value of Derivative Instruments, Non-current                                                  |                   | 1,018.7  |                  |   |   | 836.8 |   |
| Other      Long-term Liabilities and Deferred Credits                                                   |                   | 579.7    |                  |   |   | 618.0 |   |
|                                                                                                    |                   | 14,483.1 |                  |   |   | 21,025.7 |   |
|                                                                                                    |                   |     |                  |   |   |   |   |
| Minority      Interests in Equity of Subsidiaries                                                       |                   | 3,474.3  |                  |   |   | 3,314.0 |   |
|                                                                                                    |                   |     |                  |   |   |   |   |
| Commitments      and Contingencies (Notes 13 and 18)                                                    |                   |     |                  |   |   |   |   |
|                                                                                               |                   |     |                  |   |   |   |   |
| Stockholder’s      Equity                                                                         |                   |     |                  |   |   |   |   |
| Common      Stock – Authorized and Outstanding – 100 Shares, Par Value $0.01 Per      Share |                   | -        |                  |   |   | - |   |
| Additional      Paid-in Capital                                                                         |                   | 7,811.9  |                  |   |   | 7,822.2 |   |
| Retained      Earnings (Deficit)                                                                        |                   | (3,399.2 | )                     |   |   | 247.0 |   |
| Accumulated      Other Comprehensive Loss                                                               |                   | (390.4   | )                     |   |   | (247.7 | ) |
|                                                                                                    |                   | 4,022.3  |                  |   |   | 7,821.5 |   |
| Total      Liabilities and Stockholder’s Equity                                                   | $                      | 24,708.7 |                  |   | $ | 36,101.0 |   |

----

|                                                              | Successor      Company                    |
|-------------------------------------------------------------------|-------------------------------------------|
|                                                              | Three      Months EndedSeptember      30, |
|                                                              | 2008                                      |   | 2007 |
| Operating      Revenues                                           |                                      |   |   |   |   |   |   |
| Natural      Gas Sales                                            | $                                         | 2,183.3 |   |   | $ | 1,451.8 |   |
| Transportation      and Storage                                   |                                      | 700.9 |   |   |   | 849.2 |   |
| Oil      and Product Sales                                        |                                      | 412.4 |   |   |   | 308.0 |   |
| Total      Operating Revenues                                     |                                      | 3,296.6 |   |   |   | 2,609.0 |   |
|                                                         |                                      |   |   |   |   |   |   |
| Operating      Costs and Expenses                                 |                                      |   |   |   |   |   |   |
| Gas      Purchases and Other Costs of Sales                       |                                      | 2,179.2 |   |   |   | 1,482.8 |   |
| Operations      and Maintenance                                   |                                      | 360.8 |   |   |   | 357.0 |   |
| General      and Administrative                                   |                                      | 85.9 |   |   |   | 77.9 |   |
| Depreciation,      Depletion and Amortization                     |                                      | 217.2 |   |   |   | 204.1 |   |
| Taxes,      Other Than Income Taxes                               |                                      | 48.0 |   |   |   | 46.6 |   |
| Other      Expense (Income), Net                                  |                                      | 7.2 |   |   |   | (2.4 | ) |
| Total      Operating Costs and Expenses                           |                                      | 2,898.3 |   |   |   | 2,166.0 |   |
|                                                         |                                      |   |   |   |   |   |   |
| Operating      Income                                             |                                      | 398.3 |   |   |   | 443.0 |   |
|                                                         |                                      |   |   |   |   |   |   |
| Other      Income and (Expenses)                                  |                                      |   |   |   |   |   |   |
| Earnings      of Equity Investees                                 |                                      | 42.9 |   |   |   | 26.7 |   |
| Interest      Expense, Net                                        |                                      | (141.5 | ) |   |   | (252.6 | ) |
| Interest      Expense – Deferrable Interest Debentures, Net |                                      | (0.5 | ) |   |   | (5.4 | ) |
| Minority      Interests                                           |                                      | (106.8 | ) |   |   | (52.4 | ) |
| Other,      Net                                                   |                                      | 4.4 |   |   |   | 5.4 |   |
| Total      Other Income and (Expenses)                            |                                      | (201.5 | ) |   |   | (278.3 | ) |
|                                                         |                                      |   |   |   |   |   |   |
| Income      from Continuing Operations Before Income Taxes   |                                      | 196.8 |   |   |   | 164.7 |   |
| Income      Taxes                                                 |                                      | 87.9 |   |   |   | 74.6 |   |
| Income      from Continuing Operations                            |                                      | 108.9 |   |   |   | 90.1 |   |
| Loss      from Discontinued Operations, Net of Tax                |                                      | (0.2 | ) |   |   | (4.4 | ) |
|                                                         |                                      |   |   |   |   |   |   |
| Net      Income                                                   | $                                         | 108.7 |   |   | $ | 85.7 |   |

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KNIGHT INC. AND SUBSIDIARIES

|                                                                   | SuccessorCompany                            |     |                                        | PredecessorCompany |
|------------------------------------------------------------------------|---------------------------------------------|----------|---------------------------------------------|--------------------|
|                                                                   | Nine      MonthsEndedSeptember      30,2008 |     | Four      MonthsEndedSeptember      30,2007 |               |   | Five      MonthsEndedMay      31, 2007 |
| Operating      Revenues                                                |                                        |     |                                        |               |   |   |   |   |   |   |   |   |
| Natural      Gas Sales                                                 | $                                           | 6,369.8  |                                        |               | $ | 2,013.7 |   |   |   | $ | 2,430.6 |   |
| Transportation      and Storage                                        |                                        | 2,187.5  |                                        |               |   | 1,124.7 |   |   |   |   | 1,350.5 |   |
| Oil      and Product Sales                                             |                                        | 1,194.8  |                                        |               |   | 407.5 |   |   |   |   | 384.0 |   |
| Total      Operating Revenues                                          |                                        | 9,752.1  |                                        |               |   | 3,545.9 |   |   |   |   | 4,165.1 |   |
|                                                              |                                        |     |                                        |               |   |   |   |   |   |   |   |   |
| Operating      Costs and Expenses                                      |                                        |     |                                        |               |   |   |   |   |   |   |   |   |
| Gas      Purchases and Other Costs of Sales                            |                                        | 6,433.9  |                                        |               |   | 2,040.0 |   |   |   |   | 2,490.4 |   |
| Operations      and Maintenance                                        |                                        | 977.4    |                                        |               |   | 463.8 |   |   |   |   | 476.1 |   |
| General      and Administrative                                        |                                        | 264.0    |                                        |               |   | 107.9 |   |   |   |   | 283.6 |   |
| Depreciation,      Depletion and Amortization                          |                                        | 651.0    |                                        |               |   | 276.3 |   |   |   |   | 261.0 |   |
| Taxes,      Other Than Income Taxes                                    |                                        | 151.6    |                                        |               |   | 62.1 |   |   |   |   | 74.4 |   |
| Other      Expense (Income), Net                                       |                                        | 4.5      |                                        |               |   | (6.4 | ) |   |   |   | (2.3 | ) |
| Goodwill      Impairment                                               |                                        | 4,033.3  |                                        |               |   | - |   |   |   |   | 377.1 |   |
| Total      Operating Costs and Expenses                                |                                        | 12,515.7 |                                        |               |   | 2,943.7 |   |   |   |   | 3,960.3 |   |
|                                                              |                                        |     |                                        |               |   |   |   |   |   |   |   |   |
| Operating      Income (Loss)                                           |                                        | (2,763.6 | )                                           |               |   | 602.2 |   |   |   |   | 204.8 |   |
|                                                              |                                        |     |                                        |               |   |   |   |   |   |   |   |   |
| Other      Income and (Expenses)                                       |                                        |     |                                        |               |   |   |   |   |   |   |   |   |
| Earnings      of Equity Investees                                      |                                        | 141.9    |                                        |               |   | 35.9 |   |   |   |   | 38.3 |   |
| Interest      Expense, Net                                             |                                        | (493.8   | )                                           |               |   | (336.1 | ) |   |   |   | (241.1 | ) |
| Interest      Expense – Deferrable Interest Debentures, Net      |                                        | 5.6      |                                        |               |   | (7.3 | ) |   |   |   | (9.1 | ) |
| Minority      Interests                                                |                                        | (359.4   | )                                           |               |   | (86.9 | ) |   |   |   | (90.7 | ) |
| Other,      Net                                                        |                                        | 18.1     |                                        |               |   | 6.1 |   |   |   |   | 0.6 |   |
| Total      Other Income and (Expenses)                                 |                                        | (687.6   | )                                           |               |   | (388.3 | ) |   |   |   | (302.0 | ) |
|                                                              |                                        |     |                                        |               |   |   |   |   |   |   |   |   |
| Income      (Loss) from Continuing Operations Before Income Taxes |                                        | (3,451.2 | )                                           |               |   | 213.9 |   |   |   |   | (97.2 | ) |
| Income      Taxes                                                      |                                        | 194.4    |                                        |               |   | 95.9 |   |   |   |   | 135.5 |   |
| Income      (Loss) from Continuing Operations                          |                                        | (3,645.6 | )                                           |               |   | 118.0 |   |   |   |   | (232.7 | ) |
| Income      (Loss) from Discontinued Operations, Net of Tax            |                                        | (0.6     | )                                           |               |   | (2.1 | ) |   |   |   | 298.6 |   |
|                                                              |                                        |     |                                        |               |   |   |   |   |   |   |   |   |
| Net      Income (Loss)                                                 | $                                           | (3,646.2 | )                                           |               | $ | 115.9 |   |   |   | $ | 65.9 |   |

----

KNIGHT INC. AND SUBSIDIARIES

|                                                                                                     | Successor      Company                      |     |                                        | Predecessor      Company |
|----------------------------------------------------------------------------------------------------------|---------------------------------------------|----------|---------------------------------------------|--------------------------|
|                                                                                                     | Nine      MonthsEndedSeptember      30,2008 |     | Four      MonthsEndedSeptember      30,2007 |                     |   | Five      MonthsEndedMay      31, 2007 |
| Cash      Flows from Operating Activities                                                                |                                        |     |                                        |                     |   |   |   |   |   |   |   |   |
| Net      Income (Loss)                                                                                   | $                                           | (3,646.2 | )                                           |                     | $ | 115.9 |   |   |   | $ | 65.9 |   |
| Adjustments      to Reconcile Net Income to Net Cash Flows from Operating      Activities                |                                        |     |                                        |                     |   |   |   |   |   |   |   |   |
| (Income)      Loss from Discontinued Operations, Net of Tax                                              |                                        | 0.6      |                                        |                     |   | 13.2 |   |   |   |   | (287.9 | ) |
| Loss      from Goodwill Impairment                                                                       |                                        | 4,033.3  |                                        |                     |   | - |   |   |   |   | 377.1 |   |
| Loss      on Early Extinguishment of Debt                                                                |                                        | 23.6     |                                        |                     |   | - |   |   |   |   | 4.4 |   |
| Depreciation,      Depletion and Amortization                                                            |                                        | 651.0    |                                        |                     |   | 278.6 |   |   |   |   | 264.9 |   |
| Deferred      Income Taxes                                                                               |                                        | 46.4     |                                        |                     |   | 14.2 |   |   |   |   | 138.7 |   |
| Equity      in Earnings of Equity Investees                                                              |                                        | (141.9   | )                                           |                     |   | (36.8 | ) |   |   |   | (39.1 | ) |
| Distributions      from Equity Investees                                                                 |                                        | 185.0    |                                        |                     |   | 45.1 |   |   |   |   | 48.2 |   |
| Minority      Interests in Income of Consolidated Subsidiaries                                           |                                        | 359.4    |                                        |                     |   | 86.9 |   |   |   |   | 90.7 |   |
| Gains      from Property Casualty Indemnifications                                                       |                                        | -        |                                        |                     |   | - |   |   |   |   | (1.8 | ) |
| Net      Losses (Gains) on Sales of Assets                                                               |                                        | 4.4      |                                        |                     |   | (7.0 | ) |   |   |   | (2.6 | ) |
| Mark-to-Market      Interest Rate Swap Gain                                                              |                                        | (19.8    | )                                           |                     |   | - |   |   |   |   | - |   |
| Foreign      Currency Loss                                                                               |                                        | 0.2      |                                        |                     |   | - |   |   |   |   | 15.5 |   |
| Changes      in Gas in Underground Storage                                                               |                                        | (28.0    | )                                           |                     |   | 34.5 |   |   |   |   | (84.2 | ) |
| Changes      in Working Capital Items                                                                    |                                        | (851.7   | )                                           |                     |   | (13.6 | ) |   |   |   | (202.9 | ) |
| (Payment      for) Proceeds from Termination of Interest Rate Swaps                                      |                                        | (2.5     | )                                           |                     |   | (2.2 | ) |   |   |   | 51.9 |   |
| Kinder      Morgan Energy Partners’ Rate Reparations, Refunds and Reserve      Adjustments    |                                        | (10.7    | )                                           |                     |   | - |   |   |   |   | - |   |
| Other,      Net                                                                                          |                                        | (19.3    | )                                           |                     |   | (16.7 | ) |   |   |   | 54.4 |   |
| Cash      Flows Provided by Continuing Operations                                                        |                                        | 583.8    |                                        |                     |   | 512.1 |   |   |   |   | 493.2 |   |
| Net      Cash Flows (Used in) Provided by Discontinued Operations                                        |                                        | (0.7     | )                                           |                     |   | (2.5 | ) |   |   |   | 109.8 |   |
| Net      Cash Flows Provided by Operating Activities                                                     |                                        | 583.1    |                                        |                     |   | 509.6 |   |   |   |   | 603.0 |   |
|                                                                                                |                                        |     |                                        |                     |   |   |   |   |   |   |   |   |
| Cash      Flows from Investing Activities                                                                |                                        |     |                                        |                     |   |   |   |   |   |   |   |   |
| Purchase      of Predecessor Stock                                                                       |                                        | -        |                                        |                     |   | (11,534.3 | ) |   |   |   | - |   |
| Capital      Expenditures                                                                                |                                        | (1,922.8 | )                                           |                     |   | (656.1 | ) |   |   |   | (652.8 | ) |
| Proceeds      from Sale of 80% Interest in NGPL PipeCo LLC, Net of $1.1      Million Cash Sold |                                        | 2,899.3  |                                        |                     |   | - |   |   |   |   | - |   |
| Proceeds      from NGPL PipeCo LLC Restricted Cash                                                       |                                        | 3,106.4  |                                        |                     |   | - |   |   |   |   | - |   |
| Acquisitions                                                                                             |                                        | (16.4    | )                                           |                     |   | (119.7 | ) |   |   |   | (42.1 | ) |
| Net      Proceeds from (Investments in) Margin Deposits                                                  |                                        | 40.3     |                                        |                     |   | (22.9 | ) |   |   |   | (54.8 | ) |
| Distributions      from Equity Investees                                                                 |                                        | 92.5     |                                        |                     |   | - |   |   |   |   | - |   |
| Other      Investments                                                                                   |                                        | (342.1   | )                                           |                     |   | (17.5 | ) |   |   |   | (29.7 | ) |
| Change      in Natural Gas Storage and NGL Line Fill Inventory                                           |                                        | (2.5     | )                                           |                     |   | 6.3 |   |   |   |   | 8.4 |   |
| Property      Casualty Indemnifications                                                                  |                                        | -        |                                        |                     |   | - |   |   |   |   | 8.0 |   |
| Net      Proceeds (Cost of Removal) from Sales of Other Assets                                           |                                        | 113.3    |                                        |                     |   | 10.6 |   |   |   |   | (1.5 | ) |
| Net      Cash Flows Provided by (Used in) Continuing Investing      Activities                           |                                        | 3,968.0  |                                        |                     |   | (12,333.6 | ) |   |   |   | (764.5 | ) |
| Net      Cash Flows Provided by Discontinued Investing Activities                                        |                                        | -        |                                        |                     |   | 190.9 |   |   |   |   | 1,488.2 |   |
| Net      Cash Flows Provided by (Used in) Investing Activities                                           | $                                           | 3,968.0  |                                        |                     | $ | (12,142.7 | ) |   |   | $ | 723.7 |   |

----

|                                                                              | Successor      Company                       |     |                                         | PredecessorCompany |
|-----------------------------------------------------------------------------------|----------------------------------------------|----------|----------------------------------------------|--------------------|
|                                                                              | Nine      MonthsEndedSeptember      30, 2008 |     | Four      MonthsEndedSeptember      30, 2007 |               |   | Five      Months EndedMay      31, 2007 |
| Cash      Flows from Financing Activities                                         |                                         |     |                                         |               |   |   |   |   |   |   |   |   |
| Short-term      Debt, Net                                                         | $                                            | (323.1   | )                                            |               | $ | 62.7 |   |   |   | $ | (247.5 | ) |
| Long-term      Debt Issued                                                        |                                         | 1,600.1  |                                         |               |   | 5,805.0 |   |   |   |   | 1,000.0 |   |
| Long-term      Debt Retired                                                       |                                         | (5,878.3 | )                                            |               |   | (827.7 | ) |   |   |   | (302.4 | ) |
| Issuance      of Kinder Morgan, G.P., Inc. Preferred Stock                        |                                         | -        |                                         |               |   | 100.0 |   |   |   |   |   |   |
| Discount      on Early Extinguishment of Debt                                     |                                         | 69.2     |                                         |               |   | - |   |   |   |   | - |   |
| Cash      Book Overdraft                                                          |                                         | 43.5     |                                         |               |   | (2.0 | ) |   |   |   | (14.9 | ) |
| Common      Stock Issued                                                          |                                         | -        |                                         |               |   | - |   |   |   |   | 9.9 |   |
| Excess      Tax Benefits from Share-based Payment Arrangements                    |                                         | -        |                                         |               |   | - |   |   |   |   | 56.7 |   |
| Cash      Paid to Share-based Award Holders Due to Going Private      Transaction |                                         | -        |                                         |               |   | (181.1 | ) |   |   |   | - |   |
| Issuance      of Kinder Morgan Management, LLC Shares                             |                                         | -        |                                         |               |   | - |   |   |   |   | 297.9 |   |
| Contributions      from Successor Investors                                       |                                         | -        |                                         |               |   | 5,112.0 |   |   |   |   | - |   |
| Short-term      Advances (to) from Unconsolidated Affiliates                      |                                         | 2.7      |                                         |               |   | (2.7 | ) |   |   |   | 2.3 |   |
| Cash      Dividends, Common Stock                                                 |                                         | -        |                                         |               |   | - |   |   |   |   | (234.9 | ) |
| Minority      Interests, Contributions                                            |                                         | 385.0    |                                         |               |   | - |   |   |   |   | - |   |
| Minority      Interests, Distributions                                            |                                         | (463.3   | )                                            |               |   | (127.6 | ) |   |   |   | (248.9 | ) |
| Debt      Issuance Costs                                                          |                                         | (14.3    | )                                            |               |   | (66.6 | ) |   |   |   | (13.1 | ) |
| Other,      Net                                                                   |                                         | 8.9      |                                         |               |   | 0.5 |   |   |   |   | (4.3 | ) |
| Net      Cash Flows (Used in) Provided by Continuing Financing      Activities    |                                         | (4,569.6 | )                                            |               |   | 9,872.5 |   |   |   |   | 300.8 |   |
| Net      Cash Flows Provided by Discontinued Financing Activities                 |                                         | -        |                                         |               |   | - |   |   |   |   | 140.1 |   |
| Net      Cash Flows (Used in) Provided by Financing Activities                    |                                         | (4,569.6 | )                                            |               |   | 9,872.5 |   |   |   |   | 440.9 |   |
|                                                                              |                                         |     |                                         |               |   |   |   |   |   |   |   |   |
| Effect      of Exchange Rate Changes on Cash                                      |                                         | (3.5     | )                                            |               |   | (2.4 | ) |   |   |   | 7.6 |   |
|                                                                              |                                         |     |                                         |               |   |   |   |   |   |   |   |   |
| Cash      Balance Included in Assets Held for Sale                                |                                         | -        |                                         |               |   | - |   |   |   |   | (2.7 | ) |
|                                                                         |                                         |     |                                         |               |   |   |   |   |   |   |   |   |
| Net      Increase (Decrease) in Cash and Cash Equivalents                         |                                         | (22.0    | )                                            |               |   | (1,763.0 | ) |   |   |   | 1,772.5 |   |
| Cash      and Cash Equivalents at Beginning of Period                             |                                         | 148.6    |                                         |               |   | 1,902.3 |   |   |   |   | 129.8 |   |
| Cash      and Cash Equivalents at End of Period                                   | $                                            | 126.6    |                                         |               | $ | 139.3 |   |   |   | $ | 1,902.3 |   |

