----

----

| 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 |
|--------------------------------|--------------------------|-----------------------------------|----------------------------------|

----

KNIGHT INC. AND SUBSIDIARIES

|    |                                                              | Page   |
|--------------|-------------------------------------------------------------------|--------|
| PART I.      | FINANCIAL    INFORMATION                                          |   |
|         |                                                              |   |
| Item 1.      | 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                   | 9-65   |
|    |                                                              |   |
| Item 2.      | Management’s Discussion and Analysis of      Financial      |   |
|         | Condition and Results of      Operations.                         | 66-97  |
|    |                                                              |   |
| Item 3.      | Quantitative and Qualitative      Disclosures About Market Risk.  | 97     |
|    |                                                              |   |
| Item 4.      | Controls and      Procedures.                                     | 97     |
|    |                                                              |   |
| PART II.     | OTHER INFORMATION                                                 |   |
|    |                                                              |   |
| Item 1.      | Legal Proceedings.                                                | 98     |
|    |                                                              |   |
| Item 1A.     | Risk Factors.                                                     | 98-100 |
|    |                                                              |   |
| Item 2.      | Unregistered Sales of Equity Securities      and Use of Proceeds. | 100    |
|    |                                                              |   |
| Item 3.      | Defaults Upon Senior      Securities.                             | 100    |
|    |                                                              |   |
| Item 4.      | Submission of Matters to a Vote of      Security Holders.         | 100    |
|    |                                                              |   |
| Item 5.      | Other Information.                                                | 100    |
|    |                                                              |   |
| Item 6.      | Exhibits.                                                         | 101    |
|    |                                                              |   |
| SIGNATURE    | 102                                                               |

----

PART I. - FINANCIALINFORMATION

Item 1.  FinancialStatements.

KNIGHT INC. ANDSUBSIDIARIES

|                                                      | June      30,2008 |     | December      31,2007 |
|-----------------------------------------------------------|-------------------|----------|-----------------------|
| ASSETS:                                                   |              |     |                  |   |   |   |   |
| Current      Assets:                                      |              |     |                  |   |   |   |   |
| Cash      and Cash Equivalents                            | $                 | 180.9    |                  |   | $ | 148.6 |   |
| Restricted      Deposits                                  |              | 275.0    |                  |   |   | 67.9 |   |
| Accounts,      Notes and Interest Receivable, Net:        |              |     |                  |   |   |   |   |
| Trade                                                     |              | 1,423.3  |                  |   |   | 970.0 |   |
| Related      Parties                                      |              | 22.1     |                  |   |   | 5.2 |   |
| Inventories:                                              |              |     |                  |   |   |   |   |
| Product                                                   |              | 74.5     |                  |   |   | 19.5 |   |
| Materials      and Supplies                               |              | 19.1     |                  |   |   | 18.3 |   |
| Gas      Imbalances                                       |              | 9.7      |                  |   |   | 26.9 |   |
| Assets      Held for Sale                                 |              | -        |                  |   |   | 3,353.3 |   |
| Fair      Value of Derivative Instruments                 |              | 78.0     |                  |   |   | 37.1 |   |
| Other                                                     |              | 50.9     |                  |   |   | 36.8 |   |
|                                                      |              | 2,133.5  |                  |   |   | 4,683.6 |   |
|                                            |              |     |                  |   |   |   |   |
| Notes      Receivable – Related Parties             |              | 197.4    |                  |   |   | 87.9 |   |
|                                                 |              |     |                  |   |   |   |   |
| Investments                                               |              | 1,864.9  |                  |   |   | 1,996.2 |   |
|                                                 |              |     |                  |   |   |   |   |
| Goodwill                                                  |              | 4,995.7  |                  |   |   | 8,174.0 |   |
|                                            |              |     |                  |   |   |   |   |
| Other      Intangibles, Net                               |              | 261.0    |                  |   |   | 321.1 |   |
|                                                 |              |     |                  |   |   |   |   |
| Property,      Plant and Equipment, Net:                  |              |     |                  |   |   |   |   |
| Property,      Plant and Equipment                        |              | 15,952.6 |                  |   |   | 15,080.9 |   |
| Accumulated      Depreciation, Depletion and Amortization |              | (673.9   | )                     |   |   | (277.0 | ) |
|                                                      |              | 15,278.7 |                  |   |   | 14,803.9 |   |
|                                            |              |     |                  |   |   |   |   |
| Assets      Held for Sale, Non-current                    |              | -        |                  |   |   | 5,634.6 |   |
|                                                 |              |     |                  |   |   |   |   |
| Deferred      Charges and Other Assets:                   |              |     |                  |   |   |   |   |
| Fair      Value of Derivative Instruments                 |              | 196.2    |                  |   |   | 142.4 |   |
| Other                                                     |              | 212.0    |                  |   |   | 257.3 |   |
|                                                      |              | 408.2    |                  |   |   | 399.7 |   |
|                                                 |              |     |                  |   |   |   |   |
| Total      Assets                                         | $                 | 25,139.4 |                  |   | $ | 36,101.0 |   |

----

|                                                                                                    | June      30,2008 |     | December      31,2007 |
|---------------------------------------------------------------------------------------------------------|-------------------|----------|-----------------------|
| LIABILITIES      AND STOCKHOLDERS’ EQUITY:                                                        |              |     |                  |   |   |   |   |
| Current      Liabilities:                                                                               |              |     |                  |   |   |   |   |
| Current      Maturities of Long-term Debt                                                               | $                 | 275.9    |                  |   | $ | 79.8 |   |
| Notes      Payable                                                                                      |              | 265.0    |                  |   |   | 888.1 |   |
| Cash      Book Overdrafts                                                                               |              | 49.1     |                  |   |   | 30.7 |   |
| Accounts      Payable:                                                                                  |              |     |                  |   |   |   |   |
| Trade                                                                                                   |              | 1,315.3  |                  |   |   | 943.1 |   |
| Related      Parties                                                                                    |              | 2.1      |                  |   |   | 0.6 |   |
| Accrued      Interest                                                                                   |              | 219.2    |                  |   |   | 242.7 |   |
| Accrued      Taxes                                                                                      |              | 381.2    |                  |   |   | 728.2 |   |
| Gas      Imbalances                                                                                     |              | 16.4     |                  |   |   | 23.7 |   |
| Liabilities      Held for Sale                                                                          |              | -        |                  |   |   | 168.2 |   |
| Fair      Value of Derivative Instruments                                                               |              | 1,191.4  |                  |   |   | 594.7 |   |
| Other                                                                                                   |              | 316.8    |                  |   |   | 240.0 |   |
|                                                                                                    |              | 4,032.4  |                  |   |   | 3,939.8 |   |
|                                                                                                    |              |     |                  |   |   |   |   |
| Other      Liabilities and Deferred Credits:                                                            |              |     |                  |   |   |   |   |
| Deferred      Income Taxes, Non-current                                                                 |              | 1,349.9  |                  |   |   | 1,849.4 |   |
| Liabilities      Held for Sale, Non-current                                                             |              | -        |                  |   |   | 2,424.1 |   |
| Fair      Value of Derivative Instruments                                                               |              | 2,004.5  |                  |   |   | 836.8 |   |
| Other                                                                                                   |              | 600.0    |                  |   |   | 618.0 |   |
|                                                                                                    |              | 3,954.4  |                  |   |   | 5,728.3 |   |
|                                                                                               |              |     |                  |   |   |   |   |
| Long-term      Debt:                                                                                    |              |     |                  |   |   |   |   |
| Outstanding      Notes and Debentures                                                                   |              | 10,534.3 |                  |   |   | 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                                                                       |              | 164.8    |                  |   |   | 199.7 |   |
|                                                                                               |              | 10,834.8 |                  |   |   | 15,297.4 |   |
|                                                                                               |              |     |                  |   |   |   |   |
| Minority      Interests in Equity of Subsidiaries                                                       |              | 2,872.0  |                  |   |   | 3,314.0 |   |
|                                                                                                    |              |     |                  |   |   |   |   |
| Commitments      and Contingencies (Note 19)                                                            |              |     |                  |   |   |   |   |
|                                                                                               |              |     |                  |   |   |   |   |
| Stockholders’      Equity:                                                                        |              |     |                  |   |   |   |   |
| Common      Stock – Authorized and Outstanding – 100 Shares, Par Value $0.01 Per      Share |              | -        |                  |   |   | - |   |
| Additional      Paid-in Capital                                                                         |              | 7,810.0  |                  |   |   | 7,822.2 |   |
| Retained      Earnings (Deficit)                                                                        |              | (3,507.9 | )                     |   |   | 247.0 |   |
| Accumulated      Other Comprehensive Loss                                                               |              | (856.3   | )                     |   |   | (247.7 | ) |
| Total      Stockholders’ Equity                                                                   |              | 3,445.8  |                  |   |   | 7,821.5 |   |
|                                                                                               |              |     |                  |   |   |   |   |
| Total      Liabilities and Stockholders’ Equity                                                   | $                 | 25,139.4 |                  |   | $ | 36,101.0 |   |

----

|                                                                   | SuccessorCompany                         |     |                                  | PredecessorCompany |
|------------------------------------------------------------------------|------------------------------------------|----------|---------------------------------------|--------------------|
|                                                                   | Three      MonthsEndedJune      30, 2008 |     | One      MonthEndedJune      30, 2007 |               |   | Two      MonthsEndedMay      31, 2007 |
| Operating      Revenues:                                               |                                     |     |                                  |               |   |   |   |   |   |   |   |   |
| Natural      Gas Sales                                                 | $                                        | 2,464.7  |                                  |               | $ | 561.9 |   |   |   | $ | 1,012.7 |   |
| Transportation      and Storage                                        |                                     | 678.7    |                                  |               |   | 275.5 |   |   |   |   | 549.4 |   |
| Oil      and Product Sales                                             |                                     | 417.1    |                                  |               |   | 99.5 |   |   |   |   | 158.6 |   |
| Total      Operating Revenues                                          |                                     | 3,560.5  |                                  |               |   | 936.9 |   |   |   |   | 1,720.7 |   |
|                                                              |                                     |     |                                  |               |   |   |   |   |   |   |   |   |
| Operating      Costs and Expenses:                                     |                                     |     |                                  |               |   |   |   |   |   |   |   |   |
| Gas      Purchases and Other Costs of Sales                            |                                     | 2,494.1  |                                  |               |   | 557.2 |   |   |   |   | 1,037.9 |   |
| Operations      and Maintenance                                        |                                     | 314.8    |                                  |               |   | 106.8 |   |   |   |   | 189.9 |   |
| General      and Administrative                                        |                                     | 91.8     |                                  |               |   | 30.0 |   |   |   |   | 173.2 |   |
| Depreciation,      Depletion and Amortization                          |                                     | 215.7    |                                  |               |   | 72.2 |   |   |   |   | 108.0 |   |
| Taxes,      Other Than Income Taxes                                    |                                     | 51.1     |                                  |               |   | 15.5 |   |   |   |   | 30.9 |   |
| Other      Income, Net                                                 |                                     | (2.2     | )                                     |               |   | (4.0 | ) |   |   |   | (0.1 | ) |
| Goodwill      Impairment                                               |                                     | 4,033.3  |                                  |               |   | - |   |   |   |   | - |   |
| Total      Operating Costs and Expenses                                |                                     | 7,198.6  |                                  |               |   | 777.7 |   |   |   |   | 1,539.8 |   |
|                                                              |                                     |     |                                  |               |   |   |   |   |   |   |   |   |
| Operating      Income (Loss)                                           |                                     | (3,638.1 | )                                     |               |   | 159.2 |   |   |   |   | 180.9 |   |
|                                                              |                                     |     |                                  |               |   |   |   |   |   |   |   |   |
| Other      Income and (Expenses):                                      |                                     |     |                                  |               |   |   |   |   |   |   |   |   |
| Earnings      of Equity Investees                                      |                                     | 55.3     |                                  |               |   | 9.2 |   |   |   |   | 14.5 |   |
| Interest      Expense, Net                                             |                                     | (141.6   | )                                     |               |   | (83.5 | ) |   |   |   | (97.0 | ) |
| Interest      Expense – Deferrable Interest Debentures           |                                     | (0.6     | )                                     |               |   | (1.9 | ) |   |   |   | (3.6 | ) |
| Minority      Interests                                                |                                     | (126.4   | )                                     |               |   | (34.5 | ) |   |   |   | (32.5 | ) |
| Other,      Net                                                        |                                     | 10.5     |                                  |               |   | 0.7 |   |   |   |   | (1.6 | ) |
| Total      Other Income and (Expenses)                                 |                                     | (202.8   | )                                     |               |   | (110.0 | ) |   |   |   | (120.2 | ) |
|                                                              |                                     |     |                                  |               |   |   |   |   |   |   |   |   |
| Income      (Loss) from Continuing Operations Before Income Taxes |                                     | (3,840.9 | )                                     |               |   | 49.2 |   |   |   |   | 60.7 |   |
| Income      Taxes                                                      |                                     | 19.4     |                                  |               |   | 21.3 |   |   |   |   | 47.8 |   |
| Income      (Loss) from Continuing Operations                          |                                     | (3,860.3 | )                                     |               |   | 27.9 |   |   |   |   | 12.9 |   |
| Income      (Loss) from Discontinued Operations, Net of Tax            |                                     | (0.3     | )                                     |               |   | 2.3 |   |   |   |   | 65.4 |   |
|                                                              |                                     |     |                                  |               |   |   |   |   |   |   |   |   |
| Net      Income (Loss)                                                 | $                                        | (3,860.6 | )                                     |               | $ | 30.2 |   |   |   | $ | 78.3 |   |

----

KNIGHT INC. AND SUBSIDIARIES

|                                                                   | SuccessorCompany                       |     |                                  | PredecessorCompany |
|------------------------------------------------------------------------|----------------------------------------|----------|---------------------------------------|--------------------|
|                                                                   | Six      MonthsEndedJune      30, 2008 |     | One      MonthEndedJune      30, 2007 |               |   | Five      MonthsEndedMay      31, 2007 |
| Operating      Revenues:                                               |                                   |     |                                  |               |   |   |   |   |   |   |   |   |
| Natural      Gas Sales                                                 | $                                      | 4,186.5  |                                  |               | $ | 561.9 |   |   |   | $ | 2,430.6 |   |
| Transportation      and Storage                                        |                                   | 1,486.6  |                                  |               |   | 275.5 |   |   |   |   | 1,350.5 |   |
| Oil      and Product Sales                                             |                                   | 782.4    |                                  |               |   | 99.5 |   |   |   |   | 384.0 |   |
| Total      Operating Revenues                                          |                                   | 6,455.5  |                                  |               |   | 936.9 |   |   |   |   | 4,165.1 |   |
|                                                              |                                   |     |                                  |               |   |   |   |   |   |   |   |   |
| Operating      Costs and Expenses:                                     |                                   |     |                                  |               |   |   |   |   |   |   |   |   |
| Gas      Purchases and Other Costs of Sales                            |                                   | 4,254.7  |                                  |               |   | 557.2 |   |   |   |   | 2,490.4 |   |
| Operations      and Maintenance                                        |                                   | 616.6    |                                  |               |   | 106.8 |   |   |   |   | 476.1 |   |
| General      and Administrative                                        |                                   | 178.1    |                                  |               |   | 30.0 |   |   |   |   | 283.6 |   |
| Depreciation,      Depletion and Amortization                          |                                   | 433.8    |                                  |               |   | 72.2 |   |   |   |   | 261.0 |   |
| Taxes,      Other Than Income Taxes                                    |                                   | 103.6    |                                  |               |   | 15.5 |   |   |   |   | 74.4 |   |
| Other      Income, Net                                                 |                                   | (2.7     | )                                     |               |   | (4.0 | ) |   |   |   | (2.3 | ) |
| Goodwill      Impairment                                               |                                   | 4,033.3  |                                  |               |   | - |   |   |   |   | 377.1 |   |
| Total      Operating Costs and Expenses                                |                                   | 9,617.4  |                                  |               |   | 777.7 |   |   |   |   | 3,960.3 |   |
|                                                              |                                   |     |                                  |               |   |   |   |   |   |   |   |   |
| Operating      Income (Loss)                                           |                                   | (3,161.9 | )                                     |               |   | 159.2 |   |   |   |   | 204.8 |   |
|                                                              |                                   |     |                                  |               |   |   |   |   |   |   |   |   |
| Other      Income and (Expenses):                                      |                                   |     |                                  |               |   |   |   |   |   |   |   |   |
| Earnings      of Equity Investees                                      |                                   | 99.0     |                                  |               |   | 9.2 |   |   |   |   | 38.3 |   |
| Interest      Expense, Net                                             |                                   | (352.3   | )                                     |               |   | (83.5 | ) |   |   |   | (241.1 | ) |
| Interest      Expense – Deferrable Interest Debentures           |                                   | 6.1      |                                  |               |   | (1.9 | ) |   |   |   | (9.1 | ) |
| Minority      Interests                                                |                                   | (252.6   | )                                     |               |   | (34.5 | ) |   |   |   | (90.7 | ) |
| Other,      Net                                                        |                                   | 13.7     |                                  |               |   | 0.7 |   |   |   |   | 0.6 |   |
| Total      Other Income and (Expenses)                                 |                                   | (486.1   | )                                     |               |   | (110.0 | ) |   |   |   | (302.0 | ) |
|                                                              |                                   |     |                                  |               |   |   |   |   |   |   |   |   |
| Income      (Loss) from Continuing Operations Before Income Taxes |                                   | (3,648.0 | )                                     |               |   | 49.2 |   |   |   |   | (97.2 | ) |
| Income      Taxes                                                      |                                   | 106.5    |                                  |               |   | 21.3 |   |   |   |   | 135.5 |   |
| Income      (Loss) from Continuing Operations                          |                                   | (3,754.5 | )                                     |               |   | 27.9 |   |   |   |   | (232.7 | ) |
| Income      (Loss) from Discontinued Operations, Net of Tax            |                                   | (0.4     | )                                     |               |   | 2.3 |   |   |   |   | 298.6 |   |
|                                                              |                                   |     |                                  |               |   |   |   |   |   |   |   |   |
| Net      Income (Loss)                                                 | $                                      | (3,754.9 | )                                     |               | $ | 30.2 |   |   |   | $ | 65.9 |   |

