UNITED STATES SECURITIES & EXCHANGE COMMISSION
                         Washington D. C.   205409
                                     
                                     
                                 FORM 10-Q

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

          For the quarterly period ended March 31, 1997

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

                      Commission File Number 1-12499
   
                    CORNERSTONE PROPANE PARTNERS, L.P.
          (Exact name of registrant as specified in its charter)

           Delaware                              77-0439862
   (State or other jurisdiction of    (I.R.S. Employer Identification
   incorporation or organization)     Number)

  432 Westridge Drive, California                   95076
 (Address of principal executive offices)               (Zip Code)

   Registrants telephone number, including area code  (408) 724-1921
   
                                   NONE
   (Former name, former address and former fiscal year, if changed since
                               last report.)

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

Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of March 31, 1997:

  Cornerstone Propane Partners, L.P.        9,821,000  Common Units
                                            6,597,619  Subordinated Units
                    CORNERSTONE PROPANE PARTNERS, L.P.
                                     
                             TABLE OF CONTENTS
                                     

PAGES
                      Part I.  Financial Information

Item 1. Financial Statements

   Cornerstone Propane Partners, L.P.
   -----------------------------------
     Consolidated Balance Sheet as of March 31, 1997

     Consolidated Statement of Operations from Commencement
       of Operations (on December 17, 1996) to March 31, 1997,
       and for the three months ended January 1, 1997, to
       March 31, 1997

     Consolidated Statement of Cash Flows from Commencement
       of Operations (on December 17, 1996) to March 31, 1997

     Consolidated Statement of Partners' Capital from
       Commencement of Operations (on December 17, 1996)
       to March 31, 1997

     Notes to Consolidated Financial Statements

   Cornerstone Propane Partners, L.P. (Pro Forma)
   ----------------------------------------------
     Consolidated Statements of Operations for the periods
       July 1, 1996 to March 31, 1997,
       July 1, 1995 to March 31, 1996,
       January 1, 1997 to March 31, 1997 (Actual) and
       January 1, 1996 to March 31, 1996

     Notes to Pro Forma Consolidated Financial Information

   SYN Inc. (Predecessor)
   ----------------------
     Consolidated Balance Sheet as of June 30, 1996

     Consolidated Statements of Operations for the
       periods July 1, 1995 to August 14, 1995,
       August 15, 1995 to March 31, 1996,
       and January 1, 1996 to March 31, 1996
                    CORNERSTONE PROPANE PARTNERS, L.P.
                                     
                       TABLE OF CONTENTS (Continued)


PAGES
                Part I.  Financial Information (Continued)

   SYN Inc. (Predecessor) (Continued)
   ----------------------------------
     Consolidated Statement of Cash Flows for
       the period July 1, 1995 to March 31, 1996

     Notes to Consolidated Financial Statements

   Empire Energy Corporation (Predecessor)
   ---------------------------------------
     Consolidated Balance Sheet as of June 30, 1996

     Consolidated Statements of Operations for the
       periods July 1, 1995 to March 31, 1996 and
       January 1, 1996 to March 31, 1996

     Consolidated Statement of Cash Flows for the
       period July 1, 1995 to March 31, 1996

     Notes to Consolidated Financial Statements

   CGI Holdings, Inc. (Predecessor)
   --------------------------------
     Consolidated Balance Sheet as of July 31, 1996

     Consolidated Statements of Operations for the
       periods August 1, 1995 to March 31, 1996 and
       January 1, 1996 to March 31, 1996

     Consolidated Statement of Cash Flows for the
       period August 1, 1995 to March 31, 1996
                    CORNERSTONE PROPANE PARTNERS, L.P.
                                     
                       TABLE OF CONTENTS (Continued)


PAGES

   CGI Holdings, Inc. (Predecessor) (Continued)
   --------------------------------------------
     Notes to Consolidated Financial Statements

Item 2. Management's Discussion and Analysis of
        Financial Condition and Results of Operations of
        Cornerstone Propane Partners, L.P. for the Three
        Months Ended March 31, 1997 (Actual) to the Three
        Months Ended March 31, 1996 (Pro Forma) and for the
        Nine Months Ended March 31, 1997 (Pro Forma) to the
        Nine Months Ended March 31, 1996 (Pro Forma)


                  Part II.  Other Information

Item 6. Exhibits and Reports on Form 8-K

Signature
                    CORNERSTONE PROPANE PARTNERS, L.P.
                        CONSOLIDATED BALANCE SHEET
                          (Dollars in thousands)
                                (unaudited)

                                                           March 31,
                                                             1997
ASSETS                                                   -----------

CURRENT ASSETS:
  Cash and cash equivalents                              $   23,115
  Trade receivables, net                                     40,557
  Inventories                                                19,539
  Prepayments and other current assets                        6,350
                                                         -----------
     Total current assets                                    89,561
                                                         -----------

Property, plant and equipment, net of accumulated
  depreciation of $3,274                                    240,550
Excess of cost over fair value, net                         201,876
Other assets, net                                            11,572
                                                         -----------

     Total assets                                        $  543,559
                                                         ===========

LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
  Current portion of long-term debt                      $    5,406
  Trade accounts payable                                     33,444
  Accrued liabilities                                        15,925
                                                         -----------
     Total current liabilities                               54,775
                                                         -----------

Long-term debt                                              224,135
Notes payable related party                                   2,353
Other non-current liabilities                                14,663
                                                         -----------
     Total liabilities                                      295,926
                                                         -----------
COMMITMENTS AND CONTINGENCIES (Note 6)

PARTNERS' CAPITAL
  Common unitholders                                        143,232
  Subordinated unitholders                                   99,351
  General partners                                            5,050
                                                         -----------
     Total partners' capital                                247,633
                                                         -----------

     Total liabilities and partners' capital             $  543,559
                                                         ===========

     The accompanying notes are an integral part of these consolidated
                           financial statements.
                    CORNERSTONE PROPANE PARTNERS, L.P.
                   CONSOLIDATED STATEMENT OF OPERATIONS
               (Dollars in thousands, except per Unit data)
                                (unaudited)


                                                       From Commencement
                                   Three Months          of Operations
                                      Ended         (on December 17, 1996)
                                   March 31, 1997      to March 31, 1997
                                   --------------   ---------------------

REVENUE                                     $220,566             $
260,936
COST OF SALES                         178,050              209,391
                                   --------------      ------------

GROSS PROFIT                           42,516               51,545
                                   --------------      ------------

EXPENSES
  Operating, general & administrative  23,590               27,968
  Depreciation and amortization         3,819                4,394
                                   --------------      ------------
                                       27,409               32,362
                                   --------------      ------------

OPERATING INCOME                       15,107               19,183
INTEREST EXPENSE                       (4,450)              (5,228)
                                   --------------      ------------
INCOME BEFORE INCOME TAXES             10,657               13,955
INCOME TAXES                               20                   25
                                   --------------      ------------
NET INCOME                                  $10,637              $
13,930
                                   ==============      ============
General partners' interest
  in net income                    $      213           $      376
                                   --------------      ------------
Limited partners' interest
  in net income                    $   10,424           $   13,554
                                   --------------      ------------
Net income per Unit                     $0.65                $0.85
                                   --------------      ------------
Weighted average number of Units
  outstanding                          16,513               16,513
                                   ==============      ============

     The accompanying notes are an integral part of these consolidated
                           financial statements.
                    CORNERSTONE PROPANE PARTNERS, L.P.
                   CONSOLIDATED STATEMENT OF CASH FLOWS
                          (Dollars in thousands)
                                (unaudited)
                                     
                                                        From Commencement
                                                        of Operations
                                                     (on December 17, 1996)
                                                        to March 31, 1997
                                                    ----------------------

CASH FLOWS FROM (USED FOR) OPERATING ACTIVITIES:
     Net income                                             $13,930
  Adjustments to reconcile net income to net cash
   provided by (used for) operating activities:
     Depreciation and amortization                            4,394
     Loss on sale of assets                                      26
     Changes in assets and liabilities, net of
       acquisitions:
       Trade receivables                                     37,922
       Inventories                                            6,754
       Prepayments and other current assets                  (3,583)
       Trade accounts payable                               (46,923)
       Accrued expenses                                       5,576
                                                            --------
        Net cash provided by operating activities            18,096
                                                            --------

CASH FLOWS FROM (USED FOR) INVESTING ACTIVITIES:
  Proceeds from sale of assets                                  365
  Expenditures for property, plant and equipment             (2,075)
                                                            --------
        Net cash used for investing activities               (1,710)
                                                            --------

CASH FLOWS FROM (USED FOR) FINANCING ACTIVITIES:
  Net repayments on Working Capital Facility                     (12,800)
  Additional borrowings on mortgages                          1,141
  Payments on mortgages                                        (683)
                                                            --------
        Net cash used for financing activities              (12,342)
                                                            --------

PARTNERSHIP FORMATION TRANSACTIONS:
  Net proceeds from issuance of Common and Subordinated
   Units                                                    191,804
  Borrowings on Working Capital Facility                     12,800
  Issuance of long-term debt                                220,000
  Cash transfers from Predecessor Companies                  22,418
  Repayment of long-term debt and related interes          (337,631)
  Distribution to Special General Partner for the
   redemption of preferred stock                            (61,196)
  Distribution to Special General Partner                   (15,500)
  Other fees and expenses                                   (13,626)
                                                            --------
        Net cash provided by partnership formation
         transactions                                        19,069
                                                            --------

Increase in Cash and cash equivalents                        23,113

Cash and cash equivalents, Beginning of Period                    2
                                                            --------
Cash and Cash Equivalents, End of Period                    $23,115
                                                            ========

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

<PAGE>
                       CORNERSTONE PROPANE PARTNERS, L.P.
                   CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
                    (Dollars in thousands, except Unit data)
                                   (unaudited)
                                        

                     Number of limited
                      partner Units                                    Total
                  ----------------------             Subor-  General  Partners'
                  Common    Subordinated   Common   dinated  Partners  Capital
                  ------    ------------   ------   -------  -------- ---------
Balance at
 Commencement of
 Operations (on
 December 17, 1996                         $        $        $        $

Contribution of
 net assets of
 predecessor
 companies and
 issuance of
 Common Units     9,821,000    6,597,619    136,997  92,032            229,029

Issuance of 2%
 interest for
 general partners
 contribution                                                 4,674      4,674

Net income                                    6,235   7,319     376     13,930
                  ---------    ---------   -------- -------  ------   --------
Balance
 March 31, 1997   9,821,000    6,597,619   $143,232 $99,351  $5,050   $247,633
                  =========    =========   ======== =======  ======   ========

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

                     CORNERSTONE PROPANE PARTNERS, L.P.
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MARCH 31, 1997
                 (Dollars in thousands, except Unit data)
                                (Unaudited)