----

KNIGHT INC. AND SUBSIDIARIES

| 1. | General |
|----|---------|

| 2. | Significant      Accounting Policies |
|----|--------------------------------------|

----

|                                                     | (In      millions) |
|----------------------------------------------------------|--------------------|
| The      Total Purchase Price Consisted of the Following |               |   |   |
| Cash      Paid                                           | $                  | 5,112.0 |   |
| Kinder      Morgan, Inc. Shares Contributed              |               | 2,719.2 |   |
| Equity      Contributed                                  |               | 7,831.2 |   |
| Cash      from Issuances of Long-term Debt               |               | 4,696.2 |   |
| Total      Purchase Price                                | $                  | 12,527.4 |   |
|                                                |               |   |   |
| The      Allocation of the Purchase Price is as Follows  |               |   |   |
| Current      Assets                                      | $                  | 1,551.2 |   |
| Investments                                              |               | 897.8 |   |
| Goodwill                                                 |               | 13,674.3 |   |
| Property,      Plant and Equipment, Net                  |               | 15,520.0 |   |
| Deferred      Charges and Other Assets                   |               | 1,639.8 |   |
| Current      Liabilities                                 |               | (3,279.5 | ) |
| Other      Liabilities and Deferred Credits              |               |   |   |
| Deferred      Income Taxes, Non-current                  |               | (2,519.4 | ) |
| Other      Deferred Credits                              |               | (1,786.3 | ) |
| Long-term      Debt                                      |               | (9,855.9 | ) |
| Minority      Interests in Equity of Subsidiaries        |               | (3,314.6 | ) |
|                                                     | $                  | 12,527.4 |   |

|                                                                 |   | Number      ofShares |   |   |   | Price      perShare |   |   |   | Total      Value |   |
|----------------------------------------------------------------------|--------|----------------------|--------|--------|--------|---------------------|--------|--------|--------|------------------|--------|
| Shares      Purchased with Cash                                      |   | 107.6                |   |   | $      | 107.50              |   |   | $      | 11,561.3         |   |
|                                                                 |   |                 |   |   |   |                |   |   |   |             |   |
| Shares      Contributed                                              |   |                 |   |   |   |                |   |   |   |             |   |
| Richard      D. Kinder                                               |   | 24.0                 |   |   | $      | 101.00              |   |   |   | 2,424.0          |   |
| Other      Knight Inc. Management and Board Members                  |   | 2.7                  |   |   | $      | 107.50              |   |   |   | 295.2            |   |
| Total      Shares Contributed                                        |   | 26.7                 |   |   |   |                |   |   |   | 2,719.2          |   |
|                                                                 |   |                 |   |   |   |                |   |   |   |             |   |
| Total      Shares Outstanding as of May 31, 2007                     |   | 134.3                |   |   |   |                |   |   |   | 14,280.5         |   |
|                                                                 |   |                 |   |   |   |                |   |   |   |             |   |
| Less:      Portion of Shares Acquired using Knight Inc. Cash on Hand |   |                 |   |   |   |                |   |   |   | (1,756.8         | )      |
| Add:      Cash Contributions by Management At or After May 30, 2007  |   |                 |   |   |   |                |   |   |   | 3.7              |   |
| Purchase      Price                                                  |   |                 |   |   |   |                |   |   | $      | 12,527.4         |   |

----

| 3. | Goodwill |
|----|----------|

|                                   | December      31,2007 |    | AcquisitionsandPurchase      PriceAdjustments1 |   | Impairmentof      Assets |   | Other2 |   | September      30,2008 |
|----------------------------------------|-----------------------|---------|------------------------------------------------|--------|--------------------------|--------|--------|--------|------------------------|
|                                   | (In      millions)    |
| Products      Pipelines – KMP    | $                     | 2,179.4 |                                           |   |                     | $      | (43.1  | )      |                   |   | $ | (1,266.5 | ) |   | $ | (6.9 | ) |   | $ | 862.9 |   |
| Natural      Gas Pipelines – KMP |                  | 3,201.0 |                                           |   |                     |   | 266.8  |   |                   |   |   | (2,090.2 | ) |   |   | (10.6 | ) |   |   | 1,367.0 |   |
| CO2      – KMP                   |                  | 1,077.6 |                                           |   |                     |   | 457.2  |   |                   |   |   | - |   |   |   | (3.7 | ) |   |   | 1,531.1 |   |
| Terminals      – KMP             |                  | 1,465.9 |                                           |   |                     |   | (3.2   | )      |                   |   |   | (676.6 | ) |   |   | (4.5 | ) |   |   | 781.6 |   |
| Kinder      Morgan Canada – KMP  |                  | 250.1   |                                           |   |                     |   | -      |   |                   |   |   | - |   |   |   | (17.0 | ) |   |   | 233.1 |   |
| Consolidated      Total                | $                     | 8,174.0 |                                           |   |                     | $      | 677.7  |   |                   |   | $ | (4,033.3 | ) |   | $ | (42.7 | ) |   | $ | 4,775.7 |   |

| 1 | Adjustments      relate primarily to a reallocation between goodwill and property, plant,      and equipment in our final purchase price  allocation. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Adjustments      include (i) the translation of goodwill denominated in foreign currencies      and (ii) reductions in the allocation of equity method goodwill due to      reductions in our ownership percentage of Kinder Morgan Energy      Partners. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 4. | Other      Intangibles |
|----|------------------------|

|                                                  | September      30,2008 |   | December      31,2007 |
|-------------------------------------------------------|------------------------|--------|-----------------------|
|                                                  | (In      millions)     |
| Customer      Relationships, Contracts and Agreements |                   |   |                  |   |   |   |   |   |   |   |   |
| Gross      Carrying Amount1                           |                   | $      | 270.9                 |   |   |   |   | $ | 321.3 |   |   |
| Accumulated      Amortization                         |                   |   | (25.7                 | ) |   |   |   |   | (11.6 | ) |   |
| Net      Carrying Amount                              |                   |   | 245.2                 |   |   |   |   |   | 309.7 |   |   |
|                                                  |                   |   |                  |   |   |   |   |   |   |   |   |
| Technology-based      Assets, Lease Values and Other  |                   |   |                  |   |   |   |   |   |   |   |   |
| Gross      Carrying Amount                            |                   |   | 11.7                  |   |   |   |   |   | 11.7 |   |   |
| Accumulated      Amortization                         |                   |   | (0.7                  | ) |   |   |   |   | (0.3 | ) |   |
| Net      Carrying Amount                              |                   |   | 11.0                  |   |   |   |   |   | 11.4 |   |   |
|                                                  |                   |   |                  |   |   |   |   |   |   |   |   |
| Total      Other Intangibles, Net                     |                   | $      | 256.2                 |   |   |   |   | $ | 321.1 |   |   |

|   | 1 | The      change in the Gross Carrying Amount is primarily due to (i) a decrease of      approximately $18 million for Kinder Morgan Energy Partners’ allocated      purchase price to Marine Terminals, Inc.’s bulk terminal assets and (ii) a      decrease of approximately $32 million for Knight Inc.’s allocated purchase      price to the assets belonging to the Products Pipelines, Natural Gas      Pipelines, CO2, and      Terminals segments, related to the Going Private transaction. These      adjustments had the effect of increasing “Goodwill” and decreasing “Other      Intangibles, Net” by the describedamounts. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                  | Successor      Company                    |   |                                    | PredecessorCompany |
|-------------------------------------------------------|-------------------------------------------|--------|-----------------------------------------|--------------------|
|                                                  | Three      Months EndedSeptember      30, |   | Nine      MonthsEndedSeptember      30, |               | Four      Months EndedSeptember      30, |   |   | Five      Months EndedMay      31, |
|                                                  | 2008                                      |   | 2007                                    |               | 2008 |   | 2007 |   |   | 2007 |
|                                                  | (In      millions)                        |   |                                    | (In      millions) |
| Customer      Relationships, Contracts and Agreements | $                                         | 4.6    |                                    |               | $ | 3.9 |   |   | $ | 14.1 |   |   | $ | 5.1 |   |   |   | $ | 6.1 |   |
| Technology-based      Assets, Lease Value and Other   |                                      | 0.2    |                                    |               |   | 0.1 |   |   |   | 0.4 |   |   |   | 0.1 |   |   |   |   | 0.2 |   |
| Total      Amortization                               | $                                         | 4.8    |                                    |               | $ | 4.0 |   |   | $ | 14.5 |   |   | $ | 5.2 |   |   |   | $ | 6.3 |   |

| 5. | Minority      Interests |
|----|-------------------------|

|                               | September      30,2008 |    | December      31,2007 |
|------------------------------------|------------------------|---------|-----------------------|
|                               | (In      millions)     |
| Kinder      Morgan Energy Partners | $                      | 1,717.8 |                  |   | $ | 1,616.0 |   |
| Kinder      Morgan Management      |                   | 1,705.8 |                  |   |   | 1,657.7 |   |
| Triton      Power Company LLC      |                   | 41.4    |                  |   |   | 29.2 |   |
| Other                              |                   | 9.3     |                  |   |   | 11.1 |   |
|                               | $                      | 3,474.3 |                  |   | $ | 3,314.0 |   |

| 6. | Related      Party Transactions |
|----|---------------------------------|

|                                                                                                    | September      30,2008 |   | December      31,2007 |
|---------------------------------------------------------------------------------------------------------|------------------------|--------|-----------------------|
|                                                                                                    | (In      millions)     |
| Derivative      Assets (Liabilities)                                                                    |                   |   |                  |   |   |   |   |
| Assets:      Fair Value of Derivative Instruments, Non-current                                          | $                      | 13.6   |                  |   | $ | - |   |
| Current      Liabilities: Fair Value of Derivative Instruments                                          | $                      | (256.3 | )                     |   | $ | (239.8 | ) |
| Liabilities      and Stockholder’s Equity: Fair Value of Derivative Instruments,      Non-current | $                      | (594.2 | )                     |   | $ | (386.5 | ) |

----

----

| 7. | Cash      Flow Information |
|----|----------------------------|

|   | Changes      in Working Capital Items (Net of Effects of Acquisitions and      Sales) |
|--------|---------------------------------------------------------------------------------------|

|                                  | SuccessorCompany                            |   |                                        | PredecessorCompany |
|---------------------------------------|---------------------------------------------|--------|---------------------------------------------|--------------------|
|                                  | Nine      MonthsEndedSeptember      30,2008 |   | Four      MonthsEndedSeptember      30,2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                  | (In      millions)                          |   |                                        | (In      millions) |
| Accounts      Receivable              | $                                           | (55.5  | )                                           |               | $ | 70.2 |   |   |   | $ | (31.9 | ) |
| Materials      and Supplies Inventory |                                        | (7.3   | )                                           |               |   | 0.8 |   |   |   |   | (1.7 | ) |
| Other      Current Assets             |                                        | 29.0   |                                        |               |   | 3.6 |   |   |   |   | 0.5 |   |
| Accounts      Payable                 |                                        | (89.3  | )                                           |               |   | (7.8 | ) |   |   |   | 26.3 |   |
| Accrued      Interest                 |                                        | (145.3 | )                                           |               |   | (51.1 | ) |   |   |   | (22.5 | ) |
| Accrued      Taxes                    |                                        | (502.3 | )                                           |               |   | (47.0 | ) |   |   |   | (114.0 | ) |
| Other      Current Liabilities        |                                        | (81.0  | )                                           |               |   | 17.7 |   |   |   |   | (59.6 | ) |
|                                  | $                                           | (851.7 | )                                           |               | $ | (13.6 | ) |   |   | $ | (202.9 | ) |

|                                                   | SuccessorCompany                            |   |                                         | PredecessorCompany |
|--------------------------------------------------------|---------------------------------------------|--------|----------------------------------------------|--------------------|
|                                                   | Nine      MonthsEndedSeptember      30,2008 |   | Four      MonthsEndedSeptember      30, 2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                                   | (In      millions)                          |   |                                         | (In      millions) |
| Cash      Paid During the Period for                   |                                        |   |                                         |               |   |   |   |   |   |   |   |   |
| Interest,      Net of Amount Capitalized               | $                                           | 623.0  |                                         |               | $ | 390.3 |   |   |   | $ | 381.8 |   |
| Income      Taxes Paid, Including Prior Period Amounts | $                                           | 622.9  |                                         |               | $ | 141.8 |   |   |   | $ | 133.3 |   |

----

| 8. | Income      Taxes |
|----|-------------------|

|                     | Successor      Company                    |   |                                     | PredecessorCompany |
|--------------------------|-------------------------------------------|--------|------------------------------------------|--------------------|
|                     | Three      Months EndedSeptember      30, |   | Nine      Months EndedSeptember      30, |               | Four      Months EndedSeptember      30, |   |   | Five      Months EndedMay      31, |
|                     | 2008                                      |   | 2007                                     |               | 2008 |   | 2007 |   |   | 2007 |
|                     | (In      millions)                        |   |                                     | (In      millions) |
| Income      Taxes        | $                                         | 87.9   |                                     |               | $ | 74.6 |   |   | $ | 194.4 |   |   | $ | 95.9 |   |   |   | $ | 135.5 |   |
| Effective      Tax Rate1 |                                      | 44.7   | %                                        |               |   | 45.3 | % |   |   | 33.4 | % |   |   | 44.8 | % |   |   |   | 48.4 | % |

|   | 1 | Excludes      goodwill impairment charges related to non-deductible goodwill; see Note      3. |
|--------|---|------------------------------------------------------------------------------------------------|

| 9. | Comprehensive      Income (Loss) |
|----|----------------------------------|

|                                                                                    | Successor      Company                    |
|-----------------------------------------------------------------------------------------|-------------------------------------------|
|                                                                                    | Three      MonthsEnded      September 30, |
|                                                                                    | 2008                                      |   | 2007 |
|                                                                                    | (In      millions)                        |
| Net      Income                                                                         | $                                         | 108.7 |   |   | $ | 85.7 |   |
| Other      Comprehensive Income (Loss), Net of Tax                                      |                                      |   |   |   |   |   |   |
| Change      in Fair Value of Derivatives Utilized for      Hedging Purposes        |                                      | 543.4 |   |   |   | (25.5 | ) |
| Reclassification      of Change in Fair Value of Derivatives    to Net Income |                                      | (70.5 | ) |   |   | (20.2 | ) |
| Employee      Benefit Plans                                                             |                                      |   |   |   |   |   |   |
| Prior      Service Cost Arising During Period                                           |                                      | (0.1 | ) |   |   | - |   |
| Net      Gain Arising During Period                                                     |                                      | 0.2 |   |   |   | - |   |
| Amortization      of Net Loss Included in Net    Periodic Benefit Costs       |                                      | - |   |   |   | (0.1 | ) |
| Change      in Foreign Currency Translation Adjustment                                  |                                      | (22.8 | ) |   |   | 14.1 |   |
| Other      Comprehensive Income (Loss), Net of Tax                                      |                                      | 450.2 |   |   |   | (31.7 | ) |
|                                                                               |                                      |   |   |   |   |   |   |
| Comprehensive      Income                                                               | $                                         | 558.9 |   |   | $ | 54.0 |   |

----

|                                                                                          | SuccessorCompany                             |     |                                         | PredecessorCompany |
|-----------------------------------------------------------------------------------------------|----------------------------------------------|----------|----------------------------------------------|--------------------|
|                                                                                          | Nine      MonthsEndedSeptember      30, 2008 |     | Four      MonthsEndedSeptember      30, 2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                                                                          | (In      millions)                           |     |                                         | (In      millions) |
| Net      Income (Loss)                                                                        | $                                            | (3,646.2 | )                                            |               | $ | 115.9 |   |   |   | $ | 65.9 |   |
| Other      Comprehensive Income (Loss), Net of Tax                                            |                                         |     |                                         |               |   |   |   |   |   |   |   |   |
| Change      in Fair Value of Derivatives Utilized for Hedging Purposes                        |                                         | (253.5   | )                                            |               |   | (44.5 | ) |   |   |   | (21.3 | ) |
| Reclassification      of Change in Fair Value of Derivatives    to Net Income       |                                         | 140.9    |                                         |               |   | (21.1 | ) |   |   |   | 10.3 |   |
| Employee      Benefit Plans                                                                   |                                         |     |                                         |               |   |   |   |   |   |   |   |   |
| Prior      Service Cost Arising During Period                                                 |                                         | 0.2      |                                         |               |   | - |   |   |   |   | (1.7 | ) |
| Net      Gain Arising During Period                                                           |                                         | 1.3      |                                         |               |   | - |   |   |   |   | 11.4 |   |
| Amortization      of Prior Service Cost Included in Net      Periodic Benefit Costs |                                         | -        |                                         |               |   | - |   |   |   |   | (0.4 | ) |
| Amortization      of Net Loss Included in Net Periodic Benefit Costs                     |                                         | (0.1     | )                                            |               |   | (0.1 | ) |   |   |   | 1.4 |   |
| Change      in Foreign Currency Translation Adjustment                                        |                                         | (31.5    | )                                            |               |   | 12.7 |   |   |   |   | 40.1 |   |
| Other      Comprehensive Income (Loss), Net of Tax                                            |                                         | (142.7   | )                                            |               |   | (53.0 | ) |   |   |   | 39.8 |   |
|                                                                                     |                                         |     |                                         |               |   |   |   |   |   |   |   |   |
| Comprehensive      Income (Loss)                                                              | $                                            | (3,788.9 | )                                            |               | $ | 62.9 |   |   |   | $ | 105.7 |   |

| 10. | Kinder      Morgan Management, LLC |
|-----|------------------------------------|

| 11. | Business      Combinations, Investments, andSales |
|-----|---------------------------------------------------|