----

KNIGHT INC. AND SUBSIDIARIES

|                                                                                                     | SuccessorCompany                       |     |                                  | Predecessor      Company |
|----------------------------------------------------------------------------------------------------------|----------------------------------------|----------|---------------------------------------|--------------------------|
|                                                                                                     | Six      MonthsEndedJune      30, 2008 |     | One      MonthEndedJune      30, 2007 |                     |   | Five      MonthsEndedMay      31, 2007 |
| Cash      Flows from Operating Activities:                                                               |                                   |     |                                  |                     |   |   |   |   |   |   |   |   |
| Net      Income (Loss)                                                                                   | $                                      | (3,754.9 | )                                     |                     | $ | 30.2 |   |   |   | $ | 65.9 |   |
| Adjustments      to Reconcile Net Income to Net Cash Flows from Operating      Activities:               |                                   |     |                                  |                     |   |   |   |   |   |   |   |   |
| Loss      (Income) from Discontinued Operations, Net of Tax                                              |                                   | 0.4      |                                  |                     |   | (0.5 | ) |   |   |   | (287.9 | ) |
| Loss      from Goodwill Impairment                                                                       |                                   | 4,033.3  |                                  |                     |   | - |   |   |   |   | 377.1 |   |
| Loss      on Early Extinguishment of Debt                                                                |                                   | 23.6     |                                  |                     |   | - |   |   |   |   | - |   |
| Depreciation,      Depletion and Amortization                                                            |                                   | 433.8    |                                  |                     |   | 73.0 |   |   |   |   | 264.9 |   |
| Deferred      Income Taxes                                                                               |                                   | 33.6     |                                  |                     |   | 4.1 |   |   |   |   | 138.7 |   |
| Equity      in Earnings of Equity Investees                                                              |                                   | (99.0    | )                                     |                     |   | (9.5 | ) |   |   |   | (39.1 | ) |
| Distributions      from Equity Investees                                                                 |                                   | 83.7     |                                  |                     |   | 22.5 |   |   |   |   | 48.2 |   |
| Minority      Interests in Income of Consolidated Subsidiaries                                           |                                   | 252.6    |                                  |                     |   | 34.5 |   |   |   |   | 90.7 |   |
| Gains      from Property Casualty Indemnifications                                                       |                                   | -        |                                  |                     |   | - |   |   |   |   | (1.8 | ) |
| Net      Gains on Sales of Assets                                                                        |                                   | (2.8     | )                                     |                     |   | (4.5 | ) |   |   |   | (2.6 | ) |
| Mark-to-Market      Interest Rate Swap Gain                                                              |                                   | (19.8    | )                                     |                     |   | - |   |   |   |   | - |   |
| Foreign      Currency (Gain) Loss                                                                        |                                   | (0.2     | )                                     |                     |   | - |   |   |   |   | 15.5 |   |
| Changes      in Gas in Underground Storage                                                               |                                   | (28.0    | )                                     |                     |   | (5.0 | ) |   |   |   | (84.2 | ) |
| Changes      in Working Capital Items                                                                    |                                   | (542.0   | )                                     |                     |   | 107.9 |   |   |   |   | (202.9 | ) |
| (Payment      for) Proceeds from Termination of Interest Rate Swaps                                      |                                   | (2.5     | )                                     |                     |   | - |   |   |   |   | 51.9 |   |
| Kinder      Morgan Energy Partners’ Rate Reparations, Refunds and Reserve      Adjustments    |                                   | (23.3    | )                                     |                     |   | - |   |   |   |   | - |   |
| Other,      Net                                                                                          |                                   | (7.3     | )                                     |                     |   | (31.9 | ) |   |   |   | 58.8 |   |
| Cash      Flows Provided by Continuing Operations                                                        |                                   | 381.2    |                                  |                     |   | 220.8 |   |   |   |   | 493.2 |   |
| Net      Cash Flows (Used in) Provided by Discontinued Operations                                        |                                   | (0.5     | )                                     |                     |   | (2.1 | ) |   |   |   | 109.8 |   |
| Net      Cash Flows Provided by Operating Activities                                                     |                                   | 380.7    |                                  |                     |   | 218.7 |   |   |   |   | 603.0 |   |
|                                                                                                |                                   |     |                                  |                     |   |   |   |   |   |   |   |   |
| Cash      Flows from Investing Activities:                                                               |                                   |     |                                  |                     |   |   |   |   |   |   |   |   |
| Purchase      of Predecessor Stock                                                                       |                                   | -        |                                  |                     |   | (11,534.3 | ) |   |   |   | - |   |
| Capital      Expenditures                                                                                |                                   | (1,269.2 | )                                     |                     |   | (148.8 | ) |   |   |   | (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                                                                                             |                                   | (4.2     | )                                     |                     |   | (5.7 | ) |   |   |   | (42.1 | ) |
| Net      (Investments in) Proceeds from Margin Deposits                                                  |                                   | (207.1   | )                                     |                     |   | 35.8 |   |   |   |   | (54.8 | ) |
| Distributions      from Equity Investees                                                                 |                                   | 89.1     |                                  |                     |   | - |   |   |   |   | - |   |
| Other      Investments                                                                                   |                                   | (339.4   | )                                     |                     |   | (14.6 | ) |   |   |   | (29.7 | ) |
| Change      in Natural Gas Storage and NGL Line Fill Inventory                                           |                                   | (2.7     | )                                     |                     |   | 1.5 |   |   |   |   | 8.4 |   |
| Property      Casualty Indemnifications                                                                  |                                   | -        |                                  |                     |   | - |   |   |   |   | 8.0 |   |
| Net      Proceeds (Cost of Removal) from Sales of Other Assets                                           |                                   | 113.0    |                                  |                     |   | 7.5 |   |   |   |   | (1.5 | ) |
| Net      Cash Flows Provided by (Used in) Continuing Investing      Activities                           |                                   | 4,385.2  |                                  |                     |   | (11,658.6 | ) |   |   |   | (764.5 | ) |
| Net      Cash Flows Provided by Discontinued Investing Activities                                        |                                   | -        |                                  |                     |   | 199.9 |   |   |   |   | 1,488.2 |   |
| Net      Cash Flows Provided by (Used in) Investing Activities                                           | $                                      | 4,385.2  |                                  |                     | $ | (11,458.7 | ) |   |   | $ | 723.7 |   |

----

|                                                                                   | SuccessorCompany                       |     |                                  | PredecessorCompany |
|----------------------------------------------------------------------------------------|----------------------------------------|----------|---------------------------------------|--------------------|
|                                                                                   | Six      MonthsEndedJune      30, 2008 |     | One      MonthEndedJune      30, 2007 |               |   | Five      Months EndedMay      31, 2007 |
| Cash      Flows from Financing Activities:                                             |                                   |     |                                  |               |   |   |   |   |   |   |   |   |
| Short-term      Debt, Net                                                              | $                                      | (623.1   | )                                     |               | $ | (230.2 | ) |   |   | $ | (247.5 | ) |
| Long-term      Debt Issued                                                             |                                   | 1,600.1  |                                  |               |   | 5,305.0 |   |   |   |   | 1,000.0 |   |
| Long-term      Debt Retired                                                            |                                   | (5,861.5 | )                                     |               |   | (455.5 | ) |   |   |   | (302.4 | ) |
| Discount      on Early Extinguishment of Debt                                          |                                   | 69.2     |                                  |               |   | - |   |   |   |   | - |   |
| Cash      Book Overdraft                                                               |                                   | 18.5     |                                  |               |   | 0.5 |   |   |   |   | (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                           |                                   | (11.5    | )                                     |               |   | (2.3 | ) |   |   |   | 2.3 |   |
| Cash      Dividends, Common Stock                                                      |                                   | -        |                                  |               |   | - |   |   |   |   | (234.9 | ) |
| Minority      Interests, Contributions                                                 |                                   | 384.8    |                                  |               |   | - |   |   |   |   | - |   |
| Minority      Interests, Distributions                                                 |                                   | (300.9   | )                                     |               |   | - |   |   |   |   | (248.9 | ) |
| Debt      Issuance Costs                                                               |                                   | (12.1    | )                                     |               |   | (62.7 | ) |   |   |   | (13.1 | ) |
| Other,      Net                                                                        |                                   | 3.9      |                                  |               |   | - |   |   |   |   | (4.3 | ) |
| Net      Cash Flows (Used in) Provided by Continuing Financing      Activities         |                                   | (4,732.6 | )                                     |               |   | 9,485.7 |   |   |   |   | 300.8 |   |
| Net      Cash Flows Provided by Discontinued Financing Activities                      |                                   | -        |                                  |               |   | - |   |   |   |   | 140.1 |   |
| Net      Cash Flows (Used in) Provided by Financing Activities                         |                                   | (4,732.6 | )                                     |               |   | 9,485.7 |   |   |   |   | 440.9 |   |
|                                                                                   |                                   |     |                                  |               |   |   |   |   |   |   |   |   |
| Effect      of Exchange Rate Changes on Cash                                           |                                   | (1.0     | )                                     |               |   | - |   |   |   |   | 7.6 |   |
|                                                                                   |                                   |     |                                  |               |   |   |   |   |   |   |   |   |
| Cash      Balance Included in Assets Held for Sale                                     |                                   | -        |                                  |               |   | - |   |   |   |   | (2.7 | ) |
|                                                                              |                                   |     |                                  |               |   |   |   |   |   |   |   |   |
| Net      Increase (Decrease) in Cash and Cash Equivalents                              |                                   | 32.3     |                                  |               |   | (1,754.3 | ) |   |   |   | 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                                        | $                                      | 180.9    |                                  |               | $ | 148.0 |   |   |   | $ | 1,902.3 |   |

----

KNIGHT INC. AND SUBSIDIARIES

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

| 2. | Summary      of 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                                                  |               | 13,892.4 |   |
| Property,      Plant and Equipment, Net                   |               | 15,281.5 |   |
| Deferred      Charges and Other Assets                    |               | 1,639.8 |   |
| Current      Liabilities                                  |               | (3,279.5 | ) |
| Other      Liabilities and Deferred Credits:              |               |   |   |
| Deferred      Income Taxes, Non-current                   |               | (2,499.0 | ) |
| Other      Deferred Credits                               |               | (1,786.3 | ) |
| Long-term      Debt                                       |               | (9,855.9 | ) |
| Minority      Interests in Equity of Subsidiaries         |               | (3,314.6 | ) |
|                                                      | $                  | 12,527.4 |   |

----

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

|                                   | December      31,2007 |    | AcquisitionsandPurchase      PriceAdjustments1 |   | Impairmentof      Assets |   | Other2 |   | June      30,2008 |
|----------------------------------------|-----------------------|---------|------------------------------------------------|--------|--------------------------|--------|--------|--------|-------------------|
|                                   | (In      millions)    |
| Products      Pipelines – KMP    | $                     | 2,179.4 |                                           |   |                     | $      | (24.3  | )      |              |   | $ | (1,113.9 | ) |   | $ | (6.9 | ) |   | $ | 1,034.3 |   |
| Natural      Gas Pipelines – KMP |                  | 3,201.0 |                                           |   |                     |   | 444.5  |   |              |   |   | (2,242.8 | ) |   |   | (10.6 | ) |   |   | 1,392.1 |   |
| CO2      – KMP                   |                  | 1,077.6 |                                           |   |                     |   | 467.4  |   |              |   |   | - |   |   |   | (3.7 | ) |   |   | 1,541.3 |   |
| Terminals      – KMP             |                  | 1,465.9 |                                           |   |                     |   | -      |   |              |   |   | (676.6 | ) |   |   | (4.5 | ) |   |   | 784.8 |   |
| Trans      Mountain – KMP        |                  | 250.1   |                                           |   |                     |   | -      |   |              |   |   | - |   |   |   | (6.9 | ) |   |   | 243.2 |   |
|                              |                  |    |                                           |   |                     |   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated      Total                | $                     | 8,174.0 |                                           |   |                     | $      | 887.6  |   |              |   | $ | (4,033.3 | ) |   | $ | (32.6 | ) |   | $ | 4,995.7 |   |

| 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 |
|----|------------------------|

|                                                   | June      30,2008  |   | December      31,2007 |
|--------------------------------------------------------|--------------------|--------|-----------------------|
|                                                   | (In      millions) |
| Customer      Relationships, Contracts and Agreements: |               |   |                  |   |   |   |   |   |   |   |   |
| Gross      Carrying Amount1                            |               | $      | 270.9                 |   |   |   |   | $ | 321.3 |   |   |
| Accumulated      Amortization                          |               |   | (21.1                 | ) |   |   |   |   | (11.6 | ) |   |
| Net      Carrying Amount                               |               |   | 249.8                 |   |   |   |   |   | 309.7 |   |   |
|                                                   |               |   |                  |   |   |   |   |   |   |   |   |
| Technology-based      Assets, Lease Value and Other:   |               |   |                  |   |   |   |   |   |   |   |   |
| Gross      Carrying Amount                             |               |   | 11.7                  |   |   |   |   |   | 11.7 |   |   |
| Accumulated      Amortization                          |               |   | (0.5                  | ) |   |   |   |   | (0.3 | ) |   |
| Net      Carrying Amount                               |               |   | 11.2                  |   |   |   |   |   | 11.4 |   |   |
|                                                   |               |   |                  |   |   |   |   |   |   |   |   |
| Total      Other Intangibles, Net                      |               | $      | 261.0                 |   |   |   |   | $ | 321.1 |   |   |

|   | 1 | The      change in the Gross Carrying Amount is due primarily 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’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 that amount. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                  | Successor  Company         |   |                            | Predecessor  Company |
|-------------------------------------------------------|--------------------------------------|--------|---------------------------------|--------------------------------|
|                                                  | Three      Months EndedJune      30, |   | Six      Months EndedJune, |                           | One      MonthEndedJune      30, |   |   | Two      MonthsEndedMay      31, |   | Five      MonthsEndedMay      31, |
|                                                  | 2008                                 |   | 2008                            |                           | 2007 |   |   | 2007 |   | 2007 |
|                                                  | (In      millions)                   |   |                            | (In      millions)             |
| Customer      Relationships, Contracts and Agreements | $                                    | 4.4    |                            |                           | $ | 9.5 |   |   | $ | 1.2 |   |   |   | $ | 2.5 |   |   | $ | 6.1 |   |
| Technology-based      Assets, Lease Value and Other   |                                 | 0.1    |                            |                           |   | 0.2 |   |   |   | - |   |   |   |   | 0.1 |   |   |   | 0.2 |   |
| Total      Amortization                               | $                                    | 4.5    |                            |                           | $ | 9.7 |   |   | $ | 1.2 |   |   |   | $ | 2.6 |   |   | $ | 6.3 |   |

| 5. | Accounting      for Minority Interests |
|----|----------------------------------------|

|                               | June      30,2008  |    | December      31,2007 |
|------------------------------------|--------------------|---------|-----------------------|
|                               | (In      millions) |
| Kinder      Morgan Energy Partners | $                  | 1,270.7 |                  |   | $ | 1,616.0 |   |
| Kinder      Morgan Management, LLC |               | 1,558.3 |                  |   |   | 1,657.7 |   |
| Triton      Power Company LLC      |               | 33.1    |                  |   |   | 29.2 |   |
| Other                              |               | 9.9     |                  |   |   | 11.1 |   |
|                               | $                  | 2,872.0 |                  |   | $ | 3,314.0 |   |

----

| 6. | Asset      Retirement Obligations |
|----|-----------------------------------|

|                     | SuccessorCompany     |   |                | PredecessorCompany |
|--------------------------|----------------------|--------|---------------------|--------------------|
|                     | Six      MonthsEnded |   | One      MonthEnded |               |   | Five      MonthsEnded |
|                     | June      30, 2008   |   | June      30, 2007  |               |   | May      31, 2007 |
|                     | (In      millions)   |   |                | (In      millions) |
| Beginning      of Period | $                    | 55.0   |                |               | $ | 53.1 |   |   |   | $ | 52.5 |   |
| Additions                |                 | 25.5   |                |               |   | - |   |   |   |   | 0.2 |   |
| Liabilities      Settled |                 | (1.8   | )                   |               |   | - |   |   |   |   | (0.7 | ) |
| Liabilities      Sold1   |                 | (2.8   | )                   |               |   | - |   |   |   |   | - |   |
| Accretion      Expense   |                 | 1.4    |                |               |   | 0.2 |   |   |   |   | 1.1 |   |
| End      of Period       | $                    | 77.3   |                |               | $ | 53.3 |   |   |   | $ | 53.1 |   |

|   | 1 | ARO      liabilities associated with the NGPL business segment, 80% of which was      sold in February 2008 (see Note12). |
|--------|---|---------------------------------------------------------------------------------------------------------------------------|

| 7. | Related      Party Transactions |
|----|---------------------------------|

|                                                                                   | June      30,2008  |     | December      31,2007 |
|----------------------------------------------------------------------------------------|--------------------|----------|-----------------------|
|                                                                                   | (In      millions) |
| Derivative      Assets (Liabilities):                                                  |               |     |                  |   |   |   |   |
| Deferred      Charges and Other Assets: Fair Value of Derivative    Instruments        | $                  | 7.8      |                  |   | $ | - |   |
| Current      Liabilities: Fair Value of Derivative Instruments                         | $                  | (566.7   | )                     |   | $ | (239.8 | ) |
| Other      Liabilities and Deferred Credits: Fair Value of Derivative      Instruments | $                  | (1,154.5 | )                     |   | $ | (386.5 | ) |

----

| 8. | Cash      Flow Information |
|----|----------------------------|

|                                  | SuccessorCompany                       |   |                                  | PredecessorCompany |
|---------------------------------------|----------------------------------------|--------|---------------------------------------|--------------------|
|                                  | Six      MonthsEndedJune      30, 2008 |   | One      MonthEndedJune      30, 2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                  | (In      millions)                     |   |                                  | (In      millions) |
| Accounts      Receivable              | $                                      | (463.7 | )                                     |               | $ | (12.1 | ) |   |   | $ | (31.9 | ) |
| Materials      and Supplies Inventory |                                   | (5.3   | )                                     |               |   | (1.9 | ) |   |   |   | (1.7 | ) |
| Other      Current Assets             |                                   | (34.2  | )                                     |               |   | 0.5 |   |   |   |   | 0.5 |   |
| Accounts      Payable                 |                                   | 364.1  |                                  |               |   | 49.4 |   |   |   |   | 26.3 |   |
| Other      Current Liabilities        |                                   | (402.9 | )                                     |               |   | 72.0 |   |   |   |   | (196.1 | ) |
|                                  | $                                      | (542.0 | )                                     |               | $ | 107.9 |   |   |   | $ | (202.9 | ) |

|                                                   | SuccessorCompany                       |   |                                  | PredecessorCompany |
|--------------------------------------------------------|----------------------------------------|--------|---------------------------------------|--------------------|
|                                                   | Six      MonthsEndedJune      30, 2008 |   | One      MonthEndedJune      30, 2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                                   | (In      millions)                     |   |                                  | (In      millions) |
| Cash      Paid During the Period for:                  |                                   |   |                                  |               |   |   |   |   |   |   |   |   |
| Interest,      Net of Amount Capitalized               | $                                      | 358.0  |                                  |               | $ | 41.2 |   |   |   | $ | 381.8 |   |
| Income      Taxes Paid, Including Prior Period Amounts | $                                      | 399.6  |                                  |               | $ | 5.1 |   |   |   | $ | 133.3 |   |

----

| 9. | Income      Taxes |
|----|-------------------|

|                                                                                                                                                                                                                                                                                 | SuccessorCompany                         |   |                                  | PredecessorCompany        |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------|--------|---------------------------------------|---------------------------|
|                                                                                                                                                                                                                                                                                 | Three      MonthsEndedJune      30, 2008 |   | One      MonthEndedJune      30, 2007 |                      |   | Two      MonthsEndedMay      31, 2007 |
|                                                                                                                                                                                                                                                                                 | (Dollars      in millions)               |   |                                  | (Dollars      inmillions) |
| Income      Taxes                                                  | $                                        | 19.4   |                                  |                      | $ | 21.3 |   |   |   | $ | 47.8 |   |
| Effective      Tax Rate1                                           |                                     | 10.1   | %                                     |                      |   | 43.3 | % |   |   |   | 78.7 | % |

|                                                                                                                                                                                                                                                                                 | SuccessorCompany                       |   |                                  | PredecessorCompany        |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------|--------|---------------------------------------|---------------------------|
|                                                                                                                                                                                                                                                                                 | Six      MonthsEndedJune      30, 2008 |   | One      MonthEndedJune      30, 2007 |                      |   | Five      MonthsEndedMay      31, 2007 |
|                                                                                                                                                                                                                                                                                 | (Dollars      in millions)             |   |                                  | (Dollars      inmillions) |
| Income      Taxes                                                  | $                                      | 106.5  |                                  |                      | $ | 21.3 |   |   |   | $ | 135.5 |   |
| Effective      Tax Rate1                                           |                                   | 27.6   | %                                     |                      |   | 43.3 | % |   |   |   | 48.4 | % |

