##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to.
 Commission File Number 1-10403
 TEPPCO Partners, L.P.
 (Exact name of Registrant as specified in its charter)
 Delaware
    
    76-0291058(State or Other Jurisdiction of
    
    (I.R.S. Employer Identification Number)Incorporation or Organization)
 1100 Louisiana Street, Suite 1600
Houston, Texas 77002
(Address of principal executive offices, including zip code)
 (713) 381-3636
(Registrants telephone number, including area code)
 Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of each exchange on which registeredLimited Partner Units representing Limited
    
    New York Stock ExchangePartner Interests
 None.
 þ o
 o þ
 þ o
 þ
  þ o o o
  o þ
   None.




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##### 



TEPPCO PARTNERS, L.P.
TABLE OF CONTENTS
 Significant Relationships Referenced in this Annual Report
    
    
    1Cautionary Note Regarding Forward-Looking Statements
    
    
    2PART IITEMS 1
    
    Business and Properties
    
    
    2AND 2.ITEM 1A.
    
    Risk Factors
    
    
    30ITEM 1B.
    
    Unresolved Staff Comments
    
    
    47ITEM 3.
    
    Legal Proceedings
    
    
    47ITEM 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    49PART IIITEM 5.
    
    Market for Registrants Units and Related Unitholder Matters and Issuer Purchases of Equity Securities
    
    
    50ITEM 6.
    
    Selected Financial Data
    
    
    51ITEM 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    52ITEM 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    85ITEM 8.
    
    Financial Statements and Supplementary Data
    
    
    87ITEM 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    87ITEM 9A.
    
    Controls and Procedures
    
    
    88ITEM 9B.
    
    Other Information
    
    
    90PART IIIITEM 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    90ITEM 11.
    
    Executive Compensation
    
    
    95ITEM 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    108ITEM 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    110ITEM 14.
    
    Principal Accounting Fees and Services
    
    
    117PART IVITEM 15.
    
    Exhibits, Financial Statement Schedules
    
    
    119Statement of Computation of Ratio of Earnings to Fixed ChargesSubsidiariesConsent of Deloitte & Touche LLPConsent of Deloitte & Touche LLPConsent of Deloitte & Touche LLPConsent of KPMG LLPPowers of AttorneyCertification of CEO Pursuant to Rule 13a-14(a)Certification of CFO Pursuant to Rule 13a-14(a)Certification of CEO Pursuant to Section 1350Certification of CFO Pursuant to Section 1350




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##### Table of Contents



SIGNIFICANT RELATIONSHIPS REFERENCED IN THIS ANNUAL REPORT
 we us our TEPPCO
 TE Products, TCTM TEPPCO Midstream Operating Companies.
 General Partner
 TEPPCO GP
 Enterprise GP Holdings
 Enterprise Products Partners
 EPCO
 Enterprise Products GP
 EPE Holdings
 DFI DFIGP
 Dan Duncan LLC
 Duncan Energy Partners
   /d
    
    =
    
    per dayBBtus
    
    =
    
    billion British Thermal unitsBcf
    
    =
    
    billion cubic feetMMBtus
    
    =
    
    million British Thermal unitsMMcf
    
    =
    
    million cubic feetMcf
    
    =
    
    thousand cubic feetMMBbls
    
    =
    
    million barrels
 1




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##### Table of Contents



CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
 The matters discussed in this Annual Report on Form 10-K (this Report) include
forward-looking statements. All statements that express belief, expectation, estimates or
intentions, as well as those that are not statements of historical facts are forward-looking
statements. The words proposed, anticipate, potential, may, will, could, should,
expect, estimate, believe, intend, plan, seek and similar expressions are intended to
identify forward-looking statements. Without limiting the broader description of forward-looking
statements above, we specifically note that statements included in this document that address
activities, events or developments that we expect or anticipate will or may occur in the future,
including such things as future distributions, estimated future capital expenditures (including the
amount and nature thereof), business strategy and measures to implement strategy, competitive
strengths, goals, expansion and growth of our business and operations, plans, references to future
success, references to intentions as to future matters and other such matters are forward-looking
statements. These statements are based on certain assumptions and analyses made by us in light of
our experience and our perception of historical trends, current conditions and expected future
developments as well as other factors we believe are appropriate under the circumstances. While we
believe our expectations reflected in these forward-looking statements are reasonable, whether
actual results and developments will conform with our expectations and predictions is subject to a
number of risks and uncertainties, including general economic, market or business conditions, the
opportunities (or lack thereof) that may be presented to and pursued by us, competitive actions by
other pipeline or energy transportation companies, changes in laws or regulations and other
factors, many of which are beyond our control. For example, the demand for refined products is
dependent upon the price, prevailing economic conditions and demographic changes in the markets
served, trucking and railroad freight, agricultural usage and military usage; the demand for
propane is sensitive to the weather and prevailing economic conditions; the demand for
petrochemicals is dependent upon prices for products produced from petrochemicals; the demand for
crude oil and petroleum products is dependent upon the price of crude oil and the products produced
from the refining of crude oil; and the demand for natural gas is dependent upon the price of
natural gas and the locations in which natural gas is drilled. Further, the success of our new
marine transportation business is dependent upon, among other things, our ability to effectively
assimilate and provide for the operation of that business and maintain key personnel and customer
relationships. We are also subject to regulatory factors such as the amounts we are allowed to
charge our customers for the services we provide on our regulated pipeline systems and the cost and
ability of complying with government regulations of the marine transportation industry.
Consequently, all of the forward-looking statements made in this document are qualified by these
cautionary statements, and we cannot assure you that actual results or developments that we
anticipate will be realized or, even if substantially realized, will have the expected consequences
to or effect on us or our business or operations. Also note that we provide additional cautionary
discussion of risks and uncertainties under the captions Risk Factors, Managements Discussion
and Analysis of Financial Condition and Results of Operations and elsewhere in this Report.
 The forward-looking statements contained in this Report speak only as of the date hereof.
Except as required by the federal and state securities laws, we undertake no obligation to publicly
update or revise any forward-looking statements, whether as a result of new information, future
events or any other reason. All forward-looking statements attributable to us or any person acting
on our behalf are expressly qualified in their entirety by the cautionary statements contained or
referred to in this Report and in our future periodic reports filed with the U.S. Securities and
Exchange Commission (SEC). In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this Report may not occur.
 
 PART I
 
 Items 1 and 2 . Business and Properties
 General
  2




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##### Table of Contents




    
    transportation, marketing and storage of refined products, LPGs and
petrochemicals (Downstream Segment);
    
    gathering, transportation, marketing and storage of crude oil and distribution
of lubrication oils and specialty chemicals (Upstream Segment); and
    
    gathering of natural gas, fractionation of NGLs and transportation of NGLs
(Midstream Segment).
 petroleum products products
    Business Strategy
  
    
    Focus on internal growth prospects in order to increase pipeline system and
terminal throughput, expand and upgrade existing assets and services and construct
new pipelines, terminals and facilities;
    
    Target accretive and complementary acquisitions and expansion opportunities that
provide attractive, long-term, balanced growth in each business segment;
    
    Continue to invest in fee based, demand driven, long-lived growth opportunities
that complement our businesses, including blending and logistical opportunities
using ethanol;
    
    Fund our growth with the financial discipline necessary to maintain our
investment grade credit ratings; and
    
    Operate in a safe, efficient, compliant and environmentally responsible manner.
 3




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##### Table of Contents




    
    We expect that refined products imports to the U.S. will increase;
    
    We expect to see turnover in commercial terminal ownership and operations;
    
    We expect that Canadian crude oil imports to the U.S. will increase;
    
    We expect that crude oil imports to the U.S. Gulf Coast will increase;
    
    We expect the demand for marine transportation services in our market areas to
remain strong;
    
    We expect to see continued expansion opportunities for natural gas gathering and
related services in the Jonah, Pinedale and San Juan Basin areas; and
    
    Standards for use of ethanol and other renewable fuels are currently mandated to
increase to 15 billion gallons by 2015 and will ultimately reach 36 billion gallons
per year under newly passed energy legislation.
  Acquisition of Marine Transportation Business
  Chaparral Open Season
  4




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##### Table of Contents



2007 Developments
 Acquisitions
   Dispositions
    Organic Growth Projects
  
    
    Construction of a 32-mile, 8-inch diameter pipeline, connecting Valero Energy
Corp.s Texas City refinery to its Houston refinery to deliver feedstock from Texas
City to Houston under a 15-year capacity lease.
    
    Expansion of our LPG pipeline from Greensburg, Pennsylvania, to Philadelphia,
Pennsylvania, which increased capacity of the pipeline by approximately 35% in
order to participate in market growth.
    
    Completion of an extension of the refined products pipeline system in Memphis,
Tennessee to provide for the delivery of jet fuel to the Memphis airport.
    
    Commencement of construction on a new refined product terminal located in
Boligee, Alabama along the Tennessee-Tombigbee waterway. The 500,000 barrel
storage terminal is expected to
 5




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have capabilities of receiving U.S. Gulf Coast refined products and distributing
them via barge or truck and is expected to be completed in the second quarter of
2008.
    
    Commencement of construction of the multi-year Motiva project (see  Downstream
Segment  Transportation and Storage of Refined Products, LPGs and Petrochemicals
below).
    
    Construction of a mainline connection to both our 20-inch and 16-inch diameter
pipelines allowing gasoline and distillate deliveries to a new grass roots terminal
serving northeast Arkansas, supported by a 10-year transportation agreement.
    
    Construction and installation of 50,000 barrel ethanol tank, ethanol truck
unloading and gasoline truck rack blending facilities to comply with Missouris
ethanol gasoline mandate. This project is backed by the mandated use of ethanol in
historical truck rack demand, charges for leasing space in the new storage tank and
additional ethanol handling fees.
    
    Installation of a new natural gasoline tank with vapor recovery and associated
facilities to enable year-round natural gasoline deliveries via new connections to
ExxonMobils refinery and chemical plants.
    
    Construction of three new crude oil storage tanks at our Cushing, Oklahoma
facility, representing a 900,000 barrel, or nearly 50%, increase in our storage
capacity at that facility. The expansion, which is supported by long-term lease
agreements, brings our total storage capacity at the Cushing facility to 2.8
million barrels.
    
    Completion of a pipeline connection in our West Texas system to supply crude oil
to a New Mexico refinery. This connection is supported by a long-term supply
agreement.
 Jonah Phase V Expansion
  Debt Financings and Retirements
    6




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##### Table of Contents



Registration Statements
   Business Segments
   Downstream Segment  Transportation and Storage of Refined Products, LPGs and Petrochemicals
  
    
    TE Products, our principal operating company for the Downstream Segment;
    
    TEPPCO Terminals Company, L.P. (TEPPCO Terminals), which owns a refined
products terminal and two-bay truck loading rack both connected to the mainline
system;
    
    TEPPCO Terminaling and Marketing Company, LLC, (TTMC) which provides refined
products terminaling and marketing services and owns a refined products terminal in
Aberdeen, Mississippi;
    
    a subsidiary which owns the northern portion of the Dean Pipeline (Dean
North); and
    
    our 50% equity investment in Centennial.
 
 7




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Properties and Operations
        8




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##### Table of Contents



OurOwnershipRefined products and LPGs pipelines and terminals
    
    
    100
    %Mont Belvieu, Texas, to Port Arthur, Texas, petrochemical pipelines
    
    
    100
    %Northern portion of Dean Pipeline
    
    
    100
    %Centennial (1)
    
    
    50
    %
 
 (1)
    
    Accounted for as an equity investment.  For Year Ended December 31,2007
    
    2006
    
    2005Refined Products Deliveries: (1)Gasoline
    
    
    96.3
    
    
    
    94.9
    
    
    
    92.4Jet Fuels
    
    
    25.7
    
    
    
    25.5
    
    
    
    25.4Distillates (2)
    
    
    53.0
    
    
    
    44.9
    
    
    
    42.9Subtotal
    
    
    175.0
    
    
    
    165.3
    
    
    
    160.7LPGs Deliveries:Propane (3)
    
    
    31.8
    
    
    
    36.5
    
    
    
    35.6Butanes (includes isobutane)
    
    
    10.1
    
    
    
    8.5
    
    
    
    9.4Subtotal
    
    
    41.9
    
    
    
    45.0
    
    
    
    45.0Petrochemical Deliveries (4)
    
    
    43.9
    
    
    
    32.5
    
    
    
    37.4Total Product Deliveries
    
    
    260.8
    
    
    
    242.8
    
    
    
    243.1Centennial Product Deliveries
    
    
    55.6
    
    
    
    44.8
    
    
    
    50.6
 
 (1)
    
    Includes volumes on terminals not connected to the mainline system.(2)
    
    Primarily diesel fuel, heating oil and other middle distillates.(3)
    
    Includes short-haul propane barrels of 2.2 million, 10.0 million and 5.4 million for
the years ended December 31, 2007, 2006 and 2005, respectively, related to a pipeline that
was sold on March 1, 2007 to Louis Dreyfus. The tariff on these pipeline movements was
32.8 cents per barrel.(4)
    
    Includes Dean North RGP volumes and petrochemical volumes on pipelines between Mont
Belvieu and Port Arthur, Texas. Refined Products, LPGs and Petrochemical Pipeline Systems
   9




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Centennial Pipeline Equity Investment
  10




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Seasonality
  Major Business Sector Markets and Related Factors
     11




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##### Table of Contents



For Year Ended December 31,2007
    
    2006
    
    2005Refined Products Deliveries:Central (1)
    
    
    84.3
    
    
    
    74.6
    
    
    
    73.3Midwest (2)
    
    
    66.6
    
    
    
    66.6
    
    
    
    60.1Ohio and Kentucky
    
    
    24.1
    
    
    
    24.1
    
    
    
    27.3Subtotal
    
    
    175.0
    
    
    
    165.3
    
    
    
    160.7LPGs Deliveries:Central, Midwest and Kentucky (1)(2)
    
    
    22.1
    
    
    
    28.5
    
    
    
    26.3Ohio and Northeast (3)
    
    
    19.8
    
    
    
    16.5
    
    
    
    18.7Subtotal
    
    
    41.9
    
    
    
    45.0
    
    
    
    45.0Petrochemical Deliveries (4)
    
    
    43.9
    
    
    
    32.5
    
    
    
    37.4Total Product Deliveries
    
    
    260.8
    
    
    
    242.8
    
    
    
    243.1Centennial Product Deliveries (5)
    
    
    55.6
    
    
    
    44.8
    
    
    
    50.6
 
 (1)
    
    Arkansas, Louisiana, Missouri, Mississippi and Texas.(2)
    
    Illinois and Indiana.(3)
    
    New York and Pennsylvania.(4)
    
    Includes Dean North RGP volumes and petrochemical volumes on pipelines between Mont
Belvieu and Port Arthur, Texas.(5)
    
    Texas, Louisiana, Mississippi, Tennessee, Kentucky and Illinois. Customers
   Competition
  12




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##### Table of Contents



Upstream Segment  Gathering, Transportation, Marketing and Storage of Crude Oil
  
    
    TCTM, our holding company for the Upstream Segment;
    
    TEPPCO Crude Pipeline, LLC (TCPL), TEPPCO Crude Oil, LLC (TCO) and
Lubrication Services, LLC (LSI), wholly owned subsidiaries of TCTM; and
    
    our 50% equity investment in Seaway.
 Properties and Operations
    13




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For Year Ended December 31,2007
    
    2006
    
    2005Barrels Delivered:Crude oil transportation
    
    
    96.5
    
    
    
    91.5
    
    
    
    94.7Crude oil marketing
    
    
    232.0
    
    
    
    222.1
    
    
    
    203.3Crude oil terminaling
    
    
    135.0
    
    
    
    126.0
    
    
    
    110.3Lubricants and chemicals (total gallons)
    
    
    15.3
    
    
    
    14.4
    
    
    
    14.8Seaway Barrels Delivered:Long-haul
    
    
    49.4
    
    
    
    88.4
    
    
    
    99.7Short-haul
    
    
    229.5
    
    
    
    223.4
    
    
    
    213.9
 Properties
  Crude Oil
    
    OurPipeline
    
    Ownership
    
    Operator
    
    Description (1)Red River System
    
    
    100
    %
    
    TCPL
    
    1,690 miles of
small diameter
pipeline; 1,491,000
barrels of storage
 North Texas to
South OklahomaSouth Texas System
    
    
    100
    %
    
    TCPL
    
    1,150 miles of
small diameter
pipeline; 1,106,000
barrels of storage
 South Central
Texas to Houston,
Texas areaWest Texas System
    
    
    100
    %
    
    TCPL
    
    360 miles of small
diameter pipeline;
415,000 barrels of
storage 
connecting West
Texas and Southeast
New Mexico to
TCPLs Midland,
Texas terminalOther crude oil
assets
    
    
    100
    %
    
    TCPL
    
    265 miles of small
diameter pipeline;
295,000 barrels of
storage  primarily
in Texas and
OklahomaCushing Terminal
    
    
    100
    %
    
    TCPL
    
    17 tanks with
2,668,000 barrels
of storage in
Cushing, OklahomaMidland Station
    
    
    100
    %
    
    TCPL
    
    12 tanks with
980,000 barrels of
storage in Midland,
TexasSeaway (2)
    
    50% general
partnership
interest
    
    TCPL
    
    500-mile, 30-inch
diameter pipeline 
Texas Gulf Coast to
Cushing, Oklahoma 
2,600,000 barrels
of breakout
tankage; 30-mile
Texas City system 
1,800,000 barrels
of storage tankage
and 2,436,000
barrels of breakout
tankage (3)Basin
    
    13% joint ownership
    
    Plains All American 
Pipeline, L.P.
    