1.Partnership Organization and Formation

    Cornerstone Propane Partners, L.P. ("Cornerstone Partners") was formed
  on October 7, 1996 as a Delaware limited partnership.  Cornerstone
  Partners and its subsidiary Cornerstone Propane, L.P., a Delaware
  limited partnership (the "Operating Partnership"), were formed to
  acquire, own and operate substantially all of the propane businesses and
  assets of SYN Inc. and its subsidiaries ("Synergy"), Empire Energy
  Corporation and its subsidiaries ("Empire"), Myers Propane Gas Company
  ("Myers") and CGI Holdings, Inc. and its subsidiaries ("Coast").  The
  principal predecessor entities, Synergy, Empire and Coast are
  collectively referred to herein as the "Predecessor Companies."  The
  consolidated financial statements include the accounts of Cornerstone
  Partners, the Operating Partnership and its corporate subsidiary
  Cornerstone Sales & Service Corporation, a Delaware corporation,
  collectively referred to herein as the Partnership.  The Operating
  Partnership is, and the Predecessor Companies were, principally engaged
  in (i) the retail marketing and distribution of propane for residential,
  commercial, industrial, agricultural and other retail uses, (ii) the
  wholesale marketing and distribution of propane and natural gas liquids
  to the retail propane industry, the chemical and petrochemical
  industries and other commercial and agricultural markets, (iii) the
  repair and maintenance of propane heating systems and appliances and
  (iv) the sale of propane-related supplies, appliances and other
  equipment.  Pursuant to a Contribution, Conveyance and Assumption
  Agreement dated as of December 17, 1996, substantially all of the assets
  and liabilities of the Predecessor Companies were contributed to the
  Operating Partnership (the "Conveyance").  As a result of the
  Conveyance, Cornerstone Propane GP, Inc., a Delaware corporation and the
  managing general partner of Cornerstone Partners and the Operating
  Partnership (the "Managing General Partner") and SYN Inc., a Delaware
  corporation and the special general partner of Cornerstone Propane and
  the Operating Partnership (the "Special General Partner"), received all
  of the interests in the Operating Partnership, and the Operating
  Partnership received substantially all of the assets and assumed
  substantially all of the liabilities of the Predecessor Companies.
  Immediately after the Conveyance, and in accordance with the Amended and
  Restated Agreement of Limited Partnership of Cornerstone Partners (the
  "Partnership Agreement"), the Managing General Partner and the Special
  General Partner conveyed their limited partner interests in the
  Operating Partnership to Cornerstone Partners in exchange for a 2%
  interest in Cornerstone Partners, and the Operating Partnership.

    Following these transactions, on December 17, 1996, Cornerstone
  Partners completed its initial public offering through underwriters of
  9,821,000 Common Units (the "IPO") at a price to the public of $21.00 a
  unit.  The net proceeds of approximately $191,804 from the IPO, the
  proceeds from the issuance of $220,000 aggregate principal amount of the
  Operating Partnership's 7.53% senior notes, and $12,800 borrowings under
  the Working Capital Facility (as described in Note 3) were used to repay
  $414,327 in liabilities assumed by the Operating Partnership (including
  $141,799 paid to affiliates of the Managing General Partner) that were
  in large part incurred in connection with the transactions entered into
  prior to the offering.  A portion of the funds were distributed to the
  Special General Partner to redeem its preferred stock ($61,196) and to
  provide net worth to the Special General Partner ($15,500).  The balance
  ($10,277) was used to pay expenses

    Partners' capital of limited partners consists of 9,821,000 Common
  Units and 6,597,619 Subordinated Units, representing an aggregate 58.6%
  and 39.4% limited partner interest in Cornerstone Partners,
  respectively.  Partners' capital of general partners consists of a 2%
  interest in the Partnership. .  In accordance with the Offering
  Prospectus, 100% of the income for the fourteen day period ended
  December 31, 1996 was allocated to the Subordinated Unit holders and the
  General Partners.  No income from this period was allocated to the
  Common Unit holders.

    During the Subordination Period (see Note 5), the Partnership may
  issue up to 4,270,000 additional Parity Units (generally defined as
  Common Units and all other Units having rights to distribution or in
  liquidation ranking on a parity with the Common Units), excluding Common
  Units issued in connection with (i) employee benefit plans and (ii) the
  conversion of Subordinated Units into Common Units, without the approval
  of a majority of the Unitholders (see Note 5).  The Partnership may
  issue an unlimited number of additional Parity Units without Unitholder
  approval if such issuance occurs in connection with acquisitions,
  including, in certain circumstances, the repayment of debt incurred in
  connection with an acquisition.  In addition, under certain conditions
  the Partnership may issue without Unitholder approval an unlimited
  number of parity securities for the repayment of up to $75,000 of long-
  term indebtedness of the Partnership.  After the Subordination Period,
  the Managing General Partner may cause the Partnership to issue an
  unlimited number of additional limited partner interests and other
  equity securities of the Partnership for such consideration and on such
  terms and conditions as shall be established by the General Partner in
  its sole discretion.

  Cornerstone Partners and the Operating Partnership have no employees.
  The Managing General Partner conducts, directs and manages all
  activities of Cornerstone Partners and the Operating Partnership and is
  reimbursed on a monthly basis for all direct and indirect expenses it
  incurs on their behalf.

2.Basis of Presentation and Summary of Significant Accounting Policies

  Nature of Operations.  The Partnership is the fifth largest retail
  marketer of propane in the United States in terms of volume, serving
  more than 360,000 residential, commercial, industrial and agricultural
  customers from 306 customer service centers in 26 states.  The
  Partnership was recently formed to own and operate the propane business
  and assets of Synergy, Empire, Myers and Coast.  The Partnership's
  operations are concentrated in the east coast, south-central and west
  coast regions of the United States.

  Basis of Presentation.  The consolidated financial statements include
  the accounts of the Predecessor Companies and Myers.  Historical
  financial statements of Myers have not been separately presented based
  on the Partnership's belief that the separate inclusion of Myers does
  not have a material effect on the consolidated financial statements of
  the Partnership.  The acquisitions of the Predecessor Companies are
  accounted for as purchase business combinations based on management's
  best estimate of the fair value of the assets acquired.  All purchase
  price allocations for the acquisition of the Predecessor Companies are
  preliminary in nature and are subject to change within the twelve months
  following the acquisitions based on refinements as actual data becomes
  available.  All significant inter-company transactions and accounts have
  been eliminated.  The accompanying consolidated financial statements are
  unaudited and have been prepared in accordance with the rules and
  regulations of the Securities and Exchange Commission.  They include all
  adjustments which the Partnership believes necessary for a fair
  presentation of the results for the interim periods presented.  Such
  adjustments consist only of normal recurring items.  Due to the seasonal
  nature of the Partnership's propane business, the results of operations
  for interim periods are not necessarily indicative of the results to be
  expected for a full year.

  Fiscal Year.  The Partnership's fiscal year is July 1 to June 30.
  Previously, Coast's fiscal year began on August 1 and ended on July 31,
  while Empire's, Synergy's and Myers' fiscal years began on July 1 and
  ended on June 30.  Because the Partnership commenced operations upon
  completion of the IPO, the accompanying consolidated statements of
  operations, cash flows and partners' capital are for the period from
  commencement of operations on December 17, 1996 to March 31, 1997.

  Use of Estimates.  The preparation of financial statements in conformity
  with generally accepted accounting principles requires management to
  make estimates and assumptions that affect the reported amounts of
  assets and liabilities and disclosure of contingent assets and
  liabilities at the date of the financial statements and the reported
  amounts of revenues and expenses during the reporting period.  Actual
  results could differ from those estimates.

  Futures contracts.  The Partnership routinely uses commodity futures
  contracts to reduce the risk of future price fluctuations for natural
  gas and LPG inventories and contracts.  Gains and losses on futures
  contracts purchased as hedges are deferred and recognized in cost of
  sales as a component of the product cost for the related hedged
  transaction.  In the statement of cash flows, cash flows from qualifying
  hedges are classified in the same category as the cash flows from the
  items being hedged.  Contracts which do not qualify as hedges are marked
  to market, with the resulting gains and losses charged to current
  operations.  Net realized gains and losses for the current fiscal year
  and unrealized gains, losses on outstanding positions and open positions
  as of March 31, 1997 were not material.

  Accounts Receivable.  The outstanding balance is stated net of allowance
  of doubtful accounts of $5,406 at March 31, 1997.

  Revenue Recognition.  Sales of natural gas, crude oil, natural gas
  liquids and LPG and the related cost of product are recognized upon
  delivery of the product.

  Inventories.  Inventories are stated at the lower of cost or market.
  The cost of natural gas, crude oil, natural gas liquids and LPG is
  determined using the first-in, first-out (FIFO) method.  The cost of gas
  distribution parts, appliances and equipment is determined using the
  weighted average method.  The major components of inventory consist of
  the following:

                                                March 31, 1997
                                                (unaudited)
                                              ----------------
       LPG and Other                           $    10,707
       Parts and Fittings                            8,832
                                               -----------
                                               $    19,539
                                               ===========

    Property, Plant and Equipment.  Property, plant and equipment are
   stated at cost.  Depreciation is computed using the straight-line
   method over the estimated useful lives of the assets as follows:
   buildings and improvements, 25 to 33 years; LPG storage and rental
   tanks, 40 to 50 years; and office furniture, equipment and tank
   installation costs, 5 to 10 years.  Leasehold improvements are
   amortized over the shorter of the estimated useful life or the lease
   term.  When property, plant or equipment is retired or otherwise
   disposed, the cost and related accumulated depreciation is removed from
   the accounts, and the resulting gain or loss is credited or charged to
   operations.  Maintenance and repairs are charged to earnings, while
   replacements and betterments that extend estimated useful lives are
   capitalized.

    Excess of Cost Over Fair Value of Net Assets Acquired.  The excess of
   acquisition cost over the estimated fair market value of identifiable
   net assets of acquired businesses is amortized on a straight-line basis
   over 40 years.  The related costs and accumulated amortization were
   $203,376 and $1,500, respectively, at March 31, 1997.

    It is the Partnership's policy to review intangible assets for
   impairment whenever events or changes in circumstances indicate that
   the carrying amount of such assets may not be recoverable.  If such a
   review should indicate that the carrying amount of intangible assets is
   not recoverable, it is the Partnership's policy to reduce the carrying
   amount of such assets to fair value.

    Income Taxes.  Neither Cornerstone Partners nor the Operating
   Partnership are directly subject to federal and state income taxes.
   Instead, taxable income or loss is allocated to the individual
   partners.  As a result, no income tax expense has been reflected in the
   Partnership's consolidated financial statements relating to the
   earnings of Cornerstone Partners or the Operating Partnership.  The
   Partnership has one subsidiary which operates in corporate form and is
   subject to federal and state income taxes.  Accordingly, the
   Partnership's consolidated financial statements reflect income tax
   expense related to the subsidiary's earnings.

    Net Income per Unit.  Net income per Unit is computed by dividing net
   income, after deducting the General Partners' 2% interest, by the
   weighted average number of outstanding Common and Subordinated Units.