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

----

| 10. | Comprehensive      Income (Loss) |
|-----|----------------------------------|

|                                                                                     | SuccessorCompany                         |     |                                  | PredecessorCompany |
|------------------------------------------------------------------------------------------|------------------------------------------|----------|---------------------------------------|--------------------|
|                                                                                     | Three      MonthsEndedJune      30, 2008 |     | One      MonthEndedJune      30, 2007 |               |   | Two      MonthsEndedMay      31, 2007 |
|                                                                                     | (In      millions)                       |     |                                  | (In      millions) |
| Net      Income (Loss)                                                                   | $                                        | (3,860.6 | )                                     |               | $ | 30.2 |   |   |   | $ | 78.3 |   |
| Other      Comprehensive Income (Loss), Net of Tax:                                      |                                     |     |                                  |               |   |   |   |   |   |   |   |   |
| Change      in Fair Value of Derivatives Utilized for      Hedging Purposes         |                                     | (577.3   | )                                     |               |   | (19.0 | ) |   |   |   | 0.5 |   |
| Reclassification      of Change in Fair Value of Derivatives    to Net Income  |                                     | 95.9     |                                  |               |   | (0.9 | ) |   |   |   | (0.3 | ) |
| Employee      Benefit Plans:                                                             |                                     |     |                                  |               |   |   |   |   |   |   |   |   |
| Prior      Service Cost Arising During Period                                            |                                     | (0.1     | )                                     |               |   | - |   |   |   |   | (1.7 | ) |
| Net      Gain Arising During Period                                                      |                                     | (0.4     | )                                     |               |   | - |   |   |   |   | 11.4 |   |
| Amortization      of Prior Service Cost Included in Net Periodic Benefit      Costs |                                     | (0.1     | )                                     |               |   | - |   |   |   |   | (0.2 | ) |
| Amortization      of Net Loss Included in Net    Periodic Benefit Costs        |                                     | 0.1      |                                  |               |   | - |   |   |   |   | 0.5 |   |
| Change      in Foreign Currency Translation Adjustment                                   |                                     | 15.6     |                                  |               |   | (1.4 | ) |   |   |   | 30.8 |   |
| Other      Comprehensive Income (Loss)                                                   |                                     | (466.3   | )                                     |               |   | (21.3 | ) |   |   |   | 41.0 |   |
|                                                                                |                                     |     |                                  |               |   |   |   |   |   |   |   |   |
| Comprehensive      Income (Loss)                                                         | $                                        | (4,326.9 | )                                     |               | $ | 8.9 |   |   |   | $ | 119.3 |   |

|                                                                                          | SuccessorCompany                       |     |                                  | PredecessorCompany |
|-----------------------------------------------------------------------------------------------|----------------------------------------|----------|---------------------------------------|--------------------|
|                                                                                          | Six      MonthsEndedJune      30, 2008 |     | One      MonthEndedJune      30, 2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                                                                          | (In      millions)                     |     |                                  | (In      millions) |
| Net      Income (Loss)                                                                        | $                                      | (3,754.9 | )                                     |               | $ | 30.2 |   |   |   | $ | 65.9 |   |
| Other      Comprehensive Income (Loss), Net of Tax:                                           |                                   |     |                                  |               |   |   |   |   |   |   |   |   |
| Change      in Fair Value of Derivatives Utilized for Hedging Purposes                        |                                   | (797.0   | )                                     |               |   | (19.0 | ) |   |   |   | (21.3 | ) |
| Reclassification      of Change in Fair Value of Derivatives    to Net Income       |                                   | 211.4    |                                  |               |   | (0.9 | ) |   |   |   | 10.3 |   |
| Employee      Benefit Plans:                                                                  |                                   |     |                                  |               |   |   |   |   |   |   |   |   |
| Prior      Service Cost Arising During Period                                                 |                                   | 0.3      |                                  |               |   | - |   |   |   |   | (1.7 | ) |
| Net      Gain Arising During Period                                                           |                                   | 1.1      |                                  |               |   | - |   |   |   |   | 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     | )                                     |               |   | - |   |   |   |   | 1.4 |   |
| Change      in Foreign Currency Translation Adjustment                                        |                                   | (8.7     | )                                     |               |   | (1.4 | ) |   |   |   | 40.1 |   |
| Other      Comprehensive Income (Loss)                                                        |                                   | (593.0   | )                                     |               |   | (21.3 | ) |   |   |   | 39.8 |   |
|                                                                                     |                                   |     |                                  |               |   |   |   |   |   |   |   |   |
| Comprehensive      Income (Loss)                                                              | $                                      | (4,347.9 | )                                     |               | $ | 8.9 |   |   |   | $ | 105.7 |   |

----

| 11. | Kinder      Morgan Management, LLC |
|-----|------------------------------------|

| 12. | Business      Combinations, Investments, andSales |
|-----|---------------------------------------------------|

----

|   | · | $500      million in principal amount of 6.25% senior notes due July 15,      2013; |
|--------|--------|-------------------------------------------------------------------------------------|

|   | · | $550      million in principal amount of 6.85% senior notes due July 15, 2018;      and |
|--------|--------|-----------------------------------------------------------------------------------------|

|   | · | $250      million in principal amount of 7.50% senior notes due July 15,      2038. |
|--------|--------|-------------------------------------------------------------------------------------|

----

| 13. | Discontinued      Operations |
|-----|------------------------------|

----

|                                                                      | SuccessorCompany                         |   |                                  | PredecessorCompany |
|---------------------------------------------------------------------------|------------------------------------------|--------|---------------------------------------|--------------------|
|                                                                      | Three      MonthsEndedJune      30, 2008 |   | One      MonthEndedJune      30, 2007 |               |   | Two      MonthsEndedMay      31, 2007 |
|                                                                      | (In      millions)                       |   |                                  | (In      millions) |
| Operating      Revenues                                                   | $                                        | -      |                                  |               | $ | 9.8 |   |   |   | $ | 223.2 |   |
|                                                                      |                                     |   |                                  |               |   |   |   |   |   |   |   |   |
| Earnings      (Loss) from Discontinued OperationsBefore      Income Taxes |                                     | (0.3   | )                                     |               |   | 2.3 |   |   |   |   | 52.4 |   |
| Income      Taxes                                                         |                                     | -      |                                  |               |   | - |   |   |   |   | 13.0 |   |
| Earnings      (Loss) from Discontinued Operations                         | $                                        | (0.3   | )                                     |               | $ | 2.3 |   |   |   | $ | 65.4 |   |

|                                                                      | SuccessorCompany                       |   |                                  | PredecessorCompany |
|---------------------------------------------------------------------------|----------------------------------------|--------|---------------------------------------|--------------------|
|                                                                      | Six      MonthsEndedJune      30, 2008 |   | One      MonthEndedJune      30, 2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                                                      | (In      millions)                     |   |                                  | (In      millions) |
| Operating      Revenues                                                   | $                                      | -      |                                  |               | $ | 9.8 |   |   |   | $ | 921.8 |   |
|                                                                      |                                   |   |                                  |               |   |   |   |   |   |   |   |   |
| Earnings      (Loss) from Discontinued OperationsBefore      Income Taxes |                                   | (0.4   | )                                     |               |   | 2.3 |   |   |   |   | 393.2 |   |
| Income      Taxes                                                         |                                   | -      |                                  |               |   | - |   |   |   |   | (94.6 | ) |
| Earnings      (Loss) from Discontinued Operations                         | $                                      | (0.4   | )                                     |               | $ | 2.3 |   |   |   | $ | 298.6 |   |

| 14. | Financing |
|-----|-----------|

|                                                       | June      30, 2008                                                |
|------------------------------------------------------------|-------------------------------------------------------------------|
|                                                       | Short-termBorrowingsOutstandingUnderRevolvingCredit      Facility |   | CommercialPaperOutstanding |   | Weighted-AverageInterest      Rate ofShort-term      DebtOutstanding |
|                                                       | (In      millions)                                                |
|                                                       |                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Knight      Inc. – Secured Debt1                     |                                                              | $ | 265.0 |   |   | $ | - |   |   |   | 3.61 | % |   |
| Kinder      Morgan Energy Partners – Unsecured Debt2 |                                                              | $ | - |   |   | $ | - |   |   |   | - | % |   |

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

|   | 1 | The      average short-term debt outstanding (and related weighted-average interest      rate) was $168.4 million (3.95%) and $180.0 million (4.81%) during the      three and six months ended June 30, 2008,  respectively. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2 | The      average short-term debt outstanding (and weighted-average interest rate)      was $380.4 million (2.85%) and $413.6 million (3.50%) during the three and      six months ended June 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 |   |   |

----

----

| 15. | Business      Segments |
|-----|------------------------|

----

----

|                                                                                                                                  | SuccessorCompany                         |     |                                  | PredecessorCompany |
|---------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------|----------|---------------------------------------|--------------------|
|                                                                                                                                  | Three      MonthsEndedJune      30, 2008 |     | One      MonthEndedJune      30, 2007 |               |   | Two      MonthsEndedMay      31, 2007 |
|                                                                                                                                  | (In      millions)                       |     |                                  | (In      millions) |
| Segment      Earnings (Loss) before Depreciation, Depletion, Amortization and      Amortization of Excess Cost of Equity Investments: |                                     |     |                                  |               |   |   |   |   |   |   |   |   |
| NGPL1                                                                                                                                 | $                                        | 8.7      |                                  |               | $ | 59.4 |   |   |   | $ | 107.1 |   |
| Power                                                                                                                                 |                                     | 0.7      |                                  |               |   | 2.4 |   |   |   |   | 3.2 |   |
| Express                                                                                                                               |                                     | 5.2      |                                  |               |   | 2.7 |   |   |   |   | 1.8 |   |
| Products      Pipelines – KMP2,      4                                                                                          |                                     | (977.2   | )                                     |               |   | 47.4 |   |   |   |   | 90.7 |   |
| Natural      Gas Pipelines – KMP2,      4                                                                                       |                                     | (2,072.9 | )                                     |               |   | 49.8 |   |   |   |   | 93.8 |   |
| CO2 –      KMP2                                                                                                                 |                                     | 250.6    |                                  |               |   | 57.2 |   |   |   |   | 84.6 |   |
| Terminals      – KMP2,      4                                                                                                   |                                     | (536.3   | )                                     |               |   | 38.3 |   |   |   |   | 71.8 |   |
| Trans      Mountain – KMP2                                                                                                      |                                     | 33.4     |                                  |               |   | 8.8 |   |   |   |   | 20.8 |   |
| Total      Segment Earnings (Loss) Before DD&A                                                                                    |                                     | (3,287.8 | )                                     |               |   | 266.0 |   |   |   |   | 473.8 |   |
| Depreciation,      Depletion and Amortization                                                                                         |                                     | (215.7   | )                                     |               |   | (72.2 | ) |   |   |   | (108.0 | ) |
| Amortization      of Excess Cost of Equity Investments                                                                                |                                     | (1.4     | )                                     |               |   | (0.5 | ) |   |   |   | (1.0 | ) |
| Other                                                                                                                                 |                                     | 17.6     |                                  |               |   | 0.6 |   |   |   |   | 2.9 |   |
| Interest      and Corporate Expenses, Net3                                                                                            |                                     | (355.9   | )                                     |               |   | (144.7 | ) |   |   |   | (313.6 | ) |
| Add      Back: Income Taxes Included in Segments Above2                                                                               |                                     | 2.3      |                                  |               |   | - |   |   |   |   | 6.6 |   |
| Income      (Loss) from Continuing Operations Before Income Taxes                                                                     | $                                        | (3,840.9 | )                                     |               | $ | 49.2 |   |   |   | $ | 60.7 |   |

----

| Revenues      from External Customers: |   |    |   |   |   |   |   |   |   |   |    |   |
|----------------------------------------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|
| NGPL1                                  | $      | -       |   |   | $      | 99.2   |   |   |   | $      | 161.5   |   |
| Power                                  |   | 13.2    |   |   |   | 8.9    |   |   |   |   | 8.3     |   |
| Products      Pipelines – KMP    |   | 198.6   |   |   |   | 66.7   |   |   |   |   | 134.8   |   |
| Natural      Gas Pipelines – KMP |   | 2,644.7 |   |   |   | 587.9  |   |   |   |   | 1,105.2 |   |
| CO2 –      KMP                   |   | 342.5   |   |   |   | 79.8   |   |   |   |   | 132.6   |   |
| Terminals      – KMP             |   | 300.4   |   |   |   | 79.5   |   |   |   |   | 149.3   |   |
| Trans      Mountain – KMP        |   | 43.4    |   |   |   | 14.4   |   |   |   |   | 30.0    |   |
| Other                                  |   | 17.7    |   |   |   | 0.5    |   |   |   |   | (1.0    | )      |
| Total      Revenues                    | $      | 3,560.5 |   |   | $      | 936.9  |   |   |   | $      | 1,720.7 |   |
| Intersegment      Revenues:            |   |    |   |   |   |   |   |   |   |   |    |   |
| NGPL1                                  | $      | -       |   |   | $      | 0.6    |   |   |   | $      | 1.4     |   |
| Terminals      – KMP             |   | 0.3     |   |   |   | 0.1    |   |   |   |   | 0.1     |   |
| Other                                  |   | (0.1    | )      |   |   | -      |   |   |   |   | -       |   |
| Total      Intersegment Revenues       | $      | 0.2     |   |   | $      | 0.7    |   |   |   | $      | 1.5     |   |

| Depreciation,      Depletion and Amortization:                   |   |   |   |   |   |   |   |   |   |   |   |   |
|------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| NGPL1                                                            | $      | -      |   |   | $      | 5.9    |   |   |   | $      | 18.3   |   |
| Power                                                            |   | -      |   |   |   | -      |   |   |   |   | 0.3    |   |
| Products      Pipelines – KMP                              |   | 28.8   |   |   |   | 8.5    |   |   |   |   | 13.3   |   |
| Natural      Gas Pipelines – KMP                           |   | 25.8   |   |   |   | 6.8    |   |   |   |   | 10.8   |   |
| CO2 –      KMP                                             |   | 114.4  |   |   |   | 39.8   |   |   |   |   | 47.4   |   |
| Terminals      – KMP                                       |   | 39.1   |   |   |   | 9.5    |   |   |   |   | 13.9   |   |
| Trans      Mountain – KMP                                  |   | 7.5    |   |   |   | 1.5    |   |   |   |   | 3.5    |   |
| Other                                                            |   | 0.1    |   |   |   | 0.2    |   |   |   |   | 0.5    |   |
| Total      Consolidated Depreciation, Depletion and Amortization | $      | 215.7  |   |   | $      | 72.2   |   |   |   | $      | 108.0  |   |

| Capital      Expenditures – Continuing Operations:      |   |   |   |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| NGPL1                                                         | $      | -      |   |   | $      | 15.1   |   |   |   | $      | 28.3   |   |
| Products      Pipelines – KMP                           |   | 63.5   |   |   |   | 23.3   |   |   |   |   | 43.2   |   |
| Natural      Gas Pipelines – KMP                        |   | 229.1  |   |   |   | 32.5   |   |   |   |   | 39.7   |   |
| CO2 –      KMP                                          |   | 153.4  |   |   |   | 28.4   |   |   |   |   | 43.7   |   |
| Terminals      – KMP                                    |   | 94.6   |   |   |   | 41.9   |   |   |   |   | 77.3   |   |
| Trans      Mountain – KMP                               |   | 93.9   |   |   |   | 6.0    |   |   |   |   | 58.7   |   |
| Other                                                         |   | (3.6   | )      |   |   | 1.6    |   |   |   |   | 4.5    |   |
| Total      Capital Expenditures – Continuing Operations | $      | 630.9  |   |   | $      | 148.8  |   |   |   | $      | 295.4  |   |

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

| 2 | Income      taxes of Kinder Morgan Energy Partners of $2.3 million and $6.6 million      for the three months ended June 30, 2008 and the two 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) general and administrative expense, (ii) interest expense, (iii)      minority interests and (iv) miscellaneous other income and expenses not      allocated to business segments. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Three      months ended June 30, 2008 includes a goodwill impairment charge; see Note      3. |
|---|-----------------------------------------------------------------------------------------------|

----

|                                                                                                                                                | SuccessorCompany                       |     |                                  | PredecessorCompany |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------|----------|---------------------------------------|--------------------|
|                                                                                                                                                | Six      MonthsEndedJune      30, 2008 |     | One      MonthEndedJune      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                                                                                                                                               | $                                      | 104.7    |                                  |               | $ | 59.4 |   |   |   | $ | 267.4 |   |
| Power                                                                                                                                               |                                   | 2.8      |                                  |               |   | 2.4 |   |   |   |   | 8.9 |   |
| Express                                                                                                                                             |                                   | 9.2      |                                  |               |   | 2.7 |   |   |   |   | 5.4 |   |
| Products      Pipelines – KMP2,      4                                                                                                        |                                   | (836.9   | )                                     |               |   | 47.4 |   |   |   |   | 224.4 |   |
| Natural      Gas Pipelines – KMP2,      4                                                                                                     |                                   | (1,884.5 | )                                     |               |   | 49.8 |   |   |   |   | 228.5 |   |
| CO2 –      KMP2                                                                                                                               |                                   | 483.9    |                                  |               |   | 57.2 |   |   |   |   | 210.0 |   |
| Terminals      – KMP2,      4                                                                                                                 |                                   | (410.5   | )                                     |               |   | 38.3 |   |   |   |   | 172.3 |   |
| Trans      Mountain – KMP2,      4                                                                                                            |                                   | 63.6     |                                  |               |   | 8.8 |   |   |   |   | (337.4 | ) |
| Total      Segment Earnings (Loss) Before DD&A                                                                                                  |                                   | (2,467.7 | )                                     |               |   | 266.0 |   |   |   |   | 779.5 |   |
| Depreciation,      Depletion and Amortization                                                                                                       |                                   | (433.8   | )                                     |               |   | (72.2 | ) |   |   |   | (261.0 | ) |
| Amortization      of Excess Cost of Equity Investments                                                                                              |                                   | (2.9     | )                                     |               |   | (0.5 | ) |   |   |   | (2.4 | ) |
| Other                                                                                                                                               |                                   | 18.4     |                                  |               |   | 0.6 |   |   |   |   | 2.9 |   |
| Interest      and Corporate Expenses, Net3                                                                                                          |                                   | (773.3   | )                                     |               |   | (144.7 | ) |   |   |   | (631.8 | ) |
| Add      Back: Income Taxes Included in Segments Above2                                                                                             |                                   | 11.3     |                                  |               |   | - |   |   |   |   | 15.6 |   |
| Income      (Loss) from Continuing Operations Before Income Taxes                                                                                   | $                                      | (3,648.0 | )                                     |               | $ | 49.2 |   |   |   | $ | (97.2 | ) |

| Revenues      from External Customers: |   |    |   |   |   |   |   |   |   |   |    |   |
|----------------------------------------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|
| NGPL1                                  |   |    |   |   |   |   |   |   |   |   |    |   |
| Power                                  | $      | 132.1   |   |   | $      | 99.2   |   |   |   | $      | 424.5   |   |
| Products      Pipelines – KMP    |   | 20.7    |   |   |   | 8.9    |   |   |   |   | 19.9    |   |
| Natural      Gas Pipelines – KMP |   | 396.9   |   |   |   | 66.7   |   |   |   |   | 331.9   |   |
| CO2 –      KMP                   |   | 4,557.2 |   |   |   | 587.9  |   |   |   |   | 2,637.6 |   |
| Terminals      – KMP             |   | 662.4   |   |   |   | 79.8   |   |   |   |   | 324.2   |   |
| Trans      Mountain – KMP        |   | 580.4   |   |   |   | 79.5   |   |   |   |   | 364.2   |   |
| Other                                  |   | 86.5    |   |   |   | 14.4   |   |   |   |   | 62.8    |   |
| Total      Revenues                    |   | 19.3    |   |   |   | 0.5    |   |   |   |   | -       |   |
|                              | $      | 6,455.5 |   |   | $      | 936.9  |   |   |   | $      | 4,165.1 |   |

| Intersegment      Revenues:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| NGPL1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | $      | 0.9    |   |   | $      | 0.6    |   |   |   | $      | 2.0    |   |
| Natural      Gas Pipelines – KMP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | -      |   |   |   | -      |   |   |   |   | 3.0    |   |
| Terminals      – KMP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 0.5    |   |   |   | 0.1    |   |   |   |   | 0.3    |   |
| Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (0.9   | )      |   |   | -      |   |   |   |   | -      |   |
| Total      Intersegment      Revenues                                                                                | $      | 0.5    |   |   | $      | 0.7    |   |   |   | $      | 5.3    |   |

| Depreciation,      Depletion and Amortization:                   |   |   |   |   |   |   |   |   |   |   |   |   |
|------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| NGPL1                                                            | $      | 9.3    |   |   | $      | 5.9    |   |   |   | $      | 45.3   |   |
| Power                                                            |   | -      |   |   |   | -      |   |   |   |   | (4.2   | )      |
| Products      Pipelines – KMP                              |   | 56.7   |   |   |   | 8.5    |   |   |   |   | 33.6   |   |
| Natural      Gas Pipelines – KMP                           |   | 51.3   |   |   |   | 6.8    |   |   |   |   | 26.8   |   |
| CO2 –      KMP                                             |   | 222.8  |   |   |   | 39.8   |   |   |   |   | 116.3  |   |
| Terminals      – KMP                                       |   | 78.4   |   |   |   | 9.5    |   |   |   |   | 34.4   |   |
| Trans      Mountain – KMP                                  |   | 15.1   |   |   |   | 1.5    |   |   |   |   | 8.2    |   |
| Other                                                            |   | 0.2    |   |   |   | 0.2    |   |   |   |   | 0.6    |   |
| Total      Consolidated Depreciation, Depletion and Amortization | $      | 433.8  |   |   | $      | 72.2   |   |   |   | $      | 261.0  |   |

----

|                                                          | SuccessorCompany                       |    |                                  | PredecessorCompany |
|---------------------------------------------------------------|----------------------------------------|---------|---------------------------------------|--------------------|
|                                                          | Six      MonthsEndedJune      30, 2008 |    | One      MonthEndedJune      30, 2007 |               |   | Five      MonthsEndedMay      31, 2007 |
|                                                          | (In      millions)                     |    |                                  | (In      millions) |
| Capital      Expenditures – Continuing Operations:      |                                   |    |                                  |               |   |   |   |   |   |   |   |   |
| NGPL1                                                         | $                                      | 10.2    |                                  |               | $ | 15.1 |   |   |   | $ | 77.3 |   |
| Products      Pipelines – KMP                           |                                   | 120.8   |                                  |               |   | 23.3 |   |   |   |   | 79.5 |   |
| Natural      Gas Pipelines – KMP                        |                                   | 416.8   |                                  |               |   | 32.5 |   |   |   |   | 66.6 |   |
| CO2 –      KMP                                          |                                   | 248.4   |                                  |               |   | 28.4 |   |   |   |   | 133.3 |   |
| Terminals      – KMP                                    |                                   | 240.6   |                                  |               |   | 41.9 |   |   |   |   | 169.9 |   |
| Trans      Mountain – KMP                               |                                   | 236.0   |                                  |               |   | 6.0 |   |   |   |   | 109.0 |   |
| Other                                                         |                                   | (3.6    | )                                     |               |   | 1.6 |   |   |   |   | 17.2 |   |
| Total      Capital Expenditures – Continuing Operations | $                                      | 1,269.2 |                                  |               | $ | 148.8 |   |   |   | $ | 652.8 |   |