    416-mile pipeline,
20 to 24 inches in
diameter  Permian
Basin (New Mexico
and Texas) to
Cushing, Oklahoma
 
 (1)
    
    Small diameter of pipeline ranges from two inches to twelve inches.(2)
    
    TCPLs participation in revenues and expenses of Seaway vary as described below in
Seaway Crude Pipeline Equity Investment.(3)
    
    Breakout tankage is used to facilitate transportation and is not leased to customers.
Storage tankage is non-FERC jurisdictional and is leased to customers. 
 14




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Seaway Crude Pipeline Equity Investment
    Line Transfers, Pumpovers and Other
    15




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Customers
    Competition
  Midstream Segment  Gathering of Natural Gas, Transportation of NGLs and Fractionation of NGLs
  
    
    TEPPCO Midstream, our holding company for the Midstream Segment;
    
    our 80.64% equity investment in Jonah Gas Gathering Company, which gathers
natural gas;
    
    Val Verde Gas Gathering Company, L.P., which gathers and treats natural gas for
carbon dioxide removal;
    
    Chaparral Pipeline Company, LLC and Quanah Pipeline Company, LLC (collectively
referred to as Chaparral or Chaparral NGL system), Panola Pipeline Company, LLC
(Panola Pipeline), Dean Pipeline Company, LLC (Dean Pipeline) and Wilcox
Pipeline Company, LLC (Wilcox Pipeline), which transport NGLs; and
    
    TEPPCO Colorado, LLC (TEPPCO Colorado), which fractionates NGLs.
 Properties and Operations
  16




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##### Table of Contents



For Year Ended December 31,2007
    
    2006
    
    2005Gathering  Natural Gas  Jonah (Bcf) (1)
    
    
    587.4
    
    
    
    473.9
    
    
    
    415.2Gathering  Natural Gas  Val Verde (Bcf)
    
    
    175.7
    
    
    
    181.9
    
    
    
    180.7Transportation  NGLs (MMBbls)
    
    
    77.0
    
    
    
    69.7
    
    
    
    61.1Fractionation  NGLs (MMBbls)
    
    
    4.2
    
    
    
    4.4
    
    
    
    4.4
 
 (1)
    
    Effective August 1, 2006, with the formation of a joint venture with Enterprise
Products Partners, Jonah was deconsolidated and operating results after August 1, 2006, are
included in equity earnings. However, the table includes Jonahs gathering volumes for the
full years ended December 31, 2007, 2006 and 2005. Jonah Gas Gathering Joint Venture
       17




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Jonah Gas Gathering System Business .
   Val Verde Gas Gathering System
   18




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##### Table of Contents



NGL Transportation and Fractionation
  PhysicalCapacityNGL Pipeline
    
    (barrels/day)
    
    DescriptionChaparral (1) (2)
    
    
    135,000
    
    
    845 miles of pipeline  West Texas and New Mexico to Mont Belvieu, TexasQuanah (1)
    
    
    30,000
    
    
    180 miles of pipeline  Sutton County, Texas to the Chaparral Pipeline near Midland, TexasPanola (3)
    
    
    70,000
    
    
    189 miles of pipeline  Carthage, Texas to Mont Belvieu, TexasSan Jacinto (3)
    
    
    12,000
    
    
    34 miles of pipeline  Carthage, Texas to Longview, TexasThe southern portion of the Dean Pipeline (4)
    
    
    8,500
    
    
    155 miles of pipeline  South Texas to Point Comfort, Texas
 
 (1)
    
    The Chaparral NGL system, including the Quanah Pipeline, extends from West Texas and
New Mexico to Mont Belvieu. Shippers on Chaparral, which include Enterprise Products
Partners (see Customers below), pay posted tariffs, which tariffs are adjusted each July
based upon a FERC approved indexing methodology. The specified capacity of the Chaparral
Pipeline represents aggregate volume transported system-wide. Long-haul capacity from West
Texas and New Mexico to Mont Belvieu is approximately 115,000 barrels per day.(2)
    
    See discussion in Chaparral Open Season within these Items 1 and 2.(3)
    
    The Panola Pipeline and San Jacinto Pipeline originate at an East Texas Plant Complex
in Panola County, Texas, and transport NGLs for major integrated oil and gas companies,
including Enterprise Products Partners (see Customers below).(4)
    
    The southern portion of the Dean Pipeline originates in South Texas and transports NGLs
for one customer and delivers those NGLs into that customers pipeline at Point Comfort,
Texas.  19




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Seasonality
  Customers
   Competition
   Marine Transportation Segment  Barge Transportation of Petroleum Products
  20




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Properties and Operations
    Capacity (bbl)/Class of Equipment
    
    Number in Class
    
    Horsepower (hp)Inland:Barges
    
    16
    
    < 25,000 bblBarges
    
    65
    
    > 25,000 bblPush boats
    
    18
    
    < 2,000 hpPush boats
    
    17
    
    > 2,000 hpOffshore:Barges
    
    8
    
    > 20,000 bblTug boats
    
    4
    
    < 2,000 hpTug boats
    
    3
    
    > 2,000 hp
    21




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##### Table of Contents



Vessel Management, Crewing and Employees
    Seasonality
  Customers
  22




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##### Table of Contents



Competition
  Title to Properties
  Capital Expenditures
  SustainingRevenue
    
    
    Existing
    
    
    System
    
    
    CapitalizedGenerating
    
    
    Operations
    
    
    Upgrades
    
    
    Interest
    
    
    TotalDownstream Segment
    
    $
    125.9
    
    
    $
    27.5
    
    
    $
    6.8
    
    
    $
    5.2
    
    
    $
    165.4Midstream Segment
    
    
    2.3
    
    
    
    4.5
    
    
    
    0.6
    
    
    
    
    
    
    
    7.4Upstream Segment
    
    
    32.9
    
    
    
    19.1
    
    
    
    0.7
    
    
    
    1.7
    
    
    
    54.4Other
    
    
    
    
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    1.0Total
    
    $
    161.1
    
    
    $
    52.1
    
    
    $
    8.1
    
    
    $
    6.9
    
    
    $
    228.2
   23




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Regulation
 FERC
   i.e
  24




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25




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##### Table of Contents



Environmental and Safety Matters
   Water
  26




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##### Table of Contents



Air Emissions
   Massachusetts, et al. v. EPA
 Risk Management Plans
  27




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##### Table of Contents



Solid Waste
  Environmental Remediation
   Maritime Law
  Jones Act
  28




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##### Table of Contents



Merchant Marine Act of 1936
  DOT Pipeline Compliance Matters
    Safety Matters
   29




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##### Table of Contents



Employees
  Available Information
  http://www.teppco.com
 
 Item 1A . Risk Factors
  Risks Relating to Our Business
 Potential future acquisitions and expansions may affect our business by substantially increasing
the level of our indebtedness and contingent liabilities and increasing our risks of being unable
to effectively integrate these new operations.
  30




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Our marine transportation acquisition may not achieve anticipated results.
   
    
    managing relationships with customers in a new line of business;
    
    potential loss of key employees, customers or suppliers;
    
    assessing the internal controls and procedures for the acquired operations that
we are required to maintain under the Sarbanes-Oxley Act of 2002; and
    
    consolidating other partnership and administrative functions.
   Our future debt level or downgrades of our debt ratings by credit
agencies may limit our future financial and operating flexibility.
  31




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
    
    a significant portion of our cash flow could be dedicated to the payment of
principal and interest on our future debt and may not be available for other
purposes, including the payment of distributions on our Units and capital
expenditures;
    
    credit rating agencies may view our debt level negatively;
    
    covenants contained in our existing debt arrangements will require us to
continue to meet financial tests that may adversely affect our flexibility in
planning for and reacting to changes in our business;
    
    our ability to obtain additional financing for working capital, capital
expenditures, acquisitions and general partnership purposes may be limited;
    
    we may be at a competitive disadvantage relative to similar companies that have
less debt; and
    
    we may be more vulnerable to adverse economic and industry conditions as a
result of our significant debt level.
   Our cash distributions may vary based on our operating performance and level of cash reserves.
  
    
    the volume of products that we handle and the prices we receive for our
services;
    
    the level of our operating costs;
    
    the level of competition in our business segments;
    
    prevailing economic conditions;
    
    the level of capital expenditures we make;
    
    the restrictions contained in our debt agreements and debt service requirements;
    
    fluctuations in our working capital needs;
    
    the cost of acquisitions, if any; and
    
    the amount, if any, of cash reserves established by our General Partner in its
discretion.
 
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The interruption of distributions to us from our subsidiaries and joint ventures may affect our
ability to satisfy our obligations and to make distributions to our partners.
  Expanding our natural gas gathering business by constructing new pipelines and compression
facilities subjects us to construction risks and risks that natural gas supplies will not be
available upon completion of the new pipelines, and cash flows from such capital projects may not
be immediate.
  Our tariff rates are subject to review and possible adjustment by federal and state regulators,
which could have a material adverse effect on our financial condition and results of operations.
   33




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Our partnership status may be a disadvantage to us in calculating our cost of service for
rate-making purposes.
     34




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Competition could adversely affect our operating results.
   Our business requires extensive credit risk management that may not be adequate to protect against
customer nonpayment.
   Our risk management policies cannot eliminate all commodity price risks. In addition, any
non-compliance with our risk management policies could result in significant financial losses.
  35




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Our pipelines are dependent on their interconnections with other pipelines to reach their
destination markets.
  Reduced demand could affect our pipeline shipments and marine transportation business.
  
    
    Demand for gasoline, which has in recent years accounted for approximately 55%
of our refined products transportation revenues and which we expect will account
for a significant portion of transportation revenues in our marine transportation
business, depends upon price, prevailing economic conditions and demographic
changes in the markets we serve.
    
    Weather conditions, government policy and crop prices affect the demand for
refined products used in agricultural operations.
    
    Demand for jet fuel, which has in recent years accounted for approximately 15%
of our refined products revenues, depends on prevailing economic conditions and
military usage.
    
    Propane deliveries are generally sensitive to the weather and meaningful
year-to-year variances have occurred and will likely continue to occur.
 The success of our Jonah gas gathering operations is substantially dependent upon Enterprise
Products Partners.
  36




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Profits and cash flow from Jonah and Val Verde depend on the volumes of natural gas produced from
the fields served by the systems and are subject to factors beyond our control.
  
    
    the absolute price of, volatility in the price of, and market demand for natural
gas;
    
    changes in laws and regulations, particularly with regard to taxes, denial of
reduced well density spacing, safety and protection of the environment;
    
    the depletion rates of existing wells;
    
    adverse weather and other natural phenomena;
    
    the availability of drilling and service rigs;
    
    the availability of labor and skilled personnel; and
    
    industry changes, including the effect of consolidations or divestitures.
   In accordance with midstream industry practice, we do not obtain third party evaluations of natural
gas reserves dedicated to our gathering systems, including Jonah. Accordingly, volumes of natural
gas gathering on our pipeline systems in the future could be less than we anticipate, which could
adversely affect our cash flow and our ability to make cash distributions to unitholders.
  The use of derivative financial instruments could result in material financial losses by us.
  37




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Our pipeline integrity program may impose significant costs and liabilities on us.
  Our operations are subject to governmental laws and regulations relating to the protection of the
environment and safety which may expose us to significant costs and liabilities. Additionally, as
a result of our marine transportation acquisition, we are subject to additional laws and
regulations, including environmental regulations, that may adversely affect the cost, manner or
feasibility of doing business in that segment.
    38




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Our marine transportation business would be adversely affected if we failed to comply with the
Jones Act provisions on coastwise trade, or if those provisions were modified, repealed or waived.
    39




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Maritime claimants could arrest the vessels carrying our cargoes.
  Terrorist attacks aimed at our facilities could adversely affect our business.
  Our business involves many hazards and operational risks, some of which may not be fully covered by
insurance. If a significant accident or event occurs that is not fully insured, our operations and
financial results could be adversely affected.
  We depend on the leadership and involvement of our key personnel for the success of our business.
  40




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We do not own all of the land on which our pipelines and facilities are located, which could
disrupt our operations.
  Mergers among our customers or competitors could result in lower volumes being shipped by us,
thereby reducing the amount of cash we generate.
  Risks Relating to Our Units as a Result of Our Partnership Structure
 We may issue additional limited partnership interests, diluting existing interests of unitholders
and benefiting our General Partner .
  Cost reimbursements and fees due EPCO and its affiliates may be substantial and will reduce our
cash available for distribution to holders of our Units.
  Our General Partner and its affiliates may have conflicts with our partnership.
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
    
    Enterprise GP Holdings, Enterprise Products Partners, EPCO and their affiliates
may engage in substantial competition with us on the terms set forth in the ASA.
    
    Neither our Partnership Agreement nor any other agreement requires entities that
control our General Partner or other entities controlled by Mr. Duncan (other than
our General Partner) to pursue a business strategy that favors us. Directors and
officers of EPCO, the general partner of Enterprise GP Holdings and the general
partner of Enterprise Products Partners and their affiliates have a fiduciary duty
to make decisions in the best interest of their members, shareholders or
unitholders, as the case may be, which may be contrary to our interests.
    
    Our General Partner is allowed to take into account the interests of parties
other than us, such as Enterprise GP Holdings, Enterprise Products Partners and
their affiliates, in resolving conflicts of interest, which has the effect of
limiting its fiduciary duty to our unitholders.
    
    Some of the officers of EPCO who provide services to us also may devote
significant time to the business of Enterprise Products Partners or its other
affiliates and will be compensated by EPCO for such services.
    