----

----

----

| 12. | Discontinued      Operations |
|-----|------------------------------|

----

|                                                                | Successor      Company                    |   |                                    | PredecessorCompany |
|---------------------------------------------------------------------|-------------------------------------------|--------|-----------------------------------------|--------------------|
|                                                                | Three      Months EndedSeptember      30, |   | Nine      MonthsEndedSeptember      30, |               | Four      MonthsEndedSeptember      30, |   |   | Five      MonthsEndedMay      31, |
|                                                                | 2008                                      |   | 2007                                    |               | 2008 |   | 2007 |   |   | 2007 |
|                                                                | (In      millions)                        |   |                                    | (In      millions) |
| Operating      Revenues                                             | $                                         | -      |                                    |               | $ | 14.4 |   |   | $ | - |   |   | $ | 19.2 |   |   |   | $ | 921.8 |   |
|                                                                |                                      |   |                                    |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      (Loss) from Discontinued Operations Before Income Taxes |                                      | (0.2   | )                                       |               |   | (1.4 | ) |   |   | (0.6 | ) |   |   | 0.9 |   |   |   |   | 393.2 |   |
| Income      Taxes                                                   |                                      | -      |                                    |               |   | (3.0 | ) |   |   | - |   |   |   | (3.0 | ) |   |   |   | (94.6 | ) |
| Income      (Loss) from Discontinued Operations                     | $                                         | (0.2   | )                                       |               | $ | (4.4 | ) |   | $ | (0.6 | ) |   | $ | (2.1 | ) |   |   |   | 298.6 |   |

| 13. | Financing |
|-----|-----------|

|                                                       | September      30, 2008 |
|------------------------------------------------------------|-------------------------|
|                                                       | Short-termNotesPayable  |   | CommercialPaperOutstanding |   | Weighted-AverageInterest      Rate |
|                                                       | (In      millions)      |
|                                                       |                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Knight      Inc. – Secured Debt1                     |                    | $ | 270.0 |   |   | $ | - |   |   |   | 3.62 | % |   |
| Kinder      Morgan Energy Partners – Unsecured Debt2 |                    | $ | 295.0 |   |   | $ | - |   |   |   | 5.00 | % |   |

|   | ____________ |
|--------|--------------|

|   | 1 | The      average short-term debt outstanding (and related weighted-average interest      rate) was $196.8 million (3.61%) and $185.6 million (4.38%) during the      three and nine months ended September 30, 2008,    respectively. |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2 | The      average short-term debt outstanding (and related weighted-average interest      rate) was $163.5 million (3.34%) and $329.6 million (3.48%) during the      three and nine months ended September 30, 2008,    respectively. |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                             | Debt      Paid Downand/or      Retired |
|--------------------------------------------------|----------------------------------------|
|                                             | (In      millions)                     |
| Knight      Inc.                                 |                                   |   |   |   |   |
| Senior      Secured Credit Term Loan Facilities  |                                   |   |   |   |   |
| Tranche      A Term Loan, Due 2013               |                                   | $ | 995.0 |   |   |
| Tranche      B Term Loan, Due 2014               |                                   |   | 3,183.5 |   |   |
| Credit      Facility                             |                                   |   |   |   |   |
| $1.0      billion Secured Revolver, Due May 2013 |                                   |   | 375.0 |   |   |
| Total      Paid Down and/or Retired              |                                   | $ | 4,553.5 |   |   |

|                                                                             | Par      Value ofDebt      Repurchased |
|----------------------------------------------------------------------------------|----------------------------------------|
|                                                                             | (In      millions)                     |
| Knight      Inc.                                                                 |                                   |   |   |   |   |
| Debentures                                                                       |                                   |   |   |   |   |
| 6.50%      Series, Due 2013                                                      |                                   | $ | 18.9 |   |   |
| 6.67%      Series, Due 2027                                                      |                                   |   | 143.0 |   |   |
| 7.25%      Series, Due 2028                                                      |                                   |   | 461.0 |   |   |
| 7.45%      Series, Due 2098                                                      |                                   |   | 124.1 |   |   |
| Senior      Notes                                                                |                                   |   |   |   |   |
| 6.50%      Series, Due 2012                                                      |                                   |   | 160.7 |   |   |
| Kinder      Morgan Finance Company, LLC                                          |                                   |   |   |   |   |
| 6.40%      Series, Due 2036                                                      |                                   |   | 513.6 |   |   |
| Deferrable      Interest Debentures Issued to Subsidiary Trusts                  |                                   |   |   |   |   |
| 8.56%      Junior Subordinated Deferrable Interest Debentures      Due 2027 |                                   |   | 87.3 |   |   |
| 7.63%      Junior Subordinated Deferrable Interest Debentures      Due 2028 |                                   |   | 160.6 |   |   |
| Repurchase      of Outstanding Debt Securities                                   |                                   | $ | 1,669.2 |   |   |

----

----

----

| 14. | Business      Segments |
|-----|------------------------|

----

|   | · | Products      Pipelines – KMP (excluding associated terminals) – $1.19      billion, |
|--------|--------|--------------------------------------------------------------------------------------------------|

|   | · | Products      Pipelines Terminals – KMP (separate from Products Pipelines – KMP for      goodwill impairment purposes) - $70million, |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Natural      Gas Pipelines – KMP – $2.09 billion,and |
|--------|--------|------------------------------------------------------------------|

|   | · | Terminals      – KMP – $677 million, for a total impairment of $4.03    billion. |
|--------|--------|----------------------------------------------------------------------------------------------|

----

----

|                                                                                                                          | Three      MonthsEndedSeptember      30,2008 |   | Three      MonthsEndedSeptember      30,2007 |
|-------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------|--------|----------------------------------------------|
|                                                                                                                          | (In      millions)                           |
| Segment      Earnings before Depreciation, Depletion, Amortization and Amortization of      Excess Cost of Equity Investments |                                         |   |                                         |   |   |   |   |
| NGPL1                                                                                                                         | $                                            | 11.5   |                                         |   | $ | 158.1 |   |
| Power                                                                                                                         |                                         | 1.6    |                                         |   |   | 5.0 |   |
| Products      Pipelines – KMP2,4                                                                                        |                                         | (22.4  | )                                            |   |   | 127.0 |   |
| Natural      Gas Pipelines – KMP2,4                                                                                     |                                         | 337.6  |                                         |   |   | 142.3 |   |
| CO2 –      KMP2                                                                                                         |                                         | 237.7  |                                         |   |   | 184.2 |   |
| Terminals      – KMP2                                                                                                   |                                         | 117.3  |                                         |   |   | 84.4 |   |
| Kinder      Morgan Canada – KMP2                                                                                        |                                         | 44.5   |                                         |   |   | 31.0 |   |
| Total      Segment Earnings Before DD&A                                                                                   |                                         | 727.8  |                                         |   |   | 732.0 |   |
| Depreciation,      Depletion and Amortization                                                                                 |                                         | (217.2 | )                                            |   |   | (204.1 | ) |
| Amortization      of Excess Cost of Equity Investments                                                                        |                                         | (1.4   | )                                            |   |   | (1.4 | ) |
| Other      Operating Income                                                                                                   |                                         | 11.1   |                                         |   |   | 0.2 |   |
| General      and Administrative Expense                                                                                       |                                         | (85.9  | )                                            |   |   | (77.9 | ) |
| Interest      and Other, Net3                                                                                                 |                                         | (246.4 | )                                            |   |   | (304.9 | ) |
| Add      Back: Income Taxes Included in Segments Above2                                                                       |                                         | 8.8    |                                         |   |   | 20.8 |   |
| Income      from Continuing Operations Before Income Taxes                                                                    | $                                            | 196.8  |                                         |   | $ | 164.7 |   |

| Revenues      from External Customers  |   |    |   |   |   |    |   |
|----------------------------------------|--------|---------|--------|--------|--------|---------|--------|
| NGPL1                                  | $      | -       |   |   | $      | 311.3   |   |
| Power                                  |   | 17.5    |   |   |   | 21.0    |   |
| Products      Pipelines – KMP    |   | 205.6   |   |   |   | 202.7   |   |
| Natural      Gas Pipelines – KMP |   | 2,359.4 |   |   |   | 1,526.8 |   |
| CO2 –      KMP                   |   | 339.6   |   |   |   | 256.8   |   |
| Terminals      – KMP             |   | 306.0   |   |   |   | 247.1   |   |
| Kinder      Morgan Canada – KMP  |   | 57.2    |   |   |   | 43.3    |   |
| Other                                  |   | 11.3    |   |   |   | -       |   |
| Total      Revenues                    | $      | 3,296.6 |   |   | $      | 2,609.0 |   |
| Intersegment      Revenues             |   |    |   |   |   |    |   |
| NGPL1                                  | $      | -       |   |   | $      | 2.1     |   |
| Terminals      – KMP             |   | 0.2     |   |   |   | 0.1     |   |
| Total      Intersegment Revenues       | $      | 0.2     |   |   | $      | 2.2     |   |

| Depreciation,      Depletion and Amortization                    |   |   |   |   |   |   |   |
|------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| NGPL1                                                            | $      | -      |   |   | $      | 17.8   |   |
| Power                                                            |   | -      |   |   |   | 0.1    |   |
| Products      Pipelines – KMP                              |   | 30.0   |   |   |   | 25.1   |   |
| Natural      Gas Pipelines – KMP                           |   | 24.2   |   |   |   | 20.9   |   |
| CO2 –      KMP                                             |   | 116.0  |   |   |   | 109.6  |   |
| Terminals      – KMP                                       |   | 39.4   |   |   |   | 24.8   |   |
| Kinder      Morgan Canada – KMP                            |   | 7.6    |   |   |   | 5.8    |   |
| Total      Consolidated Depreciation, Depletion and Amortization | $      | 217.2  |   |   | $      | 204.1  |   |

| Capital      Expenditures – Continuing Operations       |   |   |   |   |   |   |   |
|---------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| NGPL1                                                         | $      | -      |   |   | $      | 54.8   |   |
| Products      Pipelines – KMP                           |   | 46.6   |   |   |   | 68.1   |   |
| Natural      Gas Pipelines – KMP                        |   | 280.8  |   |   |   | 63.7   |   |
| CO2 –      KMP                                          |   | 135.8  |   |   |   | 111.7  |   |
| Terminals      – KMP                                    |   | 105.4  |   |   |   | 139.0  |   |
| Kinder      Morgan Canada – KMP                         |   | 83.2   |   |   |   | 70.0   |   |
| Other                                                         |   | 0.3    |   |   |   | -      |   |
| Total      Capital Expenditures – Continuing Operations | $      | 652.1  |   |   | $      | 507.3  |   |

----

| 1 | Effective      February 15, 2008, we sold an 80% ownership interest in NGPL PipeCo LLC to      Myria. As a result of the sale, beginning February 15, 2008, we account      for our 20% ownership interest in NGPL PipeCo LLC as an equity method      investment. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Income      taxes of Kinder Morgan Energy Partners of $8.8 million and $20.8 million      for the three months ended September 30, 2008 and 2007, respectively, are      included in segment earnings before depreciation, depletion, amortization      and amortization of excess cost of equity  investments. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Includes      (i) interest expense, (ii) minority interests and (iii) miscellaneous      other income and expenses not allocated to business    segments. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | 2008      amount includes non-cash goodwill impairment charge (see Note      3). |
|---|----------------------------------------------------------------------------------|

|                                                                                                                                               | Successor      Company                      |     |                                        | PredecessorCompany |
|----------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------|----------|---------------------------------------------|--------------------|
|                                                                                                                                               | Nine      MonthsEndedSeptember      30,2008 |     | Four      MonthsEndedSeptember      30,2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                                                                                                                               | (In      millions)                          |     |                                        | (In      millions) |
| Segment      Earnings (Loss) before Depreciation, Depletion, Amortization and      Amortization of Excess Cost of  Equity    Investments |                                        |     |                                        |               |   |   |   |   |   |   |   |   |
| NGPL1                                                                                                                                              | $                                           | 116.2    |                                        |               | $ | 217.5 |   |   |   | $ | 267.4 |   |
| Power                                                                                                                                              |                                        | 4.4      |                                        |               |   | 7.4 |   |   |   |   | 8.9 |   |
| Products      Pipelines – KMP2,      4                                                                                                       |                                        | (859.3   | )                                           |               |   | 174.4 |   |   |   |   | 224.4 |   |
| Natural      Gas Pipelines – KMP2,      4                                                                                                    |                                        | (1,546.9 | )                                           |               |   | 192.1 |   |   |   |   | 228.5 |   |
| CO2 –      KMP2                                                                                                                              |                                        | 721.6    |                                        |               |   | 241.4 |   |   |   |   | 210.0 |   |
| Terminals      – KMP2,      4                                                                                                                |                                        | (293.2   | )                                           |               |   | 122.7 |   |   |   |   | 172.3 |   |
| Kinder      Morgan Canada – KMP2,5                                                                                                           |                                        | 114.0    |                                        |               |   | 42.7 |   |   |   |   | (332.0 | ) |
| Total      Segment Earnings (Loss) Before DD&A                                                                                                 |                                        | (1,743.2 | )                                           |               |   | 998.2 |   |   |   |   | 779.5 |   |
| Depreciation,      Depletion and Amortization                                                                                                      |                                        | (651.0   | )                                           |               |   | (276.3 | ) |   |   |   | (261.0 | ) |
| Amortization      of Excess Cost of Equity Investments                                                                                             |                                        | (4.3     | )                                           |               |   | (1.9 | ) |   |   |   | (2.4 | ) |
| Other      Operating Income                                                                                                                        |                                        | 27.9     |                                        |               |   | 0.6 |   |   |   |   | 2.9 |   |
| General      and Administrative Expense                                                                                                            |                                        | (264.0   | )                                           |               |   | (107.9 | ) |   |   |   | (283.6 | ) |
| Interest      and Other, Net3                                                                                                                      |                                        | (836.7   | )                                           |               |   | (419.6 | ) |   |   |   | (348.2 | ) |
| Add      Back: Income Taxes Included in Segments Above2                                                                                            |                                        | 20.1     |                                        |               |   | 20.8 |   |   |   |   | 15.6 |   |
| Income      (Loss) from Continuing Operations Before Income Taxes                                                                                  | $                                           | (3,451.2 | )                                           |               | $ | 213.9 |   |   |   | $ | (97.2 | ) |

| Revenues      from External Customers  |   |    |   |   |   |    |   |   |   |   |    |   |
|----------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|--------|---------|--------|
| NGPL1                                  | $      | 132.1   |   |   | $      | 410.5   |   |   |   | $      | 424.5   |   |
| Power                                  |   | 38.2    |   |   |   | 29.9    |   |   |   |   | 19.9    |   |
| Products      Pipelines – KMP    |   | 602.5   |   |   |   | 269.4   |   |   |   |   | 331.8   |   |
| Natural      Gas Pipelines – KMP |   | 6,916.6 |   |   |   | 2,114.7 |   |   |   |   | 2,637.6 |   |
| CO2 –      KMP                   |   | 1,002.1 |   |   |   | 336.6   |   |   |   |   | 324.2   |   |
| Terminals      – KMP             |   | 886.4   |   |   |   | 326.6   |   |   |   |   | 364.2   |   |
| Kinder      Morgan Canada – KMP  |   | 145.4   |   |   |   | 58.2    |   |   |   |   | 62.9    |   |
| Other                                  |   | 28.8    |   |   |   | -       |   |   |   |   | -       |   |
| Total      Revenues                    | $      | 9,752.1 |   |   | $      | 3,545.9 |   |   |   | $      | 4,165.1 |   |

| Intersegment      Revenues             |   |   |   |   |   |   |   |   |   |   |   |   |
|----------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| NGPL1                                  | $      | 0.9    |   |   | $      | 2.7    |   |   |   | $      | 2.0    |   |
| Natural      Gas Pipelines – KMP |   | -      |   |   |   | -      |   |   |   |   | 3.0    |   |
| Terminals      – KMP             |   | 0.7    |   |   |   | 0.2    |   |   |   |   | 0.3    |   |
| Other                                  |   | (0.9   | )      |   |   | -      |   |   |   |   | -      |   |
| Total      Intersegment Revenues       | $      | 0.7    |   |   | $      | 2.9    |   |   |   | $      | 5.3    |   |