    Unit-Based Compensation.  The Partnership accounts for unit-based
   compensation as (a) deferred compensation for time-vesting units and
   (b) contingent consideration for performance-vesting units.
   Compensation expense for the time-vesting units is recognized over the
   vesting period.  Compensation expense for the performance-vesting units
   is recognized when the units become issuable.  Time vesting units are
   considered Common Unit equivalents for the purpose of computing primary
   earnings per unit.  Performance-vesting units are considered for the
   purpose of computing fully diluted earnings per unit.

3. Credit Facilities

    Concurrently with the IPO, the Operating Partnership entered into a
   credit agreement (the "Bank Credit Agreement") which consists of a
   Working Capital Facility and an Acquisition Facility.

    The Working Capital Facility provides for revolving borrowings up to
   $50,000 (including a $30,000 sublimit for letters of credit through
   March 31, 1997 and $20,000 thereafter), and matures on December 31,
   1999.  The Bank Credit Agreement provides that there must be less than
   $10,000 outstanding under the Working Capital Facility (excluding
   letters of credit) for at least 30 consecutive days during each fiscal
   year.  There were no borrowings under the Working Capital Facility at
   March 31, 1997.  Outstanding letters of credit totaled $7,600 at March
   31, 1997.

    The Acquisition Facility provides the Operating Partnership with the
   ability to borrow up to $75,000 to finance propane business
   acquisitions.  The Acquisition Facility operates as a revolving
   facility through December 31, 1999, at which time any loans then
   outstanding may be converted to term loans and be amortized quarterly
   for a period of four years thereafter.  No amounts were outstanding at
   March 31, 1997.

    The Operating Partnership's obligations under the Bank Credit
   Agreement are secured, on an equal and ratable basis, with its
   obligations under the Note Agreement (see Note 4), by a first priority
   security interest in the Operating Partnership's inventory, accounts
   receivable and certain customer storage tanks.  Loans under the Bank
   Credit Agreement bear interest at a per annum rate equal to either (at
   the Operating Partnership's option):  (a) the sum (the "Base Rate") of
   the applicable margin, and the higher of (i) the agent bank's prime
   rate and (ii) the federal funds rate plus 1/2 of 1%, or (b) the sum (the
   "Eurodollar Rate") of the applicable margin and the rate offered by the
   agent bank to major banks in the offshore dollar market (as adjusted
   for applicable reserve requirements, if any).  The applicable margin
   for Base Rate loans varies between 0% and .12%, and the applicable
   margin for Eurodollar Rate loans varies between .25% and .80%, in each
   case depending upon the Operating Partnership's ratio of consolidated
   "Debt" to "Consolidated Cash Flow" (as such terms are defined in the
   Bank Credit Agreement).  At March 31, 1997, the applicable Base and
   Eurodollar Rates were 8.625% and 6.675%, respectively.  In addition, an
   annual fee is payable quarterly by the Operating Partnership (whether
   or not borrowings occur) ranging from .125% to .325% depending upon the
   ratio referenced above.

    The Bank Credit Agreement contains customary representations,
   warranties, events of default and covenants including limitations,
   among others, on the ability of the Operating Partnership and its
   "Restricted Subsidiaries" (as defined therein) to incur or maintain
   certain indebtedness or liens, make investments and loans, enter into
   mergers, consolidations or sales of all or substantially all of its
   assets and make asset sales.  Generally, so long as no default exists
   or would result, the Operating Partnership is permitted to make any
   Restricted Payment (as defined in the Bank Credit Agreement and
   including distributions to the Partnership) during each fiscal quarter
   in amount not to exceed Available Cash with respect to the immediately
   preceding quarter.

    In addition, the Bank Credit Agreement provides that:  (1) the
   Operating Partnership not permit the ratio of its consolidated Debt (as
   defined in the Bank Credit Agreement) less cash on hand (in excess of
   $1,000 up to $10,000) to Consolidated Cash Flow (as defined in the Bank
   Credit Agreement) to exceed 4.75:1.00 at any time on or before December
   31, 1997, 4.50:1.00 at any time on or before December 31, 1998 and
   4.25:1.00 at any time thereafter; and (2) the Operating Partnership not
   permit the ratio of its Consolidated Cash Flow to consolidated
   "Interest Expense" (as defined therein) to be less than 2.00:1.00 prior
   to December 31, 1997, 2.25:1.00 any time thereafter on or before
   December 31, 1998 and 2.50:1.00 at any time thereafter.

4. Long-Term Debt

    On the IPO date, the Operating Partnership issued $220,000 of Senior
   Notes with an annual interest rate of 7.53% pursuant to note purchase
   agreements with various investors (collectively, the "Note Agreement").
   The Senior Notes mature on December 30, 2010, and require semi-annual
   interest payments each December 30 and June 30.  The Note Agreement
   requires that the principal be paid in equal annual payments of $27,500
   starting December 30, 2003.

    The Operating Partnership's obligations under the Note Agreement are
   secured, on an equal and ratable basis with its obligations under the
   Bank Credit Agreement, by a first priority security interest in the
   Operating Partnership's inventory, accounts receivable and certain
   customer storage tanks.  The Note Agreement contains customary
   representations, warranties, events of default and covenants applicable
   to the Operating Partnership and its "Restricted Subsidiaries" (as
   defined therein), including limitations, among others, on the ability
   of the Operating Partnership and its Restricted Subsidiaries to incur
   additional indebtedness, create liens, make investments and loans,
   enter into mergers, consolidations or sales of all or substantially all
   of its assets and make asset sales.  Generally, so long as no default
   exists or would result, the Operating Partnership is permitted to make
   any Restricted Payment (as defined in the Note Agreement and including
   distributions to the Partnership) during each fiscal quarter in amount
   not in excess of Available Cash (see Note 5) with respect to the
   immediately preceding quarter.

5. Quarterly Distributions of Available Cash

    The Partnership will make distributions to its partners with respect
   to each fiscal quarter of the Partnership approximately 45 days after
   the end of each fiscal quarter in an aggregate amount equal to its
   Available Cash for such quarter.  Available Cash generally means, with
   respect to any fiscal quarter of the Partnership, all cash on hand at
   the end of such quarter less the amount of cash reserves established by
   the Managing General Partner in its reasonable discretion for future
   cash requirements.  These reserves are retained to provide for the
   proper conduct of the Partnership's business, the payment of debt
   principal and interest and to provide funds for distribution during the
   next four quarters.  The Partnership expects to make a distribution
   with respect to the fiscal quarter ending March 31, 1997 to holders of
   record on the applicable record date.

    Distributions by the Partnership in an amount equal to 100% of its
   Available Cash will generally be made 98% to all Unitholders and 2% to
   the General Partners until there has been distributed in respect of
   each Unit an amount equal to the Minimum Quarterly Distribution ($.54
   per unit) for such quarter.  With respect to each quarter during the
   Subordination Period (defined below), to the extent there is sufficient
   Available Cash, the holders of Common Units have the right to receive
   the Minimum Quarterly Distribution, plus any arrearages on the Minimum
   Quarterly Distribution ("Common Unit Arrearages"), prior to the
   distribution of Available Cash to holders of Subordinated Units.
   Common Units will not accrue arrearages with respect to distributions
   for any quarter after the Subordination Period and Subordinated Units
   will not accrue any arrearages with respect to distributions for any
   quarter.

    The Subordination Period will generally extend to the first day of any
   quarter beginning after December 31, 2001 in respect of which (i)
   distributions of Available Cash from Operating Surplus (generally
   defined as $25,000 plus $22,000 cash on hand as of December 17, 1996
   plus all operating cash receipts less operating cash expenditures, debt
   service payments, maintenance capital expenditures and cash reserves)
   on the Common Units and the Subordinated Units with respect to each of
   the three consecutive four-quarter periods immediately preceding such
   date equaled or exceeded the sum of the Minimum Quarterly Distribution
   on all of the outstanding Common Units and Subordinated Units during
   such periods, (ii) the Adjusted Operating Surplus (generally defined as
   Operating Surplus generated during such period (a) less (i) any net
   increase in working capital borrowings during such period and (ii) any
   net reduction in cash reserves for operating expenditures during such
   period not relating to an operating expenditure made during such
   period, and (b) plus (i) any net decrease in working capital borrowings
   during such period and (ii) any net increase in cash reserves for
   operating expenditures during such period required by any debt
   instrument for the repayment of principal, interest or premium.
   Adjusted Operating Surplus does not include that portion of Operating
   Surplus included in clause (a)(i) of the definition of Operating
   Surplus) generated during each of the three consecutive four-quarter
   periods immediately preceding such date equaled or exceeded the sum of
   the Minimum Quarterly Distribution on all of the outstanding Common
   Units and Subordinated Units and the related distribution on the
   general partner interests in the Partnership during such periods, and
   (iii) there are no outstanding Common Unit Arrearages.  For the period
   commencing December 17, 1996 and ending March 31, 1997, the Partnership
   declared a Minimum Quarterly Distribution of $.63 per Common and
   Subordinated unit amounting to approximately $10.6 million.

6. Commitments and Contingencies

    The Partnership has succeeded to obligations of the self insurance
   programs maintained by Empire and Synergy for any incidents occurring
   prior to December 17, 1996.  The companies' insurance programs provided
   coverage for comprehensive general liability and vehicle liability for
   catastrophic exposures as well as those risks required to be insured by
   law or contract.  The companies retained a significant portion of
   certain expected losses related primarily to comprehensive general
   liability and vehicle liability.  Provisions for self-insured losses
   were recorded based upon the companies' estimates of the aggregate self-
   insured liability for claims incurred, and totaled $1,365 on March 31,
   1997.

    The Partnership leases certain property, plant and equipment for
   various periods under noncancelable leases, including an office space
   agreement with the previous owner of Empire for $175 each year over a
   period of ten years.  The annual rental payments may increase to $250,
   depending on certain circumstances occurring after two years.

    A number of personal injury, property damage and products liability
   suits are pending or threatened against the Partnership.  In general,
   these lawsuits have arisen in the ordinary course of the Partnership's
   business and involve claims for actual damages and in some cases,
   punitive damages, arising from the alleged negligence of the
   Partnership or as a result of product defects or similar matters.  Of
   the pending or threatened matters, a number involve property damage,
   several involve serious personal injuries and the claims made are for
   relatively large amounts.  Although any litigation is inherently
   uncertain, based on past experience, the information currently
   available to it and the availability of insurance coverage, the
   Partnership does not believe that these pending or threatened
   litigation matters will have a material adverse effect on its results
   of operations or its financial condition.

    The Managing General Partner and its affiliates performing services
   for the Partnership are entitled to reimbursement for all expenses
   incurred on behalf of the Partnership, including the cost of
   compensation properly allocable to the Partnership, and all other
   expenses necessary or appropriate to the conduct of the business of,
   and allocable to, the Partnership.  These costs, which totaled $17,400
   for the period December 17, 1996, to March 31, 1997, include employee
   compensation and benefit expenses of employees of the Managing General
   Partner and its affiliates.