    Our Partnership Agreement limits the liability and reduces the fiduciary duties
of our General Partner, while also restricting the remedies available to our
unitholders for actions that, without these limitations, might constitute breaches
of fiduciary duty. By purchasing Units, unitholders are deemed to have consented
to some actions and conflicts of interest that might otherwise constitute a breach
of fiduciary or other duties under applicable law.
    
    Our General Partner determines the amount and timing of asset purchases and
sales, operating expenditures, capital expenditures, borrowings, repayments of
indebtedness, issuances of additional partnership securities and cash reserves,
each of which can affect the amount of cash that is available for distribution to
our unitholders.
    
    Our General Partner determines which costs, including allocated overhead,
incurred by it and its affiliates are reimbursable by us.
    
    Our Partnership Agreement does not restrict our General Partner from causing us
to pay it or its affiliates for any services rendered on terms that are fair and
reasonable to us or entering into additional contractual arrangements with any of
these entities on our behalf.
    
    Our General Partner generally seeks to limit its liability regarding our
contractual obligations.
    
    Our General Partner may exercise its rights to call and purchase all of our
Units if at any time it and its affiliates own 85% or more of the outstanding
Units.
    
    Our General Partner controls the enforcement of obligations owed to us by it and
its affiliates, including the ASA.
    
    Our General Partner decides whether to retain separate counsel, accountants or
others to perform services for us.
  Unitholders have limited voting rights and control of management.
 2
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EPCOs employees may be subjected to conflicts in managing our business and the allocation of time
and compensation costs between our business and the business of EPCO and its other affiliates.
    Our Partnership Agreement limits our General Partners fiduciary duties to unitholders and
restricts the remedies available to unitholders for actions taken by our General Partner that might
otherwise constitute breaches of fiduciary duty.
  
    
    permits our General Partner to make a number of decisions on its behalf, as
opposed to in its capacity as our General Partner. This entitles our General
Partner to consider only the interests and factors that it desires, and it has no
duty or obligation to give any consideration to any interest of, or factors
affecting, us, our affiliates or any limited partner. Examples include the
exercise of its limited call right with respect to Units, its registration rights
and the determination of whether to consent to any merger or consolidation of the
Partnership or amendment to the Partnership Agreement;
    
    provides that, in the absence of bad faith by the ACG Committee of the board of
directors of our General Partner or our General Partner, the resolution, action or
terms made, taken or provided by the ACG Committee or our General Partner in
connection with a potential conflict of interest transaction will be conclusive and
binding on all persons (including all partners) and will not constitute a breach of
the Partnership Agreement or any standard of care or duty imposed by law;
    
    provides that any conflict of interest and any resolution of such conflict of
interest will be conclusively deemed fair and reasonable to us if approved by the
ACG Committee or is on terms objectively demonstrable to be no less favorable to us
than those generally being provided to or available from unrelated third party;
    
    provides that the General Partner shall not be liable to the Partnership or any
partner for its good faith reliance on the provisions of the Partnership Agreement
to the extent it has duties, including fiduciary duties, and liabilities at law or
in equity;
    
    provides that it shall be presumed that the resolution of any conflicts of
interest by our General Partner or the audit and conflicts committee of the board
of directors of our General Partner was not made in bad faith, and in any
proceeding brought by or on behalf of any limited partner or us, the person
bringing or prosecuting such proceeding will have the burden of overcoming such
presumption; and
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##### Table of Contents




    
    provides that our General Partner and its officers and directors will not be
liable for monetary damages to us or our limited partners for any acts or omissions
unless there has been a final and non-appealable judgment entered by a court of
competent jurisdiction determining that the General Partner or those other persons
acted in bad faith or engaged in fraud or willful misconduct or, in the case of a
criminal matter, acted with knowledge that the conduct was criminal.
 Our General Partner has a limited call right that may require unitholders to sell their Units at an
undesirable time or price.
  Our unitholders may not have limited liability if a court finds that limited partner actions
constitute control of our business.
  
    
    we were conducting business in a state, but had not complied with that
particular states partnership statute; or
    
    the right of limited partners to remove our General Partner or to take other
action under our Partnership Agreement constituted participation in the control
of our business.
  The credit and risk profile of our General Partner and its owners could adversely affect our credit
ratings and profile, which could increase our borrowing costs or hinder our ability to raise
capital.
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Control of our General Partner may be transferred to a third party without unitholder consent.
  Tax Risks to Unitholders
 We have adopted certain methodologies that may result in a shift of income, gain, loss and
deduction between the General Partner and our unitholders. The Internal Revenue Service (IRS)
may challenge this treatment, which could adversely affect the value of our Units.
   Our tax treatment depends on our status as a partnership for federal income tax purposes, as well
as our not being subject to a material amount of entity-level taxation by individual states. The
amount of cash available for distribution to you would be substantially reduced if the IRS treats
us as a corporation or we become subject to a material amount of entity-level taxation for state or
foreign tax purposes.
    45




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Our tax treatment as a partnership for federal income tax purposes is subject to potential
legislative, judicial or administrative changes and differing interpretations, possibly on a
retroactive basis.
  A successful IRS contest of the federal income tax positions we take may adversely affect the
market for our Units, and the cost of an IRS contest will reduce our cash available for
distribution to our unitholders.
  You may be required to pay taxes on income from us even if you do not receive any cash
distributions from us.
  Tax gain or loss on the disposition of Units could be more or less than expected.
  Tax-exempt entities and foreign persons face unique tax issues from owning Units that may result in
adverse tax consequences to them.
  46




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We treat each purchaser of our Units as having the same tax benefits without regard to the actual
Units purchased. The IRS may challenge this treatment, which could adversely affect the value of
the Units.
  Unitholders may be subject to foreign, state and local taxes and return filing requirements in
states and jurisdictions where they do not live as a result of investing in our Units.
  The sale or exchange of 50% or more of our capital and profits interests during any twelve-month
period will result in the termination of our partnership for federal income tax purposes.
  
 Item 1B. Unresolved Staff Comments
  
 Item 3. Legal Proceedings
 Rebecca L. Grisham et al. v. TE Products Pipeline
Company, Limited Partnership
 47




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Jimmy R. Green, et al. v. Cities
Service Refinery, et al. th
      48




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Item 4. Submission of Matters to a Vote of Security Holders
  49




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PART II
 
 Item 5. Market for Registrants Units and Related Unitholder Matters and Issuer Purchases of
Equity Securities
  2007
    
    2006Quarter
    
    High
    
    Low
    
    High
    
    LowFirst
    
    $
    44.53
    
    
    $
    39.88
    
    
    $
    39.00
    
    
    $
    35.29Second
    
    
    46.20
    
    
    
    42.15
    
    
    
    38.49
    
    
    
    35.20Third
    
    
    46.01
    
    
    
    37.04
    
    
    
    37.65
    
    
    
    34.44Fourth
    
    
    40.81
    
    
    
    37.17
    
    
    
    41.86
    
    
    
    36.90
   AmountRecord Date
    
    Payment Date
    
    Per UnitApril 28, 2006
    
    May 5, 2006
    
    $
    0.675July 31, 2006
    
    August 7, 2006
    
    
    0.675October 31, 2006
    
    November 7, 2006
    
    
    0.675January 31, 2007
    
    February 7, 2007
    
    
    0.675April 28, 2007
    
    May 7, 2007
    
    
    0.685July 31, 2007
    
    August 7, 2007
    
    
    0.685October 31, 2007
    
    November 7, 2007
    
    
    0.695January 31, 2008
    
    February 7, 2008
    
    
    0.695
    Recent Sales of Unregistered Securities
  50




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Units Authorized for Issuance Under Equity Compensation Plan
  Issuer Purchases of Equity Securities
  
 Item 6. Selected Financial Data
  For Year Ended December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(in thousands, except per Unit amounts)Income Statement Data:Operating revenues:Sales of petroleum products
    
    $
    9,147,104
    
    
    $
    9,080,516
    
    
    $
    8,061,808
    
    
    $
    5,426,832
    
    
    $
    3,766,651Transportation  Refined products
    
    
    170,231
    
    
    
    152,552
    
    
    
    144,552
    
    
    
    148,166
    
    
    
    138,926Transportation  LPGs
    
    
    101,076
    
    
    
    89,315
    
    
    
    96,297
    
    
    
    87,050
    
    
    
    91,787Transportation  Crude oil
    
    
    45,952
    
    
    
    38,822
    
    
    
    37,614
    
    
    
    37,177
    
    
    
    29,057Transportation  NGLs
    
    
    46,542
    
    
    
    43,838
    
    
    
    43,915
    
    
    
    41,204
    
    
    
    39,837Gathering  Natural gas
    
    
    61,634
    
    
    
    123,933
    
    
    
    152,797
    
    
    
    140,122
    
    
    
    135,144Other revenues
    
    
    85,521
    
    
    
    78,509
    
    
    
    68,051
    
    
    
    67,539
    
    
    
    54,430Total operating revenues
    
    
    9,658,060
    
    
    
    9,607,485
    
    
    
    8,605,034
    
    
    
    5,948,090
    
    
    
    4,255,832Purchases of petroleum products
    
    
    9,017,109
    
    
    
    8,967,062
    
    
    
    7,986,438
    
    
    
    5,367,027
    
    
    
    3,711,207Operating expenses (1)
    
    
    271,167
    
    
    
    278,448
    
    
    
    255,359
    
    
    
    257,372
    
    
    
    235,028General and administrative expenses
    
    
    33,657
    
    
    
    31,348
    
    
    
    33,143
    
    
    
    28,016
    
    
    
    20,409Depreciation and amortization
    
    
    105,225
    
    
    
    108,252
    
    
    
    110,729
    
    
    
    112,284
    
    
    
    100,728Gains on sales of assets
    
    
    (18,653
    )
    
    
    (7,404
    )
    
    
    (668
    )
    
    
    (1,053
    )
    
    
    (3,948
    )Operating income
    
    
    249,555
    
    
    
    229,779
    
    
    
    220,033
    
    
    
    184,444
    
    
    
    192,408Interest expense  net
    
    
    (101,223
    )
    
    
    (86,171
    )
    
    
    (81,861
    )
    
    
    (72,053
    )
    
    
    (84,250
    )Gain on sale of ownership interest in MB Storage
    
    
    59,628
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity earnings
    
    
    68,755
    
    
    
    36,761
    
    
    
    20,094
    
    
    
    22,148
    
    
    
    12,874Other income  net (including interest income)
    
    
    3,022
    
    
    
    2,965
    
    
    
    1,135
    
    
    
    1,320
    
    
    
    748Income before provision for income taxes
    
    
    279,737
    
    
    
    183,334
    
    
    
    159,401
    
    
    
    135,859
    
    
    
    121,780Provision for income taxes
    
    
    557
    
    
    
    652
    
    
    
    
    
    
    
    
    
    
    
    Income from continuing operations
    
    
    279,180
    
    
    
    182,682
    
    
    
    159,401
    
    
    
    135,859
    
    
    
    121,780Discontinued operations (2)
    
    
    
    
    
    
    19,369
    
    
    
    3,150
    
    
    
    2,689
    
    
    
    Net income
    
    $
    279,180
    
    
    $
    202,051
    
    
    $
    162,551
    
    
    $
    138,548
    
    
    $
    121,780Basic and diluted income per Unit: (3)Continuing operations
    
    $
    2.60
    
    
    $
    1.77
    
    
    $
    1.67
    
    
    $
    1.53
    
    
    $
    1.47Discontinued operations (2)
    
    
    
    
    
    
    0.19
    
    
    
    0.04
    
    
    
    0.03
    
    
    
    Net income per Unit
    
    $
    2.60
    
    
    $
    1.96
    
    
    $
    1.71
    
    
    $
    1.56
    
    
    $
    1.47
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December 31,2007
    
    2006
    
    2005
    
    2004
    
    2003(in thousands)Balance Sheet Data:Property, plant and equipment  net
    
    $
    1,793,634
    
    
    $
    1,642,095
    
    
    $
    1,960,068
    
    
    $
    1,703,702
    
    
    $
    1,619,163Total assets
    
    
    4,750,057
    
    
    
    3,922,092
    
    
    
    3,680,538
    
    
    
    3,186,284
    
    
    
    2,934,480Total short-term debt
    
    
    353,976
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total long-term debt
    
    
    1,511,083
    
    
    
    1,603,287
    
    
    
    1,525,021
    
    
    
    1,480,226
    
    
    
    1,339,650Partners capital
    
    
    1,264,627
    
    
    
    1,320,330
    
    
    
    1,201,370
    
    
    
    1,011,103
    
    
    
    1,102,809
 For Year Ended December 31,2007
    
    2006
    
    2005
    
    2004
    
    2003(in thousands, except per Unit amounts)Cash Flow Data:Net cash provided by continuing operating
activities (2)
    
    $
    350,572
    
    
    $
    271,552
    
    
    $
    250,723
    
    
    $
    263,896
    
    
    
    
    
    
    $
    242,424Net cash provided by operating activities
    
    
    350,572
    
    
    
    273,073
    
    
    
    254,505
    
    
    
    267,167
    
    
    
    
    
    
    
    242,424Capital expenditures to sustain existing
operations (4)
    
    
    (52,149
    )
    
    
    (39,966
    )
    
    
    (40,783
    )
    
    
    (41,733
    )
    
    
    
    
    
    
    (32,864
    )Capital expenditures
    
    
    (228,272
    )
    
    
    (170,046
    )
    
    
    (220,553
    )
    
    
    (156,749
    )
    
    
    
    
    
    
    (126,707
    )Distributions paid
    
    
    (294,450
    )
    
    
    (278,566
    )
    
    
    (251,101
    )
    
    
    (233,057
    )
    
    
    
    
    
    
    (202,498
    )Distributions paid per Unit (3)
    
    $
    2.74
    
    
    $
    2.70
    
    
    $
    2.68
    
    
    $
    2.64
    
    
    
    
    
    
    $
    2.50
 
 (1)
    
    Includes operating fuel and power and taxes  other than income taxes.(2)
    
    Reflects the Pioneer plant as discontinued operations for the years ended December 31,
2004, 2005 and 2006. The Pioneer plant was constructed as part of the Phase III expansion
of the Jonah system and was completed during the first quarter of 2004.(3)
    
    Per Unit calculation includes 9,188,957 Units issued in 2003, net of retirement of
Class B Units of 3,916,547. No Units were issued in 2004. In 2005 and 2006, 6,965,000
Units and 5,750,000 Units were issued, respectively. On December 8, 2006, we issued
14,091,275 Units to our General Partner in consideration for a reduction in the incentive
distribution rights of the General Partner. In 2007, 106,703 Units were issued.(4)
    
    Capital expenditures to sustain existing operations include projects required by
regulatory agencies or required life-cycle replacements. 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
  
    
    Overview of Business.
    
    Critical Accounting Policies and Estimates  Presents accounting policies that
are among the most critical to the portrayal of our financial condition and results
of operations.
    
    Results of Operations  Discusses material period-to-period variances in the
statements of consolidated income.
    
    Financial Condition and Liquidity  Analyzes cash flows and financial position.
    
    Other Considerations  Addresses available sources of liquidity, trends, future
plans and contingencies that are reasonably likely to materially affect future
liquidity or earnings.
    
    Recent Accounting Pronouncements.
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Overview of Business
  
    
    Our Downstream Segment, which is engaged in the transportation, marketing and
storage of refined products, LPGs and petrochemicals;
    
    Our Upstream Segment, which is engaged in the gathering, transportation,
marketing and storage of crude oil and distribution of lubrication oils and
specialty chemicals; and
    
    Our Midstream Segment, which is engaged in the gathering of natural gas,
transportation of NGLs and fractionation of NGLs.
   Downstream Segment
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Upstream Segment
     Midstream Segment
  54




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##### Table of Contents



Marine Transportation Segment
  Business Trends
  
    
    We expect that refined products imports to the U.S. will increase.
 o
    
    Acquire or develop facilities to take advantage of the increased volumes.o
    
    Enhance refined products storage business.
 