----

| Depreciation,      Depletion and Amortization                    |   |   |   |   |   |   |   |   |   |   |   |   |
|------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| NGPL1                                                            | $      | 9.3    |   |   | $      | 23.7   |   |   |   | $      | 45.3   |   |
| Power                                                            |   | -      |   |   |   | 0.1    |   |   |   |   | (4.2   | )      |
| Products      Pipelines – KMP                              |   | 86.7   |   |   |   | 33.6   |   |   |   |   | 33.6   |   |
| Natural      Gas Pipelines – KMP                           |   | 75.5   |   |   |   | 27.7   |   |   |   |   | 26.8   |   |
| CO2 –      KMP                                             |   | 338.8  |   |   |   | 149.4  |   |   |   |   | 116.3  |   |
| Terminals      – KMP                                       |   | 117.8  |   |   |   | 34.3   |   |   |   |   | 34.4   |   |
| Kinder      Morgan Canada – KMP                            |   | 22.9   |   |   |   | 7.3    |   |   |   |   | 8.2    |   |
| Other                                                            |   | -      |   |   |   | 0.2    |   |   |   |   | 0.6    |   |
| Total      Consolidated Depreciation, Depletion and Amortization | $      | 651.0  |   |   | $      | 276.3  |   |   |   | $      | 261.0  |   |

|                                                          | Successor      Company                      |    |                                        | PredecessorCompany |
|---------------------------------------------------------------|---------------------------------------------|---------|---------------------------------------------|--------------------|
|                                                          | Nine      MonthsEndedSeptember      30,2008 |    | Four      MonthsEndedSeptember      30,2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                                          | (In      millions)                          |    |                                        | (In      millions) |
| Capital      Expenditures – Continuing Operations       |                                        |    |                                        |               |   |   |   |   |   |   |   |   |
| NGPL1                                                         | $                                           | 10.2    |                                        |               | $ | 69.9 |   |   |   | $ | 77.3 |   |
| Products      Pipelines – KMP                           |                                        | 167.4   |                                        |               |   | 91.4 |   |   |   |   | 79.5 |   |
| Natural      Gas Pipelines – KMP                        |                                        | 697.6   |                                        |               |   | 96.2 |   |   |   |   | 66.6 |   |
| CO2 –      KMP                                          |                                        | 384.2   |                                        |               |   | 140.1 |   |   |   |   | 133.3 |   |
| Terminals      – KMP                                    |                                        | 346.0   |                                        |               |   | 180.9 |   |   |   |   | 169.9 |   |
| Kinder      Morgan Canada – KMP                         |                                        | 319.2   |                                        |               |   | 76.0 |   |   |   |   | 109.0 |   |
| Other                                                         |                                        | (3.3    | )                                           |               |   | 1.6 |   |   |   |   | 17.2 |   |
| Total      Capital Expenditures – Continuing Operations | $                                           | 1,921.3 |                                        |               | $ | 656.1 |   |   |   | $ | 652.8 |   |

| 1 | Effective      February 15, 2008, we sold an 80% ownership interest in NGPL PipeCo LLC to      Myria. As a result of the sale, beginning February 15, 2008, we account      for our 20% ownership interest in NGPL PipeCo LLC as an equity method      investment. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Income      taxes of Kinder Morgan Energy Partners of $20.1 million, $20.8 million and      $15.6 million for the nine months ended September 30, 2008, the four      months ended September 30, 2007 and the five months ended May 31, 2007,      respectively, are included in segment earnings before depreciation,      depletion, amortization and amortization of excess cost of equity      investments. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Includes      (i) interest expense, (ii) minority interests and (iii) miscellaneous      other income and expenses not allocated to business    segments. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Nine      months ended September 30, 2008 includes non-cash goodwill impairment      charges (see Note 3). |
|---|------------------------------------------------------------------------------------------------------------|

| 5 | Five      months ended May 31, 2007 includes a non-cash goodwill impairment charge      (see Note 3). |
|---|-------------------------------------------------------------------------------------------------------|

|                                   | September      30, 2008 |
|----------------------------------------|-------------------------|
|                                   | (In      millions)      |
| Assets                                 |                    |   |   |
| NGPL1                                  | $                       | 724.2 |   |
| Power                                  |                    | 62.6 |   |
| Products      Pipelines – KMP    |                    | 5,516.7 |   |
| Natural      Gas Pipelines – KMP |                    | 7,412.7 |   |
| CO2 –      KMP                   |                    | 4,436.9 |   |
| Terminals      – KMP             |                    | 4,299.1 |   |
| Kinder      Morgan Canada – KMP  |                    | 1,803.6 |   |
| Total      segment assets              |                    | 24,255.8 |   |
| Other2                                 |                    | 452.9 |   |
| Total      Consolidated Assets         | $                       | 24,708.7 |   |

| 1 | Effective      February 15, 2008, we sold an 80% ownership interest in NGPL PipeCo LLC to      Myria. As a result of the sale, beginning February 15, 2008, we account      for our 20% ownership interest in NGPL PipeCo LLC as an equity method      investment. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 2 | Includes      assets of cash, restricted deposits, market value of derivative      instruments (including interest rate swaps) and miscellaneous corporate      assets (such as information technology and telecommunications equipment)      not allocated to individualsegments. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15. | Accounting      for Derivative Instruments and Hedging  Activities |
|-----|--------------------------------------------------------------------|

|                                                                                                    | September      30,2008 |     | December      31,2007 |
|---------------------------------------------------------------------------------------------------------|------------------------|----------|-----------------------|
|                                                                                                    | (In      millions)     |
| Derivatives      Asset (Liability)                                                                      |                   |     |                  |   |   |   |   |
| Current      Assets: Fair Value of Derivative Instruments                                               | $                      | 36.9     |                  |   | $ | 37.1 |   |
| Current      Assets: Assets Held for Sale                                                               | $                      | -        |                  |   | $ | 8.4 |   |
| Assets:      Fair Value of Derivative Instruments                                                       | $                      | 49.3     |                  |   | $ | 4.4 |   |
| Current      Liabilities: Fair Value of Derivative Instruments,    Non-current                          | $                      | (611.6   | )                     |   | $ | (594.7 | ) |
| Current      Liabilities: Liabilities Held for Sale                                                     | $                      | -        |                  |   | $ | (0.4 | ) |
| Liabilities      and Stockholders’ Equity: Fair Value of Derivative Instruments,      Non-current | $                      | (1,007.2 | )                     |   | $ | (836.8 | ) |

----

----

----

|   | · | Level      1 Inputs—quoted prices (unadjusted) in active markets for identical assets      or liabilities that the reporting entity has the ability to access at the      measurement date; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Level      2 Inputs—inputs other than quoted prices included within Level 1 that are      observable for the asset or liability, either directly or indirectly. If      the asset or liability has a specified (contractual) term, a Level 2 input      must be observable for substantially the full term of the asset or      liability; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Level      3 Inputs—unobservable inputs for the asset or liability. These      unobservable inputs reflect the entity’s own assumptions about the      assumptions that market participants would use in pricing the asset or      liability, and are developed based on the best information available in      the circumstances (which might include the reporting entity’s own      data). |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                        | Asset      Fair Value Measurements as of September 30, 2008 Using |
|---------------------------------------------|-------------------------------------------------------------------|
|                                        | Total                                                             |   | Quoted      Prices inActive      Marketsfor      IdenticalAssets      (Level 1) |   | Significant      OtherObservableInputs      (Level 2) |   | SignificantUnobservableInputs      (Level 3) |
|                                        | (In      millions)                                                |
| Energy      Commodity Derivative Contracts1 | $                                                                 | 86.2 |   |   | $ | 1.8 |   |   | $ | 31.8 |   |   | $ | 52.6 |   |   |
|                                        |                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Rate Swap Agreements          | $                                                                 | 210.7 |   |   | $ | - |   |   | $ | 210.7 |   |   | $ | - |   |   |

|                                        | Liability      Fair Value Measurements as of September 30, 2008 Using |
|---------------------------------------------|-----------------------------------------------------------------------|
|                                        | Total                                                                 |   | Quoted      Prices inActive      Marketsfor      IdenticalAssets      (Level 1) |   | Significant      OtherObservableInputs      (Level 2) |   | SignificantUnobservableInputs      (Level 3) |
|                                        | (In      millions)                                                    |
| Energy      Commodity Derivative Contracts2 | $                                                                     | (1,618.8 | ) |   | $ | (0.1 | ) |   | $ | (1,485.5 | ) |   | $ | (133.2 | ) |   |
|                                        |                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Rate Swap Agreements          | $                                                                     | (11.5 | ) |   | $ | - |   |   | $ | (11.5 | ) |   | $ | - |   |   |
|                                        |                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cross      Currency Swaps                   | $                                                                     | (13.3 | ) |   | $ | - |   |   | $ | (13.3 | ) |   | $ | - |   |   |

| 1 | Level      2 consists primarily of OTC West Texas Intermediate derivatives. Level 3      consists primarily of West Texas Sour derivatives and West Texas      Intermediate options. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Level      1 consists primarily of New York Mercantile Exchange (“NYMEX”) Natural Gas      futures.  Level 2 consists primarily of OTC West Texas      Intermediate derivatives. Level 3 consists primarily of West Texas Sour      derivatives and West Texas Intermediateoptions. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                | Significant      UnobservableInputs (Level      3) |
|-----------------------------------------------------------------------------------------------------|----------------------------------------------------|
|                                                                                                | Three      MonthsEndedSeptember      30,2008       |   | Nine      MonthsEndedSeptember      30,2008 |
|                                                                                                | (In      millions)                                 |
| Net      Asset (Liability)                                                                          |                                               |   |   |   |   |   |   |
| Beginning      Balance                                                                              | $                                                  | (233.0 | ) |   | $ | (100.3 | ) |
| Realized      and Unrealized Net Losses                                                             |                                               | 133.4 |   |   |   | (52.9 | ) |
| Purchases      and Settlements                                                                      |                                               | 19.0 |   |   |   | 72.6 |   |
| Balance      as of September 30, 2008                                                               | $                                                  | (80.6 | ) |   | $ | (80.6 | ) |
| Change      in Unrealized Net Losses Relating to Contracts Still Held as of September      30, 2008 | $                                                  | 138.5 |   |   | $ | (22.3 | ) |

----

| 16. | Employee      Benefits |
|-----|------------------------|

|                                      | Successor      Company                    |   |                                     | PredecessorCompany |
|-------------------------------------------|-------------------------------------------|--------|------------------------------------------|--------------------|
|                                      | Three      Months EndedSeptember      30, |   | Nine      Months EndedSeptember      30, |               | Four      Months EndedSeptember      30, |   |   | Five      Months EndedMay      31, |
|                                      | 2008                                      |   | 2007                                     |               | 2008 |   | 2007 |   |   | 2007 |
|                                      | (In      millions)                        |   |                                     | (In      millions) |
| Service      Cost                         | $                                         | 2.9    |                                     |               | $ | 2.7 |   |   | $ | 8.5 |   |   | $ | 3.6 |   |   |   | $ | 4.5 |   |
| Interest      Cost                        |                                      | 3.6    |                                     |               |   | 3.3 |   |   |   | 10.8 |   |   |   | 4.5 |   |   |   |   | 5.6 |   |
| Expected      Return on Assets            |                                      | (5.8   | )                                        |               |   | (5.7 | ) |   |   | (17.4 | ) |   |   | (7.7 | ) |   |   |   | (9.6 | ) |
| Amortization      of Prior Service Credit |                                      | -      |                                     |               |   | - |   |   |   | - |   |   |   | - |   |   |   |   | 0.1 |   |
| Amortization      of Net Loss             |                                      | -      |                                     |               |   | - |   |   |   | - |   |   |   | - |   |   |   |   | 0.2 |   |
| Net      Periodic Pension Cost            | $                                         | 0.7    |                                     |               | $ | 0.3 |   |   | $ | 1.9 |   |   | $ | 0.4 |   |   |   | $ | 0.8 |   |

|                                      | Successor      Company                    |   |                                    | PredecessorCompany |
|-------------------------------------------|-------------------------------------------|--------|-----------------------------------------|--------------------|
|                                      | Three      Months EndedSeptember      30, |   | Nine      MonthsEndedSeptember      30, |               | Four      MonthsEndedSeptember      30, |   |   | Five      MonthsEndedMay      31, |
|                                      | 2008                                      |   | 2007                                    |               | 2008 |   | 2007 |   |   | 2007 |
|                                      | (In      millions)                        |   |                                    | (In      millions) |
| Service      Cost                         | $                                         | 0.1    |                                    |               | $ | 0.1 |   |   | $ | 0.3 |   |   | $ | 0.1 |   |   |   | $ | 0.2 |   |
| Interest      Cost                        |                                      | 1.2    |                                    |               |   | 1.1 |   |   |   | 3.4 |   |   |   | 1.5 |   |   |   |   | 1.9 |   |
| Expected      Return on Assets            |                                      | (1.8   | )                                       |               |   | (1.6 | ) |   |   | (5.0 | ) |   |   | (2.1 | ) |   |   |   | (2.7 | ) |
| Amortization      of Prior Service Credit |                                      | -      |                                    |               |   | - |   |   |   | - |   |   |   | - |   |   |   |   | (0.7 | ) |
| Amortization      of Net Loss             |                                      | (0.1   | )                                       |               |   | - |   |   |   | (0.4 | ) |   |   | - |   |   |   |   | 2.0 |   |
| Net      Periodic Pension Cost            | $                                         | (0.6   | )                                       |               | $ | (0.4 | ) |   | $ | (1.7 | ) |   | $ | (0.5 | ) |   |   | $ | 0.7 |   |

----

|                           | PredecessorCompany                                    |
|--------------------------------|-------------------------------------------------------|
|                           | For      the PeriodJanuary      1 – May 17,2007 |
|                           | (In      millions)                                    |
| Service      Cost              |                                                  | $ | 2.7 |   |   |
| Interest      Cost             |                                                  |   | 4.4 |   |   |
| Expected      Return on Assets |                                                  |   | (5.5 | ) |   |
| Other                          |                                                  |   | 0.1 |   |   |
| Net      Periodic Pension Cost |                                                  | $ | 1.7 |   |   |

|                                          | PredecessorCompany                                    |
|-----------------------------------------------|-------------------------------------------------------|
|                                          | For      the PeriodJanuary      1 – May 17,2007 |
|                                          | (In      millions)                                    |
| Service      Cost                             |                                                  | $ | 0.6 |   |   |
| Interest      Cost                            |                                                  |   | 1.4 |   |   |
| Net      Periodic Postretirement Benefit Cost |                                                  | $ | 2.0 |   |   |

----

| 17. | Regulatory      Matters |
|-----|-------------------------|

|   | · | the      Standards of Conduct apply only to the relationship between interstate      natural gas transmission pipelines and their marketing affiliates, not      their energy affiliates; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | all      risk management personnel can beshared; |
|--------|--------|--------------------------------------------------|

|   | · | the      requirement to post discretionary tariff actions was eliminated (but      interstate natural gas pipelines must still maintain a log of      discretionary tariff waivers); |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | lawyers      providing legal advice may be shared employees;  and |
|--------|--------|-------------------------------------------------------------------|

|   | · | new      interstate natural gas transmission pipelines are not subject to the      Standards of Conduct until they commence  service. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

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----

----

----

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| 18. | Litigation,      Environmental and OtherContingencies |
|-----|-------------------------------------------------------|

|   | · | FERC      Docket No. OR92-8, et      al.—Complainants/Protestants: Chevron; Navajo; ARCO; BP WCP;      Western Refining; ExxonMobil ; Tosco; and Texaco (Ultramar is an      intervenor)—Defendant: SFPP |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. OR92-8-025—Complainants/Protestants: BP WCP; ExxonMobil ;      Chevron; ConocoPhillips; and Ultramar—Defendant:  SFPP |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | FERC      Docket No. OR96-2, et      al.—Complainants/Protestants: All Shippers except Chevron (which is      an intervenor)—Defendant: SFPP |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket Nos. OR02-4 and OR03-5—Complainant/Protestant: Chevron—Defendant:      SFPP |
|--------|--------|----------------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. OR04-3—Complainants/Protestants: America West Airlines;      Southwest Airlines; Northwest Airlines; and Continental      Airlines—Defendant: SFPP |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket Nos. OR03-5, OR05-4 and OR05-5—Complainants/Protestants: BP WCP;      ExxonMobil; and ConocoPhillips (other shippers intervened)—Defendant:      SFPP |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. OR03-5-001—Complainants/Protestants: BP WCP; ExxonMobil ; and      ConocoPhillips (other shippers intervened)—Defendant:  SFPP |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. OR07-1—Complainant/Protestant: Tesoro—Defendant:      SFPP |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. OR07-2—Complainant/Protestant: Tesoro—Defendant:      SFPP |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. OR07-3—Complainants/Protestants: BP WCP; Chevron; ExxonMobil;      Tesoro; and Valero Marketing—Defendant:SFPP |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Complaint      alleges that SFPP’s North Line indexed rate increase was not just and      reasonable. The FERC dismissed the complaint and denied rehearing.      Petitions for review were filed by BP WCP and ExxonMobil at the D.C.      Court. This proceeding is currently in abeyance pending a decision by the      D.C. Court in the Tesoro review proceeding related to Docket No.      OR07-16; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. OR07-4—Complainants/Protestants: BP WCP; Chevron; and      ExxonMobil—Defendants: SFPP; Kinder Morgan G.P., Inc.; and Knight      Inc. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket Nos. OR07-5 and OR07-7 (consolidated)—Complainants/Protestants:      ExxonMobil and Tesoro—Defendants: Calnev; Kinder Morgan G.P., Inc.; and      Knight Inc. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. OR07-6—Complainant/Protestant: ConocoPhillips—Defendant:      SFPP |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket Nos. OR07-8 and OR07-11 (consolidated)—Complainants/Protestants: BP      WCP and ExxonMobil —Defendant: SFPP |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. OR07-9—Complainant/Protestant: BP WCP—Defendant:      SFPP |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. OR07-14—Complainants/Protestants: BP WCP and      Chevron—Defendants: SFPP; Calnev, and several  affiliates |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. OR07-16—Complainant/Protestant: Tesoro—Defendant:      Calnev |
|--------|--------|------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. OR07-18—Complainants/Protestants: Airline Complainants;      Chevron; and Valero Marketing—Defendant:Calnev |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | FERC      Docket No. OR07-19—Complainant/Protestant: ConocoPhillips—Defendant:      Calnev |
|--------|--------|--------------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. OR07-20—Complainant/Protestant: BP WCP—Defendant:      SFPP |
|--------|--------|----------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. OR07-22—Complainant/Protestant: BP WCP—Defendant:      Calnev |
|--------|--------|------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. OR08-13—Complainants/Protestants: BP WCP and      ExxonMobil—Defendant: SFPP |
|--------|--------|---------------------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. OR08-15—Complainants/Protestants: BP WCP and      ExxonMobil—Defendant: SFPP |
|--------|--------|---------------------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. IS05-230 (North Line rate case)—Complainants/Protestants:      Shippers—Defendant: SFPP |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. IS05-327—Complainants/Protestants: Shippers—Defendant:      SFPP |
|--------|--------|---------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. IS06-283 (East Line rate case)—Complainants/Protestants:      Shippers—Defendant: SFPP |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. IS06-296—Complainant/Protestant: ExxonMobil —Defendant:      Calnev |
|--------|--------|------------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. IS06-356—Complainants/Protestants: Shippers—Defendant:      SFPP |
|--------|--------|---------------------------------------------------------------------------------------------------|

----

|   | · | FERC      Docket No. IS07-137 (Ultra Low Sulfur Diesel (ULSD)      surcharge)—Complainants/Protestants: Shippers—Defendant:    SFPP |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. IS07-229—Complainants/Protestants: BP WCP and ExxonMobil      —Defendant: SFPP |
|--------|--------|-----------------------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. IS07-234—Complainants/Protestants: BP WCP and ExxonMobil      —Defendant: Calnev |
|--------|--------|-------------------------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. IS08-28—Complainants/Protestants: ConocoPhillips; Chevron; BP      WCP; ExxonMobil ; Southwest Airlines; Western; and Valero—Defendant:      SFPP |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. IS08-302—Complainants/Protestants: Chevron; BP WCP; ExxonMobil;      and Tesoro—Defendant: SFPP |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. IS08-389—Complainants/Protestants: ConocoPhillips, Valero,      Southwest Airlines Co., Navajo, Western—Defendant:  SFPP |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | FERC      Docket No. IS08-390—Complainants/Protestants: BP WCP, ExxonMobil,      ConocoPhillips, Valero, Chevron, the Airlines—Defendant:    SFPP |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Motions      to compel payment of interim damages (various      dockets)—Complainants/Protestants: Shippers—Defendants: SFPP; Kinder      Morgan G.P., Inc.; and Knight Inc. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

No 

----

action has been taken by the CPUC with respect to either the SFPPamended general rate case filing or the Calnev general rate casefiling.