7. Restricted Unit Plan

    The Partnership adopted the 1996 Restricted Unit Award Plan (the
   "Restricted Unit Plan") which authorizes the issuance of Common Units
   with an aggregate value of $12,500 (595,238 Common Units valued at the
   initial public offering price of $21.00 per Unit) to executives,
   managers and elected supervisors of the Partnership.  Units issued
   under the Restricted Unit Plan are subject to a bifurcated vesting
   procedure such that (a) 25% of the issued Units will vest over time
   with one-third of such units vesting at the end of each of the third,
   fifth and seventh anniversaries of the issuance date, and (b) the
   remaining 75% of the Units will vest automatically upon, and in the
   same proportions as, the conversion of Subordinated Units to Common
   Units.  Restricted Unit Plan participants are not eligible to receive
   quarterly distributions or vote their respective Units until vested.
   Restrictions generally limit the sale or transfer of the Units during
   the restricted periods.  The value of the restricted Unit is
   established by the market price of the Common Unit at the date of
   grant.

    As of and for the three and one half month period ended March 31,
   1997, a total of 376,190 restricted Common Units were awarded.  For the
   three and one half month period ended March 31, 1997, the Partnership
   recorded $20 of compensation expense.

8. Partners' Capital

    A portion of the Subordinated Units will convert into Common Units on
   the first day after the record date established for the distribution in
   respect of any quarter ending on or after (a) December 31, 1999 (with
   respect to one-quarter of the Subordinated Units) and (b) December 31,
   2000 (with respect to one-quarter of the Subordinated Units), in
   respect of which (i) distributions of Available Cash from Operating
   Surplus on the Common Units and the Subordinated Units with respect to
   each of the three consecutive four-quarter periods immediately
   preceding such date equaled or exceeded the sum of the Minimum
   Quarterly Distribution on all of the outstanding Common Units and
   Subordinated Units during such periods, (ii) the Adjusted Operating
   Surplus generated during each of the two consecutive four-quarter
   periods immediately preceding such date equaled or exceeded the sum of
   the Minimum Quarterly Distribution on all of the outstanding Common
   Units and Subordinated Units and the related distribution on the
   general partner interests in the Partnership during such periods, and
   (iii) there are no outstanding Common Unit Arrearages; provided,
   however that the early conversion of the second one-quarter of
   Subordinated Units may not occur until at least one year following the
   early conversion of the first one-quarter of Subordinated Units.

    Upon expiration of the Subordination Period, all remaining
   Subordinated Units will convert into Common Units on a one-for-one
   basis and will thereafter participate pro rata with the other Common
   Units in distributions of Available Cash.

9. Subsequent Event

    Effective April 16, 1997, the Partnership registered 750,000
   additional units which are available to be used for future
   acquisitions.  On April 24, 1997 Cornerstone consummated the
   acquisition of substantially all of the assets of American Propane,
   Inc.  The total consideration paid for this acquisition was
   approximately $2.4 million, of which $1.9 million was in the form of
   Cornerstone Common Units.
                    CORNERSTONE PROPANE PARTNERS, L.P.
                                 PRO FORMA
                   CONSOLIDATED STATEMENTS OF OPERATIONS
               (Dollars in thousands, except per Unit data)
                                (unaudited)

               July 1, 1996   July 1, 1995   Jan 1, 1997    Jan 1, 1996
                    to             to             to             to
               Mar 31, 1997   Mar 31, 1996   Mar 31, 1997   Mar 31, 1996
                (Pro Forma)    (Pro Forma)    (Pro Forma)    (Pro Forma)
               ------------   ------------   ------------   ------------
REVENUE         $535,503       $452,477       $220,566        $198,690
COST OF SALES    428,959        336,311        178,050         144,149
               ---------      ---------      ---------      ----------
GROSS PROFIT     106,544        116,166         42,516          54,541
               ---------      ---------      ---------      ----------
EXPENSES
  Operating,
  general and
  administrative  66,209         68,195         23,590          27,143
  Depreciation and
  amortization    10,948         10,169          3,819           3,417

OPERATING INCOME  29,387         37,802         15,107          23,981
INTEREST EXPENSE,
  NET            (13,499)       (13,301)        (4,450)         (4,392)
               ---------      ---------      ---------      ----------
INCOME BEFORE
  INCOME TAXES    15,888         24,501         10,657          19,589
INCOME TAXES          70             75             20              25
               ---------      ---------      ---------      ----------
NET INCOME      $ 15,818       $ 24,426       $ 10,637        $ 19,564
               =========      =========      =========      ==========
General partners'
 interest in net
 income             $413           $489           $213            $391
               ---------      ---------      ---------      ----------
Limited partners'
 interest in net
 income         $ 15,405       $ 23,937       $ 10,424        $ 19,173
               ---------      ---------      ---------      ----------
Net income
 per Unit          $0.97          $1.48          $0.65           $1.18
               ---------      ---------      ---------      ----------
Weighted average
 number of Units
 outstanding      16,513         16,513         16,513          16,513
               =========      =========      =========      ==========
     The accompanying notes are an integral part of these consolidated
                           financial statements.

<PAGE>

                    CORNERSTONE PROPANE PARTNERS, L.P.
                      NOTES TO PRO FORMA CONSOLIDATED
                           FINANCIAL INFORMATION
                              MARCH 31, 1997
                          (Dollars in thousands)
                                (unaudited)


1. Basis of Presentation

   The unaudited pro forma consolidated statements of operations for the
   three month period ended March 31, 1996 and the nine month periods ended
   March 31, 1997 and 1996 were derived from the historical statements of
   operations of Empire Energy Corporation for the periods January 1
   through March 31, 1996, July 1 through December 16, 1996, and July 1,
   1995 through March 31, 1996;  of SYN Inc. and Myers Propane Gas Company
   ("Myers") for the periods January 1 through March 31, 1996,  July 1,
   through December 16, 1996 and August 15, 1995 to March 31, 1996;  of
   Synergy Group Incorporated for the period July 1, 1995 to August 14,
   1995;  of CGI Holdings, Inc. for the periods February 1 through March
   31, 1996 August 1, 1995 through March 31, 1996 and August 1, 1996
   through December 16, 1996, and the consolidated statement of operations
   of the Partnership from December 17, 1996 through March 31, 1997.
   Historical financial statements of Myers have not been separately
   presented based on the Partnership's belief that the separate inclusion
   of Myers does not have a material effect on the pro forma consolidated
   financial statements of the Partnership.  The pro forma consolidated
   statements of operations were prepared to reflect the effects of the IPO
   as if it had been completed in its entirety as of the beginning of the
   periods presented.  However, these statements do not purport to present
   the results of operations of the Partnership had the IPO actually been
   completed as of the beginning of the periods presented.  In addition,
   the pro forma consolidated statements of operations are not necessarily
   indicative of the results of future operations of the Partnership and
   should therefore be read in conjunction with the historical consolidated
   financial statements of the Predecessor Companies and the Partnership
   appearing elsewhere in this Quarterly Report on Form 10-Q.

2. Pro Forma Adjustments

   Significant pro forma adjustments reflected in the pro forma
   consolidated statements of operations include the following:

   Adjustments to reflect the full period effect of operating expense
   savings resulting from the consolidation of certain operations that
   occurred subsequent to July 1, 1995, as well as the elimination of
   certain operating and general administrative expenses associated with
   the operation of the Partnership.  Operating expense adjustments for
   retail overlap consolidations were $535 and $175 for the nine and three
   months ended March 31, 1996, respectively.  General and administrative
   adjustments relating to corporate overhead consolidation, the
   elimination of bank and consulting fees and the estimated incremental
   general and administrative cost associated with the Partnership were
   $1,254 for each of the nine month periods ended March 31, 1997 and 1996,
   and $416 for the three month period ended March 31, 1996.  The pro forma
   adjustments do not include any amount for the incentive compensation
   that might be paid to key employees.

   Adjustments to reflect the additional depreciation and amortization
   expense due to the increase in property and intangibles that result from
   applying the purchase method of accounting to the Empire Energy and
   Coast acquisitions.  Depreciation and amortization adjustments were $60
   for each of the nine month periods ended March 31, 1997 and 1996, and
   $20 for the three month period ended March 31, 1996.

   Adjustments to reflect interest expense applicable to the Partnership.
   Interest expense adjustments relating to expense for the $220,000 senior
   notes at a rate of 7.53% per annum, expense attributable to the working
   capital facility based on an average outstanding principal balance of
   $120 at 6.5% per annum, expense attributable to debt assumed based on an
   average outstanding principal balance of $7,000 at 8.5% per annum and
   debt expense amortization based on $5,500 estimated debt issuance costs
   were $270 for each for the nine month periods ended March 31, 1997 and
   1996 and $90 for the three month period ended March 31, 1996.

   Adjustments to reflect the elimination of income tax related accounts
   because income taxes will not be borne by the Partnership, except for
   income taxes applicable to operations to be conducted by the
   Partnership's wholly owned corporate subsidiary.

   Net income per limited partner Unit is determined by dividing the net
   income that would be allocated to the Unitholders, which is 98% of net
   income, by the number of Units outstanding.  The weighted average number
   of Units outstanding (which includes equivalent units issued under the
   restricted unit plan) totaling 16,513 were assumed to have been
   outstanding the entire period.

<PAGE>


                                 SYN Inc.
                        CONSOLIDATED BALANCE SHEET
                          (Dollars in thousands)

                                  ASSETS

                                                     June 30, 1996
                                                    --------------
CURRENT ASSETS:
 Cash                                                  $       14
 Trade receivables, less allowance for doubtful
   accounts of $1,505                                       9,195
 Inventories                                                7,447
 Prepaid expenses and other                                   678
 Deferred income taxes                                      3,727
 Due from Former Stockholders                              37,966
                                                     -------------
     Current Assets                                        59,027
                                                     -------------

PROPERTY AND EQUIPMENT, at cost:
 Land and buildings                                         6,420
 Storage and consumer service facilities                   52,953
 Transportation, office and other equipment                11,910
 Less Accumulated depreciation                             (2,592)
                                                     -------------
     Total property and equipment                          68,691
                                                     -------------

OTHER ASSETS:
 Investments and restricted cash deposits                   3,025
 Deferred income tax benefit                                4,849
 Intangible assets, primarily the excess of cost
   over fair value of net assets acquired, net of
   accumulated amortization                                30,943
 Other                                                        227
                                                     -------------
     Total Other Assets                                    39,044
                                                     -------------
                                                        $ 166,762
                                                     =============

                   LIABILITIES AND STOCKHOLDERS' EQUITY


CURRENT LIABILITIES:
 Current maturities of long-term debt                  $    1,025
 Accounts payable                                           1,604
 Accrued expenses                                           2,915
 Acquisition related liabilities                           29,306
                                                     -------------
     Total current liabilities                             34,850
LONG-TERM DEBT                                             25,687
NOTE PAYABLE - RELATED PARTY                               52,812
                                                     -------------
     Total liabilities                                    113,349
                                                     -------------

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:

 Cumulative preferred stock, $.01 par value;
 70,500 shares authorized; 55,312 shares, issued
 and outstanding, at stated value of $1,00 per share   $   55,312
 Common stock; $0.001 par value; authorized 100,000
 shares, issued and outstanding                                 1
 Additional paid-in capital                                    99
 Accumulated deficit                                       (1,999)
                                                     -------------
     Total stockholders' equity                            53,413
                                                     -------------
                                                       $  166,762
                                                     =============