    
    We expect to see turnover in commercial terminal ownership and operations.
 o

    
    Acquire refined products terminals and distribution assets to
provide logistical service offerings to companies seeking to outsource or
partner.
 
    
    We expect that Canadian crude oil imports to the U.S. will increase.
 o

    
    Develop competitive options to move Canadian crude oil to U.S.
refining customers with third parties through an optimum combination of new
pipeline construction and existing pipeline assets.
 
    
    We expect that crude oil imports to the U.S. Gulf Coast will increase.
 o

    
    Build onshore or offshore crude oil discharge, handling and
transportation facilities to optimize the U.S. Gulf Coast marine delivery
options for imported crude oil.
 55




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##### Table of Contents



o

    
    Strengthen market position around our existing market base by
focusing on activities in West Texas, South Texas and Red River areas, align
Seaway Crude Pipeline Company with key refiners and suppliers and increase
margins by expanding services and managing costs.o

    
    Focus on new refinery supply markets with existing assets and
expand our asset base in the upper Texas Gulf Coast as well as utilize the
existing Cushing, Oklahoma, storage for mid-continent refineries and other
customers.
 
    
    We expect the demand for marine transportation services in our market areas to remain strong.
 o

    
    Expand our current barge capacity through new construction or acquisition.o

    
    Utilize our newly acquired marine transportation business,
which complements our existing strategy of developing a network of terminals
along the nations inland and coastal waterways, to extend the logistical
services to our existing and new customers.
 
    
    We expect to see continued expansion opportunities for natural gas gathering and
related services in the Jonah, Pinedale and San Juan Basin areas.
 o

    
    Continue development and expansion of the Jonah system which
serves the Jonah and Pinedale fields in our Midstream Segment.o

    
    Add new volumes and improve the operating efficiency of the Val
Verde system in our Midstream Segment in New Mexicos San Juan Basin, through
new connections of conventional and Colorado coal seam gas.o

    
    Capitalize on our assets that are positioned in active
producing areas important to future domestic gas supply.
 
    
    Standards for use of ethanol and other renewable fuels are currently mandated to
increase to 15 billion gallons by 2015 and will ultimately reach 36 billion gallons
per year under newly passed energy legislation.
 o

    
    Capitalize on blending and logistical business opportunities at
our existing terminal locations and participate in the overall supply and
distribution of ethanol.
    Critical Accounting Policies and Estimates
   56




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Revenue and Expense Accruals
   Reserves for Environmental Matters
  Depreciation Methods and Estimated Useful Lives of Property, Plant and Equipment
  57




---



##### Table of Contents



Accounting for the Impairment or Disposal of Long-Lived
Assets.
 Goodwill and Intangible Assets
  Goodwill and Other Intangible Assets
  58




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59




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Results of Operations
  For Year Ended December 31,2007
    
    
    2006
    
    
    2005Operating revenues:Downstream Segment
    
    $
    362,691
    
    
    $
    304,301
    
    
    $
    287,191Upstream Segment
    
    
    9,173,683
    
    
    
    9,109,629
    
    
    
    8,110,239Midstream Segment (1)
    
    
    122,235
    
    
    
    201,269
    
    
    
    211,171Intersegment eliminations
    
    
    (549
    )
    
    
    (7,714
    )
    
    
    (3,567
    )Total operating revenues
    
    
    9,658,060
    
    
    
    9,607,485
    
    
    
    8,605,034Operating income:Downstream Segment
    
    
    135,055
    
    
    
    91,262
    
    
    
    88,143Upstream Segment
    
    
    84,222
    
    
    
    70,840
    
    
    
    33,174Midstream Segment (1)
    
    
    25,767
    
    
    
    65,499
    
    
    
    98,716Intersegment eliminations
    
    
    4,511
    
    
    
    2,178
    
    
    
    Total operating income
    
    
    249,555
    
    
    
    229,779
    
    
    
    220,033Equity earnings (losses):Downstream Segment
    
    
    (12,396
    )
    
    
    (8,018
    )
    
    
    (2,984
    )Upstream Segment
    
    
    2,602
    
    
    
    11,905
    
    
    
    23,078Midstream Segment (1)
    
    
    83,060
    
    
    
    35,052
    
    
    
    Intersegment eliminations
    
    
    (4,511
    )
    
    
    (2,178
    )
    
    
    Total equity earnings
    
    
    68,755
    
    
    
    36,761
    
    
    
    20,094Earnings before interest: (2)Downstream Segment
    
    
    184,251
    
    
    
    84,746
    
    
    
    85,914Upstream Segment
    
    
    87,246
    
    
    
    83,540
    
    
    
    56,408Midstream Segment (1)
    
    
    109,463
    
    
    
    101,219
    
    
    
    98,940Interest expense
    
    
    (112,253
    )
    
    
    (96,852
    )
    
    
    (88,620
    )Interest capitalized
    
    
    11,030
    
    
    
    10,681
    
    
    
    6,759Income before provision for income taxes
    
    
    279,737
    
    
    
    183,334
    
    
    
    159,401Provision for income taxes
    
    
    557
    
    
    
    652
    
    
    
    Income from continuing operations
    
    
    279,180
    
    
    
    182,682
    
    
    
    159,401Discontinued operations
    
    
    
    
    
    
    19,369
    
    
    
    3,150Net income
    
    $
    279,180
    
    
    $
    202,051
    
    
    $
    162,551
 
 (1)
    
    Effective August 1, 2006, with the formation of a joint venture with Enterprise
Products Partners, Jonah was deconsolidated and has been subsequently accounted for as an
equity investment (see Note 9 in the Notes to Consolidated Financial Statements).(2)
    
    See Note 14 in the Notes to Consolidated Financial Statements for a reconciliation of
earnings before interest to net income.Below is an analysis of the results of operations, including reasons for changes in results,
by each of our operating segments. 60




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Downstream Segment
  For Year Ended December 31,
    
    
    Increase (Decrease)2007
    
    
    2006
    
    
    2005
    
    
    2007-2006
    
    
    2006-2005Operating revenues:Sales of petroleum products
    
    $
    30,326
    
    
    $
    5,800
    
    
    $
    
    
    
    $
    24,526
    
    
    $
    5,800Transportation  Refined products
    
    
    170,231
    
    
    
    152,552
    
    
    
    144,552
    
    
    
    17,679
    
    
    
    8,000Transportation  LPGs
    
    
    101,076
    
    
    
    89,315
    
    
    
    96,297
    
    
    
    11,761
    
    
    
    (6,982
    )Other
    
    
    61,058
    
    
    
    56,634
    
    
    
    46,342
    
    
    
    4,424
    
    
    
    10,292Total operating revenues
    
    
    362,691
    
    
    
    304,301
    
    
    
    287,191
    
    
    
    58,390
    
    
    
    17,110Costs and expenses:Purchases of petroleum products
    
    
    30,041
    
    
    
    5,526
    
    
    
    
    
    
    
    24,515
    
    
    
    5,526Operating expense
    
    
    103,406
    
    
    
    106,455
    
    
    
    98,534
    
    
    
    (3,049
    )
    
    
    7,921Operating fuel and power
    
    
    39,906
    
    
    
    38,354
    
    
    
    32,500
    
    
    
    1,552
    
    
    
    5,854General and administrative
    
    
    16,929
    
    
    
    17,085
    
    
    
    17,653
    
    
    
    (156
    )
    
    
    (568
    )Depreciation and amortization
    
    
    46,141
    
    
    
    41,405
    
    
    
    39,403
    
    
    
    4,736
    
    
    
    2,002Taxes  other than income taxes
    
    
    9,866
    
    
    
    8,437
    
    
    
    11,097
    
    
    
    1,429
    
    
    
    (2,660
    )Gains on sales of assets
    
    
    (18,653
    )
    
    
    (4,223
    )
    
    
    (139
    )
    
    
    (14,430
    )
    
    
    (4,084
    )Total costs and expenses
    
    
    227,636
    
    
    
    213,039
    
    
    
    199,048
    
    
    
    14,597
    
    
    
    13,991Operating income
    
    
    135,055
    
    
    
    91,262
    
    
    
    88,143
    
    
    
    43,793
    
    
    
    3,119Gain on sale of ownership
interest in MB Storage
    
    
    59,628
    
    
    
    
    
    
    
    
    
    
    
    59,628
    
    
    
    Equity losses
    
    
    (12,396
    )
    
    
    (8,018
    )
    
    
    (2,984
    )
    
    
    (4,378
    )
    
    
    (5,034
    )Interest income
    
    
    879
    
    
    
    1,008
    
    
    
    477
    
    
    
    (129
    )
    
    
    531Other income  net
    
    
    1,085
    
    
    
    494
    
    
    
    278
    
    
    
    591
    
    
    
    216Earnings before interest
    
    $
    184,251
    
    
    $
    84,746
    
    
    $
    85,914
    
    
    $
    99,505
    
    
    $
    (1,168
    )
  PercentageFor Year Ended December 31,
    
    
    Increase (Decrease)2007
    
    
    2006
    
    
    2005
    
    
    2007-2006
    
    
    2006-2005Volumes Delivered:Refined products
    
    
    174,910
    
    
    
    165,269
    
    
    
    160,667
    
    
    
    6
    %
    
    
    3
    %LPGs
    
    
    41,950
    
    
    
    44,997
    
    
    
    45,061
    
    
    
    (7
    %)
    
    
    Total
    
    
    216,860
    
    
    
    210,266
    
    
    
    205,728
    
    
    
    3
    %
    
    
    2
    %Average Tariff per Barrel:Refined products
    
    $
    0.97
    
    
    $
    0.92
    
    
    $
    0.90
    
    
    
    5
    %
    
    
    2
    %LPGs
    
    
    2.41
    
    
    
    1.98
    
    
    
    2.14
    
    
    
    22
    %
    
    
    (7
    %)Average system tariff per barrel
    
    $
    1.25
    
    
    $
    1.15
    
    
    $
    1.17
    
    
    
    9
    %
    
    
    (2
    %)
 Year Ended December 31, 2007 Compared with Year Ended December 31, 2006
  61




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62




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For Year EndedDecember 31,
    
    
    Increase2007
    
    
    2006
    
    
    (Decrease)Centennial
    
    $
    (13,528
    )
    
    $
    (17,094
    )
    
    $
    3,566MB Storage
    
    
    1,089
    
    
    
    9,082
    
    
    
    (7,993
    )Other
    
    
    43
    
    
    
    (6
    )
    
    
    49Total equity losses
    
    $
    (12,396
    )
    
    $
    (8,018
    )
    
    $
    (4,378
    )
    Year Ended December 31, 2006 Compared with Year Ended December 31, 2005
     63




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For Year EndedDecember 31,
    
    
    Increase2006
    
    
    2005
    
    
    (Decrease)Centennial
    
    $
    (17,094
    )
    
    $
    (10,727
    )
    
    $
    (6,367
    )MB Storage
    
    
    9,082
    
    
    
    7,715
    
    
    
    1,367Other
    
    
    (6
    )
    
    
    28
    
    
    
    (34
    )Total equity losses
    
    $
    (8,018
    )
    
    $
    (2,984
    )
    
    $
    (5,034
    )
  64




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Upstream Segment
  For Year Ended December 31,
    
    
    Increase (Decrease)2007
    
    
    2006
    
    
    2005
    
    
    2007-2006
    
    
    2006-2005Operating revenues: (1)Sales of petroleum products (2) (3)
    
    $
    9,117,327
    
    
    $
    9,060,782
    
    
    $
    8,062,131
    
    
    $
    56,545
    
    
    $
    998,651Transportation  Crude oil
    
    
    45,952
    
    
    
    38,822
    
    
    
    37,614
    
    
    
    7,130
    
    
    
    1,208Other
    
    
    10,404
    
    
    
    10,025
    
    
    
    10,494
    
    
    
    379
    
    
    
    (469
    )Total operating revenues
    
    
    9,173,683
    
    
    
    9,109,629
    
    
    
    8,110,239
    
    
    
    64,054
    
    
    
    999,390Costs and expenses: (1)Purchases of petroleum products
(2) (3)
    
    
    8,992,048
    
    
    
    8,953,407
    
    
    
    7,989,682
    
    
    
    38,641
    
    
    
    963,725Operating expense
    
    
    58,976
    
    
    
    54,422
    
    
    
    52,808
    
    
    
    4,554
    
    
    
    1,614Operating fuel and power
    
    
    7,001
    
    
    
    6,989
    
    
    
    5,122
    
    
    
    12
    
    
    
    1,867General and administrative
    
    
    7,619
    
    
    
    5,986
    
    
    
    7,077
    
    
    
    1,633
    
    
    
    (1,091
    )Depreciation and amortization
    
    
    18,257
    
    
    
    14,400
    
    
    
    17,161
    
    
    
    3,857
    
    
    
    (2,761
    )Taxes  other than income taxes
    
    
    5,560
    
    
    
    5,390
    
    
    
    5,333
    
    
    
    170
    
    
    
    57Gains on sales of assets
    
    
    
    
    
    
    (1,805
    )
    
    
    (118
    )
    
    
    1,805
    
    
    
    (1,687
    )Total costs and expenses
    
    
    9,089,461
    
    
    
    9,038,789
    
    
    
    8,077,065
    
    
    
    50,672
    
    
    
    961,724Operating income
    
    
    84,222
    
    
    
    70,840
    
    
    
    33,174
    
    
    
    13,382
    
    
    
    37,666Equity earnings
    
    
    2,602
    
    
    
    11,905
    
    
    
    23,078
    
    
    
    (9,303
    )
    
    
    (11,173
    )Interest income
    
    
    161
    
    
    
    407
    
    
    
    
    
    
    
    (246
    )
    
    
    407Other income  net
    
    
    261
    
    
    
    388
    
    
    
    156
    
    
    
    (127
    )
    
    
    232Earnings before interest
    
    $
    87,246
    
    
    $
    83,540
    
    
    $
    56,408
    
    
    $
    3,706
    
    
    $
    27,132
 
 (1)
    
    Amounts in this table are presented after elimination of intercompany transactions,
including sales and purchases of petroleum products.(2)
    
    Petroleum products includes crude oil, lubrication oils and specialty chemicals.(3)
    
    On April 1, 2006, we adopted Emerging Issues Task Force (EITF) 04-13. Amounts for
the period from April 1, 2006 through December 31, 2006 have been fully adjusted for the
impact of adopting EITF 04-13. The period from January 1, 2006 through March 31, 2006 and
the 2005 period have not been adjusted for the adoption of EITF 04-13, as retroactive
restatement was not permitted, which impacts comparability (for further discussion, see
below).  65




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PercentageFor Year Ended December 31,
    
    
    Increase (Decrease)2007
    
    
    2006
    
    
    2005
    
    
    2007-2006
    
    
    2006-2005Margins: (1)Crude oil marketing
    
    $
    72,655
    
    
    $
    58,358
    
    
    $
    30,597
    
    
    
    24
    %
    
    
    91
    %Lubrication oil sales
    
    
    8,820
    
    
    
    8,565
    
    
    
    7,455
    
    
    
    3
    %
    
    
    15
    %Revenues: (1)Crude oil transportation
    
    
    75,285
    
    
    
    67,439
    
    
    
    61,611
    
    
    