----

----

----

----

----

----

----

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| 19. | Recent      Accounting Pronouncements |
|-----|---------------------------------------|

----

SFAS No. 142
, Goodwill and Other IntangibleAssets. This Staff Position is effective for financial statements issuedfor fiscal years beginning after December 15, 2008 (January 1, 2009 for us), andinterim periods within those fiscal years. Early adoption is prohibited. We donot anticipate that the adoption of this Staff Position will have a materialeffect on our consolidated financial statements.

----

| 20. | Subsequent      Events |
|-----|------------------------|

----

Item 2.  Management’s Discussion and Analysis ofFinancial Condition and Results of Operations.

|   | · | Natural      Gas Pipeline Company of America and certain affiliates, referred to as      Natural Gas Pipeline Company of America or NGPL, a major interstate      natural gas pipeline and storage system. In February 2008, we sold an 80%      ownership interest in NGPL PipeCo LLC for      approximately $5.9 billion; see Note 11 of the accompanying Notes to      Consolidated Financial Statements. Our remaining 20% interest is recorded      as an equity investment within the “Investments” caption of the      accompanying interim Consolidated Balance  Sheets; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Power,      a business that owns and operates a natural gas-fired electric generation      facility. On January 25, 2008, we sold our interests in three natural      gas-fired power plants in Colorado to Bear Stearns. The sale was effective      January 1, 2008, and we received net proceeds of $63.1      million; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Products      Pipelines – KMP, the ownership and operation of refined petroleum products      pipelines that deliver gasoline, diesel fuel, jet fuel and natural gas      liquids to various markets, plus the ownership and/or operation of      associated product terminals and petroleum pipeline transmix      facilities; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Natural      Gas Pipelines – KMP, the ownership and operation of major interstate and      intrastate natural gas pipeline and storage  systems; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | CO2 –      KMP, (i) the production, transportation and marketing of carbon dioxide,      or “CO2,” to      oil fields that use CO2 to      increase production of oil, (ii) ownership interests in and/or operation      of oil fields in West Texas and (iii) the ownership and operation of a      crude oil pipeline system in WestTexas; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Terminals      – KMP, the ownership and/or operation of liquids and bulk terminal      facilities and rail transloading and materials handling facilities located      throughout the United States; and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Kinder      Morgan Canada – KMP, the ownership and operation of (i) Trans Mountain, a      pipeline system that transports crude oil and refined petroleum products      from Edmonton, Alberta, Canada to marketing terminals and refineries in      British Columbia, Canada and the state of Washington, (ii) Express, a      pipeline system in which we own a one-third interest that transports crude      oil from Hardisty, Alberta, Canada through Casper, Wyoming to the Wood      River, Illinois area and (iii) Jet Fuel, a 25-mile long pipeline      transporting jet fuel to Vancouver International Airport. In August 2008,      we sold the Express pipeline system and the Jet Fuel pipeline to Kinder      Morgan Energy Partners. In prior periods, Knight Inc. reported the results      of the Trans Mountain pipeline system in the Trans Mountain – KMP segment,      the Express pipeline system in the Express segment and the results of Jet      Fuel were included in the “Other” caption in the Consolidated Financial      Results table in the Management’s Discussion and Analysis of Financial      Condition and Results ofOperations. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|                                                                                                                                           | Three      Months EndedSeptember      30, |   | Increase/(Decrease)Change      from 2007 |
|------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------|--------|------------------------------------------|
|                                                                                                                                           | 2008                                      |   | 2007                                     |   | $ |   | % |
|                                                                                                                                           | (In      millions, except percentages)    |
| Segment      Earnings before Depreciation, Depletion and Amortization Expense and      Amortization of Excess Cost of Equity Investments1 |                                      |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| NGPL2                                                                                                                                          | $                                         | 11.5   |                                     |   | $ | 158.1 |   |   | $ | (146.6 | ) |   |   | (93 | )% |
| Power                                                                                                                                          |                                      | 1.6    |                                     |   |   | 5.0 |   |   |   | (3.4 | ) |   |   | (68 | )% |
| Products      Pipelines – KMP3                                                                                                           |                                      | (22.4  | )                                        |   |   | 127.0 |   |   |   | (149.4 | ) |   |   | (118 | )% |
| Natural      Gas Pipelines – KMP4                                                                                                        |                                      | 337.6  |                                     |   |   | 142.3 |   |   |   | 195.3 |   |   |   | 137 | % |
| CO2 –      KMP                                                                                                                           |                                      | 237.7  |                                     |   |   | 184.2 |   |   |   | 53.5 |   |   |   | 29 | % |
| Terminals      – KMP                                                                                                                     |                                      | 117.3  |                                     |   |   | 84.4 |   |   |   | 32.9 |   |   |   | 39 | % |
| Kinder      Morgan Canada – KMP5                                                                                                         |                                      | 44.5   |                                     |   |   | 31.0 |   |   |   | 13.5 |   |   |   | 44 | % |
| Segment      Earnings before DD&A                                                                                                          |                                      | 727.8  |                                     |   |   | 732.0 |   |   |   | (4.2 | ) |   |   | (1 | )% |
| Depreciation,      Depletion and Amortization Expense                                                                                          |                                      | (217.2 | )                                        |   |   | (204.1 | ) |   |   | (13.1 | ) |   |   | (6 | )% |
| Amortization      of Excess Cost of Equity Investments                                                                                         |                                      | (1.4   | )                                        |   |   | (1.4 | ) |   |   | - |   |   |   | - | % |
| Other      Operating Income                                                                                                                    |                                      | 11.1   |                                     |   |   | 0.2 |   |   |   | 10.9 |   |   |   | 5,450 | % |
| General      and Administrative Expense                                                                                                        |                                      | (85.9  | )                                        |   |   | (77.9 | ) |   |   | (8.0 | ) |   |   | (10 | )% |
| Interest      and Other, Net                                                                                                                   |                                      | (246.4 | )                                        |   |   | (304.9 | ) |   |   | 58.5 |   |   |   | 19 | % |
| Income      from Continuing Operations before Income Taxes1                                                                                    |                                      | 188.0  |                                     |   |   | 143.9 |   |   |   | 44.1 |   |   |   | 31 | % |
| Income      Taxes1                                                                                                                             |                                      | (79.1  | )                                        |   |   | (53.8 | ) |   |   | (25.3 | ) |   |   | (47 | )% |
| Income      from Continuing Operations                                                                                                         |                                      | 108.9  |                                     |   |   | 90.1 |   |   |   | 18.8 |   |   |   | 21 | % |
| Loss      from Discontinued Operations, Net of Tax                                                                                             |                                      | (0.2   | )                                        |   |   | (4.4 | ) |   |   | 4.2 |   |   |   | 95 | % |
| Net      Income                                                                                                                                | $                                         | 108.7  |                                     |   | $ | 85.7 |   |   | $ | 23.0 |   |   |   | 27 | % |

| 1 | Kinder      Morgan Energy Partners’ income taxes of $8.8 million and $20.8 million for      the three months ended September 30, 2008 and 2007, respectively, are      included in segment earnings. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Effective      February 15, 2008, we sold an 80% ownership interest in NGPL PipeCo LLC to      Myria. As a result of the sale, beginning February 15, 2008, we account      for our 20% ownership interest in NGPL PipeCo LLC as an equity method      investment. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Three      months ended September 30, 2008 includes a non-cash goodwill impairment      charge of $152.6 million. |
|---|-------------------------------------------------------------------------------------------------------------------|

| 4 | Three      months ended September 30, 2008 includes a non-cash goodwill impairment      adjustment of $152.6 million. |
|---|-----------------------------------------------------------------------------------------------------------------------|

| 5 | Includes      earnings of the Trans Mountain pipeline system, our interest in the      Express pipeline system and the Jet Fuel pipeline system; see Note 14 of      the accompanying Notes to Consolidated Financial    Statements. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                             | Successor      Company                      |     |                                        | PredecessorCompany |
|--------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------|----------|---------------------------------------------|--------------------|
|                                                                                                                                             | Nine      MonthsEndedSeptember      30,2008 |     | Four      MonthsEndedSeptember      30,2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                                                                                                                             | (In      millions)                          |     |                                        | (In      millions) |
| Segment      Earnings (Loss) before Depreciation, Depletion and Amortization Expense      and Amortization of Excess Cost of Equity Investments1 |                                        |     |                                        |               |   |   |   |   |   |   |   |   |
| NGPL2                                                                                                                                            | $                                           | 116.2    |                                        |               | $ | 217.5 |   |   |   | $ | 267.4 |   |
| Power                                                                                                                                            |                                        | 4.4      |                                        |               |   | 7.4 |   |   |   |   | 8.9 |   |
| Products      Pipelines – KMP3                                                                                                             |                                        | (859.3   | )                                           |               |   | 174.4 |   |   |   |   | 224.4 |   |
| Natural      Gas Pipelines – KMP4                                                                                                          |                                        | (1,546.9 | )                                           |               |   | 192.1 |   |   |   |   | 228.5 |   |
| CO2 –      KMP                                                                                                                             |                                        | 721.6    |                                        |               |   | 241.4 |   |   |   |   | 210.0 |   |
| Terminals      – KMP5                                                                                                                      |                                        | (293.2   | )                                           |               |   | 122.7 |   |   |   |   | 172.3 |   |
| Kinder      Morgan Canada – KMP6                                                                                                           |                                        | 114.0    |                                        |               |   | 42.7 |   |   |   |   | (332.0 | ) |
| Segment      Earnings (Loss) before DD&A                                                                                                     |                                        | (1,743.2 | )                                           |               |   | 998.2 |   |   |   |   | 779.5 |   |
| Depreciation,      Depletion and Amortization Expense                                                                                            |                                        | (651.0   | )                                           |               |   | (276.3 | ) |   |   |   | (261.0 | ) |
| Amortization      of Excess Cost of Equity Investments                                                                                           |                                        | (4.3     | )                                           |               |   | (1.9 | ) |   |   |   | (2.4 | ) |
| Other      Operating Income                                                                                                                      |                                        | 27.9     |                                        |               |   | 0.6 |   |   |   |   | 2.9 |   |
| General      and Administrative Expense                                                                                                          |                                        | (264.0   | )                                           |               |   | (107.9 | ) |   |   |   | (283.6 | ) |
| Interest      and Other, Net                                                                                                                     |                                        | (836.7   | )                                           |               |   | (419.6 | ) |   |   |   | (348.2 | ) |
| Income      (Loss) from Continuing Operations before Income Taxes1                                                                               |                                        | (3,471.3 | )                                           |               |   | 193.1 |   |   |   |   | (112.8 | ) |
| Income      Taxes1                                                                                                                               |                                        | (174.3   | )                                           |               |   | (75.1 | ) |   |   |   | (119.9 | ) |
| Income      (Loss) from Continuing Operations                                                                                                    |                                        | (3,645.6 | )                                           |               |   | 118.0 |   |   |   |   | (232.7 | ) |
| Income      (Loss) from Discontinued Operations, Net of Tax                                                                                      |                                        | (0.6     | )                                           |               |   | (2.1 | ) |   |   |   | 298.6 |   |
| Net      Income (Loss)                                                                                                                           | $                                           | (3,646.2 | )                                           |               | $ | 115.9 |   |   |   | $ | 65.9 |   |

| 1 | Kinder      Morgan Energy Partners’ income taxes for the nine months ended September      30, 2008, the four months ended September 30, 2007, and the five months      ended May 31, 2007, were $20.1 million, $20.8 million, and $15.6 million      respectively, and are included in segment  earnings. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Effective      February 15, 2008, we sold an 80% ownership interest in NGPL PipeCo LLC to      Myria. As a result of the sale, beginning February 15, 2008, we account      for our 20% ownership interest in NGPL PipeCo LLC as an equity method      investment. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Nine      months ended September 30, 2008 includes a non-cash goodwill impairment      charge of $1.26 billion. |
|---|-----------------------------------------------------------------------------------------------------------------|

| 4 | Nine      months ended September 30, 2008 includes a non-cash goodwill impairment      charge of $2.09 billion. |
|---|-----------------------------------------------------------------------------------------------------------------|

| 5 | Nine      months ended September 30, 2008 includes a non-cash goodwill impairment      charge of $0.68 billion. |
|---|-----------------------------------------------------------------------------------------------------------------|

| 6 | Includes      earnings of the Trans Mountain pipeline system, our interest in the      Express pipeline system and the Jet Fuel pipeline system and a non-cash      goodwill impairment charge for the five months ended May 31,      2007. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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----

|                                  | Successor      Company                    |
|---------------------------------------|-------------------------------------------|
|                                  | Three      Months EndedSeptember      30, |
|                                  | 2008                                      |   | 2007 |
|                                  | (In      millions)                        |
| Segment      Earnings Before DD&A | $                                         | 11.5 |   |   | $ | 158.1 |   |

----

|                                  | Successor      Company                      |   |                                        | PredecessorCompany |
|---------------------------------------|---------------------------------------------|--------|---------------------------------------------|--------------------|
|                                  | Nine      MonthsEndedSeptember      30,2008 |   | Four      MonthsEndedSeptember      30,2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                  | (In      millions)                          |   |                                        | (In      millions) |
| Segment      Earnings Before DD&A | $                                           | 116.2  |                                        |               | $ | 217.5 |   |   |   | $ | 267.4 |   |

----

|                                                       | Successor      Company                    |
|------------------------------------------------------------|-------------------------------------------|
|                                                       | Three      Months EndedSeptember      30, |
|                                                       | 2008                                      |   | 2007 |
|                                                       | (In      millions)                        |
| Operating      Revenues                                    | $                                         | 17.5 |   |   | $ | 21.0 |   |
| Operating      Expenses and Minority Interests             |                                      | (15.9 | ) |   |   | (19.3 | ) |
| Equity      in Earnings of Thermo Cogeneration Partnership |                                      | - |   |   |   | 3.3 |   |
| Segment      Earnings Before DD&A                      | $                                         | 1.6 |   |   | $ | 5.0 |   |

|                                                       | Successor      Company                      |   |                                        | PredecessorCompany |
|------------------------------------------------------------|---------------------------------------------|--------|---------------------------------------------|--------------------|
|                                                       | Nine      MonthsEndedSeptember      30,2008 |   | Four      MonthsEndedSeptember      30,2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                                       | (In      millions)                          |   |                                        | (In      millions) |
| Operating      Revenues                                    | $                                           | 38.2   |                                        |               | $ | 29.9 |   |   |   | $ | 19.9 |   |
| Operating      Expenses and Minority Interests             |                                        | (33.8  | )                                           |               |   | (27.1 | ) |   |   |   | (16.1 | ) |
| Equity      in Earnings of Thermo Cogeneration Partnership |                                        | -      |                                        |               |   | 4.6 |   |   |   |   | 5.1 |   |
| Segment      Earnings Before DD&A                      | $                                           | 4.4    |                                        |               | $ | 7.4 |   |   |   | $ | 8.9 |   |

----

|                                         | Successor      Company                    |
|----------------------------------------------|-------------------------------------------|
|                                         | Three      Months EndedSeptember      30, |
|                                         | 2008                                      |   | 2007 |
|                                         | (In      millions)                        |
| Operating      Revenues1                     | $                                         | 205.6 |   |   | $ | 202.7 |   |
| Operating      Expenses2                     |                                      | (78.7 | ) |   |   | (80.1 | ) |
| Other      Income (Expense)3                 |                                      | (0.3 | ) |   |   | 0.6 |   |
| Goodwill      Impairment4                    |                                      | (152.6 | ) |   |   | - |   |
| Earnings      from Equity Investments5       |                                      | 3.3 |   |   |   | 7.3 |   |
| Interest      Income and Other Income, Net6  |                                      | 0.4 |   |   |   | 2.9 |   |
| Income      Tax Benefit (Expense)            |                                      | (0.1 | ) |   |   | (6.4 | ) |
| Segment      Earnings (Loss) Before DD&A | $                                         | (22.4 | ) |   | $ | 127.0 |   |
|                                    |                                      |   |   |   |   |   |   |
| Operating Statistics(MMBbl)                  |                                      |   |   |   |   |   |   |
| Gasoline                                     |                                      | 101.1 |   |   |   | 111.2 |   |
| Diesel      Fuel                             |                                      | 40.0 |   |   |   | 42.1 |   |
| Jet      Fuel                                |                                      | 29.6 |   |   |   | 31.9 |   |
| Total      Refined Product Volumes           |                                      | 170.7 |   |   |   | 185.2 |   |
| Natural      Gas Liquids                     |                                      | 5.8 |   |   |   | 7.4 |   |
| Total      Delivery Volumes7                 |                                      | 176.5 |   |   |   | 192.6 |   |

|                                                  | Successor      Company                      |     |                                        | PredecessorCompany |
|-------------------------------------------------------|---------------------------------------------|----------|---------------------------------------------|--------------------|
|                                                  | Nine      MonthsEndedSeptember      30,2008 |     | Four      MonthsEndedSeptember      30,2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                                  | (In      millions)                          |     |                                        | (In      millions) |
| Operating      Revenues1                              | $                                           | 602.5    |                                        |               | $ | 269.4 |   |   |   | $ | 331.8 |   |
| Operating      Expenses2                              |                                        | (209.6   | )                                           |               |   | (103.1 | ) |   |   |   | (116.4 | ) |
| Other      Income (Expense)3                          |                                        | (0.6     | )                                           |               |   | 1.7 |   |   |   |   | (0.6 | ) |
| Goodwill      Impairment4                             |                                        | (1,266.5 | )                                           |               |   | - |   |   |   |   | - |   |
| Earnings      from Equity Investments5                |                                        | 13.6     |                                        |               |   | 10.2 |   |   |   |   | 12.4 |   |
| Interest      Income and Other Income (Expense), Net6 |                                        | 2.2      |                                        |               |   | 3.5 |   |   |   |   | 4.7 |   |
| Income      Tax Expense                               |                                        | (0.9     | )                                           |               |   | (7.3 | ) |   |   |   | (7.5 | ) |
| Segment      Earnings (Loss) Before DD&A          | $                                           | (859.3   | )                                           |               | $ | 174.4 |   |   |   | $ | 224.4 |   |
|                                             |                                        |     |                                        |               |   |   |   |   |   |   |   |   |
| Operating Statistics(MMBbl)                           |                                        |     |                                        |               |   |   |   |   |   |   |   |   |
| Gasoline                                              |                                        | 299.5    |                                        |               |   | 149.2 |   |   |   |   | 182.8 |   |
| Diesel      Fuel                                      |                                        | 120.2    |                                        |               |   | 55.6 |   |   |   |   | 66.6 |   |
| Jet      Fuel                                         |                                        | 89.2     |                                        |               |   | 42.7 |   |   |   |   | 51.3 |   |
| Total      Refined Product Volumes                    |                                        | 508.9    |                                        |               |   | 247.5 |   |   |   |   | 300.7 |   |
| Natural      Gas Liquids                              |                                        | 18.7     |                                        |               |   | 9.1 |   |   |   |   | 13.7 |   |
| Total      Delivery Volumes7                          |                                        | 527.6    |                                        |               |   | 256.6 |   |   |   |   | 314.4 |   |