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

| 2 | Income      taxes of Kinder Morgan Energy Partners of $11.3 million and $15.6 million      for the six months ended June 30, 2008 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) general and administrative expense, (ii) interest expense, (iii)      minority interests and (iv) miscellaneous other income and expenses not      allocated to business segments. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Six      months ended June 30, 2008 and five months ended May 31, 2007 includes      goodwill impairment charges; see Note 3 of the accompanying Notes to      Consolidated Financial Statements. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                   | June      30, 2008 |
|----------------------------------------|--------------------|
|                                   | (In      millions) |
| Assets:                                |               |   |   |
| NGPL1                                  | $                  | 708.4 |   |
| Power                                  |               | 54.3 |   |
| Express                                |               | 123.5 |   |
| Products      Pipelines – KMP    |               | 5,566.5 |   |
| Natural      Gas Pipelines – KMP |               | 7,590.4 |   |
| CO2 –      KMP                   |               | 4,426.3 |   |
| Terminals      – KMP             |               | 4,246.7 |   |
| Trans      Mountain – KMP        |               | 1,587.5 |   |
| Total      segment assets              |               | 24,303.6 |   |
| Other2                                 |               | 835.8 |   |
| Total      Consolidated Assets         | $                  | 25,139.4 |   |

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

----

|                                   | Successor      Company                |
|----------------------------------------|---------------------------------------|
|                                   | Three      Months Ended June 30, 2008 |
|                                   | UnitedStates                          |   | Canada |   | Mexicoand Other2 |   | Total |
|                                   | (In      millions)                    |
| Revenues:                              |                                  |
| NGPL1                                  | $                                     | - |   | $ | - |   | $ | - |   | $ | - |   |   |
| Power                                  |                                  | 13.2 |   |   | - |   |   | - |   |   | 13.2 |   |   |
| Products      Pipelines – KMP    |                                  | 193.7 |   |   | 4.9 |   |   | - |   |   | 198.6 |   |   |
| Natural      Gas Pipelines – KMP |                                  | 2,641.1 |   |   | - |   |   | 3.6 |   |   | 2,644.7 |   |   |
| CO2 –      KMP                   |                                  | 342.5 |   |   | - |   |   | - |   |   | 342.5 |   |   |
| Terminals      – KMP             |                                  | 282.8 |   |   | 15.5 |   |   | 2.1 |   |   | 300.4 |   |   |
| Trans      Mountain                    |                                  | 3.0 |   |   | 40.4 |   |   | - |   |   | 43.4 |   |   |
| Other                                  |                                  | 16.9 |   |   | 0.8 |   |   | - |   |   | 17.7 |   |   |
|                                   | $                                     | 3,493.2 |   | $ | 61.6 |   | $ | 5.7 |   | $ | 3,560.5 |   |   |

|                                                                                                                                                                                                                                                                                                                                                          | Successor      Company             |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                          | One      Month Ended June 30, 2007 |
|                                                                                                                                                                                                                                                                                                                                                          | UnitedStates                       |   | Canada |   | Mexico      andOther2 |   | Total |
|                                                                                                                                                                                                                                                                                                                                                          | (In      millions)                 |
| Revenues:                                                                                                                                                                                                                                                                                                                                                     |                               |
| NGPL1                                                                                          | $                                  | 99.2 |   | $ | - |   | $ | - |   | $ | 99.2 |   |   |
| Power                                                                                          |                               | 8.9 |   |   | - |   |   | - |   |   | 8.9 |   |   |
| Products      Pipelines –      KMP                                                       |                               | 64.1 |   |   | 2.6 |   |   | - |   |   | 66.7 |   |   |
| Natural      Gas Pipelines –      KMP                                                    |                               | 586.8 |   |   | - |   |   | 1.1 |   |   | 587.9 |   |   |
| CO2 –      KMP                                                                           |                               | 79.8 |   |   | - |   |   | - |   |   | 79.8 |   |   |
| Terminals      –      KMP                                                                |                               | 75.6 |   |   | 3.6 |   |   | 0.3 |   |   | 79.5 |   |   |
| Trans      Mountain                                                                            |                               | 1.0 |   |   | 13.4 |   |   | - |   |   | 14.4 |   |   |
| Other                                                                                          |                               | - |   |   | 0.5 |   |   | - |   |   | 0.5 |   |   |
|                                                                                                                                                                                                                                                                                                                                                          | $                                  | 915.4 |   | $ | 20.1 |   | $ | 1.4 |   | $ | 936.9 |   |   |

|                                                                                                                                                                                                                                                                                                                                                          | Predecessor      Company           |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                          | Two      Months Ended May 31, 2007 |
|                                                                                                                                                                                                                                                                                                                                                          | UnitedStates                       |   | Canada |   | Mexico and Other2 |   | Total |
|                                                                                                                                                                                                                                                                                                                                                          | (In      millions)                 |
| Revenues:                                                                                                                                                                                                                                                                                                                                                     |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NGPL1                                                                                          | $                                  | 161.5 |   | $ | - |   |   | $ | - |   | $ | 161.5 |   |   |
| Power                                                                                          |                               | 8.3 |   |   | - |   |   |   | - |   |   | 8.3 |   |   |
| Products      Pipelines –      KMP                                                       |                               | 129.0 |   |   | 5.8 |   |   |   | - |   |   | 134.8 |   |   |
| Natural      Gas Pipelines –      KMP                                                    |                               | 1,102.8 |   |   | - |   |   |   | 2.4 |   |   | 1,105.2 |   |   |
| CO2 –      KMP                                                                           |                               | 132.6 |   |   | - |   |   |   | - |   |   | 132.6 |   |   |
| Terminals      –      KMP                                                                |                               | 148.5 |   |   | - |   |   |   | 0.8 |   |   | 149.3 |   |   |
| Trans      Mountain                                                                            |                               | 2.0 |   |   | 28.0 |   |   |   | - |   |   | 30.0 |   |   |
| Other                                                                                          |                               | - |   |   | (1.0 | ) |   |   | - |   |   | (1.0 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                          | $                                  | 1,684.7 |   | $ | 32.8 |   |   | $ | 3.2 |   | $ | 1,720.7 |   |   |

----

|                                   | Successor      Company              |
|----------------------------------------|-------------------------------------|
|                                   | Six      Months Ended June 30, 2008 |
|                                   | UnitedStates                        |   | Canada |   | Mexico and Other2 |   | Total |
|                                   | (In      millions)                  |
| Revenues:                              |                                |
| NGPL1                                  | $                                   | 132.1 |   | $ | - |   | $ | - |   | $ | 132.1 |   |   |
| Power                                  |                                | 20.7 |   |   | - |   |   | - |   |   | 20.7 |   |   |
| Products      Pipelines – KMP    |                                | 385.1 |   |   | 11.8 |   |   | - |   |   | 396.9 |   |   |
| Natural      Gas Pipelines – KMP |                                | 4,550.1 |   |   | - |   |   | 7.1 |   |   | 4,557.2 |   |   |
| CO2 –      KMP                   |                                | 662.4 |   |   | - |   |   | - |   |   | 662.4 |   |   |
| Terminals      – KMP             |                                | 550.9 |   |   | 25.6 |   |   | 3.9 |   |   | 580.4 |   |   |
| Trans      Mountain                    |                                | 6.0 |   |   | 80.5 |   |   | - |   |   | 86.5 |   |   |
| Other                                  |                                | 17.7 |   |   | 1.6 |   |   | - |   |   | 19.3 |   |   |
|                                   | $                                   | 6,325.0 |   | $ | 119.5 |   | $ | 11.0 |   | $ | 6,455.5 |   |   |

|                                                                                                                                                                                                                                                                                                                                                                | Predecessor      Company            |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                | Five      Months Ended May 31, 2007 |
|                                                                                                                                                                                                                                                                                                                                                                | UnitedStates                        |   | Canada |   | Mexico and Other2 |   | Total |
|                                                                                                                                                                                                                                                                                                                                                                | (In      millions)                  |
| Revenues:                                                                                                                                                                                                                                                                                                                                                           |                                |
| NGPL1                                                                                           | $                                   | 424.5 |   | $ | - |   | $ | - |   | $ | 424.5 |   |   |
| Power                                                                                           |                                | 19.9 |   |   | - |   |   | - |   |   | 19.9 |   |   |
| Products      Pipelines –      KMP                                                        |                                | 319.7 |   |   | 12.2 |   |   | - |   |   | 331.9 |   |   |
| Natural      Gas Pipelines –      KMP                                                     |                                | 2,631.8 |   |   | - |   |   | 5.8 |   |   | 2,637.6 |   |   |
| CO2 –      KMP                                                                            |                                | 324.2 |   |   | - |   |   | - |   |   | 324.2 |   |   |
| Terminals      –      KMP                                                                 |                                | 362.0 |   |   |   |   |   | 2.2 |   |   | 364.2 |   |   |
| Trans      Mountain                                                                                  |                                | 4.5 |   |   | 58.3 |   |   | - |   |   | 62.8 |   |   |
|                                                                                                                                                                                                                                                                                                                                                                | $                                   | 4,086.6 |   | $ | 70.5 |   | $ | 8.0 |   | $ | 4,165.1 |   |   |

|                                   | At      June 30, 2008 |
|----------------------------------------|-----------------------|
|                                   | UnitedStates          |   | Canada |   | Mexico and Other2 |   | Total |
|                                   | (In      millions)    |
| Long-lived Assets3:                    |                  |   |   |   |   |   |   |   |   |   |   |
| NGPL1                                  | $                     | 708.4 |   | $ | - |   | $ | - |   | $ | 708.4 |
| Power                                  |                  | 34.5 |   |   | - |   |   | - |   |   | 34.5 |
| Express                                |                  | 80.5 |   |   | 34.5 |   |   | - |   |   | 115.0 |
| Products      Pipelines – KMP    |                  | 4,318.6 |   |   | 113.0 |   |   | - |   |   | 4,431.6 |
| Natural      Gas Pipelines – KMP |                  | 4,973.4 |   |   | - |   |   | 90.3 |   |   | 5,063.7 |
| CO2 –      KMP                   |                  | 2,618.8 |   |   | - |   |   | - |   |   | 2,618.8 |
| Terminals      – KMP             |                  | 2,867.8 |   |   | 228.3 |   |   | 9.0 |   |   | 3,105.1 |
| Trans      Mountain – KMP        |                  | 25.8 |   |   | 1,283.1 |   |   | - |   |   | 1,308.9 |
| Other                                  |                  | 353.0 |   |   | 10.2 |   |   | - |   |   | 363.2 |
|                                   | $                     | 15,980.8 |   | $ | 1,669.1 |   | $ | 99.3 |   | $ | 17,749.2 |

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

| 2 | Terminals      – KMP includes revenues of $2.1 million and $3.9 million for the      three-month and six-month periods ended June 30, 2008, respectively, $0.3      million for the one month period ended June 30, 2007, $0.8 million and      $2.2 million for the two-month and five-month periods ended May 31, 2007,      respectively, and long-lived assets of $9.0 million at June 30, 2008,      attributable to operations in theNetherlands. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Long-lived      assets exclude goodwill and other intangibles,  net. |
|---|----------------------------------------------------------------------|

----

| 16. | Accounting      for Derivative Instruments and Hedging  Activities |
|-----|--------------------------------------------------------------------|

|                                                                                   | June      30,2008  |     |   | December      31,2007 |
|----------------------------------------------------------------------------------------|--------------------|----------|--------|-----------------------|
|                                                                                   | (In      millions) |     |   | (In      millions)    |
| Derivatives      Asset (Liability):                                                    |               |     |   |                  |   |   |   |   |
| Current      Assets: Fair Value of Derivative Instruments                              | $                  | 77.7     |   |                  |   | $ | 37.1 |   |
| Current      Assets: Assets Held for Sale                                              | $                  | -        |   |                  |   | $ | 8.4 |   |
| Deferred      Charges and Other Assets: Fair Value of Derivative    Instruments        | $                  | 37.3     |   |                  |   | $ | 4.4 |   |
| Current      Liabilities: Fair Value of Derivative Instruments                         | $                  | (1,191.4 | )      |                  |   | $ | (594.7 | ) |
| Current      Liabilities: Liabilities Held for Sale                                    | $                  | -        |   |                  |   | $ | (0.4 | ) |
| Other      Liabilities and Deferred Credits: Fair Value of Derivative      Instruments | $                  | (1,974.5 | )      |                  |   | $ | (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 June 30, 2008 Using |
|---------------------------------------------|--------------------------------------------------------------|
|                                        | Total                                                        |   | Quoted      Prices inActiveMarkets      for IdenticalAssets      (Level 1) |   | Significant      OtherObservableInputs      (Level 2) |   | SignificantUnobservableInputs      (Level 3) |
|                                        | (In      millions)                                           |
| Energy      Commodity Derivative Contracts1 | $                                                            | 115.0 |   |   | $ | - |   |   | $ | 79.1 |   |   | $ | 35.9 |   |   |
|                                        |                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Rate Swap Agreements          | $                                                            | 158.9 |   |   | $ | - |   |   | $ | 158.9 |   |   | $ | - |   |   |

|                                        | Liability      Fair Value Measurements as of June 30, 2008 Using |
|---------------------------------------------|------------------------------------------------------------------|
|                                        | Total                                                            |   | Quoted      Prices inActiveMarkets      for IdenticalAssets      (Level 1) |   | Significant      OtherObservableInputs      (Level 2) |   | SignificantUnobservableInputs      (Level 3) |
|                                        | (In      millions)                                               |
| Energy      Commodity Derivative Contracts2 | $                                                                | (3,165.9 | ) |   | $ | (6.7 | ) |   | $ | (2,890.3 | ) |   | $ | (268.9 | ) |   |
|                                        |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Rate Swap Agreements          | $                                                                | (30.0 | ) |   | $ | - |   |   | $ | (30.0 | ) |   | $ | - |   |   |
|                                        |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cross      Currency Swaps                   | $                                                                | (49.5 | ) |   | $ | - |   |   | $ | (49.5 | ) |   | $ | - |   |   |

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

| 2 | Level      1 consists primarily of NYMEX Natural Gas futures.  Level 2      consists primarily of OTC West Texas Intermediate hedges. Level 3 consists      primarily of West Texas Sour hedges and West Texas Intermediate      options. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                           | Significant Unobservable Inputs      (Level 3) |
|------------------------------------------------------------------------------------------------|------------------------------------------------|
|                                                                                           | Three      MonthsEndedJune      30, 2008       |   | Six      MonthsEndedJune      30, 2008 |
|                                                                                           | (In      millions)                             |
| Net      Asset (Liability)                                                                     |                                           |   |   |   |   |   |   |
| Beginning      Balance                                                                         | $                                              | (123.8 | ) |   | $ | (100.3 | ) |
| Realized      and Unrealized Net Losses                                                        |                                           | (141.5 | ) |   |   | (186.3 | ) |
| Purchases      and Settlements                                                                 |                                           | 32.3 |   |   |   | 53.6 |   |
| Transfers      in (out) of Level 3                                                             |                                           | - |   |   |   | - |   |
| Balance      as of June 30, 2008                                                               | $                                              | (233.0 | ) |   | $ | (233.0 | ) |
| Change      in Unrealized Net Losses Relating to Contracts Still Held as of June 30,      2008 | $                                              | (123.1 | ) |   | $ | (160.8 | ) |

----

| 17. | Employee      Benefits |
|-----|------------------------|

|                                                                                                                                                                                                                                                                                                       | SuccessorCompany                     |   |                               | PredecessorCompany |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------|--------|------------------------------------|--------------------|
|                                                                                                                                                                                                                                                                                                       | Three      Months EndedJune      30, |   | Six      Months EndedJune      30, |               | One      Month EndedJune      30, |   |   | Two      Months EndedMay      31, |   | Five      Months EndedMay      31, |
|                                                                                                                                                                                                                                                                                                       | 2008                                 |   | 2008                               |               | 2007 |   |   | 2007 |   | 2007 |
|                                                                                                                                                                                                                                                                                                       | (In      millions)                   |   |                               | (In      millions) |
| Service      Cost                                                              | $                                    | 2.8    |                               |               | $ | 5.6 |   |   | $ | 0.9 |   |   |   | $ | 1.8 |   |   | $ | 4.5 |   |
| Interest      Cost                                                             |                                 | 3.6    |                               |               |   | 7.2 |   |   |   | 1.1 |   |   |   |   | 2.2 |   |   |   | 5.6 |   |
| Expected      Return on Assets                                                                                                                                                                                                                                                                             |                                 | (5.8   | )                                  |               |   | (11.6 | ) |   |   | (1.9 | ) |   |   |   | (3.8 | ) |   |   | (9.6 | ) |
| Amortization      of Prior Service Credit                                                                                                                                                                                                                                                                  |                                 | -      |                               |               |   | - |   |   |   | - |   |   |   |   | - |   |   |   | 0.1 |   |
| Amortization      of Net      Loss                                             |                                 | -      |                               |               |   | - |   |   |   | - |   |   |   |   | - |   |   |   | 0.2 |   |
| Net      Periodic Pension Cost                                                                                                                                                                                                                                                                             | $                                    | 0.6    |                               |               | $ | 1.2 |   |   | $ | 0.1 |   |   |   | $ | 0.2 |   |   | $ | 0.8 |   |

|                                                                                                                                                                                                                                                                                                       | SuccessorCompany                     |   |                               | PredecessorCompany |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------|--------|------------------------------------|--------------------|
|                                                                                                                                                                                                                                                                                                       | Three      Months EndedJune      30, |   | Six      Months EndedJune      30, |               | One      Month EndedJune      30, |   |   | Two      Months EndedMay      31, |   | Five      Months EndedMay      31, |
|                                                                                                                                                                                                                                                                                                       | 2008                                 |   | 2008                               |               | 2007 |   |   | 2007 |   | 2007 |
|                                                                                                                                                                                                                                                                                                       | (In      millions)                   |   |                               | (In      millions) |
| Service      Cost                                                              | $                                    | 0.1    |                               |               | $ | 0.2 |   |   | $ | - |   |   |   | $ | 0.1 |   |   | $ | 0.2 |   |
| Interest      Cost                                                             |                                 | 1.1    |                               |               |   | 2.2 |   |   |   | 0.4 |   |   |   |   | 0.8 |   |   |   | 1.9 |   |
| Expected      Return on Assets                                                                                                                                                                                                                                                                             |                                 | (1.6   | )                                  |               |   | (3.2 | ) |   |   | (0.5 | ) |   |   |   | (1.1 | ) |   |   | (2.7 | ) |
| Amortization      of Prior Service Credit                                                                                                                                                                                                                                                                  |                                 | -      |                               |               |   | - |   |   |   | - |   |   |   |   | (0.3 | ) |   |   | (0.7 | ) |
| Amortization      of Net      Loss                                             |                                 | (0.2   | )                                  |               |   | (0.3 | ) |   |   | - |   |   |   |   | 0.7 |   |   |   | 2.0 |   |
| Net      Periodic Postretirement Benefit  Cost                                                                                                                                                                                                                                                   | $                                    | (0.6   | )                                  |               | $ | (1.1 | ) |   | $ | (0.1 | ) |   |   | $ | 0.2 |   |   | $ | 0.7 |   |

----

|   | Terasen      Inc. Retirement Plans – Components of Net Periodic Pension      Cost: |
|--------|------------------------------------------------------------------------------------------|

|                           | Predecessor      Company                        |
|--------------------------------|-------------------------------------------------|
|                           | For      the PeriodApril      1 – May 17, |   | For      the PeriodJanuary      1 – May 17, |
|                           | 2007                                            |   | 2007 |
|                           | (In      millions)                              |
| Service      Cost              | $                                               | 0.9 |   |   | $ | 2.7 |   |
| Interest      Cost             |                                            | 1.5 |   |   |   | 4.4 |   |
| Expected      Return on Assets |                                            | (1.9 | ) |   |   | (5.5 | ) |
| Plan      Amendments           |                                            | - |   |   |   | - |   |
| Other                          |                                            | - |   |   |   | 0.1 |   |
| Net      Periodic Pension Cost |                                            | 0.5 |   |   |   | 1.7 |   |
| Defined      Contribution Cost |                                            | - |   |   |   | - |   |
| Total      Pension Costs       | $                                               | 0.5 |   |   | $ | 1.7 |   |

|   | Other      Postretirement Employee Benefits – Components of Net Periodic Pension      Cost: |
|--------|---------------------------------------------------------------------------------------------------|

|                                          | Predecessor      Company                        |
|-----------------------------------------------|-------------------------------------------------|
|                                          | For      the PeriodApril      1 – May 17, |   | For      the PeriodJanuary      1 – May 17, |
|                                          | 2007                                            |   | 2007 |
|                                          | (In      millions)                              |
| Service      Cost                             | $                                               | 0.2 |   |   | $ | 0.6 |   |
| Interest      Cost                            |                                            | 0.5 |   |   |   | 1.4 |   |
| Net      Periodic Postretirement Benefit Cost | $                                               | 0.7 |   |   | $ | 2.0 |   |

----

| 18. | 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. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

| 19. | 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 |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 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 |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 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 No. OR07-8 (consolidated with Docket No.      OR07-11)—Complainant/Protestant: BP WCP—Defendant:  SFPP |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------|

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

|   | · | FERC      Docket No. OR07-11 (consolidated with Docket No.      OR07-8)—Complainant/Protestant: ExxonMobil —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. 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. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 20. | Recent      Accounting Pronouncements |
|-----|---------------------------------------|

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SFAS No. 142
, Goodwill and Other IntangibleAssets. This FSP is effective for financial statements issued for fiscalyears beginning after December 15, 2008 (January 1, 2009 for us), and interimperiods within those fiscal years. Early adoption is prohibited. We arecurrently reviewing the effects of this FSP.