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

<PAGE>

                                 SYN Inc.
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                          (Dollars in thousands)
                                (unaudited)

                       For the period    For the period     For the period
                           from              from                from
                        July 1, 1995     August 15, 1995    January 1 1996
                             to                to                to
                      August 14, 1995     March 31, 1996    March 31, 1996
                    ------------------   ---------------    ---------------
REVENUE                  $77,308              $7,568           $38,719

COST OF PRODUCT SOLD      37,199               3,631            18,824
                        --------            --------          --------
Gross profit              40,109               3,937            19,895

OPERATING EXPENSES:
 Salaries and commissions 10,864                 -               4,552
 General & administration 10,563               3,632             5,102
 Depreciation and
   amortization            2,697                 472               969
Related-party corporate
   administration and
   management fees         2,344                 -                 938
                        --------            --------          --------
Total operating expenses  26,468               4,104            11,561
                        --------            --------          --------
Operating income (loss)   13,641                (167)            8,334

INTEREST EXPENSE
including $0, $3,440, and
 $1,212 to related party   3,918                 816             1,571
                        --------            --------          --------
INCOME (LOSS) BEFORE
 INCOME TAXES              9,723                (983)            6,763

PROVISION (BENEFIT)
 FOR INCOME TAXES          3,700                (373)            2,350
                        --------           ---------          --------
Net income (loss)          6,023                (610)            4,413

DIVIDENDS ON CUMULATIVE
 PREFERRED STOCK          (5,185)               -              (2,074)
                        --------           ---------          --------
Net loss applicable to
 common stockholders        $838               $(610)           $2,339
                        ========           =========          ========

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

<PAGE>

                                 SYN Inc.
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (Dollars in thousands)
                                (unaudited)

                                                            For the period
                                        For the period       from July 1,
                                         from August,       1995 to August
                                         15, 1995 to          14, 1995
                                          March 31,         (Predecessor
                                            1996                 Basis)
                                        --------------      -------------
OPERATING ACTIVITIES:
  Net income (loss)                       $  6,023           $   (610)
  Items not requiring (providing) cash
  Depreciation and amortization              2,699                472
     Gain on sale of assets                   (263)
     Deferred income taxes                   5,458
  Changes in operating items
  Trade receivables                         (7,151)             4,897
  Inventories                                1,053              1,244
  Prepaid expenses and other                  (240)               345
  Accounts payable                          (4,982)            (1,864)
     Accrued expenses                       (1,970)                -
                                        --------------      -------------
     Net cash provided by
    operating activities                       627              4,484
                                        --------------      -------------

INVESTING ACTIVITIES
  Acquisition of assets of Synergy
    Group Incorporated                                       (150,922)
  Proceeds from the sale of certain
    Synergy Group assets to Empire Energy
    Corporation                                                35,980
  Sale of assets                               164              1,880
  Purchases of property and equipment       (4,663)
  Change in investments and restricted
    cash deposits                             (270)
                                        --------------      -------------
     Net cash provided by (used in)
    investing  activities                 (119,711)             1,880
                                        --------------      -------------
FINANCING ACTIVITIES:

  Increase in credit facility             $ 23,323           $ (6,965)

  Proceeds from issuance of common stock       100                 -
  Proceeds from issuance of preferred stock 52,812                -
  Proceeds from issuance of note payable
    - related party                         52,812                 -
  Borrowings from related party             36,458                 -
  Repayments to related party              (36,458)                -
  Payment on long-term debt                 (4,778)                -
  Preferred stock dividends paid            (5,185)                -
                                        --------------      -------------
      Net cash provided by (used in)
    financing activities                   119,084             (6,965)
                                        --------------      -------------
  Increase (decrease) in cash                   -                (601)

CASH:
  Beginning of period                           -                5,323
                                        --------------      -------------
  End of period                           $     -            $   4,722
                                        ==============      =============

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

<PAGE>

                         SYN INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              SEVEN AND ONE-HALF MONTHS ENDED MARCH 31, 1996,
  ONE AND ONE-HALF MONTHS ENDED AUGUST 15, 1995 (PREDECESSOR), AND THREE
                        MONTHS ENDED MARCH 31, 1996
                          (Dollars in thousands)
                                (unaudited)


1.Basis of Presentation

  In the opinion of Management, the accompanying unaudited consolidated
  financial statements contain all adjustments necessary to present fairly
  SYN Inc. and its subsidiaries ("Synergy") consolidated results of
  operations and cash flows for the period ended March 31, 1996.  All such
  adjustments are of a normal recurring nature.

  Synergy completed its acquisition of Synergy Group Incorporated ("SGI")
  on August 14, 1995.  The unaudited consolidated statement of operations
  and of cash flows for the period ended August 14, 1995 are presented as
  a predecessor entity of Synergy and contain all adjustments necessary to
  present fairly SGI consolidated results of operations and cash flows for
  the period then ended.

  The accounting policies followed by Synergy are set forth in Note 1 to
  Synergy's audited consolidated financial statements as of June 30, 1996,
  which were included in the Form S-1 of Cornerstone Propane Partners,
  L.P. (Registration No. 333-13879).  Other disclosures required by
  generally accepted accounting principles are not included herein but are
  included in the notes to the June 30, 1996, audited statements
  previously mentioned.

2.   Commitments and Contingencies

  Synergy obtains insurance coverage for catastrophic exposures related to
  comprehensive general liability, vehicle liability and workers'
  compensation, as well as those risks required to be insured by law or
  contract.  Synergy self-insures the first $250 of coverage per incident
  and obtains excess coverage from carriers for these programs.

  Provisions for self-insured losses are recorded based upon Synergy's
  estimates of the aggregate self-insured liability for claims incurred.

  Synergy self-insures for health benefits provided to its employees.
  Provisions for losses expected under this program are recorded based
  upon Synergy's estimate of the aggregate liability for claims incurred.

  Synergy and the acquired operations of SGI are presently involved in
  various federal and state tax audits and are also defendants in other
  business-related lawsuits which are not expected to have a material
  adverse effect on Synergy's financial position or results of operations.

  In conjunction with the acquisition of SGI, the former stockholders of
  SGI are contractually liable for all insurance claims and tax
  liabilities that relate to periods prior to the acquisition date.  Funds
  have been placed in escrow accounts to provide for payment of these
  liabilities.  In the event that the escrow amount is insufficient to
  settle these liabilities, Synergy could be obligated to fund any
  additional amounts due and would have to seek reimbursement from the
  former stockholders for such amounts.  Synergy has recorded its best
  estimates of the ultimate liabilities expected to arise from these
  matters and has made claims against the former stockholders for
  reimbursement.
<PAGE>

                         EMPIRE ENERGY CORPORATION
                        CONSOLIDATED BALANCE SHEET
                          (Dollars in thousands)
                                     
                                  ASSETS
                                     
                                                        June 30, 1996
CURRENT ASSETS:                                         -------------
 Cash                                                     $  2,064
 Trade receivables, less allowance for doubtful
 accounts of $1,262                                          5,724
 Inventories                                                 6,702
 Prepaid expenses                                              103
 Refundable income taxes                                       457
 Deferred income taxes                                         996
                                                        -------------
     Current Assets                                         16,046
                                                        -------------
DUE FROM SYN INC                                             7,978
                                                        -------------

PROPERTY AND EQUIPMENT, at cost:
 Land and buildings                                          8,903
 Storage and consumer service facilities                    80,615
 Transportation, office and other equipment                 18,702
                                                        -------------
                                                           108,220
 Less Accumulated depreciation                             (28,686)
                                                        -------------
                                                            79,534
                                                        -------------

OTHER ASSETS:
 Excess of cost over fair value of net assets acquired,
  at amortized cost                                          3,033
 Other                                                         511
                                                        -------------
                                                             3,544
                                                        -------------

                                                          $107,102
                                                        =============
                                     
                   LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
 Current maturities of long-term debt                   $    6,019
 Accounts payable                                            3,368
 Accrued salaries                                            1,063
 Accrued expenses                                            1,676
                                                        -------------
     Total current liabilities                              12,126
                                                        -------------
LONG-TERM DEBT                                              25,442
                                                        -------------
DEFERRED INCOME TAXES                                       16,877
                                                        -------------
ACCRUED SELF-INSURANCE LIABILITY                             2,424
                                                        -------------


STOCKHOLDERS' EQUITY:
 Common stock; $0.001 par value; authorized
  17,500,000 shares, issued,
   12,004,430 shares                                            12
 Additional paid-in capital                                 46,099
 Retained earnings                                           4,143
                                                            50,254
                                                        -------------
 Treasury stock, at cost - 3,000 shares                        (21)
                                                        -------------

                                                            50,233
                                                        -------------

                                                        $  107,102
                                                        =============

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


                         EMPIRE ENERGY CORPORATION
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                          (Dollars in thousands)
                                (unaudited)

                                   For the period      For the period
                                    from July 1,       from January 1,
                                      1995 to                  1996 to
                                   March 31, 1996      March 31, 1996
                                   --------------      --------------

OPERATING REVENUE                  $   88,233           $   44,198
COST OF PRODUCT SOLD                   44,518               23,311
                                   --------------      --------------

GROSS PROFIT                           43,715               20,887

OPERATING COSTS AND EXPENSES:
  Provision for doubtful accounts       1,024                  249
  General and administrative           22,654                8,885
  Depreciation and amortization         4,433                1,707
                                   --------------      --------------

OPERATING INCOME                       15,604               10,046

INTEREST EXPENSE (NET)                  1,775                  663
                                   --------------      --------------

INCOME BEFORE INCOME TAXES             13,829                9,383

PROVISION FOR INCOME TAXES              5,300                3,400
                                   --------------      --------------

NET INCOME                         $    8,529           $    5,983
                                   ==============      ==============


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

<PAGE>

                         EMPIRE ENERGY CORPORATION
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (Dollars in thousands)
                                (unaudited)


                                             For the period
                                              from July 1,
                                                1995 to
                                              March 31, 1996
                                             ----------------

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                 $      8,529
  Items not requiring (providing) cash
     Depreciation                                   4,201
     Amortization                                     232
     Gain on sale of assets                           (20)
     Deferred income taxes                            441
  Changes in
     Trade receivables                             (9,884)
     Inventories                                     (717)
     Accounts payable                                 590
     Accrued expenses and self insurance            2,902
     Prepaid expenses and other                      (891)
     Income taxes payable                           2,662
                                             ----------------

       Net cash provided by operating
        activities                                  8,045
                                             ----------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Proceeds from the sale of assets                     76
  Purchases of property and equipment              (2,998)
  Purchase of assets from SYN Inc.                (35,980)
                                             ----------------
       Net cash used in investing
        activities                                (38,902)
                                             ----------------

CASH FLOWS FROM FINANCING ACTIVITIES

  Decrease in credit facilities                    (3,600)
  Principal payments on purchase obligations          (98)
  Checks in process of collection                    (158)
  Proceeds from acquisition credit facility        35,000
                                             ----------------
       Net cash provided by financing
        activities                                 31,144
                                             ----------------

Increase in cash                                      287

CASH:

  Beginning of period                                  -
                                             ----------------
  End of period                              $        287
                                             ================
<PAGE>

                         EMPIRE ENERGY CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     NINE MONTHS ENDED MARCH 31, 1996
                   AND THREE MONTHS ENDED MARCH 31, 1996
                          (Dollars in thousands)
                                (unaudited)


1.Basis of Presentation

  In the opinion of Management, the accompanying unaudited consolidated
  financial statements contain all adjustments necessary to present fairly
  Empire Energy Corporation's ("Empire Energy") consolidated results of
  operations and cash flows for the period ended March 31, 1996.  All such
  adjustments are of a normal recurring nature.