----

| 1 | Three      and nine months ended September 30, 2008 amounts include a $5.1 million      negative impact to revenues from the proposed settlement of certain      litigation matters related to Kinder Morgan Energy Partners’ Pacific      operations’ East Linepipeline. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Three      and nine months ended September 30, 2008 amounts include $4.2 million in      expense from the proposed settlement of certain litigation matters related      to Kinder Morgan Energy Partners’ Pacific operations’ East Line pipeline,      and  $0.1 million expense related to hurricane clean-up and      repair activities. Nine months ended September 30, 2008 amount includes a      $3.0 million positive impact to expense related to Kinder Morgan Energy      Partners’ Pacific operations and a $3.0 million negative impact to expense      related to Kinder Morgan Energy Partners’ Calnev Pipeline associated with      legal liability adjustments. Four months ended September 30, 2007 amount      includes a $15.0 million expense for a litigation settlement reached with      Contra Costa County, California, and a $3.2 million expense from the      settlement of certain litigation matters related to Kinder Morgan Energy      Partners’ West Coast refined products terminal operations. Five months      ended May 31, 2007 amount includes an expense of $2.2 million associated      with environmental liabilityadjustments. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Three      and nine months ended September 30, 2008 amounts include a $0.3 million      negative impact to segment earnings resulting from valuation adjustments      related to assets sold in September 2008 and four months ended September      30, 2007 amount includes a $1.8 million charge to segment earnings      resulting from valuation adjustments related to assets sold in June 2007;      both were recorded in the application of the purchase method of accounting      to the Going Private transaction. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Three      and nine months ended September 30, 2008 include non-cash goodwill      impairment charges of $152.6 million and $1,266.5 million, respectively;      see Note 3 of the accompanying Notes to Consolidated Financial      Statements. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5 | Three      and nine months ended September 30, 2008 amounts include an expense of      $0.1 million reflecting Kinder Morgan Energy Partners’ portion of      Plantation Pipe Line Company’s expenses related to hurricane clean-up and      repair activities. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6 | Three      and nine month 2008 amounts include charges to income of $0.7 million and      $1.4 million, respectively, resulting from unrealized foreign currency      losses on long-term debt transactions. Three and four months ended      September 30, 2007 amounts include income of $0.9 million and $1.7      million, respectively, resulting from unrealized foreign currency gains on      long-term debt transactions. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7 | Includes      Pacific, Plantation, Calnev, Central Florida, Cochin and Cypress pipeline      volumes. |
|---|-------------------------------------------------------------------------------------------------------|

|                                    | EBDAIncrease/(Decrease)                |   | RevenuesIncrease/(Decrease) |
|-----------------------------------------|----------------------------------------|--------|-----------------------------|
|                                    | (In      millions, except percentages) |
| Pacific      Operations                 | $                                      | (9.2   | )                           |   | (13 | )% |   | $ | (2.3 | ) |   | (2 | ) |
| Cochin      Pipeline System             |                                   | (1.0   | )                           |   | (10 | )% |   |   | (3.5 | ) |   | (21 | )% |
| Southeast      Terminals                |                                   | 3.9    |                        |   | 34 | % |   |   | 8.8 |   |   | 55 | % |
| West      Coast Terminals               |                                   | 2.3    |                        |   | 20 | % |   |   | 2.7 |   |   | 15 | % |
| Central      Florida Pipeline           |                                   | 1.1    |                        |   | 11 | % |   |   | 1.6 |   |   | 14 | % |
| All      Other (Including Eliminations) |                                   | (0.7   | )                           |   | (2 | )% |   |   | 0.7 |   |   | 2 | % |
| Total      Products Pipelines           | $                                      | (3.6   | )                           |   | (3 | )% |   | $ | 8.0 |   |   | 4 | % |

----

|                                        | Successor      Company                      |               |                                        | PredecessorCompany |
|---------------------------------------------|---------------------------------------------|--------------------|---------------------------------------------|--------------------|
|                                        | Nine      MonthsEndedSeptember      30,2008 |               | Four      MonthsEndedSeptember      30,2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                        |                                        | (In      millions) |                                        |               | (In      millions) |
| Pacific      Operation                      | $                                           | 182.4              |                                        |               | $ | 90.2 |   |   |   | $ | 105.1 |   |
| Cochin      Pipeline System                 |                                        | 24.7               |                                        |               |   | 15.4 |   |   |   |   | 15.3 |   |
| Southeast      Terminals                    |                                        | 38.8               |                                        |               |   | 14.9 |   |   |   |   | 16.6 |   |
| West      Coast Terminals                   |                                        | 36.9               |                                        |               |   | (0.2 | ) |   |   |   | 19.3 |   |
| Central      Florida Pipeline               |                                        | 31.9               |                                        |               |   | 12.6 |   |   |   |   | 15.3 |   |
| Goodwill      Impairment Charge             |                                        | (1,266.5           | )                                           |               |   | - |   |   |   |   | - |   |
| All      Other (Including Eliminations)     |                                        | 92.5               |                                        |               |   | 41.5 |   |   |   |   | 52.8 |   |
| Total      Segment Earnings Before DD&A | $                                           | (859.3             | )                                           |               | $ | 174.4 |   |   |   | $ | 224.4 |   |

|                                    | Successor      Company                      |               |                                        | PredecessorCompany |
|-----------------------------------------|---------------------------------------------|--------------------|---------------------------------------------|--------------------|
|                                    | Nine      MonthsEndedSeptember      30,2008 |               | Four      MonthsEndedSeptember      30,2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                    |                                        | (In      millions) |                                        |               | (In      millions) |
| Pacific      Operation                  | $                                           | 281.5              |                                        |               | $ | 130.2 |   |   |   | $ | 156.0 |   |
| Cochin      Pipeline System             |                                        | 38.7               |                                        |               |   | 22.4 |   |   |   |   | 32.3 |   |
| Southeast      Terminals                |                                        | 63.0               |                                        |               |   | 22.3 |   |   |   |   | 29.9 |   |
| West      Coast Terminals               |                                        | 57.0               |                                        |               |   | 24.1 |   |   |   |   | 29.1 |   |
| Central      Florida Pipeline           |                                        | 38.8               |                                        |               |   | 15.5 |   |   |   |   | 19.3 |   |
| All      Other (Including Eliminations) |                                        | 123.5              |                                        |               |   | 55.0 |   |   |   |   | 65.1 |   |
| Total      Segment Operating Revenues   | $                                           | 602.5              |                                        |               | $ | 269.5 |   |   |   | $ | 331.7 |   |

----

|                                       | Successor      Company                    |
|--------------------------------------------|-------------------------------------------|
|                                       | Three      Months EndedSeptember      30, |
|                                       | 2008                                      |   | 2007 |
|                                       | (In      millions)                        |
| Operating      Revenues                    | $                                         | 2,359.4 |   |   | $ | 1,526.8 |   |
| Operating      Expenses1                   |                                      | (2,203.3 | ) |   |   | (1,387.5 | ) |
| Other      Income                          |                                      | 0.1 |   |   |   | 0.4 |   |
| Goodwill      Impairment3                  |                                      | 152.6 |   |   |   | - |   |
| Earnings      from Equity Investments      |                                      | 25.5 |   |   |   | 4.0 |   |
| Interest      Income and Other Income, Net |                                      | 3.9 |   |   |   | - |   |
| Income      Tax Benefit (Expense)          |                                      | (0.6 | ) |   |   | (1.4 | ) |
| Segment      Earnings Before DD&A      | $                                         | 337.6 |   |   | $ | 142.3 |   |
|                                  |                                      |   |   |   |   |   |   |
| Operating      Statistics (Trillion Btus)  |                                      |   |   |   |   |   |   |
| Natural      Gas Transport Volumes 5       |                                      | 559.0 |   |   |   | 441.7 |   |
| Natural      Gas Sales Volumes 6           |                                      | 220.0 |   |   |   | 224.4 |   |

----

|                                         | Successor      Company                      |               |                                        | PredecessorCompany |
|----------------------------------------------|---------------------------------------------|--------------------|---------------------------------------------|--------------------|
|                                         | Nine      MonthsEndedSeptember      30,2008 |               | Four      MonthsEndedSeptember      30,2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                         |                                        | (In      millions) |                                        |               | (In      millions) |
| Operating      Revenues                      | $                                           | 6,916.6            |                                        |               | $ | 2,114.7 |   |   |   | $ | 2,640.6 |   |
| Operating      Expenses1                     |                                        | (6,463.5           | )                                           |               |   | (1,929.7 | ) |   |   |   | (2,418.5 | ) |
| Other      Income (Expense)2                 |                                        | 2.8                |                                        |               |   | 1.8 |   |   |   |   | (0.1 | ) |
| Goodwill      Impairment3                    |                                        | (2,090.2           | )                                           |               |   | - |   |   |   |   | - |   |
| Earnings      from Equity Investments4       |                                        | 80.4               |                                        |               |   | 5.3 |   |   |   |   | 8.9 |   |
| Interest      Income and Other Income, Net   |                                        | 8.8                |                                        |               |   | - |   |   |   |   | 0.2 |   |
| Income      Tax Benefit (Expense)            |                                        | (1.8               | )                                           |               |   | - |   |   |   |   | (2.6 | ) |
| Segment      Earnings (Loss) Before DD&A | $                                           | (1,546.9           | )                                           |               | $ | 192.1 |   |   |   | $ | 228.5 |   |
|                                    |                                        |               |                                        |               |   |   |   |   |   |   |   |   |
| Operating      Statistics (Trillion Btus)    |                                        |               |                                        |               |   |   |   |   |   |   |   |   |
| Natural      Gas Transport Volumes5          |                                        | 1,599.5            |                                        |               |   | 568.8 |   |   |   |   | 707.4 |   |
| Natural      Gas Sales Volumes6              |                                        | 660.0              |                                        |               |   | 295.2 |   |   |   |   | 345.8 |   |

| 1 | Three      and nine month 2008 amounts include (i) a $12.2 million positive impact to      income and a $0.9 million negative impact to income, respectively,      resulting from unrealized mark to market gains and losses due to the      discontinuance of hedge accounting at Casper Douglas; and (ii) a $4.4      million expense related to hurricane clean-up and repair activities.      Beginning in the second quarter of 2008, the Casper and Douglas gas      processing operations discontinued hedge accounting. Amount also includes      positive impact to segment earnings of $0.5 million for the nine month      periods ended September 30, 2008, and of $0.3 million and $0.7 million for      the three and four month periods ended September 30, 2007, respectively,      resulting from valuation adjustments related to derivative contracts in      place at the time of the Going Private transaction and recorded in the      application of the purchase method of  accounting. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Four      months ended September 30, 2007 amounts include a $1.4 million expense      resulting from valuation adjustments, related to assets sold in June 2007,      recorded in the application of the purchase method of accounting to the      Going Private transaction. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Three      and nine months ended September 30, 2008 include non-cash goodwill      impairment adjustments of $152.6 million and $2,090.2 million,      respectively; see Note 3 of the accompanying Notes to Consolidated      Financial Statements. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Five      months ended May 31, 2007 amount includes an expense of $1.0 million      reflecting Kinder Morgan Energy Partners’ portion of a loss from the early      extinguishment of debt by Red Cedar Gathering  Company. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5 | Includes      Kinder Morgan Interstate Gas Transmission LLC, Trailblazer Pipeline      Company LLC, TransColorado Gas Transmission Company LLC, Rockies Express      Pipeline LLC, and Texas intrastate natural gas pipeline group pipeline      volumes. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6 | Represents      Texas intrastate natural gas pipeline group  volumes. |
|---|-----------------------------------------------------------------------|

|                                             | EBDAIncrease/(Decrease)                |   | RevenuesIncrease/(Decrease) |
|--------------------------------------------------|----------------------------------------|--------|-----------------------------|
|                                             | (In      millions, except percentages) |
| Rockies      Express Pipeline                    | $                                      | 23.0   |                        |   | 568 | % |   | $ | n/a |   |   | n/a |   |
| Texas      Intrastate Natural Gas Pipeline Group |                                   | 13.6   |                        |   | 18 | % |   |   | 834.7 |   |   | 59 | % |
| TransColorado      Pipeline                      |                                   | 3.1    |                        |   | 28 | % |   |   | 2.9 |   |   | 23 | % |
| Kinder      Morgan Louisiana Pipeline            |                                   | 3.0    |                        |   | n/a |   |   |   | - |   |   | - |   |
| Casper      and Douglas Gas Processing           |                                   | (3.0   | )                           |   | (48 | )% |   |   | 3.9 |   |   | 14 | % |
| Trailblazer      Pipeline                        |                                   | (2.7   | )                           |   | 20 | % |   |   | (1.1 | ) |   | (7 | ) |
| All      Others                                  |                                   | (1.8   | )                           |   | (5 | )% |   |   | (7.9 | ) |   | (13 | )% |
| Intrasegment      Eliminations                   |                                   | -      |                        |   | - |   |   |   | 0.1 |   |   | 27 | % |
| Total      Natural Gas Pipelines                 | $                                      | 35.2   |                        |   | 25 | % |   | $ | 832.6 |   |   | 55 | % |

----

----

|                                             | Successor      Company                      |               |                                        | PredecessorCompany |
|--------------------------------------------------|---------------------------------------------|--------------------|---------------------------------------------|--------------------|
|                                             | Nine      MonthsEndedSeptember      30,2008 |               | Four      MonthsEndedSeptember      30,2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                             |                                        | (In      millions) |                                        |               | (In      millions) |
| Rockies      Express Pipeline                    | $                                           | 58.7               |                                        |               | $ | (5.4 | ) |   |   | $ | (4.3 | ) |
| Texas      Intrastate Natural Gas Pipeline Group |                                        | 288.0              |                                        |               |   | 106.0 |   |   |   |   | 133.0 |   |
| TransColorado      Pipeline                      |                                        | 41.6               |                                        |               |   | 14.5 |   |   |   |   | 17.9 |   |
| Kinder      Morgan Louisiana Pipeline            |                                        | 6.0                |                                        |               |   | - |   |   |   |   | - |   |
| Casper      and Douglas Gas Processing           |                                        | 8.9                |                                        |               |   | 10.2 |   |   |   |   | 7.3 |   |
| Trailblazer      Pipeline                        |                                        | 34.5               |                                        |               |   | 18.0 |   |   |   |   | 18.1 |   |
| Goodwill      Impairment Charge                  |                                        | (2,090.2           | )                                           |               |   | - |   |   |   |   | - |   |
| All      Others                                  |                                        | 105.6              |                                        |               |   | 48.8 |   |   |   |   | 56.5 |   |
| Total      Segment Earnings Before DD&A      | $                                           | (1,546.9           | )                                           |               | $ | 192.1 |   |   |   | $ | 228.5 |   |

|                                             | Successor      Company                      |               |                                        | PredecessorCompany |
|--------------------------------------------------|---------------------------------------------|--------------------|---------------------------------------------|--------------------|
|                                             | Nine      MonthsEndedSeptember      30,2008 |               | Four      MonthsEndedSeptember      30,2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                             |                                        | (In      millions) |                                        |               | (In      millions) |
| Texas      Intrastate Natural Gas Pipeline Group | $                                           | 6,575.5            |                                        |               | $ | 1,964.2 |   |   |   | $ | 2,492.4 |   |
| TransColorado      Pipeline                      |                                        | 47.5               |                                        |               |   | 17.1 |   |   |   |   | 20.7 |   |
| Casper      and Douglas Gas Processing           |                                        | 111.4              |                                        |               |   | 35.9 |   |   |   |   | 34.7 |   |
| Trailblazer      Pipeline                        |                                        | 42.5               |                                        |               |   | 21.5 |   |   |   |   | 22.6 |   |
| All      Others                                  |                                        | 143.0              |                                        |               |   | 76.5 |   |   |   |   | 70.7 |   |
| Eliminations                                     |                                        | (3.3               | )                                           |               |   | (0.5 | ) |   |   |   | (0.5 | ) |
| Total      Segment Operating Revenues            | $                                           | 6,916.6            |                                        |               | $ | 2,114.7 |   |   |   | $ | 2,640.6 |   |

----

|                                                                      | Successor      Company                    |
|---------------------------------------------------------------------------|-------------------------------------------|
|                                                                      | Three      Months EndedSeptember      30, |
|                                                                      | 2008                                      |   | 2007 |
|                                                                      | (In      millions)                        |
| Operating      Revenues1                                                  | $                                         | 339.6 |   |   | $ | 256.8 |   |
| Operating      Expenses                                                   |                                      | (105.4 | ) |   |   | (75.8 | ) |
| Earnings      from Equity Investments                                     |                                      | 4.2 |   |   |   | 4.1 |   |
| Other      Income, Net                                                    |                                      | - |   |   |   | - |   |
| Income      Tax Benefit (Expense)                                         |                                      | (0.7 | ) |   |   | (0.9 | ) |
| Segment      Earnings Before DD&A                                     | $                                         | 237.7 |   |   | $ | 184.2 |   |
|                                                                 |                                      |   |   |   |   |   |   |
| Operating      Statistics                                                 |                                      |   |   |   |   |   |   |
| Carbon      Dioxide Delivery Volumes(Bcf)2                                |                                      | 171.3 |   |   |   | 150.4 |   |
| SACROC      Oil Production (Gross)(MBbl/d)3                               |                                      | 27.9 |   |   |   | 27.3 |   |
| SACROC      Oil Production (Net)(MBbl/d)4                                 |                                      | 23.3 |   |   |   | 22.8 |   |
| Yates      Oil Production (Gross)(MBbl/d)5                                |                                      | 27.1 |   |   |   | 27.1 |   |
| Yates      Oil Production (Net)(MBbl/d)4                                  |                                      | 12.0 |   |   |   | 12.0 |   |
| Natural      Gas Liquids Sales Volumes (Net)(MBbl/d)4                     |                                      | 7.6 |   |   |   | 10.0 |   |
| Realized      Weighted Average Oil Price per Bbl5,      6                 | $                                         | 51.45 |   |   | $ | 36.77 |   |
| Realized      Weighted Average Natural Gas Liquids Price per Bbl6,      7 | $                                         | 77.97 |   |   | $ | 53.68 |   |