    12
    %
    
    
    9
    %Crude oil terminaling
    
    
    14,471
    
    
    
    11,835
    
    
    
    10,400
    
    
    
    22
    %
    
    
    14
    %Total margin/revenues
    
    $
    171,231
    
    
    $
    146,197
    
    
    $
    110,063
    
    
    
    17
    %
    
    
    33
    %Total barrels/gallons:Crude oil marketing (barrels) (1)
    
    
    232,041
    
    
    
    222,069
    
    
    
    203,325
    
    
    
    4
    %
    
    
    9
    %Lubrication oil volume (gallons)
    
    
    15,344
    
    
    
    14,444
    
    
    
    14,844
    
    
    
    6
    %
    
    
    (3
    %)Crude oil transportation (barrels)
    
    
    96,451
    
    
    
    91,487
    
    
    
    94,743
    
    
    
    5
    %
    
    
    (3
    %)Crude oil terminaling (barrels)
    
    
    135,010
    
    
    
    125,974
    
    
    
    110,254
    
    
    
    7
    %
    
    
    14
    %Margin per barrel or gallon:Crude oil marketing (per barrel) (1)
    
    $
    0.313
    
    
    $
    0.263
    
    
    $
    0.150
    
    
    
    19
    %
    
    
    75
    %Lubrication oil margin (per gallon)
    
    
    0.575
    
    
    
    0.593
    
    
    
    0.502
    
    
    
    (3
    %)
    
    
    18
    %Average tariff per barrel:Crude oil transportation
    
    $
    0.781
    
    
    $
    0.737
    
    
    $
    0.650
    
    
    
    6
    %
    
    
    13
    %Crude oil terminaling
    
    
    0.107
    
    
    
    0.094
    
    
    
    0.094
    
    
    
    14
    %
    
    
    
 
 (1)
    
    Amounts in this table are presented prior to the eliminations of intercompany sales,
revenues and purchases between TCO and TCPL, both of which are our wholly-owned
subsidiaries. TCO is a significant shipper on TCPL. Crude oil marketing volumes also
include inter-region transfers, which are transfers among TCOs various geographically
managed regions.  For Year Ended December 31,2007
    
    
    2006
    
    
    2005Sales of petroleum products
    
    $
    9,117,327
    
    
    $
    9,060,782
    
    
    $
    8,062,131Transportation  Crude oil
    
    
    45,952
    
    
    
    38,822
    
    
    
    37,614Less: Purchases of petroleum products
    
    
    (8,992,048
    )
    
    
    (8,953,407
    )
    
    
    (7,989,682
    )Total margin/revenues
    
    
    171,231
    
    
    
    146,197
    
    
    
    110,063Other operating revenues
    
    
    10,404
    
    
    
    10,025
    
    
    
    10,494Net operating revenues
    
    
    181,635
    
    
    
    156,222
    
    
    
    120,557Operating expense
    
    
    58,976
    
    
    
    54,422
    
    
    
    52,808Operating fuel and power
    
    
    7,001
    
    
    
    6,989
    
    
    
    5,122General and administrative expense
    
    
    7,619
    
    
    
    5,986
    
    
    
    7,077Depreciation and amortization
    
    
    18,257
    
    
    
    14,400
    
    
    
    17,161Taxes  other than income taxes
    
    
    5,560
    
    
    
    5,390
    
    
    
    5,333Gains on sales of assets
    
    
    
    
    
    
    (1,805
    )
    
    
    (118
    )Operating income
    
    $
    84,222
    
    
    $
    70,840
    
    
    $
    33,174
 Accounting for Purchases and Sales of Inventory with
the Same Counterparty
 66




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Year Ended December 31, 2007 Compared with Year Ended December 31, 2006
    67




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Year Ended December 31, 2006 Compared with Year Ended December 31, 2005
    68




---



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69




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Midstream Segment
  For Year Ended December 31,
    
    
    Increase (Decrease)2007
    
    
    2006
    
    
    2005
    
    
    2007-2006
    
    
    2006-2005Operating revenues: (1)Sales of petroleum products (2)
    
    $
    
    
    
    $
    18,766
    
    
    $
    
    
    
    $
    (18,766
    )
    
    $
    18,766Gathering  Natural gas
    
    
    61,634
    
    
    
    123,933
    
    
    
    152,797
    
    
    
    (62,299
    )
    
    
    (28,864
    )Transportation  NGLs (3)
    
    
    46,542
    
    
    
    43,838
    
    
    
    43,915
    
    
    
    2,704
    
    
    
    (77
    )Other
    
    
    14,059
    
    
    
    14,732
    
    
    
    14,459
    
    
    
    (673
    )
    
    
    273Total operating revenues
    
    
    122,235
    
    
    
    201,269
    
    
    
    211,171
    
    
    
    (79,034
    )
    
    
    (9,902
    )Costs and expenses: (1)Purchases of petroleum products
    
    
    
    
    
    
    17,272
    
    
    
    
    
    
    
    (17,272
    )
    
    
    17,272Operating expense
    
    
    29,395
    
    
    
    42,887
    
    
    
    34,758
    
    
    
    (13,492
    )
    
    
    8,129Operating fuel and power
    
    
    14,551
    
    
    
    12,107
    
    
    
    11,350
    
    
    
    2,444
    
    
    
    757General and administrative expense
    
    
    9,109
    
    
    
    8,277
    
    
    
    8,413
    
    
    
    832
    
    
    
    (136
    )Depreciation and amortization
    
    
    40,827
    
    
    
    52,447
    
    
    
    54,165
    
    
    
    (11,620
    )
    
    
    (1,718
    )Taxes  other than income taxes
    
    
    2,586
    
    
    
    4,156
    
    
    
    4,180
    
    
    
    (1,570
    )
    
    
    (24
    )Gains on sales of assets
    
    
    
    
    
    
    (1,376
    )
    
    
    (411
    )
    
    
    1,376
    
    
    
    (965
    )Total costs and expenses
    
    
    96,468
    
    
    
    135,770
    
    
    
    112,455
    
    
    
    (39,302
    )
    
    
    23,315Operating income
    
    
    25,767
    
    
    
    65,499
    
    
    
    98,716
    
    
    
    (39,732
    )
    
    
    (33,217
    )Equity earnings (1)
    
    
    83,060
    
    
    
    35,052
    
    
    
    
    
    
    
    48,008
    
    
    
    35,052Interest income
    
    
    636
    
    
    
    662
    
    
    
    210
    
    
    
    (26
    )
    
    
    452Other income  net
    
    
    
    
    
    
    6
    
    
    
    14
    
    
    
    (6
    )
    
    
    (8
    )Earnings before interest
    
    $
    109,463
    
    
    $
    101,219
    
    
    $
    98,940
    
    
    $
    8,244
    
    
    $
    2,279
 
 (1)
    
    Effective August 1, 2006, with the formation of a joint venture with Enterprise
Products Partners, Jonah was deconsolidated and operating results, including revenues and
costs and expenses, after August 1, 2006 are included in equity earnings (see Note 9 in the
Notes to Consolidated Financial Statements).(2)
    
    The 2006 period includes Jonahs natural gas sales to Enterprise Products Partners of
$2.9 million through July 31, 2006.(3)
    
    Includes transportation revenue from Enterprise Products Partners of $13.2 million,
$10.2 million and $7.4 million for the years ended December 31, 2007, 2006 and 2005,
respectively. 70




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##### Table of Contents



PercentageFor Year Ended December 31,
    
    Increase (Decrease)2007
    
    2006
    
    2005
    
    2007-2006
    
    2006-2005Gathering
 Natural Gas  Jonah: (1) (2)MMcf
    
    
    587,354
    
    
    
    473,909
    
    
    
    415,181
    
    
    
    24
    %
    
    
    14
    %BBtu
    
    
    647,890
    
    
    
    522,667
    
    
    
    458,159
    
    
    
    24
    %
    
    
    14
    %Average fee per MMcf
    
    $
    0.236
    
    
    $
    0.224
    
    
    $
    0.208
    
    
    
    5
    %
    
    
    8
    %Average fee per MMBtu
    
    $
    0.214
    
    
    $
    0.204
    
    
    $
    0.188
    
    
    
    5
    %
    
    
    8
    %Gathering  Natural Gas  Val Verde: (2)MMcf
    
    
    175,667
    
    
    
    181,928
    
    
    
    180,699
    
    
    
    (3
    %)
    
    
    1
    %BBtu
    
    
    155,982
    
    
    
    160,929
    
    
    
    159,398
    
    
    
    (3
    %)
    
    
    1
    %Average fee per MMcf
    
    $
    0.351
    
    
    $
    0.359
    
    
    $
    0.369
    
    
    
    (2
    %)
    
    
    (3
    %)Average fee per MMBtu
    
    $
    0.395
    
    
    $
    0.406
    
    
    $
    0.418
    
    
    
    (3
    %)
    
    
    (3
    %)Transportation and movements  NGLs:Transportation barrels
    
    
    64,199
    
    
    
    63,396
    
    
    
    60,486
    
    
    
    1
    %
    
    
    5
    %Lease barrels (3)
    
    
    12,797
    
    
    
    6,350
    
    
    
    565
    
    
    
    102
    %
    
    
    1,024
    %Average rate per barrel
    
    $
    0.688
    
    
    $
    0.674
    
    
    $
    0.724
    
    
    
    2
    %
    
    
    (7
    %)Natural Gas Sales: (1)BBtu
    
    
    14,774
    
    
    
    10,206
    
    
    
    
    
    
    
    45
    %
    
    
    Average fee per MMBtu
    
    $
    4.278
    
    
    $
    4.984
    
    
    $
    
    
    
    
    (14
    %)
    
    
    Fractionation  NGLs:Barrels
    
    
    4,175
    
    
    
    4,406
    
    
    
    4,431
    
    
    
    (5
    %)
    
    
    (1
    %)Average rate per barrel
    
    $
    1.768
    
    
    $
    1.662
    
    
    $
    1.747
    
    
    
    6
    %
    
    
    (5
    %)Sales  Condensate: (1) (4)Barrels
    
    
    89.7
    
    
    
    74.2
    
    
    
    62.1
    
    
    
    21
    %
    
    
    19
    %Average rate per barrel
    
    $
    59.57
    
    
    $
    62.26
    
    
    $
    52.21
    
    
    
    (4
    %)
    
    
    19
    %
 
 (1)
    
    Effective August 1, 2006, with the formation of a joint venture with Enterprise
Products Partners, Jonah was deconsolidated and operating results after August 1, 2006 are
included in equity earnings (see Note 9 in the Notes to Consolidated Financial Statements).
However, this table includes Jonahs volume and average rate information for the full
years ended December 31, 2007, 2006 and 2005.(2)
    
    The majority of volumes in Val Verdes contracts are measured in MMcf, while the
majority of volumes in Jonahs contracts are measured in MMBtu. Both measures are shown
for each asset for comparability purposes.(3)
    
    Revenues associated with capacity leases are classified as other operating revenues in
our statements of consolidated income.(4)
    
    All of Jonahs condensate volumes are sold to TCO.  71




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Year Ended December 31, 2007 Compared with Year Ended December 31, 2006
      72




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Year Ended December 31, 2006 Compared with Year Ended December 31, 2005
     73




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##### Table of Contents



Discontinued Operations
  74




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##### Table of Contents



For Year EndedDecember 31,2006
    
    
    2005Operating revenues:Sales of petroleum products
    
    $
    3,828
    
    
    $
    10,479Other
    
    
    932
    
    
    
    2,975Total operating revenues
    
    
    4,760
    
    
    
    13,454Costs and expenses:Purchases of petroleum products
    
    
    3,000
    
    
    
    8,870Operating expense
    
    
    182
    
    
    
    692Depreciation and amortization
    
    
    51
    
    
    
    612Taxes  other than income taxes
    
    
    30
    
    
    
    130Total costs and expenses
    
    
    3,263
    
    
    
    10,304Income from discontinued operations
    
    $
    1,497
    
    
    $
    3,150
  Interest Expense and Capitalized Interest
 Year Ended December 31, 2007 Compared with Year Ended December 31, 2006
   Year Ended December 31, 2006 Compared with Year Ended December 31, 2005
  75




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##### Table of Contents



Income Taxes  Revised Texas Franchise Tax
  Financial Condition and Liquidity
  For Year Ended December 31,2007
    
    2006
    
    2005Cash provided by (used in):Continuing operating activities
    
    $
    350,572
    
    
    $
    271,552
    
    
    $
    250,723Operating activities
    
    
    350,572
    
    
    
    273,073
    
    
    
    254,505Investing activities
    
    
    (317,400
    )
    
    
    (273,716
    )
    
    
    (350,915
    )Financing activities
    
    
    (33,219
    )
    
    
    594
    
    
    
    80,107
 Year Ended December 31, 2007 Compared with Year Ended December 31, 2006
 Operating Activities
  
    
    The improvement in cash flow is generally due to increased earnings (see Results of
Operations within this Item 7) and the timing of related cash collections and
disbursements between years.
    
    Cash received for crude oil inventory was $4.8 million for the year ended December
31, 2007, compared to cash payments of $46.3 million for the year ended December 31,
2006. The increase in cash received is related to changes in activities relating to
crude oil inventory. As part of our crude oil marketing activity, we purchase crude
oil and simultaneously enter into offsetting sales contracts for physical delivery in
future periods. These transactions result in an increase in the amount of inventory
carried on our books until the crude oil is sold. The substantial majority of
inventory related to these contracts as of December 31, 2007 has been contracted for
sale in the first quarter of 2008; however, new contracts may be executed, which would
result in higher inventory balances being held
 76




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##### Table of Contents




    
    Cash distributions received from unconsolidated affiliates increased $59.4 million
primarily due to an increase of $70.0 million in distributions received from our equity
investment in Jonah as a result of the formation of the joint venture on August 1,
2006. Distributions received from our equity investment in Seaway decreased $8.1
million primarily due to the reduction of our sharing ratio to 40% in 2007 from 47% in
2006, and lower Seaway revenues, which were negatively impacted by the unexpected
temporary shutdown of several regional refineries for maintenance and repairs.
Distributions received from our equity investment in MB Storage decreased $2.5 million
due to the sale of our investment in MB Storage on March 1, 2007.
    
    Cash paid for interest, net of amounts capitalized, increased $16.1 million
year-to-year primarily due to higher outstanding balances on our variable rate
revolving credit facility, the issuance of junior subordinated notes in May 2007 and
the payment of a make-whole premium related to the redemption of $35.0 million of TE
Products Senior Notes. Excluding the effects of hedging activities and interest
capitalized during the year ended December 31, 2008, we expect interest payments on our
fixed rate Senior Notes and junior subordinated notes for 2008 to be approximately
$77.7 million. We expect to make our interest payments with cash flows from operating
activities.
 Investing Activities
  
    
    Investments in unconsolidated affiliates increased $70.3 million, which includes a
$66.5 million increase in contributions for our ownership interest in the Jonah joint
venture with Enterprise Products Partners primarily for capital expenditures on its
Phase V expansion and an $8.6 million increase in contributions to Centennial,
partially offset by a $4.8 million decrease in contributions to MB Storage, which was
sold on March 1, 2007. Contributions to Centennial in 2007 included $6.1 million for
contractual obligations that were created upon formation of Centennial and $5.0 million
for debt service requirements.
    
    Capital expenditures increased $58.2 million primarily due to an increase in organic
growth projects year-to-year and higher spending to sustain existing operations,
including pipeline integrity (see Other Considerations  Future Capital Needs and
Commitments below). Cash paid for linefill on assets owned increased $33.0 million
year-to-year primarily due to increases in our propane inventory related to the sale of
our ownership interest in MB Storage on March 1, 2007 and the completion of organic
growth projects in our Upstream Segment. Because we sold our interest in MB Storage
and we have location exchange requirements to provide barrels to shippers at Mont
Belvieu, we increased our long-term propane inventory.
    