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

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|                                                                                                                                              | SuccessorCompany                   |     | CombinedResults                    |               | SuccessorCompany                      |   |   | PredecessorCompany                    |
|---------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|----------|------------------------------------|--------------------|---------------------------------------|--------|--------|---------------------------------------|
|                                                                                                                                              | ThreeMonthsEndedJune      30, 2008 |     | ThreeMonthsEndedJune      30, 2007 |               | One      MonthEndedJune      30, 2007 |   |   | Two      MonthsEndedMay      31, 2007 |
|                                                                                                                                              | (In      millions)                 |     |                               | (In      millions) |
| Segment      Earnings (Loss) before Depreciation, Depletion and Amortization Expense      and Amortization of Excess Cost of Equity Investments:1 |                               |     |                               |               |                                  |   |   |                                  |   |   |   |   |   |   |   |   |   |
| NGPL                                                                                                                                              | $                                  | 8.7      |                               |               | $                                     | 166.5  |   |                                  |   | $ | 59.4 |   |   |   | $ | 107.1 |   |
| Power                                                                                                                                             |                               | 0.7      |                               |               |                                  | 5.6    |   |                                  |   |   | 2.4 |   |   |   |   | 3.2 |   |
| Express                                                                                                                                           |                               | 5.2      |                               |               |                                  | 4.5    |   |                                  |   |   | 2.7 |   |   |   |   | 1.8 |   |
| Products      Pipelines – KMP2                                                                                                              |                               | (977.2   | )                                  |               |                                  | 138.1  |   |                                  |   |   | 47.4 |   |   |   |   | 90.7 |   |
| Natural      Gas Pipelines – KMP2                                                                                                           |                               | (2,072.9 | )                                  |               |                                  | 143.6  |   |                                  |   |   | 49.8 |   |   |   |   | 93.8 |   |
| CO2 –      KMP                                                                                                                              |                               | 250.6    |                               |               |                                  | 141.8  |   |                                  |   |   | 57.2 |   |   |   |   | 84.6 |   |
| Terminals      – KMP2                                                                                                                       |                               | (536.3   | )                                  |               |                                  | 110.1  |   |                                  |   |   | 38.3 |   |   |   |   | 71.8 |   |
| Trans      Mountain – KMP2                                                                                                                  |                               | 33.4     |                               |               |                                  | 29.6   |   |                                  |   |   | 8.8 |   |   |   |   | 20.8 |   |
| Segment      Earnings (Loss) before Depreciation, Depletion and Amortization Expense      and Amortization of Excess Cost of Equity Investments   |                               | (3,287.8 | )                                  |               |                                  | 739.8  |   |                                  |   |   | 266.0 |   |   |   |   | 473.8 |   |
| Depreciation,      Depletion and Amortization Expense                                                                                             |                               | (215.7   | )                                  |               |                                  | (180.2 | )      |                                  |   |   | (72.2 | ) |   |   |   | (108.0 | ) |
| Amortization      of Excess Cost of Equity Investments                                                                                            |                               | (1.4     | )                                  |               |                                  | (1.5   | )      |                                  |   |   | (0.5 | ) |   |   |   | (1.0 | ) |
| Other                                                                                                                                             |                               | 17.6     |                               |               |                                  | 3.5    |   |                                  |   |   | 0.6 |   |   |   |   | 2.9 |   |
| Interest      and Corporate Expenses, Net                                                                                                         |                               | (355.9   | )                                  |               |                                  | (458.3 | )      |                                  |   |   | (144.7 | ) |   |   |   | (313.6 | ) |
| Income      (Loss) from Continuing Operations before Income Taxes1                                                                                |                               | (3,843.2 | )                                  |               |                                  | 103.3  |   |                                  |   |   | 49.2 |   |   |   |   | 54.1 |   |
| Income      Taxes1                                                                                                                                |                               | (17.1    | )                                  |               |                                  | (62.5  | )      |                                  |   |   | (21.3 | ) |   |   |   | (41.2 | ) |
| Income      (Loss) from Continuing Operations                                                                                                     |                               | (3,860.3 | )                                  |               |                                  | 40.8   |   |                                  |   |   | 27.9 |   |   |   |   | 12.9 |   |
| Income      (Loss) from Discontinued Operations, Net of Tax                                                                                       |                               | (0.3     | )                                  |               |                                  | 67.7   |   |                                  |   |   | 2.3 |   |   |   |   | 65.4 |   |
| Net      Income (Loss)                                                                                                                            | $                                  | (3,860.6 | )                                  |               | $                                     | 108.5  |   |                                  |   | $ | 30.2 |   |   |   | $ | 78.3 |   |

| 1 | Income      taxes of Kinder Morgan Energy Partners of $2.3 million, $6.6 million and      $6.6 million for the three months ended June 30, 2008, the combined three      months ended June 30, 2007 and the two months ended May 31, 2007,      respectively, are included in segmentearnings. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Results      include non-cash goodwill charges; see Note 3 of the accompanying Notes to      Consolidated Financial Statements. |
|---|---------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                              | SuccessorCompany                 |     | CombinedResults                  |               | SuccessorCompany                      |    |   | PredecessorCompany                     |
|---------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------|----------|----------------------------------|--------------------|---------------------------------------|---------|--------|----------------------------------------|
|                                                                                                                                              | SixMonthsEndedJune      30, 2008 |     | SixMonthsEndedJune      30, 2007 |               | One      MonthEndedJune      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 Investments:1 |                             |     |                             |               |                                  |    |   |                                   |   |   |   |   |   |   |   |   |   |
| NGPL                                                                                                                                              | $                                | 104.7    |                             |               | $                                     | 326.8   |   |                                   |   | $ | 59.4 |   |   |   | $ | 267.4 |   |
| Power                                                                                                                                             |                             | 2.8      |                             |               |                                  | 11.3    |   |                                   |   |   | 2.4 |   |   |   |   | 8.9 |   |
| Express                                                                                                                                           |                             | 9.2      |                             |               |                                  | 8.1     |   |                                   |   |   | 2.7 |   |   |   |   | 5.4 |   |
| Products      Pipelines – KMP2                                                                                                              |                             | (836.9   | )                                |               |                                  | 271.8   |   |                                   |   |   | 47.4 |   |   |   |   | 224.4 |   |
| Natural      Gas Pipelines – KMP2                                                                                                           |                             | (1,884.5 | )                                |               |                                  | 278.3   |   |                                   |   |   | 49.8 |   |   |   |   | 228.5 |   |
| CO2 –      KMP                                                                                                                              |                             | 483.9    |                             |               |                                  | 267.2   |   |                                   |   |   | 57.2 |   |   |   |   | 210.0 |   |
| Terminals      – KMP2                                                                                                                       |                             | (410.5   | )                                |               |                                  | 210.6   |   |                                   |   |   | 38.3 |   |   |   |   | 172.3 |   |
| Trans      Mountain – KMP2                                                                                                                  |                             | 63.6     |                             |               |                                  | (328.6  | )      |                                   |   |   | 8.8 |   |   |   |   | (337.4 | ) |
| Segment      Earnings (Loss) before Depreciation, Depletion and Amortization Expense      and Amortization of Excess Cost of Equity Investments   |                             | (2,467.7 | )                                |               |                                  | 1,045.5 |   |                                   |   |   | 266.0 |   |   |   |   | 779.5 |   |
| Depreciation,      Depletion and Amortization Expense                                                                                             |                             | (433.8   | )                                |               |                                  | (333.2  | )      |                                   |   |   | (72.2 | ) |   |   |   | (261.0 | ) |
| Amortization      of Excess Cost of Equity Investments                                                                                            |                             | (2.9     | )                                |               |                                  | (2.9    | )      |                                   |   |   | (0.5 | ) |   |   |   | (2.4 | ) |
| Other                                                                                                                                             |                             | 18.4     |                             |               |                                  | 3.5     |   |                                   |   |   | 0.6 |   |   |   |   | 2.9 |   |
| Interest      and Corporate Expenses, Net                                                                                                         |                             | (773.3   | )                                |               |                                  | (776.5  | )      |                                   |   |   | (144.7 | ) |   |   |   | (631.8 | ) |
| Income      (Loss) from Continuing Operations before Income Taxes1                                                                                |                             | (3,659.3 | )                                |               |                                  | (63.6   | )      |                                   |   |   | 49.2 |   |   |   |   | (112.8 | ) |
| Income      Taxes1                                                                                                                                |                             | (95.2    | )                                |               |                                  | (141.2  | )      |                                   |   |   | (21.3 | ) |   |   |   | (119.9 | ) |
| Income      (Loss) from Continuing Operations                                                                                                     |                             | (3,754.5 | )                                |               |                                  | (204.8  | )      |                                   |   |   | 27.9 |   |   |   |   | (232.7 | ) |
| Income      (Loss) from Discontinued Operations, Net of Tax                                                                                       |                             | (0.4     | )                                |               |                                  | 300.9   |   |                                   |   |   | 2.3 |   |   |   |   | 298.6 |   |
| Net      Income (Loss)                                                                                                                            | $                                | (3,754.9 | )                                |               | $                                     | 96.1    |   |                                   |   | $ | 30.2 |   |   |   | $ | 65.9 |   |

| 1 | Income      taxes of Kinder Morgan Energy Partners of $11.3 million, $15.6 million,      and $15.6 million for the six months ended June 30, 2008, the combined six      months ended June 30, 2007, and the five months ended May 31, 2007,      respectively, are included in segmentearnings. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Results      include non-cash goodwill charges; see Note 3 of the accompanying Notes to      Consolidated Financial Statements. |
|---|---------------------------------------------------------------------------------------------------------------------------------|

----

----

| Business      Segment                                                               | Business      Conducted                                                                                                                                                                                                                                                                                                      |   | Referred      to As:                                              |
|-------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                                                |                                                                                                                                                                                                                                                                                                                         |   |                                                              |
| Natural      Gas Pipeline Company ofAmerica      and certain affiliates   |  The      ownership and operation of a major interstate natural gas pipeline and      storage system until February 14, 2008, after which time an equity method      investment; see Note 12 of the accompanying Notes to Consolidated      Financial Statements.                                             |   |  Natural      Gas Pipeline Company of America, or NGPL  |
| Power      Generation                                                          | The      ownership and operation of natural gas-fired electric generation      facilities. Our principal remaining power assets were sold in January      2008; see Note 12 of the accompanying Notes to Consolidated Financial      Statements.                                                                   |   | Power                                                        |
| Express      Pipeline System                                                   | The      ownership of a one-third interest in the Express and Platte Pipelines, a      crude pipeline system, which investment we account for under the equity      method, and certain related entities.                                                                                                          |   | Express                                                      |
| Petroleum      Products Pipelines (Kinder Morgan Energy Partners)              |  The      ownership and operation of refined petroleum products pipelines that      deliver gasoline, diesel fuel, jet fuel and natural gas liquids to various      markets; plus associated product terminals and petroleum pipeline transmix      processing facilities.                                              |   |  Products      Pipelines – KMP                         |
| Natural      Gas Pipelines (Kinder Morgan Energy Partners)                     |  The      ownership and operation of major interstate and intrastate natural gas      pipeline and storage systems.                                                                                                                                                                                           |   |  Natural      Gas Pipelines – KMP                      |
| CO2      (Kinder Morgan Energy Partners)                                  | The      production, transportation and marketing of carbon dioxide (CO2) to      oil fields that use CO2 to      increase production of oil; plus ownership interests in and/or operation      of oil fields in West Texas; plus the ownership and operation of a crude      oil pipeline system in West Texas.   |   | CO2 –      KMP                                         |
| Liquids      and Bulk Terminals (Kinder Morgan Energy Partners)                |  The      ownership and/or operation of liquids and bulk terminal facilities and      rail transloading and materials handling facilities that together      transload, store and deliver a wide variety of bulk, petroleum,      petrochemical and other liquids products.                                   |   |  Terminals      – KMP                                  |
| Trans      Mountain Pipeline (Kinder Morgan Energy Partners)                   | The      ownership and operation of crude and refined petroleum pipelines,      principally located in Canada.                                                                                                                                                                                                               |   | Trans      Mountain – KMP                                   |

----

|                                  | SuccessorCompany                   |   | CombinedResults                    |               | SuccessorCompany                      |   |   | PredecessorCompany                    |
|---------------------------------------|------------------------------------|--------|------------------------------------|--------------------|---------------------------------------|--------|--------|---------------------------------------|
|                                  | ThreeMonthsEndedJune      30, 2008 |   | ThreeMonthsEndedJune      30, 2007 |               | One      MonthEndedJune      30, 2007 |   |   | Two      MonthsEndedMay      31, 2007 |
|                                  | (In      millions)                 |   |                               | (In      millions) |
| Segment      Earnings Before DD&A | $                                  | 8.7    |                               |               | $                                     | 166.5  |   |                                  | $ | 59.4 |   |   |   | $ | 107.1 |   |

----

|                                  | SuccessorCompany                       |   | CombinedResults                        |               | SuccessorCompany                      |   |   | PredecessorCompany                           |
|---------------------------------------|----------------------------------------|--------|----------------------------------------|--------------------|---------------------------------------|--------|--------|----------------------------------------------|
|                                  | Six      MonthsEndedJune      30, 2008 |   | Six      MonthsEndedJune      30, 2007 |               | One      MonthEndedJune      30, 2007 |   |   | Five      Months EndedMay      31, 2007 |
|                                  | (In      millions)                     |   |                                   | (In      millions) |
| Segment      Earnings Before DD&A | $                                      | 104.7  |                                   |               | $                                     | 326.8  |   |                                         | $ | 59.4 |   |   |   | $ | 267.4 |   |

|                                                       | SuccessorCompany                          |   | CombinedResults                           |               | SuccessorCompany                       |   |   | PredecessorCompany                     |
|------------------------------------------------------------|-------------------------------------------|--------|-------------------------------------------|--------------------|----------------------------------------|--------|--------|----------------------------------------|
|                                                       | Three      Months EndedJune      30, 2008 |   | Three      Months EndedJune      30, 2007 |               | One      Month EndedJune      30, 2007 |   |   | Two      Months EndedMay      31, 2007 |
|                                                       | (In      millions)                        |   |                                      | (In      millions) |
| Operating      Revenues                                    | $                                         | 13.2   |                                      |               | $                                      | 17.2   |   |                                   | $ | 8.9 |   |   |   | $ | 8.3 |   |
| Operating      Expenses and Minority Interests             |                                      | (12.5  | )                                         |               |                                   | (14.8  | )      |                                   |   | (7.8 | ) |   |   |   | (7.0 | ) |
| Equity      in Earnings of Thermo Cogeneration Partnership |                                      | -      |                                      |               |                                   | 3.2    |   |                                   |   | 1.3 |   |   |   |   | 1.9 |   |
| Segment      Earnings Before DD&A                      | $                                         | 0.7    |                                      |               | $                                      | 5.6    |   |                                   | $ | 2.4 |   |   |   | $ | 3.2 |   |

|                                                       | SuccessorCompany                       |   | CombinedResults                        |               | SuccessorCompany                      |   |   | PredecessorCompany                           |
|------------------------------------------------------------|----------------------------------------|--------|----------------------------------------|--------------------|---------------------------------------|--------|--------|----------------------------------------------|
|                                                       | Six      MonthsEndedJune      30, 2008 |   | Six      MonthsEndedJune      30, 2007 |               | One      MonthEndedJune      30, 2007 |   |   | Five      Months EndedMay      31, 2007 |
|                                                       | (In      millions)                     |   |                                   | (In      millions) |
| Operating      Revenues                                    | $                                      | 20.7   |                                   |               | $                                     | 28.8   |   |                                         | $ | 8.9 |   |   |   | $ | 19.9 |   |
| Operating      Expenses and Minority Interests             |                                   | (17.9  | )                                      |               |                                  | (23.9  | )      |                                         |   | (7.8 | ) |   |   |   | (16.1 | ) |
| Equity      in Earnings of Thermo Cogeneration Partnership |                                   | -      |                                   |               |                                  | 6.4    |   |                                         |   | 1.3 |   |   |   |   | 5.1 |   |
| Segment      Earnings Before DD&A                      | $                                      | 2.8    |                                   |               | $                                     | 11.3   |   |                                         | $ | 2.4 |   |   |   | $ | 8.9 |   |

----

|                                  | SuccessorCompany                          |   | CombinedResults                           |               | SuccessorCompany                       |   |   | PredecessorCompany                     |
|---------------------------------------|-------------------------------------------|--------|-------------------------------------------|--------------------|----------------------------------------|--------|--------|----------------------------------------|
|                                  | Three      Months EndedJune      30, 2008 |   | Three      Months EndedJune      30, 2007 |               | One      Month EndedJune      30, 2007 |   |   | Two      Months EndedMay      31, 2007 |
|                                  | (In      millions)                        |   |                                      | (In      millions) |
| Segment      Earnings Before DD&A | $                                         | 5.2    |                                      |               | $                                      | 4.5    |   |                                   | $ | 2.7 |   |   |   | $ | 1.8 |   |

|                                  | SuccessorCompany                       |   | CombinedResults                        |               | SuccessorCompany                      |   |   | PredecessorCompany                           |
|---------------------------------------|----------------------------------------|--------|----------------------------------------|--------------------|---------------------------------------|--------|--------|----------------------------------------------|
|                                  | Six      MonthsEndedJune      30, 2008 |   | Six      MonthsEndedJune      30, 2007 |               | One      MonthEndedJune      30, 2007 |   |   | Five      Months EndedMay      31, 2007 |
|                                  | (In      millions)                     |   |                                   | (In      millions) |
| Segment      Earnings Before DD&A | $                                      | 9.2    |                                   |               | $                                     | 8.1    |   |                                         | $ | 2.7 |   |   |   | $ | 5.4 |   |

|                                                  | SuccessorCompany                   |     | CombinedResults                    |               | SuccessorCompany                      |   |   | PredecessorCompany                   |
|-------------------------------------------------------|------------------------------------|----------|------------------------------------|--------------------|---------------------------------------|--------|--------|--------------------------------------|
|                                                  | ThreeMonthsEndedJune      30, 2008 |     | ThreeMonthsEndedJune      30, 2007 |               | One      MonthEndedJune      30, 2007 |   |   | Two      MonthEndedMay      31, 2007 |
|                                                  | (In      millions)                 |     |                               | (In      millions) |
| Operating      Revenues                               | $                                  | 198.5    |                               |               | $                                     | 201.4  |   |                                 | $ | 66.8 |   |   |   | $ | 134.6 |   |
| Operating      Expenses1                              |                               | (68.5    | )                                  |               |                                  | (71.4  | )      |                                 |   | (23.1 | ) |   |   |   | (48.3 | ) |
| Other      Income (Expense)2                          |                               | (0.2     | )                                  |               |                                  | 1.0    |   |                                 |   | 1.1 |   |   |   |   | (0.1 | ) |
| Goodwill      Impairment3                             |                               | (1,113.9 | )                                  |               |                                  | -      |   |                                 |   | - |   |   |   |   | - |   |
| Earnings      from Equity Investments                 |                               | 5.5      |                               |               |                                  | 8.5    |   |                                 |   | 2.9 |   |   |   |   | 5.6 |   |
| Interest      Income and Other Income (Expense), Net4 |                               | 1.3      |                               |               |                                  | 4.2    |   |                                 |   | 0.6 |   |   |   |   | 3.6 |   |
| Income      Tax Benefit (Expense)                     |                               | 0.1      |                               |               |                                  | (5.6   | )      |                                 |   | (0.9 | ) |   |   |   | (4.7 | ) |
| Segment      Earnings (Loss) Before DD&A          | $                                  | (977.2   | )                                  |               | $                                     | 138.1  |   |                                 | $ | 47.4 |   |   |   | $ | 90.7 |   |
|                                             |                               |     |                               |               |                                  |   |   |                                 |   |   |   |   |   |   |   |   |
| Operating      Statistics:                            |                               |     |                               |               |                                  |   |   |                                 |   |   |   |   |   |   |   |   |
| Gasoline      (MMBbl)                                 |                               | 100.5    |                               |               |                                  | 113.6  |   |                                 |   | 38.0 |   |   |   |   | 75.6 |   |
| Diesel      Fuel (MMBbl)                              |                               | 41.6     |                               |               |                                  | 42.0   |   |                                 |   | 13.5 |   |   |   |   | 28.5 |   |
| Jet      Fuel (MMBbl)                                 |                               | 29.9     |                               |               |                                  | 31.9   |   |                                 |   | 10.8 |   |   |   |   | 21.1 |   |
| Total      Refined Product Volumes (MMBbl)            |                               | 172.0    |                               |               |                                  | 187.5  |   |                                 |   | 62.3 |   |   |   |   | 125.2 |   |
| Natural      Gas Liquids (MMBbl)                      |                               | 6.1      |                               |               |                                  | 5.9    |   |                                 |   | 1.8 |   |   |   |   | 4.1 |   |
| Total      Delivery Volumes (MMBbl)5                  |                               | 178.1    |                               |               |                                  | 193.4  |   |                                 |   | 64.1 |   |   |   |   | 129.3 |   |