----

|                                                                      | Successor      Company                      |               |                                        | PredecessorCompany |
|---------------------------------------------------------------------------|---------------------------------------------|--------------------|---------------------------------------------|--------------------|
|                                                                      | Nine      MonthsEndedSeptember      30,2008 |               | Four      MonthsEndedSeptember      30,2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                                                      |                                        | (In      millions) |                                        |               | (In      millions) |
| Operating      Revenues1                                                  | $                                           | 1,002.1            |                                        |               | $ | 336.6 |   |   |   | $ | 324.2 |   |
| Operating      Expenses                                                   |                                        | (292.7             | )                                           |               |   | (101.1 | ) |   |   |   | (121.5 | ) |
| Earnings      from Equity Investments                                     |                                        | 15.3               |                                        |               |   | 5.6 |   |   |   |   | 8.7 |   |
| Other      Income (Expense), Net                                          |                                        | (0.2               | )                                           |               |   | 0.1 |   |   |   |   | (0.1 | ) |
| Income      Tax Benefit (Expense)                                         |                                        | (2.9               | )                                           |               |   | 0.2 |   |   |   |   | (1.3 | ) |
| Segment      Earnings Before DD&A                                     | $                                           | 721.6              |                                        |               | $ | 241.4 |   |   |   | $ | 210.0 |   |
|                                                                 |                                        |               |                                        |               |   |   |   |   |   |   |   |   |
| Operating      Statistics                                                 |                                        |               |                                        |               |   |   |   |   |   |   |   |   |
| Carbon      Dioxide Delivery Volumes(Bcf)2                                |                                        | 530.1              |                                        |               |   | 200.3 |   |   |   |   | 272.3 |   |
| SACROC      Oil Production (Gross)(MBbl/d)3                               |                                        | 27.6               |                                        |               |   | 27.5 |   |   |   |   | 29.1 |   |
| SACROC      Oil Production (Net)(MBbl/d)4                                 |                                        | 23.0               |                                        |               |   | 22.9 |   |   |   |   | 24.2 |   |
| Yates      Oil Production (Gross)(MBbl/d)3                                |                                        | 27.9               |                                        |               |   | 27.4 |   |   |   |   | 26.4 |   |
| Yates      Oil Production (Net)(MBbl/d)4                                  |                                        | 12.4               |                                        |               |   | 12.0 |   |   |   |   | 11.7 |   |
| Natural      Gas Liquids Sales Volumes (Net)(MBbl/d)4                     |                                        | 8.7                |                                        |               |   | 10.0 |   |   |   |   | 9.7 |   |
| Realized      Weighted Average Oil Price per Bbl5,      6                 | $                                           | 51.50              |                                        |               | $ | 36.25 |   |   |   | $ | 35.03 |   |
| Realized      Weighted Average Natural Gas Liquids Price per Bbl6,      7 | $                                           | 73.37              |                                        |               | $ | 53.02 |   |   |   | $ | 45.04 |   |

| 1 | Amounts      include increases in segment earnings resulting from valuation adjustments      of $34.5 million and $102.0 million for the three and nine month periods      ended September 30, 2008, respectively, and $46.2 million and $59.1      million (net of a $0.6 million loss on sale of assets) for the three and      four month periods ended September 30, 2007, respectively, primarily      related to derivative contracts in place at the time of the Going Private      transaction and recorded in the application of the purchase method of      accounting. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Includes      Cortez, Central Basin, Canyon Reef Carriers, Centerline and Pecos pipeline      volumes. |
|---|--------------------------------------------------------------------------------------------------------|

| 3 | Represents      100% of the production from the field. Kinder Morgan Energy Partners owns      an approximately 97% working interest in the SACROC unit and an      approximately 50% working interest in the Yates  unit. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Net      to Kinder Morgan Energy Partners, after royalties and outside working      interests. |
|---|------------------------------------------------------------------------------------------------|

| 5 | Includes      all of Kinder Morgan Energy Partners’ crude oil production      properties. |
|---|-------------------------------------------------------------------------------------------------|

| 6 | Hedge      gains/losses for crude oil and natural gas liquids are included with crude      oil. |
|---|-------------------------------------------------------------------------------------------------|

| 7 | Includes      production attributable to leasehold ownership and production attributable      to Kinder Morgan Energy Partners’ ownership in processing plants and third      party processing agreements. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                     | EBDAIncrease/(Decrease)                |   | RevenuesIncrease/(Decrease) |
|------------------------------------------|----------------------------------------|--------|-----------------------------|
|                                     | (In      millions, except percentages) |
| Sales      and Transportation Activities | $                                      | 39.6   |                        |   | 94 | % |   | $ | 47.8 |   |   | 105 | % |
| Oil      and Gas Producing Activities    |                                   | 25.7   |                        |   | 27 | % |   |   | 56.9 |   |   | 32 | % |
| Intrasegment      Eliminations           |                                   | -      |                        |   | - |   |   |   | (10.1 | ) |   | (88 | )% |
| Total                                    | $                                      | 65.3   |                        |   | 47 | % |   | $ | 94.6 |   |   | 45 | % |

----

----

|                                        | Successor      Company                      |               |                                        | PredecessorCompany |
|---------------------------------------------|---------------------------------------------|--------------------|---------------------------------------------|--------------------|
|                                        | Nine      MonthsEndedSeptember      30,2008 |               | Four      MonthsEndedSeptember      30,2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                        |                                        | (In      millions) |                                        |               | (In      millions) |
| Sales      and Transportation Activities    | $                                           | 323.8              |                                        |               | $ | 117.1 |   |   |   | $ | 67.2 |   |
| Oil      and Gas Producing Activities       |                                        | 397.8              |                                        |               |   | 124.3 |   |   |   |   | 142.8 |   |
| Total      Segment Earnings Before DD&A | $                                           | 721.6              |                                        |               | $ | 241.4 |   |   |   | $ | 210.0 |   |

|                                     | Successor      Company                      |               |                                        | PredecessorCompany |
|------------------------------------------|---------------------------------------------|--------------------|---------------------------------------------|--------------------|
|                                     | Nine      MonthsEndedSeptember      30,2008 |               | Four      MonthsEndedSeptember      30,2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                     |                                        | (In      millions) |                                        |               | (In      millions) |
| Sales      and Transportation Activities | $                                           | 347.4              |                                        |               | $ | 120.0 |   |   |   | $ | 71.3 |   |
| Oil      and Gas Producing Activities    |                                        | 714.3              |                                        |               |   | 231.4 |   |   |   |   | 271.7 |   |
| Intersegment      Eliminations           |                                        | (59.6              | )                                           |               |   | (14.8 | ) |   |   |   | (18.8 | ) |
| Total      Segment Operating Revenues    | $                                           | 1,002.1            |                                        |               | $ | 336.6 |   |   |   | $ | 324.2 |   |

----

|                                                 | Successor      Company                    |
|------------------------------------------------------|-------------------------------------------|
|                                                 | Three      Months EndedSeptember      30, |
|                                                 | 2008                                      |   | 2007 |
|                                                 | (In      millions)                        |
| Operating      Revenues                              | $                                         | 306.2 |   |   | $ | 247.2 |   |
| Operating      Expenses1                             |                                      | (175.0 | ) |   |   | (158.0 | ) |
| Other      Income (Expense)2                         |                                      | (6.9 | ) |   |   | 1.5 |   |
| Earnings      from Equity Investments                |                                      | 0.7 |   |   |   | 0.3 |   |
| Interest      Income and Other Income (Expense), Net |                                      | (1.3 | ) |   |   | 0.3 |   |
| Income      Tax Expense4                             |                                      | (6.4 | ) |   |   | (6.9 | ) |
| Segment      Earnings Before DD&A                | $                                         | 117.3 |   |   | $ | 84.4 |   |
|                                            |                                      |   |   |   |   |   |   |
| Operating      Statistics                            |                                      |   |   |   |   |   |   |
| Bulk      Transload Tonnage (MMtons)5                |                                      | 26.8 |   |   |   | 24.5 |   |
| Liquids      Leaseable Capacity (MMBbl)              |                                      | 54.2 |   |   |   | 46.3 |   |
| Liquids      Utilization                             |                                      | 98.2 | % |   |   | 96.5 | % |

|                                                 | Successor      Company                      |   |                                        | PredecessorCompany |
|------------------------------------------------------|---------------------------------------------|--------|---------------------------------------------|--------------------|
|                                                 | Nine      MonthsEndedSeptember      30,2008 |   | Four      MonthsEndedSeptember      30,2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                                 | (In      millions)                          |   |                                        | (In      millions) |
| Operating      Revenues                              | $                                           | 887.1  |                                        |               |   | $ | 326.8 |   |   |   | $ | 364.5 |   |
| Operating      Expenses1                             |                                        | (483.9 | )                                           |               |   |   | (198.7 | ) |   |   |   | (192.2 | ) |
| Other      Income (Expense)2                         |                                        | (6.5   | )                                           |               |   |   | 2.9 |   |   |   |   | 3.0 |   |
| Goodwill      Impairment3                            |                                        | (676.6 | )                                           |               |   |   | - |   |   |   |   | - |   |
| Earnings      from Equity Investments                |                                        | 2.4    |                                        |               |   |   | 0.3 |   |   |   |   | - |   |
| Interest      Income and Other Income (Expense), Net |                                        | 1.4    |                                        |               |   |   | - |   |   |   |   | 0.3 |   |
| Income      Tax Expense4                             |                                        | (17.1  | )                                           |               |   |   | (8.6 | ) |   |   |   | (3.3 | ) |
| Segment      Earnings (Loss) Before DD&A         | $                                           | (293.2 | )                                           |               |   | $ | 122.7 |   |   |   | $ | 172.3 |   |
|                                            |                                        |   |                                        |               |   |   |   |   |   |   |   |   |   |
| Operating      Statistics                            |                                        |   |                                        |               |   |   |   |   |   |   |   |   |   |
| Bulk      Transload Tonnage (MMtons)5                |                                        | 76.5   |                                        |               |   |   | 31.3 |   |   |   |   | 41.4 |   |
| Liquids      Leaseable Capacity (MMBbl)              |                                        | 54.2   |                                        |               |   |   | 46.3 |   |   |   |   | 43.6 |   |
| Liquids      Utilization                             |                                        | 98.2   | %                                           |               |   |   | 96.5 | % |   |   |   | 97.5 | % |

| 1 | Three      and nine month 2008 amounts include $3.6 million of expense related to      hurricane clean-up and repair activities, a $1.5 million expense related      to fire damage and repair activities, and a combined $1.5 million expense      from the settlement |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | of      certain litigation matters related to Kinder Morgan Energy Partners’      Elizabeth River bulk terminal and its Staten Island liquids terminal.      Three and four month 2007 amounts include $25.0 million in expense from      the settlement of certain litigation matters related to the Cora coal      terminal. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Three      and nine month 2008 amounts include losses of $5.3 million from asset      write-offs related to fire damage, and losses of $0.8 million from asset      write-offs related to hurricane damage. Both the three and nine months      ended September 30, 2008 amounts include expenses of $2.9 million      resulting from valuation adjustments related to assets sold, recorded in      the application of the purchase method of accounting. The five months      ended May 31, 2007 amount includes income of $1.8 million from property      casualty gains associated with the 2005 hurricane  season. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | 2008      amounts include a non-cash goodwill impairment charge; see Note 3 of the      accompanying Notes to Consolidated Financial  Statements. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Three      and nine month 2008 amounts include a decrease of $0.4 million of expenses      related to hurricane clean-up and repair  activities. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------|

| 5 | Volumes      for acquired terminals are included for all  periods. |
|---|--------------------------------------------------------------------|

----

----

|                                       | Successor      Company                    |
|--------------------------------------------|-------------------------------------------|
|                                       | Three      Months EndedSeptember      30, |
|                                       | 2008                                      |   | 2007 |
|                                       | (In      millions)                        |
| Operating      Revenues                    | $                                         | 57.2 |   |   | $ | 44.6 |   |
| Operating      Expenses                    |                                      | (18.6 | ) |   |   | (19.9 | ) |
| Earnings      from Equity Investment       |                                      | 3.4 |   |   |   | 8.6 |   |
| Interest      Income and Other Income, Net |                                      | 3.5 |   |   |   | 2.9 |   |
| Income      Tax Benefit (Expense)          |                                      | (1.0 | ) |   |   | (5.2 | ) |
| Segment      Earnings Before DD&A      | $                                         | 44.5 |   |   | $ | 31.0 |   |
|                                  |                                      |   |   |   |   |   |   |
| Operating      Statistics                  |                                      |   |   |   |   |   |   |
| Transport      Volumes (MMBbl)             |                                      | 22.6 |   |   |   | 25.3 |   |

|                                         | Successor      Company                      |   |                                        | PredecessorCompany |
|----------------------------------------------|---------------------------------------------|--------|---------------------------------------------|--------------------|
|                                         | Nine      MonthsEndedSeptember      30,2008 |   | Four      MonthsEndedSeptember      30,2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                         | (In      millions)                          |   |                                        | (In      millions) |
| Operating      Revenues                      | $                                           | 145.4  |                                        |               |   | $ | 59.1 |   |   |   | $ | 62.0 |   |
| Operating      Expenses                      |                                        | (51.3  | )                                           |               |   |   | (24.9 | ) |   |   |   | (23.1 | ) |
| Other      Income (Expense)      1           |                                        | -      |                                        |               |   |   | - |   |   |   |   | (377.1 | ) |
| Earnings      from Equity Investments        |                                        | 7.7    |                                        |               |   |   | 11.3 |   |   |   |   | 5.4 |   |
| Interest      Income and Other Income, Net   |                                        | 9.6    |                                        |               |   |   | 2.3 |   |   |   |   | 1.7 |   |
| Income      Tax Benefit (Expense)            |                                        | 2.6    |                                        |               |   |   | (5.1 | ) |   |   |   | (0.9 | ) |
| Segment      Earnings (Loss) Before DD&A | $                                           | 114.0  |                                        |               |   | $ | 42.7 |   |   |   | $ | (332.0 | ) |
|                                    |                                        |   |                                        |               |   |   |   |   |   |   |   |   |   |
| Operating      Statistics                    |                                        |   |                                        |               |   |   |   |   |   |   |   |   |   |
| Transport      Volumes (MMBbl)               |                                        | 63.5   |                                        |               |   |   | 33.7 |   |   |   |   | 36.4 |   |

| 1 | Five      month period 2007 amount represents a goodwill impairment expense, see      Note 3 of the accompanying Notes to Consolidated Financial      Statements. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                  | Successor      Company                    |
|-----------------------------------------------------------------------|-------------------------------------------|
|                                                                  | Three      Months EndedSeptember      30, |
|                                                                  | 2008                                      |   | 2007 |
|                                                                  | (In      millions)                        |
| Knight      Inc. General and Administrative Expense                   | $                                         | 11.5 |   |   | $ | 16.0 |   |
| Kinder      Morgan Energy Partners General and Administrative Expense |                                      | 74.4 |   |   |   | 61.9 |   |
| Consolidated      General and Administrative Expense                  | $                                         | 85.9 |   |   | $ | 77.9 |   |

|                                                                  | Successor      Company                       |   |                                         | PredecessorCompany |
|-----------------------------------------------------------------------|----------------------------------------------|--------|----------------------------------------------|--------------------|
|                                                                  | Nine      MonthsEndedSeptember      30, 2008 |   | Four      MonthsEndedSeptember      30, 2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                                                  | (In      millions)                           |   |                                         | (In      millions) |
| Knight      Inc. General and Administrative Expense                   | $                                            | 40.1   |                                         |               | $ | 21.3 |   |   |   |   | 138.6 |   |
| Kinder      Morgan Energy Partners General and Administrative Expense |                                         | 223.9  |                                         |               |   | 86.6 |   |   |   |   | 136.2 |   |
| Terasen      General and Administrative Expense                       |                                         | -      |                                         |               |   | - |   |   |   |   | 8.8 |   |
| Consolidated      General and Administrative Expense                  | $                                            | 264.0  |                                         |               | $ | 107.9 |   |   |   |   | 283.6 |   |

----

|                                                         | Successor      Company                    |
|--------------------------------------------------------------|-------------------------------------------|
|                                                         | Three      Months EndedSeptember      30, |
|                                                         | 2008                                      |   | 2007 |
|                                                         | (In      millions)                        |
| Interest      Expense and Other, Net                         |                                      |   |   |   |   |   |   |
| Interest      Expense, Net                                   | $                                         | (141.5 | ) |   | $ | (252.6 | ) |
| Interest      Expense – Deferrable Interest Debentures |                                      | (0.5 | ) |   |   | (5.4 | ) |
| Other,      Net                                              |                                      | 2.4 |   |   |   | 5.5 |   |
| Consolidated      Interest Expense and Other, Net            |                                      | (139.6 | ) |   |   | (252.5 | ) |
|                                                         |                                      |   |   |   |   |   |   |
| Minority      Interest                                       |                                      |   |   |   |   |   |   |
| Kinder      Morgan Management                                |                                      | (19.5 | ) |   |   | (10.0 | ) |
| Kinder      Morgan Energy Partners                           |                                      | (78.5 | ) |   |   | (34.5 | ) |
| Triton                                                       |                                      | (9.3 | ) |   |   | (7.7 | ) |
| Other                                                        |                                      | 0.5 |   |   |   | (0.2 | ) |
| Consolidated      Minority Interests Expense                 |                                      | (106.8 | ) |   |   | (52.4 | ) |
|                                                         |                                      |   |   |   |   |   |   |
|                                                         | $                                         | (246.4 | ) |   | $ | (304.9 | ) |