    Proceeds from the sales of assets and ownership interests for the year ended
December 31, 2007 were $165.1 million, which includes $137.3 million from the sale of
TE Products ownership interests in MB Storage and its general partner and $18.5
million for the sale of other Downstream Segment assets, all to Louis Dreyfus on March
1, 2007; $8.0 million for the sale of Downstream Segment assets to Enterprise Products
Partners in January 2007 (see Note 10 in the Notes to Consolidated Financial
Statements); and $1.3 million for the sale of various Upstream Segment assets in the
third quarter of 2007. Proceeds from the sales of assets for the year ended December
31, 2006 was $51.6 million, of which $38.0 million related to cash proceeds received
from the sale of the Pioneer plant in the Midstream Segment on March 31, 2006, and
$11.7 million of cash proceeds received from the sale of certain crude oil pipeline
assets from the Upstream Segment and products pipeline assets from the Downstream
Segment to an affiliate of Enterprise Products Partners in October 2006 (see Note 10 in
the Notes to Consolidated Financial Statements).
 77




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##### Table of Contents




    
    Cash paid for the acquisition of assets for the year ended December 31, 2007 was
$12.9 million, of which $6.2 million was for Downstream Segment assets and $6.7 million
was for Upstream Segment assets (see Note 10 in the Notes to Consolidated Financial
Statements). For the year ended December 31, 2006, cash paid for the acquisition of
assets was $20.5 million for Downstream Segment assets.
    
    During the year ended December 31, 2007, we paid $3.3 million related to customer
reimbursable commitments.
 Financing Activities
  
    
    Borrowings under our revolving credit facility offset repayments under our revolving
credit facility during the year ended December 31, 2007, while net borrowings under our
revolving credit facility during the year ended December 31, 2006 were $84.1 million.
    
    Cash distributions to our partners increased $15.9 million year-to-year due to an
increase in the number of Units outstanding and our quarterly cash distribution rates.
We paid cash distributions of $294.5 million ($2.74 per Unit) and $278.6 million ($2.70
per Unit) during each of the years ended December 31, 2007 and 2006, respectively.
Additionally, we declared a cash distribution of $0.695 per Unit for the quarter ended
December 31, 2007. We paid the distribution of $74.8 million on February 7, 2008 to
unitholders of record on January 31, 2008.
    
    Net proceeds from the issuance of Units decreased $193.4 million year-to-year. We
generated $195.1 million in net proceeds from an underwritten equity offering in July
2006 from the public issuance of 5.8 million Units. In 2007, we received $1.7 million
in net proceeds related to the issuance of Units to employees under the employee unit
purchase plan and the issuance of Units in connection with our DRIP (see Note 13 in the
Notes to Consolidated Financial Statements).
    
    We received $295.8 million from the issuance in May 2007 of our 7.000% junior
subordinated notes due June 2067 (net of debt issuance costs of $3.7 million) (see Note
12 in the Notes to Consolidated Financial Statements).
    
    In October 2007, TE Products redeemed $35.0 million principal amount of the 7.51% TE
Products Senior Notes for $36.1 million and accrued interest (see Note 12 in the Notes
to Consolidated Financial Statements).
    
    We received $1.4 million in proceeds from the termination of treasury locks in May
2007, and we paid $1.2 million for the termination of an interest rate swap in
September 2007 (see Note 6 in the Notes to Consolidated Financial Statements).
 Year Ended December 31, 2006 Compared with Year Ended December 31, 2005
 Operating Activities
  
    
    The improvement in cash flow is generally due to increased earnings (see Results of
Operations within this Item 7) and the timing of related cash collections and
disbursements between years.
 78




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##### Table of Contents




    
    Cash payments for crude oil inventory were $46.3 million for the year ended December
31, 2006, compared to cash received of $0.7 million for the year ended December 31,
2005.
    
    Cash distributions received from unconsolidated affiliates increased $26.4 million
primarily due to an increase of $30.0 million in distributions received from our equity
investment in Jonah and a $0.5 million increase in distributions received from our
equity investment in MB Storage, partially offset by a $4.1 million decrease in
distributions received from our equity investment in Seaway.
    
    Cash paid for interest, net of amounts capitalized, increased $5.8 million
year-to-year primarily due to higher outstanding balances on our variable rate
revolving credit facility.
 Investing Activities
  
    
    Cash paid for the acquisition of assets decreased $91.8 million. Cash paid for the
acquisition of assets for the year ended December 31, 2006 was $20.5 million for
Downstream Segment assets. Cash paid for the acquisition of assets for the year ended
December 31, 2005 was $112.2 million, of which $69.0 million was for Downstream Segment
assets and $43.2 million was for Upstream Segment assets.
    
    Capital expenditures decreased $50.5 million primarily due to the deconsolidation of
Jonah. As a result of the deconsolidation of Jonah on August 1, 2006, amounts related
to Jonah capital expenditures are reported as joint venture contributions. Cash paid
for linefill on assets owned decreased $8.0 million year-to-year primarily due to a
lower level of asset acquisitions and related long-term inventory purchases in our
Upstream Segment in 2006 compared to 2005.
    
    Proceeds from the sales of assets for the year ended December 31, 2006 were $51.6
million, of which $38.0 million related to the Pioneer plant sale in the Midstream
Segment. Proceeds from the sales of assets for the year ended December 31, 2005 were
$0.5 million.
    
    Investments in unconsolidated affiliates increased $124.1 million, which includes
$121.0 million in contributions for our ownership interest in Jonah, a $2.5 million
increase in contributions to Centennial and a $0.5 million increase in contributions to
MB Storage.
 Financing Activities
  
    
    Net proceeds from the issuance of Units decreased $83.7 million year-to-year. We
generated $195.1 million in net proceeds from the 2006 public issuance of 5.8 million
Units, while in 2005, we generated $278.8 million in net proceeds from the 2005 public
issuance of 7.0 million Units.
    
    Cash distributions to our partners increased $27.5 million year-to-year due to an
increase in the number of Units outstanding and our quarterly cash distribution rates.
We paid cash distributions of $278.6 million ($2.70 per Unit) and $251.1 million ($2.68
per Unit) during each of the years ended December 31, 2006 and 2005, respectively.
    
    Net borrowings under our revolving credit facility during the year ended December
31, 2006 were 84.1 million, while net borrowings under our revolving credit facility
during the year ended December 31, 2005 were $52.9 million. Debt issuance costs
decreased $0.5 million year-to-year.
 79




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##### Table of Contents



Other Considerations
 Registration Statements
   Credit Facilities
   80




---



##### Table of Contents



Junior Subordinated Notes
  Retirement of TE Products Senior Notes
  Future Capital Needs and Commitments
   81




---



##### Table of Contents



Liquidity Outlook
    Off-Balance Sheet Arrangements
    82




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##### Table of Contents



Contractual Obligations
  Amount of Commitment Expiration Per PeriodLess than 1
    
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    
    Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    5 YearsRevolving Credit Facility, due 2012
    
    $
    490,000
    
    
    $
    
    
    
    $
    
    
    
    $
    490,000
    
    
    $
    6.45% Senior Notes due 2008 (1) (2) (3)
    
    
    180,000
    
    
    
    180,000
    
    
    
    
    
    
    
    
    
    
    
    7.625% Senior Notes due 2012 (2)
    
    
    500,000
    
    
    
    
    
    
    
    
    
    
    
    500,000
    
    
    
    6.125% Senior Notes due 2013 (2)
    
    
    200,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,0007.51% Senior Notes due 2028 (1) (2) (3)
    
    
    175,000
    
    
    
    175,000
    
    
    
    
    
    
    
    
    
    
    
    7.00% Junior Subordinated Notes due 2067 (2)
    
    
    300,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300,000Make-whole premium on 7.51% Senior Notes
redeemed January 28, 2008 (3)
    
    
    6,571
    
    
    
    6,571
    
    
    
    
    
    
    
    
    
    
    
    Interest payments (4)
    
    
    1,633,447
    
    
    
    105,634
    
    
    
    198,708
    
    
    
    178,480
    
    
    
    1,150,625Debt and interest subtotal
    
    $
    3,485,018
    
    
    $
    467,205
    
    
    $
    198,708
    
    
    $
    1,168,480
    
    
    $
    1,650,625Operating leases (5)
    
    $
    64,915
    
    
    $
    13,397
    
    
    $
    21,427
    
    
    $
    17,125
    
    
    $
    12,966Purchase obligations: (6)Product purchase commitments:Estimated payment obligation:Crude oil
    
    $
    387,210
    
    
    $
    387,210
    
    
    $
    
    
    
    $
    
    
    
    $
    Other
    
    $
    3,971
    
    
    $
    2,199
    
    
    $
    1,196
    
    
    $
    558
    
    
    $
    18Underlying major volume commitments:Crude oil (in MBbls)
    
    
    4,492
    
    
    
    4,492
    
    
    
    
    
    
    
    
    
    
    
    Service payment commitments
    
    $
    8,974
    
    
    $
    4,499
    
    
    $
    4,475
    
    
    $
    
    
    
    $
    Contributions to Jonah (7)
    
    $
    124,000
    
    
    $
    124,000
    
    
    $
    
    
    
    $
    
    
    
    $
    Capital expenditure obligations (8)
    
    $
    11,335
    
    
    $
    11,335
    
    
    $
    
    
    
    $
    
    
    
    $
    Standby letter of credit (9)
    
    $
    23,494
    
    
    $
    23,494
    
    
    $
    
    
    
    $
    
    
    
    $
    Other liabilities and deferred credits (10)
    
    $
    27,122
    
    
    $
    
    
    
    $
    4,835
    
    
    $
    4,259
    
    
    $
    18,028Total
    
    $
    4,136,039
    
    
    $
    1,033,339
    
    
    $
    230,641
    
    
    $
    1,190,422
    
    
    $
    1,681,637
 
 (1)
    
    Obligations of TE Products.(2)
    
    At December 31, 2007, the 7.51% Senior Notes and the 7.625% Senior Notes include a
deferred loss of $1.0 million and a deferred gain of $23.2 million, respectively, both net
of amortization, from interest rate swap terminations (see Note 6 in the Notes to
Consolidated Financial Statements). At December 31, 2007, our 6.45% Senior Notes, our
7.625% Senior Notes, our 6.125% Senior Notes and our 7.00% junior subordinated notes
include $2.2 million of unamortized debt discounts. The fair value adjustments, the
deferred gain/loss adjustment and the unamortized debt discounts are excluded from this
table. 83




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##### Table of Contents



(3)
    
    On January 28, 2008, TE Products redeemed the remaining $175.0 million of 7.51% TE
Products Senior Notes outstanding at a redemption price of 103.755% of the principal amount
plus accrued and unpaid interest at the date of redemption. The 6.45% TE Products Senior
Notes matured on January 15, 2008. Retirement of these series of notes was funded with
borrowings under our Term Credit Agreement (see Note 22 in the Notes to Consolidated
Financial Statements for additional information).(4)
    
    Includes interest payments due on our Senior Notes and junior subordinated notes and
interest payments and commitment fees due on our Revolving Credit Facility. The interest
amount calculated on the Revolving Credit Facility is based on the assumption that the
amount outstanding and the interest rate charged both remain at their current levels.(5)
    
    We lease property, plant and equipment under noncancelable and cancelable operating
leases. Amounts shown in the table represent minimum cash lease payment obligations under
our operating leases with terms in excess of one year for the periods indicated. Lease
expense is charged to operating costs and expenses on a straight line basis over the period
of expected economic benefit. Contingent rental payments are expensed as incurred. Total
rental expense for the years ended December 31, 2007, 2006 and 2005, was $22.1 million,
$25.3 million and $24.0 million, respectively.(6)
    
    We have long and short-term purchase obligations for products and services with
third-party suppliers. The prices that we are obligated to pay under these contracts
approximate current market prices. The preceding table shows our commitments and estimated
payment obligations under these contracts for the periods indicated. Our estimated future
payment obligations are based on the contractual price under each contract for products and
services at December 31, 2007. The majority of contractual commitments we make for the
purchase of crude oil range in term from a thirty-day evergreen to one year. A substantial
portion of the contracts for the purchase of crude oil that extend beyond thirty days
include cancellation provisions that allow us to cancel the contract with thirty days
written notice.(7)
    
    Expected contributions to Jonah in 2008 for our share of the Phase V expansion and
other capital expenditures.(8)
    
    We have short-term payment obligations relating to capital projects we have initiated.
These commitments represent unconditional payment obligations that we have agreed to pay
vendors for services rendered or products purchased.(9)
    
    At December 31, 2007, we had outstanding a $23.5 million standby letter of credit in
connection with crude oil purchased during the fourth quarter of 2007. The payable related
to these purchases of crude oil is expected to be paid during the first quarter of 2008.(10)
    
    Includes approximately $10.1 million of long-term deferred revenue payments, which are
being transferred to income over the term of the respective revenue contracts and $12.8
million related to our estimated long-term portion of our liabilities under our guarantees
to Centennial for its credit agreement and for a catastrophic event. The amount of
commitment by year is our best estimate of projected payments of these long-term
liabilities.   Credit Ratings
   84




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Recent Accounting Pronouncements
  
 Item 7A . Quantitative and Qualitative Disclosures About Market Risk
   Commodity Risk Hedging Program
 Accounting for Derivative Instruments and Hedging Activities Accounting for Certain Derivative Instruments and Certain Hedging Activities, an
amendment of FASB Statement No. 133
   85




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##### Table of Contents



Resulting
    
    December 31,
    
    December 31,
    
    February 12,Scenario
    
    Classification
    
    2006
    
    2007
    
    2008FV assuming no change in underlying commodity prices
    
    Asset (Liability)
    
    $
    741
    
    
    $
    (18,897
    )
    
    $
    (12,981
    )FV assuming 10% increase in underlying commodity prices
    
    Asset (Liability)
    
    
    250
    
    
    
    (33,606
    )
    
    
    (25,213
    )FV assuming 10% decrease in underlying commodity prices
    
    Asset (Liability)
    
    
    1,232
    
    
    
    (4,188
    )
    
    
    (750
    )
  Interest Rate Risk Hedging Program
   Number of
    
    Period Covered
    
    TerminationHedged Debt
    
    Swaps
    

by Swaps
    

Date of Swaps
    
    Rate Swaps
    
    Notional ValueRevolving Credit
Facility, due Dec.
2012
    
    4
    
    Jan. 2006 to Jan.
2008
    
    Jan. 2008
    
    Swapped 5.18%
floating rate 
for
fixed rates ranging

from 4.67% to
4.695% (1)
    
    $200.0 million
 
 (1)
    
    On June 30, 2007, these interest rate swap agreement were de-designated as cash flow
hedges and are now accounted for using mark-to-market accounting; thus, changes in the fair
value of these swaps are recognized in earnings. At December 31, 2007 and 2006, the fair
values of these interest rate swaps were assets of $0.3 million and $1.4 million,
respectively. Interest Rate Swap Termination.
 Treasury Locks
 86




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Fair Values of Debt
  Fair ValueDecember 31,Face Value
    
    2007
    
    20066.45% TE Products Senior Notes, due January 2008 (1)
    
    $
    180,000
    
    
    $
    179,982
    
    
    $
    181,6417.625% Senior Notes, due February 2012
    
    
    500,000
    
    
    
    536,765
    
    
    
    537,0676.125% Senior Notes, due February 2013
    
    
    200,000
    
    
    