----

|                                                  | SuccessorCompany                       |     | CombinedResults                        |               | SuccessorCompany                      |   |   | PredecessorCompany                     |
|-------------------------------------------------------|----------------------------------------|----------|----------------------------------------|--------------------|---------------------------------------|--------|--------|----------------------------------------|
|                                                  | Six      MonthsEndedJune      30, 2008 |     | Six      MonthsEndedJune      30, 2007 |               | One      MonthEndedJune      30, 2007 |   |   | Five      MonthsEndedMay      31, 2007 |
|                                                  | (In      millions)                     |     |                                   | (In      millions) |
| Operating      Revenues                               | $                                      | 396.9    |                                   |               | $                                     | 398.5  |   |                                   | $ | 66.8 |   |   |   | $ | 331.7 |   |
| Operating      Expenses1                              |                                   | (130.9   | )                                      |               |                                  | (139.4 | )      |                                   |   | (23.1 | ) |   |   |   | (116.3 | ) |
| Other      Income (Expense)2                          |                                   | (0.3     | )                                      |               |                                  | 0.5    |   |                                   |   | 1.1 |   |   |   |   | (0.6 | ) |
| Goodwill      Impairment3                             |                                   | (1,113.9 | )                                      |               |                                  | -      |   |                                   |   | - |   |   |   |   | - |   |
| Earnings      from Equity Investments                 |                                   | 10.3     |                                   |               |                                  | 15.3   |   |                                   |   | 2.9 |   |   |   |   | 12.4 |   |
| Interest      Income and Other Income (Expense), Net4 |                                   | 1.8      |                                   |               |                                  | 5.3    |   |                                   |   | 0.6 |   |   |   |   | 4.7 |   |
| Income      Tax Expense                               |                                   | (0.8     | )                                      |               |                                  | (8.4   | )      |                                   |   | (0.9 | ) |   |   |   | (7.5 | ) |
| Segment      Earnings (Loss) Before DD&A          | $                                      | (836.9   | )                                      |               | $                                     | 271.8  |   |                                   | $ | 47.4 |   |   |   | $ | 224.4 |   |
|                                             |                                   |     |                                   |               |                                  |   |   |                                   |   |   |   |   |   |   |   |   |
| Operating      Statistics:                            |                                   |     |                                   |               |                                  |   |   |                                   |   |   |   |   |   |   |   |   |
| Gasoline      (MMBbl)                                 |                                   | 198.4    |                                   |               |                                  | 220.8  |   |                                   |   | 38.0 |   |   |   |   | 182.8 |   |
| Diesel      Fuel (MMBbl)                              |                                   | 80.2     |                                   |               |                                  | 80.1   |   |                                   |   | 13.5 |   |   |   |   | 66.6 |   |
| Jet      Fuel (MMBbl)                                 |                                   | 59.6     |                                   |               |                                  | 62.1   |   |                                   |   | 10.8 |   |   |   |   | 51.3 |   |
| Total      Refined Product Volumes (MMBbl)            |                                   | 338.2    |                                   |               |                                  | 363.0  |   |                                   |   | 62.3 |   |   |   |   | 300.7 |   |
| Natural      Gas Liquids (MMBbl)                      |                                   | 13.0     |                                   |               |                                  | 15.5   |   |                                   |   | 1.8 |   |   |   |   | 13.7 |   |
| Total      Delivery Volumes (MMBbl)5                  |                                   | 351.2    |                                   |               |                                  | 378.5  |   |                                   |   | 64.1 |   |   |   |   | 314.4 |   |

| 1 | 2008      amounts include a $3.0 million decrease in expense to our Pacific      operations and a $3.0 million increase in expense to our Calnev Pipeline      associated with offsetting legal liability adjustments. For the two and      five months ended May 31, 2007, amounts include an increase in expense of      $2.2 million associated with environmental liability      adjustments. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | June      2007 results include a $1.8 million decrease in segment earnings resulting      from valuation adjustments related to assets sold in June, recorded in the      application of the purchase method of accounting to the Going Private      transaction (see Note 2 of the accompanying Notes to Consolidated      Financial Statements). |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | 2008      amount includes a non-cash goodwill impairment charge of $1,113.9      million. |
|---|-------------------------------------------------------------------------------------------|

| 4 | Three      and six month 2008 amounts include an increase in income of $0.1 million      and a decrease in income of $0.7 million, respectively, resulting from      unrealized foreign currency losses on long-term debt transactions. One      month ended June 30, 2007 amounts include an increase in income of $0.8      million resulting from unrealized foreign currency gains on long-term debt      transactions. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5 | Includes      Pacific, Plantation, Calnev, Central Florida, Cochin and Cypress pipeline      volumes. |
|---|-------------------------------------------------------------------------------------------------------|

----

|                                    | EBDAIncrease/(Decrease) |   | RevenuesIncrease/(Decrease) |
|-----------------------------------------|-------------------------|--------|-----------------------------|
| Pacific      Operations                 | $                       | (4.6   | )                           |   | (7 | )% |   | $ | (0.4 | ) |   | — |   |
| West      Coast Terminals               |                    | (2.4   | )                           |   | (17 | )% |   |   | (0.2 | ) |   | (1 | )% |
| Cochin      Pipeline System             |                    | (1.3   | )                           |   | (18 | )% |   |   | (5.7 | ) |   | (34 | )% |
| Central      Florida Pipeline           |                    | 2.1    |                        |   | 23 | % |   |   | 2.0 |   |   | 18 | % |
| Southeast      Terminals                |                    | 1.0    |                        |   | 9 | % |   |   | 0.4 |   |   | 2 | % |
| All      Other (Including Eliminations) |                    | 0.5    |                        |   | 2 | % |   |   | 1.0 |   |   | 2 | % |
| Total      Products Pipelines           | $                       | (4.7   | )                           |   | (3 | )% |   | $ | (2.9 | ) |   | (1 | )% |

|                                    | EBDAIncrease/(Decrease) |   | RevenuesIncrease/(Decrease) |
|-----------------------------------------|-------------------------|--------|-----------------------------|
| Pacific      Operation                  | $                       | (1.4   | )                           |   | (1 | )% |   | $ | 2.6 |   |   | 1 | % |
| West      Coast Terminals               |                    | (2.3   | )                           |   | (9 | )% |   |   | 1.0 |   |   | 3 | % |
| Cochin      Pipeline System             |                    | (1.8   | )                           |   | (10 | )% |   |   | (12.5 | ) |   | (33 | )% |
| Central      Florida Pipeline           |                    | 2.9    |                        |   | 16 | % |   |   | 2.4 |   |   | 11 | % |
| Southeast      Terminals                |                    | 3.4    |                        |   | 17 | % |   |   | 2.0 |   |   | 5 | % |
| All      Other (Including Eliminations) |                    | 1.9    |                        |   | 3 | % |   |   | 2.9 |   |   | 3 | % |
| Total      Products Pipelines           | $                       | 2.7    |                        |   | 1 | % |   | $ | (1.6 | ) |   | - |   |

----

|                                                 | SuccessorCompany                          |     | CombinedResults                           |               | SuccessorCompany                      |     |   | PredecessorCompany                    |
|------------------------------------------------------|-------------------------------------------|----------|-------------------------------------------|--------------------|---------------------------------------|----------|--------|---------------------------------------|
|                                                 | Three      Months EndedJune      30, 2008 |     | Three      Months EndedJune      30, 2007 |               | One      MonthEndedJune      30, 2007 |     |   | Two      MonthsEndedMay      31, 2007 |
|                                                 | (In      millions)                        |     |                                      | (In      millions) |
| Operating      Revenues                              | $                                         | 2,644.7  |                                      |               | $                                     | 1,693.1  |   |                                  |   | $ | 587.9 |   |   |   | $ | 1,105.2 |   |
| Operating      Expenses1                             |                                      | (2,515.2 | )                                         |               |                                  | (1,555.0 | )      |                                  |   |   | (542.2 | ) |   |   |   | (1,012.8 | ) |
| Other      Income (Expense)2                         |                                      | 2.7      |                                      |               |                                  | 1.3      |   |                                  |   |   | 1.4 |   |   |   |   | (0.1 | ) |
| Goodwill      Impairment3                            |                                      | (2,242.8 | )                                         |               |                                  | -        |   |                                  |   |   | - |   |   |   |   | - |   |
| Earnings      from Equity Investments4               |                                      | 31.3     |                                      |               |                                  | 3.8      |   |                                  |   |   | 1.3 |   |   |   |   | 2.5 |   |
| Interest      Income and Other Income (Expense), Net |                                      | 4.7      |                                      |               |                                  | 0.2      |   |                                  |   |   | - |   |   |   |   | 0.2 |   |
| Income      Tax Benefit (Expense)                    |                                      | 1.7      |                                      |               |                                  | 0.2      |   |                                  |   |   | 1.4 |   |   |   |   | (1.2 | ) |
| Segment      Earnings (Loss) Before DD&A         | $                                         | (2,072.9 | )                                         |               | $                                     | 143.6    |   |                                  |   | $ | 49.8 |   |   |   | $ | 93.8 |   |
|                                            |                                      |     |                                      |               |                                  |     |   |                                  |   |   |   |   |   |   |   |   |   |
| Operating      Statistics:                           |                                      |     |                                      |               |                                  |     |   |                                  |   |   |   |   |   |   |   |   |   |
| Natural      Gas Transport Volumes (Trillion Btus)5  |                                      | 545.1    |                                      |               |                                  | 429.5    |   |                                  |   |   | 127.1 |   |   |   |   | 302.4 |   |
| Natural      Gas Sales Volumes (Trillion Btus)6      |                                      | 224.9    |                                      |               |                                  | 207.6    |   |                                  |   |   | 70.8 |   |   |   |   | 136.8 |   |

|                                                 | SuccessorCompany                       |     | CombinedResults                        |               | SuccessorCompany                      |     |   | PredecessorCompany                     |
|------------------------------------------------------|----------------------------------------|----------|----------------------------------------|--------------------|---------------------------------------|----------|--------|----------------------------------------|
|                                                 | Six      MonthsEndedJune      30, 2008 |     | Six      MonthsEndedJune      30, 2007 |               | One      MonthEndedJune      30, 2007 |     |   | Five      MonthsEndedMay      31, 2007 |
|                                                 | (In      millions)                     |     |                                   | (In      millions) |
| Operating      Revenues                              | $                                      | 4,557.2  |                                   |               | $                                     | 3,228.5  |   |                                   |   | $ | 587.9 |   |   |   | $ | 2,640.6 |   |
| Operating      Expenses1                             |                                   | (4,260.2 | )                                      |               |                                  | (2,960.7 | )      |                                   |   |   | (542.2 | ) |   |   |   | (2,418.5 | ) |
| Other      Income (Expense)2                         |                                   | 2.7      |                                   |               |                                  | 1.3      |   |                                   |   |   | 1.4 |   |   |   |   | (0.1 | ) |
| Goodwill      Impairment3                            |                                   | (2,242.8 | )                                      |               |                                  | -        |   |                                   |   |   | - |   |   |   |   | - |   |
| Earnings      from Equity Investments4               |                                   | 54.9     |                                   |               |                                  | 10.2     |   |                                   |   |   | 1.3 |   |   |   |   | 8.9 |   |
| Interest      Income and Other Income (Expense), Net |                                   | 4.9      |                                   |               |                                  | 0.2      |   |                                   |   |   | - |   |   |   |   | 0.2 |   |
| Income      Tax Benefit (Expense)                    |                                   | (1.2     | )                                      |               |                                  | (1.2     | )      |                                   |   |   | 1.4 |   |   |   |   | (2.6 | ) |
| Segment      Earnings (Loss) Before DD&A         | $                                      | (1,884.5 | )                                      |               | $                                     | 278.3    |   |                                   |   | $ | 49.8 |   |   |   | $ | 228.5 |   |
|                                            |                                   |     |                                   |               |                                  |     |   |                                   |   |   |   |   |   |   |   |   |   |
| Operating      Statistics:                           |                                   |     |                                   |               |                                  |     |   |                                   |   |   |   |   |   |   |   |   |   |
| Natural      Gas Transport Volumes (Trillion Btus)5  |                                   | 1,040.5  |                                   |               |                                  | 834.5    |   |                                   |   |   | 127.1 |   |   |   |   | 707.4 |   |
| Natural      Gas Sales Volumes (Trillion Btus)6      |                                   | 440.0    |                                   |               |                                  | 416.6    |   |                                   |   |   | 70.8 |   |   |   |   | 345.8 |   |

| 1 | Three      and six month 2008 amounts include a $13.1 million increase in expense      resulting from unrealized mark to market losses due to the discontinuance      of hedge accounting. Beginning in the second quarter of 2008, our Casper      and Douglas gas processing operations discontinued hedge accounting.      Amounts also include increases in segment earnings of $0.3 million and      $0.5 million for the three and six month periods ended June 30, 2008,      respectively, and of $0.4 million for both the three and six month periods      ended June 30, 2007, 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 (see Note 2 of the      accompanying Notes to Consolidated Financial  Statements). |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | June      2007 amounts include a $1.4 million decrease in segment earnings resulting      from valuation adjustments, related to assets sold in June, recorded in      the application of the purchase method of accounting to the Going Private      transaction (see Note 2 of the accompanying Notes to Consolidated      Financial Statements). |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | 2008      amount includes a non-cash goodwill impairment charge of $2,242.8      million. |
|---|-------------------------------------------------------------------------------------------|

| 4 | Six      month 2007 amount includes an expense of $1.0 million reflecting our      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) |
|--------------------------------------------------|-------------------------|---------|-----------------------------|
| Rockies      Express Pipeline                    | $                       | 28.5    |                        |   | 724 | % |   | $ | — |   |   | n/a |   |
| Texas      Intrastate Natural Gas Pipeline Group |                    | 4.5     |                        |   | 5 | % |   |   | 928.3 |   |   | 58 | % |
| TransColorado      Pipeline                      |                    | 3.0     |                        |   | 28 | % |   |   | 3.1 |   |   | 25 | % |
| Kinder      Morgan Louisiana Pipeline            |                    | 3.0     |                        |   | n/a |   |   |   | — |   |   | n/a |   |
| Casper      and Douglas Gas Processing           |                    | (2.1    | )                           |   | (42 | )% |   |   | 17.8 |   |   | 77 | % |
| All      Others                                  |                    | 1.2     |                        |   | 2 | % |   |   | 2.4 |   |   | 4 | % |
| Intrasegment      Eliminations                   |                    | — |                        |   | n/a |   |   |   | — |   |   | n/a |   |
| Total      Natural Gas Pipelines                 | $                       | 38.1    |                        |   | 26 | % |   | $ | 951.6 |   |   | 56 | % |

|                                             | EBDAIncrease/(Decrease) |    | RevenuesIncrease/(Decrease) |
|--------------------------------------------------|-------------------------|---------|-----------------------------|
| Rockies      Express Pipeline                    | $                       | 45.3    |                        |   | 808 | % |   | $ | — |   |   | n/a |   |
| Texas      Intrastate Natural Gas Pipeline Group |                    | 36.5    |                        |   | 22 | % |   |   | 1,284.2 |   |   | 25 | % |
| TransColorado      Pipeline                      |                    | 6.1     |                        |   | 29 | % |   |   | 6.8 |   |   | 27 | % |
| Kinder      Morgan Louisiana Pipeline            |                    | 3.0     |                        |   | n/a |   |   |   | — |   |   | n/a |   |
| Casper      and Douglas Gas Processing           |                    | (2.8    | )                           |   | (32 | )% |   |   | 36.9 |   |   | 87 | % |
| All      Others                                  |                    | 2.5     |                        |   | 3 | % |   |   | 3.2 |   |   | 3 | % |
| Intrasegment      Eliminations                   |                    | — |                        |   | n/a |   |   |   | (2.4 | ) |   | (385 | )% |
| Total      Natural Gas Pipelines                 | $                       | 90.6    |                        |   | 32 | % |   | $ | 1,328.7 |   |   | 41 | % |