----

|                                                         | Successor      Company                       |   |                                         | PredecessorCompany |
|--------------------------------------------------------------|----------------------------------------------|--------|----------------------------------------------|--------------------|
|                                                         | Nine      MonthsEndedSeptember      30, 2008 |   | Four      MonthsEndedSeptember      30, 2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                                         | (In      millions)                           |   |                                         | (In      millions) |
| Interest      Expense                                        |                                         |   |                                         |               |   |   |   |   |   |   |   |   |
| Interest      Expense, Net                                   | $                                            | (493.8 | )                                            |               | $ | (336.1 | ) |   |   | $ | (241.1 | ) |
| Interest      Expense – Deferrable Interest Debentures |                                         | 5.6    |                                         |               |   | (7.3 | ) |   |   |   | (9.1 | ) |
| Other,      Net                                              |                                         | 10.9   |                                         |               |   | 10.7 |   |   |   |   | (7.3 | ) |
| Consolidated      Interest Expense                           |                                         | (477.3 | )                                            |               |   | (332.7 | ) |   |   |   | (257.5 | ) |
|                                                         |                                         |   |                                         |               |   |   |   |   |   |   |   |   |
| Minority      Interest                                       |                                         |   |                                         |               |   |   |   |   |   |   |   |   |
| Kinder      Morgan Management                                |                                         | (72.2  | )                                            |               |   | (16.3 | ) |   |   |   | (17.1 | ) |
| Kinder      Morgan Energy Partners                           |                                         | (271.8 | )                                            |               |   | (58.0 | ) |   |   |   | (75.1 | ) |
| Triton                                                       |                                         | (15.0  | )                                            |               |   | (12.0 | ) |   |   |   | 2.3 |   |
| Other                                                        |                                         | (0.4   | )                                            |               |   | (0.6 | ) |   |   |   | (0.8 | ) |
| Consolidated      Minority Interests Expense                 |                                         | (359.4 | )                                            |               |   | (86.9 | ) |   |   |   | (90.7 | ) |
|                                                         |                                         |   |                                         |               |   |   |   |   |   |   |   |   |
|                                                         | $                                            | (836.7 | )                                            |               | $ | (419.6 | ) |   |   | $ | (348.2 | ) |

----

|                         | Significant      Unobservable Inputs (Level 3) |
|------------------------------|------------------------------------------------|
|                         | Assets                                         |   | Liabilities |
|                         | September      30,2008                         |   | December      31,2007 |   | Change |   | September      30,2008 |   | December      31,2007 |   | Change |
|                         | (In      millions)                             |   | (In      millions) |
| Natural      Gas Basis Swaps | $                                              | 4.9 |   |   | $ | 2.8 |   |   | $ | 2.1 |   |   | $ | (7.0 | ) |   | $ | (4.7 | ) |   | $ | (2.3 | ) |
| WTS      Oil Swaps           |                                           | 0.0 |   |   |   | 0.0 |   |   |   | 0.0 |   |   |   | (90.1 | ) |   |   | (94.5 | ) |   |   | 4.4 |   |
| WTI      Options             |                                           | 46.7 |   |   |   | 0.0 |   |   |   | 46.7 |   |   |   | (28.7 | ) |   |   | 0.0 |   |   |   | (28.7 | ) |
| Other                        |                                           | 1.0 |   |   |   | 1.0 |   |   |   | 0.0 |   |   |   | (7.4 | ) |   |   | (4.9 | ) |   |   | (2.5 | ) |
| Total                        | $                                              | 52.6 |   |   | $ | 3.8 |   |   | $ | 48.8 |   |   | $ | (133.2 | ) |   | $ | (104.1 | ) |   | $ | (29.1 | ) |

----

|   | · | Natural      gas basis swaps’ fair market values are obtained through a pricing service      and derived by combining raw inputs from NYMEX with proprietary      quantitative models and processes. Although the prices are originating      from a liquid market (NYMEX), we believe the effort to validate these      prices would not be worth the benefit received. As a result, we have      classified the valuation of these derivatives as Level  3. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Oil      swaps’ fair market values are obtained from a broker using their      proprietary model for similar assets and liabilities; quotes are      non-binding. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Oil      future options’ fair market values are established using an internal      model. Internal models incorporate the use of options pricing and      estimates of the present value of cash flows based upon underlying      contractual terms. The models reflect management’s estimates, taking into      account observable market prices, estimated market prices in the absence      of quoted market prices, the risk-free market discount rate, volatility      factors, estimated correlations of commodity prices and contractual      volumes. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Cash flow from      operations |
|--------|--------|--------------------------------|

|   | · | Credit facility      availability |
|--------|--------|-----------------------------------|

|   | · | Long-term debt and equity      markets |
|--------|--------|----------------------------------------|

----

|   | · | Kinder Morgan Energy Partners      equity infusion |
|--------|--------|----------------------------------------------------|

|   | · | Credit      Ratings |
|--------|--------|---------------------|

----

|                                                                                                                                                                                                                                                | Successor      Company     |                 |                  | Predecessor      Company   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------|----------------------|-----------------------|----------------------------|
|                                                                                                                                                                                                                                                | September      30,2008     |                 | December      31,2007 |                       |   | December      31,2006 |   | December      31,2005 |
|                                                                                                                                                                                                                                                | (Dollars      in millions) |                 |                  | (Dollars      in millions) |
| Long-term      Debt                                                                                                                                                                                                                                 |                       |                 |                  |                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding      Notes and Debentures                                                                                                                                                                                                               | $                          | 10,800.6             |                  |                       | $ | 14,714.6 |   |   |   | $ | 10,623.9 |   |   | $ | 6,286.8 |   |
| Deferrable      Interest Debentures Issued to Subsidiary Trusts                                                                                                                                                                                |                       | 35.7                 |                  |                       |   | 283.1 |   |   |   |   | 283.6 |   |   |   | 283.6 |   |
| Preferred      Interest in General Partner of KMP                                                                                                                                                                                                   |                       | 100.0                |                  |                       |   | 100.0 |   |   |   |   | - |   |   |   | - |   |
| Capital      Securities                                                                                                                                                                                                                             |                       | -                    |                  |                       |   | - |   |   |   |   | 106.9 |   |   |   | 107.2 |   |
| Value      of Interest Rate Swaps                                                                                                                                                                                                                   |                       | 233.8                |                  |                       |   | 199.7 |   |   |   |   | 46.4 |   |   |   | 51.8 |   |
|                                                                                                                                                                                                                                                |                       | 11,170.1             |                  |                       |   | 15,297.4 |   |   |   |   | 11,060.8 |   |   |   | 6,729.4 |   |
| Minority      Interests                                                                                                                                                                                                                             |                       | 3,474.3              |                  |                       |   | 3,314.0 |   |   |   |   | 3,095.5 |   |   |   | 1,247.3 |   |
| Common      Equity, Excluding Accumulated Other Comprehensive Loss                                                                                                                                                                                  |                       | 4,412.7              |                  |                       |   | 8,069.2 |   |   |   |   | 3,657.5 |   |   |   | 4,051.4 |   |
|                                                                                                                                                                                                                                                |                       | 19,057.1             |                  |                       |   | 26,680.6 |   |   |   |   | 17,813.8 |   |   |   | 12,028.1 |   |
| Value      of Interest Rate Swaps                                                                                                                                                                                                                   |                       | (233.8               | )                     |                       |   | (199.7 | ) |   |   |   | (46.4 | ) |   |   | (51.8 | ) |
| Capitalization                                                                                                                                                                                                                                      |                       | 18,823.3             |                  |                       |   | 26,480.9 |   |   |   |   | 17,767.4 |   |   |   | 11,976.3 |   |
| Short-term      Debt, Less Cash and Cash Equivalents1                                                                                                                                                                                               |                       | 433.1                |                  |                       |   | 819.3 |   |   |   |   | 2,046.7 |   |   |   | 841.4 |   |
| Invested      Capital                                                                                                                                                                                                                               | $                          | 19,256.4             |                  |                       | $ | 27,300.2 |   |   |   | $ | 19,814.1 |   |   | $ | 12,817.7 |   |
|                                                                                                                                                                                                                                           |                       |                 |                  |                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Capitalization                                                                                                                                                                                                                                      |                       |                 |                  |                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding      Notes and Debentures                                                                                                                                                                                                               |                       | 57.4%                |                  |                       |   | 55.5% |   |   |   |   | 59.8% |   |   |   | 52.5% |   |
| Minority      Interests                                                                                                                                                                                                                             |                       | 18.5%                |                  |                       |   | 12.5% |   |   |   |   | 17.4% |   |   |   | 10.4% |   |
| Common      Equity                                                                                                                                                                                                                                  |                       | 23.4%                |                  |                       |   | 30.5% |   |   |   |   | 20.6% |   |   |   | 33.8% |   |
| Deferrable      Interest Debentures Issued to Subsidiary Trusts                                                                                                                                                                                     |                       |  0.2%           |                  |                       |   |  1.1% |   |   |   |   |  1.6% |   |   |   |  2.4% |   |
| Preferred      Interest in General Partner of KMP                                                                                                                                                                                                   |                       |  0.5%           |                  |                       |   |  0.4% |   |   |   |   |    -% |   |   |   |    -% |   |
| Capital      Securities                                                                                                                                                                                                                             |                       |    -% |                  |                       |   |    -% |   |   |   |   |  0.6% |   |   |   |  0.9% |   |
|                                                                                                                                                                                                                                           |                       |                 |                  |                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Invested      Capital                                                                                                                                                                                                                               |                       |                 |                  |                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Debt2,      3                                                                                                                                                                                                                              |                       | 58.3%                |                  |                       |   | 56.9% |   |   |   |   | 63.9% |   |   |   | 55.6% |   |
| Common      Equity, Excluding Accumulated Other Comprehensive Loss and Including      Deferrable Interest Debentures Issued to Subsidiary Trusts, Preferred      Interest in General Partner of KMP, Capital Securities and Minority      Interests |                       | 41.7%                |                  |                       |   | 43.1% |   |   |   |   | 36.1% |   |   |   | 44.4% |   |

| 1 | Cash      and cash equivalents were $126.6 million, $148.6 million, $129.8 million      and $116.6 million at September 30, 2008 and December 31, 2007, 2006 and      2005, respectively. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Outstanding      notes and debentures plus short-term debt, less cash and cash      equivalents. |
|---|--------------------------------------------------------------------------------------------------|

| 3 | Our      ratio of net debt to invested capital, not including the effects of      consolidating Kinder Morgan Energy Partners, was 40.3%, 45.6% and 56.2% at      September 30, 2008 and December 31, 2007 and 2006,      respectively. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                              | At      September 30, 2008 |   | At      October 31, 2008   |
|-------------------------------------------------------------------|----------------------------|--------|----------------------------|
|                                                              | Short-termDebtOutstanding  |   | AvailableBorrowingCapacity |   | Short-termDebtOutstanding |   | AvailableBorrowingCapacity |
|                                                              | (In      millions)         |
| Credit      Facilities                                            |                       |   |                       |   |   |   |   |   |   |   |   |
| Knight      Inc.                                                  |                       |   |                       |   |   |   |   |   |   |   |   |
| $1.0      billion, six-year secured revolver, due May 2013        | $                          | 270.0  |                       | $ | 668.0 |   | $ | 277.9 |   | $ | 660.1 |
|                                                         |                       |   |                       |   |   |   |   |   |   |   |   |
| Kinder      Morgan Energy Partners                                |                       |   |                       |   |   |   |   |   |   |   |   |
| $1.85      billion, five-year unsecured revolver, due August 2010 | $                          | 295.0  |                       | $ | 810.3 |   | $ | 279.7 |   | $ | 978.8 |

----

----

|                                                      | Successor      Company                      |     |                                        | PredecessorCompany |
|-----------------------------------------------------------|---------------------------------------------|----------|---------------------------------------------|--------------------|
|                                                      | Nine      MonthsEndedSeptember      30,2008 |     | Four      MonthsEndedSeptember      30,2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                                      | (In      millions)                          |     |                                        | (In      millions) |
| Net      Cash Provided by (Used in):                      |                                        |     |                                        |               |   |   |   |   |   |   |   |   |
| Operating      Activities                                 | $                                           | 583.1    |                                        |               | $ | 509.6 |   |   |   | $ | 603.0 |   |
| Investing      Activities                                 |                                        | 3,968.0  |                                        |               |   | (12,142.7 | ) |   |   |   | 723.7 |   |
| Financing      Activities                                 |                                        | (4,569.6 | )                                           |               |   | 9,872.5 |   |   |   |   | 440.9 |   |
|                                                      |                                        |     |                                        |               |   |   |   |   |   |   |   |   |
| Effect      of Exchange Rate Changes on Cash              |                                        | (3.5     | )                                           |               |   | (2.4 | ) |   |   |   | 7.6 |   |
|                                                      |                                        |     |                                        |               |   |   |   |   |   |   |   |   |
| Cash      Balance Included in Assets Held for Sale        |                                        | -        |                                        |               |   | - |   |   |   |   | (2.7 | ) |
| Net      (Decrease) Increase in Cash and Cash Equivalents | $                                           | (22.0    | )                                           |               | $ | (1,763.0 | ) |   |   | $ | 1,772.5 |   |

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|   | · | price      trends and overall demand for natural gas liquids, refined petroleum      products, oil, carbon dioxide, natural gas, electricity, coal and other      bulk materials and chemicals in NorthAmerica; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | economic      activity, weather, alternative energy sources, conservation and      technological advances that may affect price trends and      demand; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes      in tariff rates charged by our pipeline subsidiaries implemented by the      FERC, Canada National Energy Board or other regulatory agency and, with      respect to Kinder Morgan Energy Partners, the California Public Utilities      Commission; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our      ability to acquire new businesses and assets and integrate those      operations into existing operations, as well as the ability to expand our      facilities; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | difficulties      or delays experienced by railroads, barges, trucks, ships or pipelines in      delivering products to or from our terminals or  pipelines; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | our      ability to successfully identify and close acquisitions and make      cost-saving changes in operations; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------|

|   | · | shut-downs      or cutbacks at major refineries, petrochemical or chemical plants, ports,      utilities, military bases or other businesses that use our services or      provide services or products to us; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | crude      oil and natural gas production from exploration and production areas that      we serve, such as the Permian Basin area of West Texas, the U.S. Rocky      Mountains and the Alberta oilsands; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes      in laws or regulations, third-party relations and approvals and decisions      of courts, regulators and governmental bodies that may adversely affect      our business or our ability tocompete; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes      in accounting pronouncements that impact the measurement of our results of      operations, the timing of when such measurements are to be made and      recorded, and the disclosures surrounding these  activities; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our      ability to offer and sell equity securities and our ability to sell debt      securities or obtain debt financing in sufficient amounts to implement      that portion of our business plan that contemplates growth through      acquisitions of operating businesses and assets and expansions of our      facilities; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our      indebtedness, which could make us vulnerable to general adverse economic      and industry conditions, limit our ability to borrow additional funds,      and/or place us at competitive disadvantages compared to our competitors      that have less debt or have other adverse  consequences; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | interruptions      of electric power supply to our facilities due to natural disasters, power      shortages, strikes, riots, terrorism, war or other  causes; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our      ability to obtain insurance coverage without significant levels of      self-retention of risk; |
|--------|--------|----------------------------------------------------------------------------------------------------------|

|   | · | acts      of nature, sabotage, terrorism or other similar acts causing damage      greater than our insurance coveragelimits; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------|

|   | · | capital      and credit markets conditions, inflation and interest    rates; |
|--------|--------|------------------------------------------------------------------------------|

|   | · | the      political and economic stability of the oil producing nations of the      world; |
|--------|--------|-------------------------------------------------------------------------------------------|

|   | · | national,      international, regional and local economic, competitive and regulatory      conditions and developments; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|

|   | · | our      ability to achieve cost savings and revenue  growth; |
|--------|--------|---------------------------------------------------------------|

|   | · | foreign      exchange fluctuations; |
|--------|--------|-------------------------------------|

|   | · | the      timing and extent of changes in commodity prices for oil, natural gas,      electricity and certain agriculturalproducts; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      extent of our success in discovering, developing and producing oil and gas      reserves, including the risks inherent in exploration and development      drilling, well completion and other development  activities; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | engineering      and mechanical or technological difficulties that we may experience with      operational equipment, in well completions and workovers, and in drilling      new wells; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      uncertainty inherent in estimating future oil and natural gas production      or reserves that Kinder Morgan Energy Partners may    experience; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      ability to complete expansion projects on time and on    budget; |
|--------|--------|---------------------------------------------------------------------------|

|   | · | the      timing and success of our business development efforts;  and |
|--------|--------|-----------------------------------------------------------------------|

|   | · | unfavorable      results of litigation and the fruition of contingencies referred to in the      accompanying Notes to Consolidated Financial  Statements. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Item 3.  Quantitative andQualitative Disclosures about Market Risk.

Item 4.  Controls andProcedures.

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PART II - OTHER INFORMATION

Item 1.     LegalProceedings.

Item 1A.   Risk Factors.

Our operating results may be adversely affected by unfavorable economicand market conditions.

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|   | · | limiting      our ability to obtain additional financing to fund our working capital,      capital expenditures, debt service requirements or potential growth or for      other purposes; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | limiting      our ability to use operating cash flow in other areas of our business      because we must dedicate a substantial portion of these funds to make      payments on our debt; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | placing      us at a competitive disadvantage compared to competitors with less debt;      and |
|--------|--------|------------------------------------------------------------------------------------------------|

|   | · | increasing      our vulnerability to adverse economic and industry    conditions. |
|--------|--------|-----------------------------------------------------------------------------------|

UnregisteredSales of Equity Securities and Use of Proceeds.

Item 3.     DefaultsUpon Senior Securities.

Item 4.     Submissionof Matters to a Vote of Security Holders.

Item 5.      OtherInformation.

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Item 6.     Exhibits.

|   | 4.1 | Certain      instruments with respect to the long-term debt of Knight Inc. and its      consolidated subsidiaries that relate to debt that does not exceed 10% of      the total assets of Knight Inc. and its consolidated subsidiaries are      omitted pursuant to Item 601(b) (4) (iii) (A) of Regulation S-K, 17 C.F.R.      sec.229.601. Knight Inc. hereby agrees to furnish supplementally to the      Securities and Exchange Commission a copy of each such instrument upon      request. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.1 | First      Amendment to Retention and Relocation Agreement dated as of July 16, 2008,      between Knight Inc. and Scott E. Parker (filed as Exhibit 10.1 to Knight      Inc. Form 8-K, filed July 25, 2008 and incorporated herein by      reference). |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 31.1* | Section      13a – 14(a) / 15d – 14(a) Certification of Chief Executive      Officer |
|--------|-------|--------------------------------------------------------------------------------------------------|

|   | 31.2* | Section      13a – 14(a) / 15d – 14(a) Certification of Chief Financial      Officer |
|--------|-------|--------------------------------------------------------------------------------------------------|

|   | 32.1* | Section      1350 Certification of Chief ExecutiveOfficer |
|--------|-------|-----------------------------------------------------------|

|   | 32.2* | Section      1350 Certification of Chief FinancialOfficer |
|--------|-------|-----------------------------------------------------------|

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SIGNATURE

|              | KNIGHT      INC.(Registrant)                                                                      |
|------------------------|-----------------------------------------------------------------------------------------------------------------------|
| November      12, 2008 | /s/      Kimberly A. Dang                                                                                             |
|                   | Kimberly      A. DangVice      President and Chief Financial Officer(Principal      Financial and Accounting Officer) |

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