  The accounting policies followed by Empire Energy are set forth in Note
  1 to Empire Energy's audited consolidated financial statements as of
  June 30, 1996, which were included in the Form S-1 of Cornerstone
  Propane Partners, L.P. (Registration No. 333-13879)  Other disclosures
  required by generally accepted accounting principles are not included
  herein but are included in the notes to the June 30, 1996, audited
  statements previously mentioned.

2.Commitments and Contingencies

  Under Empire Energy's current insurance program, coverage for
  comprehensive general liability and vehicle liability is obtained for
  catastrophic exposures as well as those risks required to be insured by
  law or contract. Empire Energy retains a significant portion of certain
  expected losses related primarily to comprehensive general liability and
  vehicle liability.  Under these current insurance programs, Empire
  Energy self insures the first $1 million of coverage (per incident) on
  general liability and on vehicle liability.  In addition, Empire Energy
  has a $100 deductible for each liability claim. Empire Energy obtains
  excess coverage from carriers for these programs on claims-made basis
  policies.  The excess coverage for comprehensive general liability
  provides a loss limitation that limits Empire Energy's aggregate of self-
  insured losses to $1.5 million per policy period.  Provisions for self-
  insured losses are recorded based upon Empire Energy's estimates of the
  aggregate self-insured liability for claims incurred.

  Empire Energy self insures the first $250 of workers' compensation
  coverage (per incident).  Empire Energy purchases excess coverage from
  carriers for workers' compensation claims in excess of the self-insured
  coverage.  Provisions for losses expected under this program are
  recorded based upon Empire Energy's estimates of the aggregate liability
  for claims incurred.

  Empire Energy self insures health benefits provided to the employees of
  Empire Energy and its subsidiaries.  Provisions for losses expected
  under this program are recorded based upon Empire Energy's estimate of
  the aggregate liability for claims incurred.

  In conjunction with the restructuring that occurred in June 1994 (the
  "Split Off Transaction") Empire Energy agreed to indemnify Empire Gas
  Corporation (now known as All Star Gas Corporation, "Empire Gas") for
  47.7% of the self-insured liabilities of Empire Gas incurred prior to
  June 30, 1994.  Empire Energy has included in its self-insurance
  liability its best estimate of the amount it will owe Empire Gas under
  this indemnification agreement.

  Empire Energy is presently a defendant in various lawsuits related to
  the self-insurance program and other business-related lawsuits which are
  not expected to have a material, adverse effect on Empire Energy's
  financial position or results of operations.

  The state of Missouri has assessed Empire Gas approximately $1,400 for
  additional state income tax for the years ended June 30, 1992 and 1993.
  An amount approximating one-half of the above assessment could be at
  issue for the year ended June 30, 1994.  Empire Gas and Empire Energy
  have protested these assessments and are currently waiting for a
  response from the Missouri Department of Revenue.  It is likely that
  this matter will have to be settled in litigation.  Empire Gas and
  Empire Energy believe that they have a strong position on this matter
  and intend to vigorously contest the assessment.  It is not possible at
  this time to conclude on the outcome of this matter.

  The Internal Revenue Service has begun a federal income tax audit of
  Empire Gas for the year ended June 30, 1994.  While the audit is still
  in process, the audit has principally focused on the deductibility of
  certain professional fees and travel and entertainment expenses as well
  as on the tax-free treatment of the Split-Off Transaction.

  As a former member of the Empire Gas controlled group and in connection
  with a tax indemnity agreement with Empire Gas, Empire Energy agreed to
  indemnify 47.7% of the total liabilities related to these tax audits of
  the years ended June 30, 1994, and prior thereto.

  The Split-Off Transaction was structured with the intent of qualifying
  for tax-free treatment under Section 355 of the Internal Revenue Code
  and Empire Energy, and Empire Gas, obtained a private letter ruling (the
  "Letter Ruling") from the Internal Revenue Service confirming such
  treatment, subject to certain representations and conditions specified
  in the Letter Ruling.  The Internal Revenue Service is currently
  conducting an audit of Empire Gas for the year in which the Split-Off
  Transaction occurred.  If the Internal Revenue Service were to reverse
  the position it took in the Letter Ruling and prevail on a challenge to
  the tax-free treatment of the Split-Off Transaction, Empire Energy would
  be liable for a portion of any taxes, interest and penalties due, both
  as a former member of the Empire Gas controlled group and under a tax
  indemnity agreement with Empire Gas that was executed in connection with
  the Split-Off Transaction.  Empire Energy's liability in such
  circumstances could exceed the percentage under the tax indemnity
  agreement if Empire Gas were unable to fund its percentage share under
  that agreement.  If Empire Energy were held liable for any taxes,
  interest or penalties in connection with the above Split-Off
  Transaction, the amount of this
  liability could be substantial and could adversely affect Empire
  Energy's financial position and results of operations.

  Empire Energy is presently included in various state tax audits which
  are not expected to have a material, adverse effect on Empire Energy's
  financial position or results of operations.

<PAGE>

                            CGI HOLDINGS, INC.
                        CONSOLIDATED BALANCE SHEET
                          (Dollars in thousands)
                                     
                                  ASSETS

                                                       July 31,1996
                                                       ------------
CURRENT ASSETS:
 Cash and cash equivalents                              $   1,519
 Accounts and notes receivable                             23,664
 Inventories                                                7,316
 Prepaid expenses and deposits                              1,996
 Deferred income tax benefit                                  802
                                                       ------------
     Total current assets                                  35,297
                                                       ------------
Property and equipment, at cost less accumulated
  depreciation                                             51,495
Cost in excess of net assets acquired, net of
  amortization                                             11,844
Notes receivable                                            1,357
Deferred charges and other assets                           6,186
                                                       ------------
                                                        $ 106,179
                                                        ============

              LIABILITIES, MANDATORILY REDEEMABLE SECURITIES
                         AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
 Accounts payable                                       $  30,824
 Accrued liabilities                                        3,101
 Current maturities of long-term debt and capital lease
  obligations                                               3,924
                                                       ------------
     Total current liabilities                             37,849
                                                       ------------
Long-term debt and capital lease obligations               41,801
Deferred income taxes                                      10,777
Other liabilities                                           1,095

Commitments and contingencies (Note 2)

MANDATORILY REDEEMABLE SECURITIES:
 Redeemable exchangeable preferred stock:
   10% cumulative, $0.01 par value, 62,500 shares authorized,
    issued and outstanding; at redemption value             8,559


STOCKHOLDERS' EQUITY:
 Common stock, $0.01 par value, 6,515,000 shares authorized;
   4,312,247 issued and outstanding:
 Class A voting common stock, $0.01 par value, 3,000,000
   shares authorized; 2,789,784 issued and outstanding         28
 Class B voting common stock, $0.01 par value, 200,000
   shares authorized; 149,485 issued and outstanding            1
 Class C voting common stock, $0.01 par value, 3,000,000
   shares authorized; 1,343,831 issued and outstanding         13
 Class D non-voting common stock, $0.01 par value, 250,000
   shares authorized; 29,147 issued and outstanding            --
 Warrants outstanding                                       2,134
 Additional paid-in capital                                 8,945
                                                       ------------
 Accumulated deficit                                       (5,023)
                                                       ------------
     Total stockholders' equity                             6,098
                                                       ------------
                                                        $ 106,179
                                                       ============


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

<PAGE>

                            CGI HOLDINGS, INC.
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                          (Dollars in thousands)
                                (unaudited)

                                          August 1,           January 1,
                                          1995 to              1996 to
                                        March 31, 1996      March 31, 1996
                                        --------------      --------------

Sales and other revenue                   $  271,348         $  112,244
Costs and expenses:
  Cost of sales, except for
     depreciation and amortization           246,554            100,074
  Operating, general and administrative       16,929              7,317
  Depreciation and amortization                2,742              1,071
  Interest expense                             3,781              1,417
                                        --------------      --------------

Income before income taxes                     1,342              2,365
Income tax provision                             601              1,130
                                        --------------      --------------

Net income                                $      741         $    1,235
                                        ==============      ==============

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

<PAGE>

                            CGI HOLDINGS, INC.
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (Dollars in thousands)
                                (unaudited)
                                                       August 1, 1995
                                                            to
                                                       March 31, 1996
                                                       --------------
CASH FLOWS FROM (USED FOR) OPERATING ACTIVITIES:
     Net income                                             $  741
     Adjustments to reconcile net income to net
       cash used for operating activities
     Depreciation and amortization                           2,742
     Changes in assets and liabilities, net of
       acquisitions:
          Accounts and notes receivable                     (8,163)
          Inventories                                        1,673
          Prepaid expenses and deposits                       (303)
          Other assets                                         (29)
          Accounts payable                                  14,185
          Accrued liabilities                                  370
                                                            -------
Net Cash Provided from Operating Activities                 11,216
                                                            -------
CASH FLOWS FROM (USED FOR) INVESTING ACTIVITIES:
     Payments for acquisitions of retail outlets            (3,000)
     Losses from sale of property and equipment                (20)
     Purchases of and investments in property and
      equipment                                              (2,034)
                                                            --------
Net Cash Used from Investment Activities                     (5,054)
                                                            --------
CASH FLOWS FROM (USED FOR) FINANCING ACTIVITIES:
  Repurchase of common stock                                    (24)
  Repayments of long-term debt                                 (312)
  Borrowings on capital leases and other term loans             647
  Repayment of other notes payable                             (760)
  Principal payments under capital lease obligations           (455)
  Repayments under acquisition line                          (1,530)
                                                            --------
Net Cash Used in Financing Activities                        (2,434)
                                                            --------
Net increase in cash                                          3,728
Cash and cash equivalents, beginning of period                4,423
                                                            --------
Cash and cash equivalents, end of period                     $8,151
                                                            --------
     The accompanying notes are an integral part of these consolidated
                           financial statements.

<PAGE>

                            CGI HOLDINGS, INC.
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                (unaudited)

1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Basis of presentation
  The consolidated financial statements include the accounts of CGI
  Holdings, Inc. (the "Company") and its wholly-owned subsidiary, Coast
  Gas, Inc., and its wholly-owned subsidiary Coast Energy Group, Inc.
  ("CEG").  In 1989, the Company formed CEG, headquartered in Houston,
  Texas, to conduct its wholesale procurement and distribution operations.
  All significant intercompany transactions have been eliminated in
  consolidation.