    202,027
    
    
    
    201,6107.51% TE Products Senior Notes, due January 2028 (1)
    
    
    175,000
    
    
    
    181,571
    
    
    
    221,4717.000% Junior Subordinated Notes, due June 2067
    
    
    300,000
    
    
    
    270,485
    
    
    
    
 
 (1)
    
    In October 2007, TE Products repurchased $35.0 million principal amount of the 7.51% TE
Products Senior Notes for $36.1 million and accrued interest, and on January 28, 2008, TE
Products redeemed the remaining $175.0 million of 7.51% TE Products Senior Notes at a
redemption price of 103.755% of the principal amount plus accrued and unpaid interest at
the date of redemption. Additionally, the $180.0 million principal amount of 6.45% TE
Products Senior Notes matured and was repaid on January 15, 2008. We funded the retirement
of both series with borrowings under our Term Credit Agreement (see Note 12 in the Notes to
Consolidated Financial Statements and Credit Facilities above). The face value of the
7.51% TE Products Senior Notes at December 31, 2006 was $210.0 million. 
 Item 8. Financial Statements and Supplementary Data
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
   87




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Item 9A . Controls and Procedures
  (i)
    
    that our disclosure controls and procedures are designed to ensure that information
required to be disclosed by us in the reports that we file or submit under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in the SECs rules and forms, and that such information is accumulated
and communicated to our management, including the CEO and CFO, as appropriate to allow
timely decisions regarding required disclosure; and(ii)
    
    that our disclosure controls and procedures are effective.
 Changes in Internal Control over Financial Reporting
   MANAGEMENTS ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
  (i)
    
    pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the Partnership;(ii)
    
    provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the Partnership are being made only in
accordance with authorizations of management and directors of the Partnership; and(iii)
    
    provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Partnerships assets that could have a material
effect on the financial statements.
 88




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##### Table of Contents



/s/ JERRY E. THOMPSON

Jerry E. Thompson
    
    /s/ WILLIAM G. MANIAS

William G. ManiasPresident and Chief Executive Officer 

of our General Partner,
    
    Vice President and Chief Financial Officer of our 
General Partner,Texas Eastern Products Pipeline Company, LLC
    
    Texas Eastern Products Pipeline Company, LLC
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal
Control  Integrated Framework
   89




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##### Table of Contents



Internal Control  Integrated Framework
   
 
 Item 9B. Other Information
  
 PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
 Partnership Management
     90




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##### Table of Contents



Corporate Governance
   
    
    From June 2000 until February 14, 2006, Mr. Snell was a director of Enterprise Products
GP, the general partner of Enterprise Products Partners. The Board determined that this
relationship is not material because that directorship was terminated soon after he joined
our Board and, as described below, the Board determined his ownership of Enterprise
Products Partners common units to be immaterial.
    
    Until November 2006, Mr. Snell owned 4,557 Enterprise Products Partners common units and
options to purchase 40,000 Enterprise Products Partners common units; his wife owned 1,100
Enterprise Products Partners common units; and Mr. Snell and his wife owned as tenants in
common 7,500 common units of Enterprise GP Holdings. Mr. Snell is the trustee of family
trusts that own a total of 6,000 Enterprise Products Partners common units and 200
Enterprise GP Holdings common units. The Board determined that these relationships are not
material because, consistent with principles in NYSE listing standards, the Board does not
view ownership of units, by itself, as a bar to an independence finding. Further, Mr.
Snell and his wife no longer own directly any Enterprise Products Partners or Enterprise GP
Holdings common units, and he disclaims beneficial ownership of the units owned by the
family trusts.
    
    Since May 2000, Mr. Snell has been a partner with the law firm of Thompson & Knight LLP
in Houston, Texas, which has from time to time provided legal services for Enterprise
Products Partners and its affiliates, including Mr. Duncan. For the three year period
ended December 31, 2005, Mr. Duncan paid an aggregate of approximately $51,000 to Thompson
& Knight for legal services. The Board determined that this relationship is not material
because Thompson & Knight has performed no legal services for us or any of our affiliates,
including Mr. Duncan, since Mr. Snell joined the Board and because the fees paid to his
firm for prior services were minimal.
    
    Mr. Snell and Richard Bachmann practiced law as partners for a number of years until
1998. Mr. Bachmann was a member of the Board until December 2006 and
serves as a director and executive officer of EPCO, Enterprise Products Partners and
certain affiliates of Enterprise Products Partners. The Board determined that this
relationship is not material because their relationship as partners terminated a number of
years before Mr. Snell joined the Board.
 Code of Conduct, Corporate Governance Guidelines and Charter of the Audit and Conflicts Committee
 www.teppco.com
 91




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##### Table of Contents



Committees of the Board of Directors
 Audit, Conflicts and Governance Committee
     92




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##### Table of Contents



NYSE Corporate Governance Listing Standards
 Annual CEO Certification
  Executive Sessions of Non-Management Directors
   Directors and Executive Officers
  Name
    
    Age
    
    Position with Our General PartnerMichael B. Bracy
    
    
    66
    
    
    Director, Member of Audit, Conflicts and Governance Committee*Murray H. Hutchison
    
    
    69
    
    
    Chairman of the Board, Member of the Audit, Conflicts and Governance CommitteeRichard S. Snell
    
    
    65
    
    
    Director, Member of the Audit, Conflicts and Governance CommitteeDonald H. Daigle
    
    
    66
    
    
    Director, Member of the Audit, Conflicts and Governance CommitteeJerry E. Thompson
    
    
    58
    
    
    President, Chief Executive Officer and DirectorJ. Michael Cockrell+
    
    
    61
    
    
    Senior Vice President, Commercial UpstreamWilliam G. Manias
    
    
    46
    
    
    Vice President and Chief Financial OfficerJohn N. Goodpasture+
    
    
    59
    
    
    Vice President, Corporate DevelopmentSamuel N. Brown+
    
    
    51
    
    
    Vice President, Commercial DownstreamPatricia A. Totten
    
    
    57
    
    
    Vice President, General Counsel and Secretary
 
 *
    
    Chairman of committee+
    
    See Employment Arrangements in Item 11. Michael B. Bracy
 Murray H. Hutchison
 93




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##### Table of Contents



Richard S. Snell
 Donald H. Daigle
 Jerry E. Thompson
 J. Michael Cockrell
 William G. Manias
 John N. Goodpasture
 Samuel N. Brown
 Patricia A. Totten
  94




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##### Table of Contents



Section 16(a) Beneficial Ownership Reporting Compliance
  
 Item 11. Executive Compensation
 Compensation Discussion and Analysis
 Overview of Executive Officer Compensation
  Compensation Objectives
  Components of Executive Officer Compensation and Compensation Decisions
  
    
    annual base salary;
    
    discretionary annual cash awards;
    
    awards under our and EPCOs long-term incentive plans; and
    
    other compensation, including very limited perquisites.
 95




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##### Table of Contents



96




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##### Table of Contents



Employment Arrangements and Termination or Change-in-Control Payments
   Chief Executive Officer Compensation
  97




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##### Table of Contents



Tax and Accounting Implications
 Nonqualified Deferred Compensation
  Significant Accounting Considerations
 Share-Based Payment
 Compensation Committee Report
   Submitted by:
    
    Murray H. HutchisonMichael B. BracyDonald H. DaigleRichard S. SnellJerry E. Thompson
 98




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##### Table of Contents



Summary Compensation Table
  AllUnit
    
    
    Option
    
    
    OtherName and
    
    
    
    
    
    Salary
    
    
    Bonus
    
    
    Awards
    
    
    Awards
    
    
    Compensation
    
    
    TotalPrincipal Position
    
    Year
    
    
    ($)
    
    
    ($) (3)
    
    
    ($) (4)
    
    
    ($) (5)
    
    
    ($) (6)
    
    
    ($)Jerry E. Thompson (1)
    
    
    2007
    
    
    
    463,500
    
    
    
    281,000
    
    
    
    803,761
    
    
    
    29,317
    
    
    
    151,975
    
    
    
    1,729,553President and Chief Executive Officer
    
    
    2006
    
    
    
    325,673
    
    
    
    770,000
    
    
    
    721,000
    
    
    
    
    
    
    
    58,007
    
    
    
    1,874,680William G. Manias (2)
    
    
    2007
    
    
    
    206,175
    
    
    
    74,000
    
    
    
    68,570
    
    
    
    13,498
    
    
    
    30,481
    
    
    
    392,724Vice President and Chief Financial Officer
    
    
    2006
    
    
    
    192,825
    
    
    
    75,000
    
    
    
    37,059
    
    
    
    
    
    
    
    49,497
    
    
    
    354,381J. Michael Cockrell
    
    
    2007
    
    
    
    267,750
    
    
    
    105,500
    
    
    
    127,784
    
    
    
    14,437
    
    
    
    535,029
    
    
    
    1,050,500Senior Vice President, Commercial Upstream
    
    
    2006
    
    
    
    255,628
    
    
    
    98,000
    
    
    
    119,706
    
    
    
    
    
    
    
    157,611
    
    
    
    630,945John N. Goodpasture
    
    
    2007
    
    
    
    233,375
    
    
    
    76,000
    
    
    
    108,965
    
    
    
    13,342
    
    
    
    334,865
    
    
    
    766,547Vice President, Corporate Development
    
    
    2006
    
    
    
    231,737
    
    
    
    62,000
    
    
    
    106,792
    
    
    
    
    
    
    
    107,397
    
    
    
    507,926Samuel N. Brown
    
    
    2007
    
    
    
    241,500
    
    
    
    76,000
    
    
    
    95,244
    
    
    
    13,498
    
    
    
    281,958
    
    
    
    708,200Vice President, Commercial Downstream
    
    
    2006
    
    
    
    220,901
    
    
    
    75,000
    
    
    
    88,754
    
    
    
    
    
    
    
    129,822
    
    
    
    514,477
 
 (1)
    
    Effective April 5, 2006, Mr. Thompson was appointed President and CEO of our General
Partner.(2)
    
    Effective January 12, 2006, Mr. Manias was appointed Vice President and CFO of our
General Partner.(3)
    
    Amounts represent discretionary annual cash awards accrued during the year. Payments
under the discretionary annual cash awards program are made in the subsequent year.(4)
    
    Amounts represent compensation expense related to phantom unit awards under the 1999
Plan and 2000 LTIP and restricted unit awards under the 2006 LTIP for the years ended
December 31, 2007 and 2006, respectively. The compensation amounts are based on the
following assumptions: (i) the closing price of a Unit at December 31, 2007 was $38.33;
(ii) with respect to restricted units, the grant date closing price was $45.35 per Unit;
(iii) (a) with respect to the 1999 Plan and the 2006 LTIP, the payout percentage is 100%,
and (b) with respect to the 2000 LTIP, the performance percentage is 150%; and (iv) the
percentage of the number of days in the period presented compared to the total vesting
period. See discussion of the equity awards and the 2006 and 2007 grants from these equity
incentive plans to the Named Executive Officers below.(5)
    
    Amounts represent compensation expense related to unit option awards and UARs under the
2006 LTIP for the year ended December 31, 2007. With respect to the unit option awards,
the compensation amounts are based on the following assumptions: (i) expected life of
option of 7 years, (ii) risk-free interest rate of 4.78%; (iii) expected distribution yield
on Units of 7.92%; and (iv) expected Unit price volatility on Units of 14.71%. The UARs
are accounted for as liability awards under SFAS 123(R) because they are expected to be
settled in cash. The compensation amounts related to UARs are based on the assumptions
that (i) the closing price of a Unit at December 31, 2007 was $38.33; (ii) the payout
percentage is 100%; and (iii) the percentage of the number of days in the period presented
compared to the total vesting period. See discussion of the equity awards and the 2007
grants from this equity incentive plan to the Named Executive Officers below.(6)
    
    Primary components for 2007 include (i) EPCO matching contributions under funded,
qualified, defined contribution retirement plans; (ii) quarterly
distributions paid on equity incentive plan awards; (iii) for Messrs. Cockrell, Brown and Goodpasture,
retention payments made pursuant to employment agreement supplement payments; and (iv) the
imputed value of premiums paid by EPCO for Named Executive Officers life insurance.
Components of All 99




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##### Table of Contents



Other Compensation for which $10,000 or more was paid to or accrued for any Named Executive
Officer in 2007 as set forth below for each Named Executive Officer are as follows: MatchingContributions
    
    
    QuarterlyUnder Funded
    
    
    DistributionQualified
    
    
    EquivalentsDefined
    
    
    Paid on
    
    
    Payouts fromContribution
    
    
    Equity
    
    
    Employment
    
    
    
    
    
    
    TotalRetirement
    
    
    Incentive
    
    
    Agreement
    
    
    Other
    
    
    All OtherPlan
    
    
    Plan Awards
    
    
    Supplement
    
    
    Compensation
    
    
    CompensationName
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)Jerry E. Thompson
    
    
    15,750
    
    
    
    133,222
    
    
    
    
    
    
    
    3,003
    
    
    
    151,975William G. Manias
    
    
    15,750
    
    
    
    12,077
    
    
    
    
    
    
    
    2,654
    
    
    
    30,481J. Michael Cockrell
    
    
    15,750
    
    
    
    21,471
    
    
    
    489,375
    
    
    
    8,433
    
    
    
    535,029John N. Goodpasture
    
    
    15,750
    
    
    
    18,094
    
    
    
    295,800
    
    
    
    5,221
    
    
    
    334,865Samuel N. Brown
    
    
    15,750
    
    
    
    15,913
    
    
    
    241,920
    
    
    
    8,375
    
    
    
    281,958
 Grants of Plan-Based Awards in Fiscal Year 2007
  Exercise
    
    
    GrantOr Base
    
    
    Date FairEstimated Future Payouts Under
    
    
    Price of
    
    
    Value ofEquity Incentive Plan Awards
    
    
    Option
    
    
    Unit andGrant
    
    
    Threshold
    
    
    Target
    
    
    Maximum
    
    
    Awards
    
    
    Option AwardsName
    
    Date
    
    
    (#)
    
    
    (#)
    
    
    (#)
    
    
    ($/Unit)
    
    
    ($) (4)Jerry E. ThompsonRestricted unit awards (1)
    
    
    5/22/2007
    
    
    
    
    
    
    
    19,000
    
    
    
    
    
    
    
    
    
    
    
    715,170Unit option awards (2)
    
    
    5/22/2007
    
    
    
    
    
    
    
    45,000
    
    
    
    
    
    
    
    45.35
    
    
    
    130,500UARs
    
    
    5/22/2007
    
    
    
    
    
    
    
    66,152
    
    
    
    
    
    
    
    45.35
    
    
    
    
    (3)William G. ManiasRestricted unit awards (1)
    
    
    5/22/2007
    
    
    
    
    
    
    
    3,000
    
    
    
    
    
    
    
    
    
    
    
    112,922Unit option awards (2)
    
    
    5/22/2007
    
    
    
    
    
    
    
    22,000
    
    
    
    
    
    
    
    45.35
    
    
    
    63,800UARs
    
    
    5/22/2007
    
    
    
    
    
    
    
    26,461
    
    
    
    
    
    
    
    45.35
    
    
    
    
    (3)J. Michael CockrellRestricted unit awards (1)
    
    
    5/22/2007
    
    
    
    
    
    
    
    4,200
    
    
    
    
    
    
    
    
    
    
    
    158,090Unit option awards (2)
    
    
    5/22/2007
    
    
    
    
    
    
    
    22,000
    
    
    
    
    
    
    
    45.35
    
    
    
    63,800UARs
    
    
    5/22/2007
    
    
    
    
    
    
    
    33,076
    
    
    