----

----

|                                                                      | SuccessorCompany                   |   | CombinedResults                    |               | SuccessorCompany                      |   |   | PredecessorCompany                    |
|---------------------------------------------------------------------------|------------------------------------|--------|------------------------------------|--------------------|---------------------------------------|--------|--------|---------------------------------------|
|                                                                      | ThreeMonthsEndedJune      30, 2008 |   | ThreeMonthsEndedJune      30, 2007 |               | One      MonthEndedJune      30, 2007 |   |   | Two      MonthsEndedMay      31, 2007 |
|                                                                      | (In      millions)                 |   |                               | (In      millions) |
| Operating      Revenues1                                                  | $                                  | 342.6  |                               |               | $                                     | 212.4  |   |                                  |   | $ | 79.8 |   |   |   | $ | 132.6 |   |
| Operating      Expenses                                                   |                               | (96.6  | )                                  |               |                                  | (76.2  | )      |                                  |   |   | (25.3 | ) |   |   |   | (50.9 | ) |
| Earnings      from Equity Investments                                     |                               | 5.5    |                               |               |                                  | 5.0    |   |                                  |   |   | 1.5 |   |   |   |   | 3.5 |   |
| Other      Income (Expense), Net                                          |                               | -      |                               |               |                                  | -      |   |                                  |   |   | 0.1 |   |   |   |   | (0.1 | ) |
| Income      Tax Benefit (Expense)                                         |                               | (0.9   | )                                  |               |                                  | 0.6    |   |                                  |   |   | 1.1 |   |   |   |   | (0.5 | ) |
| Segment      Earnings Before DD&A                                     | $                                  | 250.6  |                               |               | $                                     | 141.8  |   |                                  |   | $ | 57.2 |   |   |   | $ | 84.6 |   |
|                                                                 |                               |   |                               |               |                                  |   |   |                                  |   |   |   |   |   |   |   |   |   |
| Operating      Statistics:                                                |                               |   |                               |               |                                  |   |   |                                  |   |   |   |   |   |   |   |   |   |
| Carbon      Dioxide Delivery Volumes(Bcf)2                                |                               | 178.6  |                               |               |                                  | 156.6  |   |                                  |   |   | 49.9 |   |   |   |   | 106.7 |   |
| SACROC      Oil Production (Gross)(MBbl/d)3                               |                               | 27.5   |                               |               |                                  | 28.0   |   |                                  |   |   | 28.1 |   |   |   |   | 28.0 |   |
| SACROC      Oil Production (Net)(MBbl/d)4                                 |                               | 22.9   |                               |               |                                  | 23.3   |   |                                  |   |   | 23.4 |   |   |   |   | 23.3 |   |
| Yates      Oil Production (Gross)(MBbl/d)5                                |                               | 28.1   |                               |               |                                  | 27.0   |   |                                  |   |   | 27.4 |   |   |   |   | 26.9 |   |
| Yates      Oil Production (Net)(MBbl/d)4                                  |                               | 12.5   |                               |               |                                  | 12.0   |   |                                  |   |   | 12.1 |   |   |   |   | 11.9 |   |
| Natural      Gas Liquids Sales Volumes (Net)(MBbl/d)4                     |                               | 9.1    |                               |               |                                  | 9.7    |   |                                  |   |   | 10.0 |   |   |   |   | 9.6 |   |
| Realized      Weighted Average Oil Price per Bbl5,      6                 | $                                  | 53.01  |                               |               | $                                     | 34.76  |   |                                  |   | $ | 34.67 |   |   |   | $ | 34.81 |   |
| Realized      Weighted Average Natural Gas Liquids Price per Bbl6,      7 | $                                  | 77.28  |                               |               | $                                     | 50.35  |   |                                  |   | $ | 51.01 |   |   |   | $ | 50.02 |   |

|                                                                      | SuccessorCompany                       |   | CombinedResults                        |               | SuccessorCompany                      |   |   | PredecessorCompany                     |
|---------------------------------------------------------------------------|----------------------------------------|--------|----------------------------------------|--------------------|---------------------------------------|--------|--------|----------------------------------------|
|                                                                      | Six      MonthsEndedJune      30, 2008 |   | Six      MonthsEndedJune      30, 2007 |               | One      MonthEndedJune      30, 2007 |   |   | Five      MonthsEndedMay      31, 2007 |
|                                                                      | (In      millions)                     |   |                                   | (In      millions) |
| Operating      Revenues1                                                  | $                                      | 662.5  |                                   |               | $                                     | 404.0  |   |                                   |   | $ | 79.8 |   |   |   | $ | 324.2 |   |
| Operating      Expenses                                                   |                                   | (187.3 | )                                      |               |                                  | (146.8 | )      |                                   |   |   | (25.3 | ) |   |   |   | (121.5 | ) |
| Earnings      from Equity Investments                                     |                                   | 11.1   |                                   |               |                                  | 10.2   |   |                                   |   |   | 1.5 |   |   |   |   | 8.7 |   |
| Other      Income (Expense), Net                                          |                                   | (0.2   | )                                      |               |                                  | -      |   |                                   |   |   | 0.1 |   |   |   |   | (0.1 | ) |
| Income      Tax Benefit (Expense)                                         |                                   | (2.2   | )                                      |               |                                  | (0.2   | )      |                                   |   |   | 1.1 |   |   |   |   | (1.3 | ) |
| Segment      Earnings Before DD&A                                     | $                                      | 483.9  |                                   |               | $                                     | 267.2  |   |                                   |   | $ | 57.2 |   |   |   | $ | 210.0 |   |
|                                                                 |                                   |   |                                   |               |                                  |   |   |                                   |   |   |   |   |   |   |   |   |   |
| Operating      Statistics:                                                |                                   |   |                                   |               |                                  |   |   |                                   |   |   |   |   |   |   |   |   |   |
| Carbon      Dioxide Delivery Volumes(Bcf)2                                |                                   | 358.8  |                                   |               |                                  | 322.2  |   |                                   |   |   | 49.9 |   |   |   |   | 272.3 |   |
| SACROC      Oil Production (Gross)(MBbl/d)3                               |                                   | 27.4   |                                   |               |                                  | 28.9   |   |                                   |   |   | 28.1 |   |   |   |   | 29.1 |   |
| SACROC      Oil Production (Net)(MBbl/d)4                                 |                                   | 22.8   |                                   |               |                                  | 24.1   |   |                                   |   |   | 23.4 |   |   |   |   | 24.2 |   |
| Yates      Oil Production (Gross)(MBbl/d)3                                |                                   | 28.3   |                                   |               |                                  | 26.6   |   |                                   |   |   | 27.4 |   |   |   |   | 26.4 |   |
| Yates      Oil Production (Net)(MBbl/d)4                                  |                                   | 12.6   |                                   |               |                                  | 11.8   |   |                                   |   |   | 12.1 |   |   |   |   | 11.7 |   |
| Natural      Gas Liquids Sales Volumes (Net)(MBbl/d)4                     |                                   | 9.3    |                                   |               |                                  | 9.7    |   |                                   |   |   | 10.0 |   |   |   |   | 9.7 |   |
| Realized      Weighted Average Oil Price per Bbl5,      6                 | $                                      | 51.52  |                                   |               | $                                     | 34.97  |   |                                   |   | $ | 34.67 |   |   |   | $ | 35.03 |   |
| Realized      Weighted Average Natural Gas Liquids Price per Bbl6,      7 | $                                      | 71.48  |                                   |               | $                                     | 46.05  |   |                                   |   | $ | 51.01 |   |   |   | $ | 45.04 |   |

| 1 | Amounts      include increases in segment earnings resulting from valuation adjustments      of $34.0 million and $67.5 million for the three and six month periods      ended June 30, 2008, respectively, and $12.9 million (net of a $0.6      million loss on sale of assets) for both the three and six month periods      ended June 30, 2007, 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 (see Note 2 of the accompanying Notes      to Consolidated FinancialStatements). |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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 approximate 97% working interest in the SACROC unit and an approximate      50% working interest in the Yatesunit. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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) |
|------------------------------------------|----------------------------|--------|-----------------------------|
|                                     | (Dollars      in millions) |
| Sales      and Transportation Activities | $                          | 28.1   |                        |   | 64 | % |   | $ | 34.2 |   |   | 77 | % |
| Oil      and Gas Producing Activities    |                       | 59.6   |                        |   | 70 | % |   |   | 84.5 |   |   | 51 | % |
| Intrasegment      Eliminations           |                       | -      |                        |   | - |   |   |   | (9.6 | ) |   | (91 | )% |
| Total                                    | $                          | 87.7   |                        |   | 68 | % |   | $ | 109.1 |   |   | 55 | % |

|                                     | EBDAIncrease/(Decrease)    |   | RevenuesIncrease/(Decrease) |
|------------------------------------------|----------------------------|--------|-----------------------------|
|                                     | (Dollars      in millions) |
| Sales      and Transportation Activities | $                          | 57.1   |                        |   | 69 | % |   | $ | 65.4 |   |   | 75 | % |
| Oil      and Gas Producing Activities    |                       | 105.0  |                        |   | 61 | % |   |   | 154.2 |   |   | 47 | % |
| Intrasegment      Eliminations           |                       | -      |                        |   | - |   |   |   | (15.7 | ) |   | (71 | )% |
| Total                                    | $                          | 162.1  |                        |   | 64 | % |   | $ | 203.9 |   |   | 52 | % |

----

|                                                 | SuccessorCompany                         |   | CombinedResults                          |               | SuccessorCompany                      |   |   | PredecessorCompany                    |
|------------------------------------------------------|------------------------------------------|--------|------------------------------------------|--------------------|---------------------------------------|--------|--------|---------------------------------------|
|                                                 | Three      MonthsEndedJune      30, 2008 |   | Three      MonthsEndedJune      30, 2007 |               | One      MonthEndedJune      30, 2007 |   |   | Two      MonthsEndedMay      31, 2007 |
|                                                 | (In      millions)                       |   |                                     | (In      millions) |
| Operating      Revenues                              | $                                        | 300.7  |                                     |               | $                                     | 229.0  |   |                                  |   | $ | 79.6 |   |   |   | $ | 149.4 |   |
| Operating      Expenses                              |                                     | (156.1 | )                                        |               |                                  | (117.1 | )      |                                  |   |   | (40.7 | ) |   |   |   | (76.4 | ) |
| Other      Income                                    |                                     | (0.2   | )                                        |               |                                  | 1.7    |   |                                  |   |   | 1.4 |   |   |   |   | 0.3 |   |
| Goodwill      Impairment1                            |                                     | (676.6 | )                                        |               |                                  | -      |   |                                  |   |   | - |   |   |   |   | - |   |
| Earnings      from Equity Investments                |                                     | 0.7    |                                     |               |                                  | -      |   |                                  |   |   | - |   |   |   |   | - |   |
| Interest      Income and Other Income (Expense), Net |                                     | 1.4    |                                     |               |                                  | -      |   |                                  |   |   | (0.3 | ) |   |   |   | 0.3 |   |
| Income      Tax Expense                              |                                     | (6.2   | )                                        |               |                                  | (3.5   | )      |                                  |   |   | (1.7 | ) |   |   |   | (1.8 | ) |
| Segment      Earnings (Loss) Before DD&A         | $                                        | (536.3 | )                                        |               | $                                     | 110.1  |   |                                  |   | $ | 38.3 |   |   |   | $ | 71.8 |   |
|                                            |                                     |   |                                     |               |                                  |   |   |                                  |   |   |   |   |   |   |   |   |   |
| Operating      Statistics:                           |                                     |   |                                     |               |                                  |   |   |                                  |   |   |   |   |   |   |   |   |   |
| Bulk      Transload Tonnage (MMtons)2                |                                     | 26.7   |                                     |               |                                  | 25.1   |   |                                  |   |   | 6.9 |   |   |   |   | 18.2 |   |
| Liquids      Leaseable Capacity (MMBbl)              |                                     | 52.4   |                                     |               |                                  | 43.7   |   |                                  |   |   | 43.7 |   |   |   |   | 43.6 |   |
| Liquids      Utilization                             |                                     | 98.1   | %                                        |               |                                  | 97.1   | %      |                                  |   |   | 97.1 | % |   |   |   | 97.5 | % |

----

|                                                 | SuccessorCompany                       |   | CombinedResults                        |               | SuccessorCompany                       |   |   | PredecessorCompany                      |
|------------------------------------------------------|----------------------------------------|--------|----------------------------------------|--------------------|----------------------------------------|--------|--------|-----------------------------------------|
|                                                 | Six      MonthsEndedJune      30, 2008 |   | Six      MonthsEndedJune      30, 2007 |               | One      Month EndedJune      30, 2007 |   |   | Five      Months EndedMay      31, 2007 |
|                                                 | (In      millions)                     |   |                                   | (In      millions) |
| Operating      Revenues                              | $                                      | 580.9  |                                   |               | $                                      | 444.1  |   |                                    |   | $ | 79.6 |   |   |   | $ | 364.5 |   |
| Operating      Expenses                              |                                   | (308.9 | )                                      |               |                                   | (232.9 | )      |                                    |   |   | (40.7 | ) |   |   |   | (192.2 | ) |
| Other      Income3                                   |                                   | 0.4    |                                   |               |                                   | 4.4    |   |                                    |   |   | 1.4 |   |   |   |   | 3.0 |   |
| Goodwill      Impairment1                            |                                   | (676.6 | )                                      |               |                                   | -      |   |                                    |   |   | - |   |   |   |   | - |   |
| Earnings      from Equity Investments                |                                   | 1.7    |                                   |               |                                   | -      |   |                                    |   |   | - |   |   |   |   | - |   |
| Interest      Income and Other Income (Expense), Net |                                   | 2.7    |                                   |               |                                   | -      |   |                                    |   |   | (0.3 | ) |   |   |   | 0.3 |   |
| Income      Tax Expense                              |                                   | (10.7  | )                                      |               |                                   | (5.0   | )      |                                    |   |   | (1.7 | ) |   |   |   | (3.3 | ) |
| Segment      Earnings (Loss) Before DD&A         | $                                      | (410.5 | )                                      |               | $                                      | 210.6  |   |                                    |   | $ | 38.3 |   |   |   | $ | 172.3 |   |
|                                            |                                   |   |                                   |               |                                   |   |   |                                    |   |   |   |   |   |   |   |   |   |
| Operating      Statistics:                           |                                   |   |                                   |               |                                   |   |   |                                    |   |   |   |   |   |   |   |   |   |
| Bulk      Transload Tonnage (MMtons)2                |                                   | 49.8   |                                   |               |                                   | 48.3   |   |                                    |   |   | 6.9 |   |   |   |   | 41.4 |   |
| Liquids      Leaseable Capacity (MMBbl)              |                                   | 52.4   |                                   |               |                                   | 43.7   |   |                                    |   |   | 43.7 |   |   |   |   | 43.6 |   |
| Liquids      Utilization                             |                                   | 98.1   | %                                      |               |                                   | 97.1   | %      |                                    |   |   | 97.1 | % |   |   |   | 97.5 | % |

| 1 | 2008      amounts include a non-cash goodwill impairment charge of $676.6      million. |
|---|-----------------------------------------------------------------------------------------|

| 2 | Volumes      for acquired terminals are included for all  periods. |
|---|--------------------------------------------------------------------|

| 3 | The      five months ended May 31, 2007 amount includes an increase in income of      $1.8 million from property casualty gains associated with the 2005      hurricane season. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      Vancouver Wharves bulk marine terminal, which includes five deep-sea      vessel berths and terminal assets located on the north shore of the Port      of Vancouver’s main harbor. The assets include significant rail      infrastructure, dry bulk and liquid storage, and material handling      systems, and were acquired May 30, 2007;and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      terminal assets and operations acquired from Marine Terminals, Inc., which      acquired assets are primarily involved in the handling and storage of      steel and alloys and consist of two separate facilities located in      Blytheville, Arkansas, and individual terminal facilities located in      Decatur, Alabama; Hertford, North Carolina; and Berkley, South Carolina.      The assets were acquired September 1,2007. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                 | SuccessorCompany                         |   | CombinedResults                          |               | SuccessorCompany                      |   |   | PredecessorCompany                    |
|------------------------------------------------------|------------------------------------------|--------|------------------------------------------|--------------------|---------------------------------------|--------|--------|---------------------------------------|
|                                                 | Three      MonthsEndedJune      30, 2008 |   | Three      MonthsEndedJune      30, 2007 |               | One      MonthEndedJune      30, 2007 |   |   | Two      MonthsEndedMay      31, 2007 |
|                                                 | (In      millions)                       |   |                                     | (In      millions) |
| Operating      Revenues                              | $                                        | 43.4   |                                     |               | $                                     | 43.3   |   |                                  |   | $ | 14.2 |   |   |   | $ | 29.1 |   |
| Operating      Expenses                              |                                     | (17.0  | )                                        |               |                                  | (16.0  | )      |                                  |   |   | (4.9 | ) |   |   |   | (11.1 | ) |
| Interest      Income and Other Income (Expense), Net |                                     | 4.0    |                                     |               |                                  | 0.6    |   |                                  |   |   | (0.6 | ) |   |   |   | 1.2 |   |
| Income      Tax Benefit                              |                                     | 3.0    |                                     |               |                                  | 1.7    |   |                                  |   |   | 0.1 |   |   |   |   | 1.6 |   |
| Segment      Earnings Before DD&A                | $                                        | 33.4   |                                     |               | $                                     | 29.6   |   |                                  |   | $ | 8.8 |   |   |   | $ | 20.8 |   |
|                                            |                                     |   |                                     |               |                                  |   |   |                                  |   |   |   |   |   |   |   |   |   |
| Operating      Statistics:                           |                                     |   |                                     |               |                                  |   |   |                                  |   |   |   |   |   |   |   |   |   |
| Transport      Volumes (MMBbl)                       |                                     | 21.5   |                                     |               |                                  | 25.0   |   |                                  |   |   | 8.4 |   |   |   |   | 16.6 |   |

|                                                 | SuccessorCompany                        |   | CombinedResults                         |               | SuccessorCompany                      |   |   | PredecessorCompany                      |
|------------------------------------------------------|-----------------------------------------|--------|-----------------------------------------|--------------------|---------------------------------------|--------|--------|-----------------------------------------|
|                                                 | Six      Months EndedJune      30, 2008 |   | Six      Months EndedJune      30, 2007 |               | One      MonthEndedJune      30, 2007 |   |   | Five      Months EndedMay      31, 2007 |
|                                                 | (In      millions)                      |   |                                    | (In      millions) |
| Operating      Revenues                              | $                                       | 86.5   |                                    |               | $                                     | 76.1   |   |                                    |   | $ | 14.2 |   |   |   | $ | 61.9 |   |
| Operating      Expenses                              |                                    | (32.7  | )                                       |               |                                  | (27.9  | )      |                                    |   |   | (4.9 | ) |   |   |   | (23.0 | ) |
| Other      Income (Expense)      1                   |                                    | -      |                                    |               |                                  | (377.1 | )      |                                    |   |   | - |   |   |   |   | (377.1 | ) |
| Earnings      from Equity Investments                |                                    | 0.1    |                                    |               |                                  | -      |   |                                    |   |   | - |   |   |   |   | - |   |
| Interest      Income and Other Income (Expense), Net |                                    | 6.1    |                                    |               |                                  | 1.1    |   |                                    |   |   | (0.6 | ) |   |   |   | 1.7 |   |
| Income      Tax Benefit (Expense)                    |                                    | 3.6    |                                    |               |                                  | (0.8   | )      |                                    |   |   | 0.1 |   |   |   |   | (0.9 | ) |
| Segment      Earnings (Loss) Before DD&A         | $                                       | 63.6   |                                    |               | $                                     | (328.6 | )      |                                    |   | $ | 8.8 |   |   |   | $ | (337.4 | ) |
|                                            |                                    |   |                                    |               |                                  |   |   |                                    |   |   |   |   |   |   |   |   |   |
| Operating      Statistics:                           |                                    |   |                                    |               |                                  |   |   |                                    |   |   |   |   |   |   |   |   |   |
| Transport      Volumes (MMBbl)                       |                                    | 40.9   |                                    |               |                                  | 44.8   |   |                                    |   |   | 8.4 |   |   |   |   | 36.4 |   |

| 1 | Five      and six month period 2007 amounts represent a goodwill impairment      expense. |
|---|-------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                                                                                                                                                                                                            | SuccessorCompany                   |   | CombinedResults                    |               | SuccessorCompany                      |   |   | PredecessorCompany                    |   |                       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|--------|------------------------------------|--------------------|---------------------------------------|--------|--------|---------------------------------------|--------|----------------------------|
|                                                                                                                                                                                                                                                                                                                                                            | ThreeMonthsEndedJune      30, 2008 |   | ThreeMonthsEndedJune      30, 2007 |               | One      MonthEndedJune      30, 2007 |   |   | Two      MonthsEndedMay      31, 2007 |   | EarningsIncrease(Decrease) |
|                                                                                                                                                                                                                                                                                                                                                            | (In      millions)                 |   |                               | (In      millions) |
| General      and Administrative Expense                                                                                                                                                                                                                                                                                                                         | $                                  | (91.8  | )                                  |               | $                                     | (203.2 | )      |                                  |   | $                          | (30.0 | ) |   |   | $ | (173.2 | ) |   | $ | 111.4 |   |
| Interest      Expense, Net                                                                                                                                                                                                                                                                                                                                      |                               | (141.6 | )                                  |               |                                  | (180.5 | )      |                                  |   |                       | (83.5 | ) |   |   |   | (97.0 | ) |   |   | 38.9 |   |
| Interest      Expense – Deferrable Interest Debentures                                                                                                                                                                                                                                                                                                    |                               | (0.6   | )                                  |               |                                  | (5.5   | )      |                                  |   |                       | (1.9 | ) |   |   |   | (3.6 | ) |   |   | 4.9 |   |
| Minority      Interests                                                                                                                                                                                                                                                                                                                                         |                               | (126.4 | )                                  |               |                                  | (67.0  | )      |                                  |   |                       | (34.5 | ) |   |   |   | (32.5 | ) |   |   | (59.4 | ) |
| Other,      Net                                                         |                               | 4.5    |                               |               |                                  | (2.1   | )      |                                  |   |                       | 5.2 |   |   |   |   | (7.3 | ) |   |   | 6.6 |   |
|                                                                                                                                                                                                                                                                                                                                                            | $                                  | (355.9 | )                                  |               | $                                     | (458.3 | )      |                                  |   | $                          | (144.7 | ) |   |   | $ | (313.6 | ) |   | $ | 102.4 |   |

|                                                                                                                                                                                                                                                                                                                                                            | SuccessorCompany                       |   | CombinedResults                        |               | SuccessorCompany                      |   |   | PredecessorCompany                     |   |                       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------|--------|----------------------------------------|--------------------|---------------------------------------|--------|--------|----------------------------------------|--------|----------------------------|
|                                                                                                                                                                                                                                                                                                                                                            | Six      MonthsEndedJune      30, 2008 |   | Six      MonthsEndedJune      30, 2007 |               | One      MonthEndedJune      30, 2007 |   |   | Five      MonthsEndedMay      31, 2007 |   | EarningsIncrease(Decrease) |
|                                                                                                                                                                                                                                                                                                                                                            | (In      millions)                     |   |                                   | (In      millions) |
| General      and Administrative Expense                                                                                                                                                                                                                                                                                                                         | $                                      | (178.1 | )                                      |               | $                                     | (313.6 | )      |                                   |   | $                          | (30.0 | ) |   |   | $ | (283.6 | ) |   | $ | 135.5 |   |
| Interest      Expense, Net                                                                                                                                                                                                                                                                                                                                      |                                   | (352.3 | )                                      |               |                                  | (324.6 | )      |                                   |   |                       | (83.5 | ) |   |   |   | (241.1 | ) |   |   | (27.7 | ) |
| Interest      Expense – Deferrable Interest Debentures                                                                                                                                                                                                                                                                                                    |                                   | 6.1    |                                   |               |                                  | (11.0  | )      |                                   |   |                       | (1.9 | ) |   |   |   | (9.1 | ) |   |   | 17.1 |   |
| Minority      Interests                                                                                                                                                                                                                                                                                                                                         |                                   | (252.6 | )                                      |               |                                  | (125.2 | )      |                                   |   |                       | (34.5 | ) |   |   |   | (90.7 | ) |   |   | (127.4 | ) |
| Other,      Net                                                         |                                   | 3.6    |                                   |               |                                  | 2.1    |   |                                   |   |                       | 5.2 |   |   |   |   | (7.3 | ) |   |   | 5.7 |   |
|                                                                                                                                                                                                                                                                                                                                                            | $                                      | (773.3 | )                                      |               | $                                     | (776.5 | )      |                                   |   | $                          | (144.7 | ) |   |   | $ | (631.8 | ) |   | $ | (3.2 | ) |