  The accompanying consolidated financial statements are unaudited, except
  for the consolidated balance sheet at July 31, 1996, and have been
  prepared in accordance with the rules and regulations of the Securities
  and Exchange Commission.  They include all adjustments which the Company
  considers necessary for a fair statement of the results for the interim
  periods presented.

  Such adjustments consisted only of normal recurring items unless
  otherwise disclosed.  Certain notes and other information have been
  condensed or omitted from the interim financial statements presented in
  this Quarterly Report on Form 10-Q.  These financial statements should
  be read in conjunction with the Company's financial statements contained
  in the Partnership's Form S-1 Registration Statement (Registration No.
  333-13879).  Due to the seasonal nature of the Company's propane
  business, the results of operations for interim periods are not
  necessarily indicative of the results to be expected for a full year.

2.COMMITMENTS AND CONTINGENCIES

  The Company has contracts with various suppliers to purchase a portion
  of its supply needs of LPG for future deliveries with terms ranging from
  one to twelve months.  The contracted quantities are not significant
  with respect to the Company's anticipated total sales requirements and
  will generally be acquired at prevailing market prices at the time of
  shipment.  Outstanding letters of credit issued in conjunction with
  product supply contracts are a normal business requirement.  There were
  no outstanding letters of credit issued on behalf of the Company as of
  July 31, 1996, other than the $11.3 million, drawn against its credit
  guidance line.

  The Company is engaged in certain legal actions related to the normal
  conduct of business.  In the opinion of management, any possible
  liability arising from such actions will be adequately covered by
  insurance or will not have a material adverse effect on the Company's
  financial position or results of operations.

<PAGE>

                    CORNERSTONE PROPANE PARTNERS, L.P.
   Item 2.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF
               FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                     
                                     
The following discussion of the historical financial condition and results
of operations for the Partnership should be read in conjunction with the
historical and pro forma financial statements and notes thereto included
elsewhere in this Form 10-Q.

General

The Partnership is a Delaware limited partnership recently formed to own
and operate the propane business and assets of Synergy, Empire Energy,
Myers and Coast.  It is the fifth largest retail marketer of propane in the
United States, serving more than 360,000 residential, commercial,
industrial and agricultural customers from 306 customer service centers in
26 states.

Because a substantial portion of the Partnership's propane is used in the
weather-sensitive residential markets, the Heating Degree Days in the
Partnership's areas of operations, particularly during the six-month peak
heating season, have a significant effect on the financial performance of
the Partnership.  In any given area, warmer-than-normal temperatures will
tend to result in reduced propane use.  Therefore, information on normal
temperatures is used by the Partnership in understanding how historical
results of operations are affected by temperatures that are colder or
warmer than normal and in preparing forecasts of future operations, which
are based on the assumption that normal weather will prevail in each of the
Partnership's regions.

In determining actual and normal weather for a given period of time, the
Partnership compares the actual number of Heating Degree Days for such
period to the average number of Heating Degree Days for a longer time
period assumed to more accurately reflect the average normal weather, in
each case as such information is published by the National Weather Service
Climate Analysis Center, for each measuring point in each of the
Partnership's regions.  Synergy and Empire Energy have historically used
the 30-year period from 1961-1990, and Coast has historically used a 10-
year rolling average.  The Partnership then calculates weighted averages,
based on retail volumes attributable to each measuring point, of actual and
normal Heating  Degree Days within each region.  Based on this information,
the Partnership calculates a ratio of actual Heating Degree Days to normal
Heating Degree Days, first on a regional basis and then on a Partnership-
wide basis.

Although the Partnership believes that comparing temperature information
for a given period of time to "normal" temperatures is helpful for an
understanding of the Partnership's results of operations, when comparing
variations in weather to changes in total revenues or operating profit,
attention is drawn to the fact that a portion of the Partnership's total
revenues is not weather-sensitive and other factors such as price,
competition, product supply costs and customer mix also affect the results
of operations.  Furthermore, actual weather conditions in the Partnership's
regions can vary substantially from historical experience.

Gross profit margins are not only affected by weather patterns but also by
changes in customer mix.  For example, sales to residential customers
ordinarily generate higher margins than sales to other customer groups,
such as commercial or agricultural customers.  In addition, gross profit
margins vary by geographic region.  Accordingly, profit margins could vary
significantly from year to year in a period of identical sales volumes.

The Partnership intends to purchase a portion of its propane (approximately
50% to 60% of a given typical year's projected propane needs) pursuant to
agreements with terms of less than one year at market prices.  The balance
of its propane needs for the year will be satisfied in the spot market.
The Partnership generally does not enter into supply contracts containing
"take or pay" provisions.

The Partnership will engage in hedging of product cost and supply through
common hedging practices.  These practices will be monitored and maintained
by management for the Partnership on a daily basis.  Hedging of product
cost and supply does not always result increased margins and is not
considered to be material to operations or liquidity for the 3 and one-half
month period ended March 31, 1997.

Analysis of Historical Results of Operations

The following discussion compares the results of operations and other data
of Cornerstone Propane Partners, L.P. and its subsidiary Cornerstone
Propane, L.P. (collectively "Cornerstone") for the three-month period ended
March 31, 1997, to the pro forma three-month period ended March 31, 1996,
and the pro forma nine-month period ended March 31, 1997, to the pro forma
nine month period ended March 31, 1996.

Three months ended March 31, 1997, compared to pro forma three months ended
March 31, 1996.

Volume.  During the three months ended March 31, 1997, Cornerstone sold
75.0 million retail propane gallons, a decrease of 21.1 million gallons or
22.0% from the 96.1 million retail propane gallons sold during the pro
forma three months ended March 31, 1996.  The decrease in retail volume was
primarily attributable to national temperatures that averaged 14% warmer
than last year and 13% warmer than normal in the markets served by
Cornerstone.  Additionally, record high costs of propane resulted in
customer energy conservation which adversely impacted sales volume and
gross profit.  Wholesale volume sales were 81.4 million gallons and 83.0
million gallons respectively for the quarter ended March 31, 1997 and 1996.

Revenues.  Revenues increased by $21.9 million or 11.0% to $220.6 million
for the three months ended March 31, 1997, as compared to $198.7 million
for the pro forma three months ended March 31,1996.  This increase was
attributable to an increase in wholesale revenues of $36.1 million or 37.3%
to $132.9 million for the three months ended March 31, 1997, as compared to
$96.8 million for the pro forma three months ended March 31, 1996, due
primarily to higher product costs and sales prices.  This increase was
offset by a reduction in revenues from the Partnership's retail business.
The revenues for the retail business declined by $14.2 million or 13.9% to
$87.6 million for the three months ended March 31, 1997. as compared to
$101.8 million for the pro forma three months ended March 31, 1996.  This
decrease was a result of the reduction in volume described above offset by
an increase in the average sales price per gallon of propane.

Cost of Product Sold.  Cost of product sold increased by $33.9 million, or
21.4% to $178.0 million for the three months ended March 31, 1997, as
compared to $144.1 million for the pro forma three months ended March 31,
1996.  The increase in cost of product sold was primarily due to increased
wholesale business described above combined with an increase in the
wholesale cost of propane, which increased approximately 48.4% per gallon
in the three months ended March 31, 1997, compared to the pro forma same
period of the prior year.  These two increases were offset by the reduction
in retail volume described above.

As a percentage of revenues, cost of product sold increased to 80.7% for
the three months ended March 31, 1997, as compared to 72.5% for the pro
forma three months ended March 31, 1996.

Gross Profit.  Gross profit decreased $12.0 million or 22.0% to $42.5
million for the three months ended March 31, 1997, as compared to $54.5
million for the pro forma three months ended March 31, 1996.  Retail per
gallon gross margins were slightly better than the same period last year.
The decrease in gross profits were primarily due to the reduction in retail
sales volume discussed above.

Operating, General and Administrative Expenses.  Operating, general and
administrative expense decreased by $3.6 million or 13.2% to $23.6 million
for the three months ended March 31, 1997, as compared to $27.2 million for
the pro forma three months ended March 31, 1996.  This decrease was
primarily attributable to reductions in salaries and insurance expense
resulting principally from efficiencies in operations.

As a percentage of revenues, operating, general and administrative expenses
decreased to 10.7% for the three months ended March 31, 1997, as compared
to 13.7% for the pro forma three months ended March 31, 1996.

Depreciation and Amortization.  Depreciation and amortization increased $.4
million or 11.8% to $3.8 million for the three months ended March 31, 1997,
as compared to $3.4 million for the pro forma three months ended March 31,
1996.  This increase was primarily due to the revaluation of assets in
purchase accounting resulting from the purchase of Empire Energy and Coast
and to the amortization of goodwill.

Operating Income.  Operating income decreased $8.9 million, or 37.1% to
$15.1 million for the three months ended March 31, 1997, as compared to
$24.0 million for the pro forma three months ended March 31, 1996.  This
decrease was primarily the result of the decreased gross profit described
above, offset to some extent by the reduced operating, general and
administrative expenses also discussed above.

Interest Expense.  Interest expense remained at $4.4 million for both the
three months ended March 31, 1997, and the pro forma three months ended
March 31, 1996, since the overall level of borrowings and interest rates on
debt were consistent between periods, although the type of debt changed in
conjunction with the Partnership formation.

Net Income.  Net income decreased $8.9 million or 45.6% to $10.6 million
for the three months ended March 31, 1997, as compared to $19.5 million for
the pro forma three months ended March 31, 1996.  This decrease reflects
the decreased operating income discussed above.

EBITDA.  Total EBITDA decreased by $8.5 million, or 31.0% to $18.9 million
for the three months ended March 31, 1997, as compared to $27.4 million for
the pro forma three months ended March 31, 1996.  The decrease in EBITDA
reflects the decreased operating income discussed above.  As a percentage
of revenues, total EBITDA decreased to 8.6% for the three months ended
March 31, 1997, as compared to 13.8% for the pro forma three months ended
March 31, 1996.  EBITDA should not be considered as an alternative to net
income (as an indicator of operating performance) or as an alternative to
cash flow (as a measure of liquidity or ability to service debt
obligations) but provides additional information to evaluate the
Partnership's ability to distribute the Minimum Quarterly Distribution.

Pro forma nine months ended March 31, 1997, compared to pro forma nine
months ended March 31, 1996.

Volume.  During the pro forma nine months ended March 31, 1997, Cornerstone
sold 186.2 million retail propane gallons, a decrease of 15.5 million
gallons or 7.7% from the 201.7 million retail propane gallons sold during
the pro forma nine months ended March 31, 1996.  The decrease in retail
volume was primarily attributable to the decline in volume of sales in the
three months ended March 31, 1997 compared to the three months ended March
31, 1996.  Wholesale volume sales were 266.0 million gallons and 264.3
million gallons for the nine months ended March 31, 1997 and 1996,
respectively.

Revenues.  Revenues increased by $83.0 million or 18.3% to $535.5 million
for the pro forma nine months ended March 31,1997, as compared to $452.5
million for the pro forma nine months ended March 31, 1996.  This increase
was primarily attributable to an increase in wholesale revenues of $91.7
million or 43.0% to $304.7 million for the pro forma nine months ended
March 31, 1997, as compared to $213.0 million for the pro forma nine months
ended March 31, 1996.  This increase was offset by a reduction in revenues
from the Partnership's retail business.  The revenues for the retail
business declined by $8.7 million or 3.6% to $230.8 million for the pro
forma nine months ended March 31, 1997, as compared to $239.5 million for
the pro forma nine months ended March 31, 1996.  This decrease was a result
of the reductions in retail volume described above.

Cost of Product Sold.  Cost of product sold increased by $92.7 million, or
27.6% to $429.0 million for the pro forma nine months ended March 31, 1997,
as compared to $336.3 million for the pro forma nine months ended March 31,
1996.  The increase in cost of product sold was primarily due to the
increased wholesale revenue described above offset by the reduction in
retail volume described above.

As a percentage of revenues, cost of product sold increased to 80.1% for
the pro forma nine months ended March 31, 1997, as compared to 74.3% for
the pro forma nine months ended March 31, 1996.

Gross Profit.  Gross profit decreased $9.7 million or 8.3% to $106.5
million for the pro forma nine months ended March 31, 1997, as compared to
$116.2 million for the pro forma nine months ended March 31, 1996.  This
decrease was primarily due to the reduction in retail sales volume
discussed above.

Operating, General and Administrative Expenses.  Operating, general and
administrative expense decreased by $2.0 million or 2.9% to $66.2 million
for the pro forma nine months ended March 31, 1997, as compared to $68.2
million for the pro forma nine months ended March 31, 1996.  This decrease
was primarily attributable to reductions in salaries and insurance expense
resulting principally from efficiencies in operations.

As a percentage of revenues, operating, general and administrative expenses
decreased to 12.4% for the pro forma nine months ended March 31, 1997, as
compared to 15.1% for the pro forma nine months ended March 31, 1996.

Depreciation and Amortization.  Depreciation and amortization increased $.8
million or 7.8% to $11.0 million for the pro forma nine months ended March
31, 1997, as compared to $10.2 million for the pro forma nine months ended
March 31, 1996.  This increase was primarily due to the revaluation of
assets in purchase accounting resulting from the purchase of Empire Energy
and Coast and to the amortization of goodwill.

Operating Income.  Operating income decreased $8.4 million, or 22.2% to
$29.4 million for the pro forma nine months ended March 31, 1997, as
compared to $37.8 million for the pro forma nine months ended March 31,
1996.  This decrease was primarily the result of the decreased gross profit
described above, offset by the reduced operating, general and
administrative expenses also discussed above.

Interest Expense.  Interest expense increased by $.2 million or 1.5% to
$13.5 million for the pro forma nine months ended March 31, 1997, as
compared to $13.3 million for the pro forma nine months ended March 31,
1996.  The increase is due to slightly larger borrowings in the current pro
forma period compared to the same period in the prior year.

Net Income.  Net income decreased $8.6 million or 35.2% to $15.8 million
for the pro forma nine months ended March 31, 1997, as compared to $24.4
million for the pro forma nine months ended March 31, 1996.  This decrease
reflects the decreased operating income discussed above.

EBITDA.  Total EBITDA decreased by $7.7 million, or 16.0% to $40.3 million
for the pro forma nine months ended March 31, 1997, as compared to $48.0
million for the pro forma nine months ended March 31, 1996.  The decrease
in EBITDA reflects the decreased operating income discussed above.  As a
percentage of revenues, total EBITDA decreased to 7.5% for the pro forma
nine months ended March 31, 1997, as compared to 10.6% for the pro forma
nine months ended March 31, 1996.  EBITDA should not be considered as an
alternative to net income (as an indication of operating performance) or as
an alternative to cash flow (as a measure of liquidity or ability to
service debt obligations) but provides additional information to evaluate
the Partnership's ability to distribute the Minimum Quarterly Distribution.

Liquidity and Capital Resources

Cash Flows

Cash provided by operating activities during the three and one-half month
period ended March 31, 1997, was $18.1 million.  Cash flow from operations
included a net income of $13.9 million and noncash charges of $4.4 million
for the period comprised principally of depreciation and amortization
expense.  The impact of working capital changes decreased cash flow by
approximately $.2 million.

Cash used in investment activities for the three and one-half month period
ended March 31, 1997, totaled $1.7 million, which was principally used for
purchases of property and equipment.  Cash used in financing activities was
$12.3 million for the three and one-half month period ended March 31, 1997.
This amount reflects net repayments on the Working Capital Facility.

On December 17, 1996, Cornerstone Propane Partners, L.P. completed its
initial public offering, proceeds from which amounted to $191.8 million.
Concurrently with the IPO, Cornerstone Propane, L.P. (the "Operating
Partnership") issued $220.0 million of Senior Notes and borrowed $12.8
million on its Working Capital Facility.  Also on the IPO date, the
Operating Partnership received cash of $22.4 million from the Predecessor
Companies.

Proceeds from the IPO, Senior Notes and the Working Capital Facility were
used to repay liabilities assumed by the Operating Partnership ($337.6
million), to make distributions to the Special General Partner to redeem
its preferred stock ($61.2 million) and to provide net worth to the Special
General Partner ($15.5 million).  The balance ($10.3 million) was used to
pay expense of the partnership organization and formation.

Financing and Sources of Liquidity

On December 17, 1996, the Operating partnership issued $220.0 million of
Senior Notes with an annual interest rate of 7.53% pursuant to note
purchase agreements with various investors (collectively, the "Note
Agreement").  The Senior Notes mature on December 30, 2010, and require
semi-annual interest payments commencing December 30, 1996.  The Note
Agreement requires that the principal be paid in equal annual payments of
$27.5 million starting December 30, 2003.

The Operating Partnership's obligations under the Note Agreement are
secured, on an equal and ratable basis with its obligations under the Bank
Credit Agreement, by a first priority security interest in the Operating
Partnership's inventory, accounts receivable and certain customer storage
tanks.  The Note Agreement contains customary representations, warranties,
events of default and covenants applicable to the Operating Partnership and
its "Restricted Subsidiaries" (as defined therein), including limitations,
among others, on the ability of the Operating Partnership and its
Restricted Subsidiaries to incur additional indebtedness, create liens,
make investments and loans, enter into mergers consolidations or sales of
all or substantially all assets and make asset sales.  Generally, so long
as no default exists or would result, the Operating Partnership is
permitted to make any Restricted Payment (as defined in the Note Agreement
and including distributions to the Partnership) during each fiscal quarter
in an amount not in excess of Available Cash with respect to the
immediately preceding quarter.

Also on the same date, the Operating Partnership entered a bank credit
agreement consisting of a working capital facility (the "Working Capital
Facility") and an acquisition facility (the "Acquisition Facility").  The
Working Capital Facility provides for revolving borrowings up to $50
million (including a $30 million sublimit for letters of credit through
March 31, 1997, and $20 million thereafter), and matures on December 31,
1999.  The Bank Credit Agreement provides that there must be no amount
outstanding under the Working Capital Facility (excluding letters of
credit) in excess of $10 million for at least 30 consecutive days during
each fiscal year.  No amounts were outstanding under the Working Capital
Facility at March 31, 1997.  Issued outstanding letters of credit totaled
$7.6 million at March 31, 1997.  The Acquisition Facility provides the
Operating Partnership with the ability to borrow up to $75 million to
finance propane business acquisitions.  The Acquisition Facility operates
as a revolving facility through December 31, 1999, at which time any loans
then outstanding may be converted to term loans and will amortize quarterly
for a period of four years thereafter.  No amounts were outstanding at
March 31, 1997.  The Operating Partnership's obligations under the Bank
Credit Agreement are secured by a security interest in the Operating
Partnership's inventory, accounts receivable and certain customer storage
tanks.

Loans under the Bank Credit Agreement bear interest as a per annum rate
equal to either (at the Operating Partnership's option): (a) the sum (the
"Base Rate") of the applicable margin, and the higher of (i) the agent
bank's prime rate and (ii) the federal funds rate plus one-half of 1% and
(b) the sum (the "Eurodollar Rate") of the applicable margin and rate
offered by the agent requirements, if any).  The applicable margin for Base
Rate loans varies between 0% and .12%, and the applicable margin for
Eurodollar Rate loans varies between .25% and .80%, in each case depending
upon the Operating Partnership's ratio of consolidated "Debt" to
"Consolidated Cash Flow" (as such terms are defined in the Bank Credit
Agreement).  At March 31, 1997. the applicable Base and Eurodollar Rates
were 8.625% and 6.675%, respectively.  In addition, an annual fee is
payable quarterly by the Operating Partnership (whether or not borrowing
occur) ranging from .125% to .325% depending upon the ratio referenced
above.

The Bank Credit Agreement contains customary representations, warranties,
events of defaults and covenants including limitations, among others, on
the ability of the Operating Partnership and its "Restricted Subsidiaries"
(as defined therein) to incur or maintain certain indebtedness or liens,
make investments and loans, enter in mergers, consolidations or sales of
all or substantially all of its assets and make asset sales.  Generally, so
long as no default exists or would result, the Operating Partnership is
permitted to make any Restricted Payment (as defined in the Bank Credit
Agreement and including distributions to the Partnership) during each
fiscal quarter in amount not to exceed Available Cash with respect to the
immediately preceding quarter.

In addition, the Bank Credit Agreement provides that: (1) the Operating
Partnership not permit the ratio of its consolidated Debt (as defined in
the Bank Credit Agreement) less cash on hand (in excess of $1 million up to
$10 million) to Consolidated Cash Flow (as defined in the Bank Credit
Agreement) to exceed 4.75:1.00 at any time on or before December 31, 1997,
4.50:1.00 at any time on or before December 31, 1998, and 4.25:1.00 any
time thereafter; and (2) the Operating Partnership not permit the ratio of
its Consolidated Cash Flow to consolidated "Interest Expense" (as defined
therein) to be less than 2.00:1.00 prior to December 31, 1997, 2.25:1.00
any time thereafter on or before December 31, 1998 and 2.50:1.00 at any
time thereafter.

<PAGE>
                    CORNERSTONE PROPANE PARTNERS, L.P.


PART II.  OTHER INFORMATION

Item 6    Exhibits and Reports on Form 8-K

          a)   Exhibits:
          
            ( 3) Amendment No. 1 dated as of May 1, 1997 to the Amended and
            Restated Agreement of Limited Partnership of Cornerstone Propane
            Partners, L.P.
          
            (27) Financial Data Schedule
          
          b)   Reports on Form 8-K:
          
            None

<PAGE>

SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                              Cornerstone Propane Partners, L.P.
                              (Registrant)



                              By:  Cornerstone Propane GP, Inc.
                              as Managing General Partner



Date:  May 14, 1997           By:   /s/  Ronald J. Goedde
                                 -------------------------
                              Name:  Ronald J. Goedde
                              Title:  Executive Vice President
                              and Chief Financial Officer