----

----

----

|                                                                                                                                                                                                                                                | SuccessorCompany           |                 |                  | PredecessorCompany         |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------|----------------------|-----------------------|----------------------------|
|                                                                                                                                                                                                                                                | June      30,2008          |                 | December      31,2007 |                       |   | December      31,2006 |   | December      31,2005 |
|                                                                                                                                                                                                                                                | (Dollars      in millions) |                 |                  | (Dollars      in millions) |
| Long-term      Debt:                                                                                                                                                                                                                                |                       |                 |                  |                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding      Notes and Debentures                                                                                                                                                                                                               | $                          | 10,534.3             |                  |                       | $ | 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                                                                                                                                                                                                                   |                       | 164.8                |                  |                       |   | 199.7 |   |   |   |   | 46.4 |   |   |   | 51.8 |   |
|                                                                                                                                                                                                                                                |                       | 10,834.8             |                  |                       |   | 15,297.4 |   |   |   |   | 11,060.8 |   |   |   | 6,729.4 |   |
| Minority      Interests                                                                                                                                                                                                                             |                       | 2,872.0              |                  |                       |   | 3,314.0 |   |   |   |   | 3,095.5 |   |   |   | 1,247.3 |   |
| Common      Equity, Excluding Accumulated Other Comprehensive Loss                                                                                                                                                                                  |                       | 4,302.1              |                  |                       |   | 8,069.2 |   |   |   |   | 3,657.5 |   |   |   | 4,051.4 |   |
|                                                                                                                                                                                                                                                |                       | 18,008.9             |                  |                       |   | 26,680.6 |   |   |   |   | 17,813.8 |   |   |   | 12,028.1 |   |
| Value      of Interest Rate Swaps                                                                                                                                                                                                                   |                       | (164.8               | )                     |                       |   | (199.7 | ) |   |   |   | (46.4 | ) |   |   | (51.8 | ) |
| Capitalization                                                                                                                                                                                                                                      |                       | 17,844.1             |                  |                       |   | 26,480.9 |   |   |   |   | 17,767.4 |   |   |   | 11,976.3 |   |
| Short-term      Debt, Less Cash and Cash Equivalents1                                                                                                                                                                                               |                       | 360.0                |                  |                       |   | 819.3 |   |   |   |   | 2,046.7 |   |   |   | 841.4 |   |
| Invested      Capital                                                                                                                                                                                                                               | $                          | 18,204.1             |                  |                       | $ | 27,300.2 |   |   |   | $ | 19,814.1 |   |   | $ | 12,817.7 |   |
|                                                                                                                                                                                                                                           |                       |                 |                  |                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Capitalization:                                                                                                                                                                                                                                     |                       |                 |                  |                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding      Notes and Debentures                                                                                                                                                                                                               |                       | 59.0%                |                  |                       |   | 55.5% |   |   |   |   | 59.8% |   |   |   | 52.5% |   |
| Minority      Interests                                                                                                                                                                                                                             |                       | 16.1%                |                  |                       |   | 12.5% |   |   |   |   | 17.4% |   |   |   | 10.4% |   |
| Common      Equity                                                                                                                                                                                                                                  |                       | 24.1%                |                  |                       |   | 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                                                                                                                                                                                                   |                       |  0.6%           |                  |                       |   |  0.4% |   |   |   |   |    -% |   |   |   |    -% |   |
| Capital      Securities                                                                                                                                                                                                                             |                       |    -% |                  |                       |   |    -% |   |   |   |   |  0.6% |   |   |   |  0.9% |   |
|                                                                                                                                                                                                                                           |                       |                 |                  |                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Invested      Capital:                                                                                                                                                                                                                              |                       |                 |                  |                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Debt2,      3                                                                                                                                                                                                                              |                       | 59.8%                |                  |                       |   | 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 |                       | 40.2%                |                  |                       |   | 43.1% |   |   |   |   | 36.1% |   |   |   | 44.4% |   |

|   | 1 | Cash      and cash equivalents netted against short-term debt were $180.9 million,      $148.6 million, $129.8 million and $116.6 million for June 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 40.9%, 45.6% and 56.2% at      June 30, 2008 and December 31, 2007 and 2006,  respectively. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                              | At      June 30, 2008     |   | At      July 31, 2008      |
|-------------------------------------------------------------------|---------------------------|--------|----------------------------|
|                                                              | Short-termDebtOutstanding |   | AvailableBorrowingCapacity |   | Short-termDebtOutstanding |   | AvailableBorrowingCapacity |
|                                                              | (In      millions)        |
| Credit      Facilities:                                           |                      |   |                       |   |   |   |   |   |   |   |   |
| Knight      Inc.                                                  |                      |   |                       |   |   |   |   |   |   |   |   |
| $1.0      billion, six-year secured revolver, due May 2013        | $                         | 265.0  |                       | $ | 677.5 |   | $ | 265.0 |   | $ | 677.5 |
|                                                         |                      |   |                       |   |   |   |   |   |   |   |   |
| Kinder      Morgan Energy Partners                                |                      |   |                       |   |   |   |   |   |   |   |   |
| $1.85      billion, five-year unsecured revolver, due August 2010 | $                         | -      |                       | $ | 920.8 |   | $ | - |   | $ | 920.8 |

----

----

----

|                                                                                                     | SuccessorCompany                       |     | CombinedResults                        |               | SuccessorCompany                      |      |   | PredecessorCompany                     |
|----------------------------------------------------------------------------------------------------------|----------------------------------------|----------|----------------------------------------|--------------------|---------------------------------------|-----------|--------|----------------------------------------|
|                                                                                                     | Six      MonthsEndedJune      30, 2008 |     | Six      MonthsEndedJune      30, 2007 |               | One      MonthEndedJune      30, 2007 |      |   | Five      MonthsEndedMay      31, 2007 |
|                                                                                                     | (In      millions)                     |     |                                   | (In      millions) |
| Cash      Flows from Operating Activities:                                                               |                                   |     |                                   |               |                                  |      |   |                                   |   |   |   |   |   |   |   |   |
| Net      Income (Loss)                                                                                   | $                                      | (3,754.9 | )                                      |               | $                                     | 96.1      |   |                                   | $ | 30.2 |   |   |   | $ | 65.9 |   |
| Adjustments      to Reconcile Net Income to Net Cash Flows from Operating      Activities:               |                                   |     |                                   |               |                                  |      |   |                                   |   |   |   |   |   |   |   |   |
| Loss      (Income) from Discontinued Operations, Net of Tax                                              |                                   | 0.4      |                                   |               |                                  | (288.4    | )      |                                   |   | (0.5 | ) |   |   |   | (287.9 | ) |
| Loss      from Goodwill Impairment                                                                       |                                   | 4,033.3  |                                   |               |                                  | 377.1     |   |                                   |   | - |   |   |   |   | 377.1 |   |
| Loss      on Early Extinguishment of Debt                                                                |                                   | 23.6     |                                   |               |                                  | -         |   |                                   |   | - |   |   |   |   | - |   |
| Depreciation,      Depletion and Amortization                                                            |                                   | 433.8    |                                   |               |                                  | 337.9     |   |                                   |   | 73.0 |   |   |   |   | 264.9 |   |
| Deferred      Income Taxes                                                                               |                                   | 33.6     |                                   |               |                                  | 142.8     |   |                                   |   | 4.1 |   |   |   |   | 138.7 |   |
| Equity      in Earnings of Equity Investees                                                              |                                   | (99.0    | )                                      |               |                                  | (48.6     | )      |                                   |   | (9.5 | ) |   |   |   | (39.1 | ) |
| Distributions      from Equity Investees                                                                 |                                   | 83.7     |                                   |               |                                  | 70.7      |   |                                   |   | 22.5 |   |   |   |   | 48.2 |   |
| Minority      Interests in Income of Consolidated Subsidiaries                                           |                                   | 252.6    |                                   |               |                                  | 125.2     |   |                                   |   | 34.5 |   |   |   |   | 90.7 |   |
| Gains      from Property Casualty Indemnifications                                                       |                                   | -        |                                   |               |                                  | (1.8      | )      |                                   |   | - |   |   |   |   | (1.8 | ) |
| Net      Gains on Sales of Assets                                                                        |                                   | (2.8     | )                                      |               |                                  | (7.1      | )      |                                   |   | (4.5 | ) |   |   |   | (2.6 | ) |
| Mark-to-Market      Interest Rate Swap Gain                                                              |                                   | (19.8    | )                                      |               |                                  | -         |   |                                   |   | - |   |   |   |   | - |   |
| Foreign      Currency (Gain) Loss                                                                        |                                   | (0.2     | )                                      |               |                                  | 15.5      |   |                                   |   | - |   |   |   |   | 15.5 |   |
| Changes      in Gas in Underground Storage                                                               |                                   | (28.0    | )                                      |               |                                  | (89.2     | )      |                                   |   | (5.0 | ) |   |   |   | (84.2 | ) |
| Changes      in Working Capital Items                                                                    |                                   | (542.0   | )                                      |               |                                  | (95.0     | )      |                                   |   | 107.9 |   |   |   |   | (202.9 | ) |
| (Payment      for) Proceeds from Termination of Interest Rate Swaps                                      |                                   | (2.5     | )                                      |               |                                  | 51.9      |   |                                   |   | - |   |   |   |   | 51.9 |   |
| Kinder      Morgan Energy Partners’ Rate Reparations, Refunds and Reserve      Adjustments    |                                   | (23.3    | )                                      |               |                                  | -         |   |                                   |   | - |   |   |   |   | - |   |
| Other,      Net                                                                                          |                                   | (7.3     | )                                      |               |                                  | 26.9      |   |                                   |   | (31.9 | ) |   |   |   | 58.8 |   |
| Cash      Flows Provided by Continuing Operations                                                        |                                   | 381.2    |                                   |               |                                  | 714.0     |   |                                   |   | 220.8 |   |   |   |   | 493.2 |   |
| Net      Cash Flows (Used in) Provided by Discontinued Operations                                        |                                   | (0.5     | )                                      |               |                                  | 107.7     |   |                                   |   | (2.1 | ) |   |   |   | 109.8 |   |
| Net      Cash Flows Provided by Operating Activities                                                     |                                   | 380.7    |                                   |               |                                  | 821.7     |   |                                   |   | 218.7 |   |   |   |   | 603.0 |   |
|                                                                                                |                                   |     |                                   |               |                                  |      |   |                                   |   |   |   |   |   |   |   |   |
| Cash      Flows from Investing Activities:                                                               |                                   |     |                                   |               |                                  |      |   |                                   |   |   |   |   |   |   |   |   |
| Purchase      of Predecessor Stock                                                                       |                                   | -        |                                   |               |                                  | (11,534.3 | )      |                                   |   | (11,534.3 | ) |   |   |   | - |   |
| Capital      Expenditures                                                                                |                                   | (1,269.2 | )                                      |               |                                  | (801.6    | )      |                                   |   | (148.8 | ) |   |   |   | (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                                                                                             |                                   | (4.2     | )                                      |               |                                  | (47.8     | )      |                                   |   | (5.7 | ) |   |   |   | (42.1 | ) |
| Net      (Investments in) Proceeds from Margin Deposits                                                  |                                   | (207.1   | )                                      |               |                                  | (19.0     | )      |                                   |   | 35.8 |   |   |   |   | (54.8 | ) |
| Distributions      from Equity Investees                                                                 |                                   | 89.1     |                                   |               |                                  | -         |   |                                   |   | - |   |   |   |   | - |   |
| Other      Investments                                                                                   |                                   | (339.4   | )                                      |               |                                  | (44.3     | )      |                                   |   | (14.6 | ) |   |   |   | (29.7 | ) |
| Change      in Natural Gas Storage and NGL Line Fill Inventory                                           |                                   | (2.7     | )                                      |               |                                  | 9.9       |   |                                   |   | 1.5 |   |   |   |   | 8.4 |   |
| Property      Casualty Indemnifications                                                                  |                                   | -        |                                   |               |                                  | 8.0       |   |                                   |   | - |   |   |   |   | 8.0 |   |
| Net      Proceeds (Cost of Removal) from Sales of Other Assets                                           |                                   | 113.0    |                                   |               |                                  | 6.0       |   |                                   |   | 7.5 |   |   |   |   | (1.5 | ) |
| Net      Cash Flows Provided by (Used in) Continuing Investing      Activities                           |                                   | 4,385.2  |                                   |               |                                  | (12,423.1 | )      |                                   |   | (11,658.6 | ) |   |   |   | (764.5 | ) |
| Net      Cash Flows Provided by Discontinued Investing Activities                                        |                                   | -        |                                   |               |                                  | 1,688.1   |   |                                   |   | 199.9 |   |   |   |   | 1,488.2 |   |
| Net      Cash Flows Provided by (Used in) Investing Activities                                           | $                                      | 4,385.2  |                                   |               | $                                     | (10,735.0 | )      |                                   | $ | (11,458.7 | ) |   |   | $ | 723.7 |   |

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|                                                                                   | SuccessorCompany                       |     | CombinedResults                        |               | SuccessorCompany                      |    |   | PredecessorCompany                     |
|----------------------------------------------------------------------------------------|----------------------------------------|----------|----------------------------------------|--------------------|---------------------------------------|---------|--------|----------------------------------------|
|                                                                                   | Six      MonthsEndedJune      30, 2008 |     | Six      MonthsEndedJune      30, 2007 |               | One      MonthEndedJune      30, 2007 |    |   | Five      MonthsEndedMay      31, 2007 |
|                                                                                   | (In      millions)                     |     |                                   | (In      millions) |
| Cash      Flows from Financing Activities:                                             |                                   |     |                                   |               |                                  |    |   |                                   |   |   |   |   |   |   |   |   |
| Short-term      Debt, Net                                                              | $                                      | (623.1   | )                                      |               | $                                     | (477.7  | )      |                                   | $ | (230.2 | ) |   |   | $ | (247.5 | ) |
| Long-term      Debt Issued                                                             |                                   | 1,600.1  |                                   |               |                                  | 6,305.0 |   |                                   |   | 5,305.0 |   |   |   |   | 1,000.0 |   |
| Long-term      Debt Retired                                                            |                                   | (5,861.5 | )                                      |               |                                  | (757.9  | )      |                                   |   | (455.5 | ) |   |   |   | (302.4 | ) |
| Discount      on Early Extinguishment of Debt                                          |                                   | 69.2     |                                   |               |                                  | -       |   |                                   |   | - |   |   |   |   | - |   |
| Cash      Book Overdraft                                                               |                                   | 18.5     |                                   |               |                                  | (14.4   | )      |                                   |   | 0.5 |   |   |   |   | (14.9 | ) |
| Common      Stock Issued                                                               |                                   | -        |                                   |               |                                  | 9.9     |   |                                   |   | - |   |   |   |   | 9.9 |   |
| Excess      Tax Benefits from Share-based Payment Arrangements                         |                                   | -        |                                   |               |                                  | 56.7    |   |                                   |   | - |   |   |   |   | 56.7 |   |
| Cash      Paid to Share-based Award Holders Due to Going      Private Transaction |                                   | -        |                                   |               |                                  | (181.1  | )      |                                   |   | (181.1 | ) |   |   |   | - |   |
| Issuance      of Kinder Morgan Management, LLC Shares                                  |                                   | -        |                                   |               |                                  | 297.9   |   |                                   |   | - |   |   |   |   | 297.9 |   |
| Contributions      from Successor Investors                                            |                                   | -        |                                   |               |                                  | 5,112.0 |   |                                   |   | 5,112.0 |   |   |   |   | - |   |
| Short-term      Advances from (to) Unconsolidated Affiliates                           |                                   | (11.5    | )                                      |               |                                  | -       |   |                                   |   | (2.3 | ) |   |   |   | 2.3 |   |
| Cash      Dividends, Common Stock                                                      |                                   | -        |                                   |               |                                  | (234.9  | )      |                                   |   | - |   |   |   |   | (234.9 | ) |
| Minority      Interests, Contributions                                                 |                                   | 384.8    |                                   |               |                                  | -       |   |                                   |   | - |   |   |   |   | - |   |
| Minority      Interests, Distributions                                                 |                                   | (300.9   | )                                      |               |                                  | (248.9  | )      |                                   |   | - |   |   |   |   | (248.9 | ) |
| Debt      Issuance Costs                                                               |                                   | (12.1    | )                                      |               |                                  | (75.8   | )      |                                   |   | (62.7 | ) |   |   |   | (13.1 | ) |
| Other,      Net                                                                        |                                   | 3.9      |                                   |               |                                  | (4.3    | )      |                                   |   | - |   |   |   |   | (4.3 | ) |
| Net      Cash Flows (Used in) Provided by Continuing Financing      Activities         |                                   | (4,732.6 | )                                      |               |                                  | 9,786.5 |   |                                   |   | 9,485.7 |   |   |   |   | 300.8 |   |
| Net      Cash Flows Provided by Discontinued Financing Activities                      |                                   | -        |                                   |               |                                  | 140.1   |   |                                   |   | - |   |   |   |   | 140.1 |   |
| Net      Cash Flows (Used in) Provided by Financing Activities                         |                                   | (4,732.6 | )                                      |               |                                  | 9,926.6 |   |                                   |   | 9,485.7 |   |   |   |   | 440.9 |   |
|                                                                                   |                                   |     |                                   |               |                                  |    |   |                                   |   |   |   |   |   |   |   |   |
| Effect      of Exchange Rate Changes on Cash                                           |                                   | (1.0     | )                                      |               |                                  | 7.6     |   |                                   |   | - |   |   |   |   | 7.6 |   |
|                                                                                   |                                   |     |                                   |               |                                  |    |   |                                   |   |   |   |   |   |   |   |   |
| Cash      Balance Included in Assets Held for Sale                                     |                                   | -        |                                   |               |                                  | (2.7    | )      |                                   |   | - |   |   |   |   | (2.7 | ) |
|                                                                              |                                   |     |                                   |               |                                  |    |   |                                   |   |   |   |   |   |   |   |   |
| Net      (Decrease) Increase in Cash and Cash Equivalents                              |                                   | 32.3     |                                   |               |                                  | 18.2    |   |                                   |   | (1,754.3 | ) |   |   |   | 1,772.5 |   |
| Cash      and Cash Equivalents at Beginning of Period                                  |                                   | 148.6    |                                   |               |                                  | 129.8   |   |                                   |   | 1,902.3 |   |   |   |   | 129.8 |   |
| Cash      and Cash Equivalents at End of Period                                        | $                                      | 180.9    |                                   |               | $                                     | 148.0   |   |                                   | $ | 148.0 |   |   |   | $ | 1,902.3 |   |

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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; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 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      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. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

Item 3.  Quantitative andQualitative Disclosures about Market Risk.

Item 4.  Controls andProcedures.

----

PART II - OTHER INFORMATION

Item 1.     LegalProceedings.

Item 1A.   Risk Factors.

----

----

|   | · | 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.

----

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). |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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 |
|--------|-------|-----------------------------------------------------------|

----

SIGNATURE

|            | KNIGHT      INC.(Registrant)                    |
|----------------------|---------------------------------------------------------------------|
| August      15, 2008 | /s/      Kimberly A. Dang                                           |
|                 | Kimberly      A. DangVice      President and Chief FinancialOfficer |

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