    
    
    
    
    45.35
    
    
    
    
    (3)John N. GoodpastureRestricted unit awards (1)
    
    
    5/22/2007
    
    
    
    
    
    
    
    3,000
    
    
    
    
    
    
    
    
    
    
    
    112,922Unit option awards (2)
    
    
    5/22/2007
    
    
    
    
    
    
    
    22,000
    
    
    
    
    
    
    
    45.35
    
    
    
    63,800UARs
    
    
    5/22/2007
    
    
    
    
    
    
    
    25,358
    
    
    
    
    
    
    
    45.35
    
    
    
    
    (3)Samuel N. BrownRestricted unit awards (1)
    
    
    5/22/2007
    
    
    
    
    
    
    
    3,000
    
    
    
    
    
    
    
    
    
    
    
    112,922Unit option awards (2)
    
    
    5/22/2007
    
    
    
    
    
    
    
    22,000
    
    
    
    
    
    
    
    45.35
    
    
    
    63,800UARs
    
    
    5/22/2007
    
    
    
    
    
    
    
    26,461
    
    
    
    
    
    
    
    45.35
    
    
    
    
    (3)
 
 (1)
    
    Award of restricted units under the 2006 LTIP. The grant date fair value of restricted
unit awards issued during 2007 was based on a market price of our Units of $45.35 per Unit
on the grant date and an estimated forfeiture rate of 17%. 100




---



##### Table of Contents



(2)
    
    Award of unit options under the 2006 LTIP. The grant date fair value of unit options
awarded during 2007 was based on the following assumptions: (i) expected life of option of
7 years, (ii) risk-free interest rate of 4.78%; (iii) expected distribution yield on Units
of 7.92%; and (iv) expected Unit price volatility on Units of 18.03%.(3)
    
    Award of UARs under the 2006 LTIP. The UARs are accounted for as liability awards, as
opposed to equity awards, under SFAS 123(R) because they are expected to be settled in
cash, and as liability awards, they do not have a fixed fair value as of their grant date.
The fair value of the UARs at December 31, 2007 was $51,554; $20,622; $25,777; $19,762; and
$20,622 for each of Mr. Thompson, Mr. Manias, Mr. Cockrell, Mr. Goodpasture and Mr. Brown,
respectively. The fair value calculations are based on the assumptions that (i) the
closing price of a Unit at December 31, 2007 was $38.33; and (ii) the payout percentage is
100%.(4)
    
    We estimate that the compensation expense we record for each Named Executive Officer
with respect to these awards will equal these amounts over time. For the period in which
these awards were outstanding during 2007, we recognized compensation expense of $221,788,
$58,913 and $25,179 related to the restricted unit awards, the unit option awards and the
UARs, respectively. The remaining portion of the fair values will be recognized as expense
in future periods.  Summary of Long-Term Incentive Plans of TEPPCO
 1999 Plan
  2000 LTIP
   101




---



##### Table of Contents



2006 LTIP
     102




---



##### Table of Contents



Outstanding Equity Awards at 2007 Fiscal Year-End
  Option Awards
    
    
    Unit AwardsEquity
    
    
    EquityIncentive
    
    
    Plan Awards:Plan Awards:
    
    
    Market orNumber of
    
    
    Payout Value ofUnearned
    
    
    UnearnedNumber of
    
    
    
    
    
    
    
    
    
    
    Number
    
    
    Market
    
    
    Shares, Units or
    
    
    Shares, Units orUnderlying
    
    
    Option
    
    
    
    
    
    
    Of Units
    
    
    Value of Units
    
    
    Other Rights
    
    
    Other RightsOptions
    
    
    Exercise
    
    
    Option
    
    
    That Have
    
    
    That Have
    
    
    That Have
    
    
    That HaveUnexercisable
    
    
    Price
    
    
    Expiration
    
    
    Not Vested
    
    
    Not Vested
    
    
    Not Vested
    
    
    Not VestedName
    
    (#)
    
    
    ($/Unit)
    
    
    Date
    
    
    (#)
    
    
    ($) (6)
    
    
    (#)
    
    
    ($) (7)Jerry E. ThompsonPhantom units (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,000
    
    
    
    996,580
    
    
    
    
    
    
    
    Restricted units (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,000
    
    
    
    728,270
    
    
    
    
    
    
    
    Unit options (2)
    
    
    45,000
    
    
    
    45.35
    
    
    
    5/21/2017
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    UARs (3)
    
    
    66,152
    
    
    
    45.35
    
    
    
    5/22/2012
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    William G. ManiasPhantom units (4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,800
    
    
    
    107,324
    
    
    
    
    
    
    
    Restricted units (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,000
    
    
    
    114,990
    
    
    
    
    
    
    
    Unit options (2)
    
    
    22,000
    
    
    
    45.35
    
    
    
    5/21/2017
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    UARs (3)
    
    
    26,461
    
    
    
    45.35
    
    
    
    5/22/2012
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    J. Michael CockrellPhantom units (5)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,100
    
    
    
    178,235Restricted units (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,200
    
    
    
    160,986
    
    
    
    
    
    
    
    Unit options (2)
    
    
    22,000
    
    
    
    45.35
    
    
    
    5/21/2017
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    UARs (3)
    
    
    33,076
    
    
    
    45.35
    
    
    
    5/22/2012
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    John N. GoodpasturePhantom units (5)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,800
    
    
    
    160,986Restricted units (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,000
    
    
    
    114,990
    
    
    
    
    
    
    
    Unit options (2)
    
    
    22,000
    
    
    
    45.35
    
    
    
    5/21/2017
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    UARs (3)
    
    
    25,358
    
    
    
    45.35
    
    
    
    5/22/2012
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Samuel N. BrownPhantom units (5)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,700
    
    
    
    155,237Restricted units (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,000
    
    
    
    114,990
    
    
    
    
    
    
    
    Unit options (2)
    
    
    22,000
    
    
    
    45.35
    
    
    
    5/21/2017
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    UARs (3)
    
    
    26,461
    
    
    
    45.35
    
    
    
    5/22/2012
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    13,000 of these phantom units vest on April 11, 2008 and the remaining 13,000 phantom
units vest on April 11, 2009, subject to earlier vesting on death or disability. 103




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(2)
    
    Award vests on May 22, 2011, subject to earlier vesting on death, disability or
retirement of the participant with the approval of the ACG Committee on or after reaching
age 60.(3)
    
    Award vests on May 22, 2012, subject to earlier vesting on death, disability or
retirement of the participant with the approval of the ACG Committee on or after reaching
age 60.(4)
    
    Award vests on January 1, 2010, subject to earlier vesting on death or disability.(5)
    
    Award vests on December 31, 2008, subject to earlier vesting on death or disability.(6)
    
    Amount reflects the market value of the number of phantom units and restricted units at
December 31, 2007 using the December 31, 2007 Unit price of $38.33 per Unit.(7)
    
    Amount reflects the market value of the award using the maximum potential payout under
the 2000 LTIP of 150% at December 31, 2007 and the December 31, 2007 Unit price of $38.33
per Unit. Option Exercises and Stock Vested Table
  Unit AwardsNumber ofUnits
    
    ValueAcquired
    
    RealizedOn Vesting
    
    On VestingName
    
    
    (#)
    
    
    
    ($) (1)Jerry E. Thompson (1)
    
    
    
    
    
    
    577,070J. Michael Cockrell (2)
    
    
    
    
    
    
    141,210Samuel N. Brown (2)
    
    
    
    
    
    
    84,726John N. Goodpasture (2)
    
    
    
    
    
    
    124,265
 
 (1)
    
    Amount represents an April 2007 cash payout from the 1999 Plan as a result of the
vesting of 13,000 phantom units.(2)
    
    Amount represents vested 2000 LTIP phantom unit awards accrued using a performance
percentage of 148% at December 31, 2007, for which cash will be paid out to the Named
Executive Officer in March 2008. Pension Benefits for the 2007 Fiscal Year
  Nonqualified Deferred Compensation for the 2007 Fiscal Year
  Employment Arrangements and Potential Payments upon Termination or Change in Control
 Employment Agreements
  104




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Termination or Change in Control Payments
  Health
    
    
    
    
    
    
    Death,
    
    
    Death,Care
    
    
    Death or
    
    
    Disability or
    
    
    Disability orRetention
    
    
    Benefits
    
    
    Disability
    
    
    Retirement
    
    
    RetirementAward
    
    
    under 2007
    
    
    Accelerated
    
    
    Accelerated
    
    
    Acceleratedunder 2007
    
    
    Supplements
    
    
    1999 Plan
    
    
    2000 LTIP
    
    
    2006 LTIPName
    
    Supplements (1)
    
    
    (1) (2)
    
    
    Awards (3)
    
    
    Awards (4)
    
    
    Awards (5)Jerry E. Thompson
    
    
    
    
    
    
    
    
    
    
    996,580
    
    
    
    
    
    
    
    728,270William G. Manias
    
    
    
    
    
    
    
    
    
    
    107,324
    
    
    
    
    
    
    
    114,990J. Michael Cockrell
    
    
    489,375
    
    
    
    50,679
    
    
    
    
    
    
    
    118,451
    
    
    
    160,986John N. Goodpasture
    
    
    295,800
    
    
    
    50,679
    
    
    
    
    
    
    
    106,988
    
    
    
    114,990Samuel N. Brown
    
    
    241,920
    
    
    
    50,679
    
    
    
    
    
    
    
    103,167
    
    
    
    114,990
 
 (1)
    
    Named Executive Officer is entitled to benefit if he is terminated without cause or
because of death, a disability, or resigns as a result of relocation, prior to June 1,
2008.(2)
    
    Health care benefits are COBRA payments for 36 months as specified in the 2007
Supplement multiplied by an estimated monthly cost of the benefit.(3)
    
    Amount represents the market value of phantom unit awards based on a Unit price of
$38.33 at December 31, 2007. Phantom units vest in full in the event of termination due to
death or disability.(4)
    
    Named Executive Officer is entitled to this payment in the event of a qualifying
termination resulting from death, disability or retirement. These calculations are based
on the assumptions that (i) the qualifying event was effective December 31, 2007, (ii) the
average of the closing price of a Unit over the ten consecutive trading days immediately
preceding December 31, 2007 was $38.21, (iii) the performance percentage applied is 150%
and (iv) the performance period completed is two years of the three year term.(5)
    
    Restricted unit, unit option and UAR awards vest in full in the event of termination
due to (i) death, (ii) disability or (iii) retirement with the approval of the ACG
Committee on or after reaching age 60. Amount represents the market value of the
restricted unit awards based on a unit price of $38.33 at December 31, 2007. Unit options
and UARs are assigned no market value at December 31, 2007 as a result of the grant date
price of $45.35 exceeding the Unit price at December 31, 2007 of $38.33. Business Combination with Enterprise Products Partners
  105




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Director Compensation
  Fees Earned or
    
    
    Unit
    
    
    Option
    
    
    All OtherPaid in Cash
    
    
    Awards
    
    
    Awards
    
    
    Compensation
    
    
    TotalDirector
    
    ($)
    
    
    ($)(3)
    
    
    ($)(4)
    
    
    ($)(5)
    
    
    ($)Michael B. Bracy (1)
    
    
    65,000
    
    
    
    3,507
    
    
    
    3,734
    
    
    
    758
    
    
    
    72,999Murray H. Hutchison (2)
    
    
    65,000
    
    
    
    3,507
    
    
    
    3,734
    
    
    
    758
    
    
    
    72,999Richard S. Snell
    
    
    50,000
    
    
    
    3,507
    
    
    
    3,734
    
    
    
    758
    
    
    
    57,999
 
 (1)
    
    Chairman of the ACG Committee and Vice Chairman of the Board.(2)
    
    Chairman of the Board.(3)
    
    Amount presented reflects the compensation expense recognized related to phantom units
granted during 2007 under the 2006 LTIP (see  Equity-based compensation below). On
April 30, 2007, the non-executive directors were each awarded 549 phantom units, all of
which were outstanding at December 31, 2007. The phantom units are accounted for as
liability awards under SFAS 123(R) because they will be settled in cash. These
compensation amounts are based on the following assumptions: (i) the closing price of a
Unit at December 31, 2007 was $38.33; (ii) the payout percentage is 100%; and (iii) the
percentage of the number of days in the period presented compared to the total vesting
period. On July 30, 2007, the award agreements for the phantom units granted were amended
to provide for settlement in cash. At December 31, 2007, the fair value of phantom units
granted to each of Mr. Bracy, Mr. Snell and Mr. Hutchison was $21,043.(4)
    
    Amount presented reflects the compensation expense recognized related to UARs granted
during 2007 under the 2006 LTIP (see  Equity-based compensation below). On May 2,
2007, the non-executive directors were each awarded 22,075 UARs, all of which were
outstanding at December 31, 2007. The UARs are accounted for as liability awards under
SFAS 123(R) because they are expected to be settled in cash. The compensation amounts
related to UARs are based on the assumptions that (i) the closing price of a Unit at
December 31, 2007 was $38.33; and (ii) the payout percentage is 100%. At December 31,
2007, the fair value of UARs granted to each of Mr. Bracy, Mr. Snell and Mr. Hutchison, was
$17,239.(5)
    
    Amounts primarily represent quarterly distributions received from phantom unit awards.  106




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Cash Compensation
   Equity-Based Compensation
   Compensation Committee Interlocks and Insider Participation
  107




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Item 12. Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 Security Ownership of Certain Beneficial Owners
  Amount and Natureof Beneficial
    
    
    PercentageName and Address of Beneficial Owner
    
    Ownership
    
    
    Owned (2)Dan L. Duncan: (1)Units owned by EPCO: (3) (4)Duncan Family Interests, Inc.
    
    
    8,986,711
    
    
    
    9.5
    %Units owned by Duncan Family 2000 Trust (5)
    
    
    53,275
    
    
    
    *Units owned by DD Securities LLC (6)
    
    
    704,564
    
    
    
    *Units owned by Dan Duncan LLC: (7)Units owned by DFI Holdings LLC: (8)Units owned by DFI GP Holdings L.P.
    
    
    2,500,000
    
    
    
    2.6
    %Units owned by EPE Holdings, LLC: (9)Units owned by Enterprise GP Holdings L.P.
    
    
    4,400,000
    
    
    
    4.6
    %Units owned directly
    
    
    47,000
    
    
    
    *Total for Dan L. Duncan
    
    
    16,691,550
    
    
    
    17.6
    %Arlen B. Cenac, Jr.: (10)Units owned by Cenac Towing Co., Inc.
    
    
    4,434,005
    
    
    
    4.7
    %Units owned directly
    
    
    420,894
    
    
    
    *Total for Arlen B. Cenac, Jr.
    
    
    4,854,899
    
    
    
    5.1
    %
 
 (1)
    
    The address for each beneficial owner listed under Dan L. Duncan is 1100 Louisiana,
Suite 1000, Houston, Texas 77002.(2)
    
    An asterisk in the column indicates that the beneficial owner holds less than 1% of the
class.(3)
    
    The 8,986,711 Units beneficially owned by EPCO are pledged to the lenders under the
EPCO Holdings, Inc. credit facility as security.(4)
    
    As set forth above, Duncan Family Interests, Inc. holds directly 8,986,711 Units. EPCO
Holdings, Inc. has shared voting and dispositive power over the 8,986,711 Units
beneficially owned by Duncan Family Interests, Inc. Duncan Family Interests, Inc. is a
wholly owned subsidiary of EPCO Holdings, Inc., and EPCO Holdings, Inc. is a wholly owned
subsidiary of EPCO. Therefore, EPCO and EPCO Holdings, Inc. each have an indirect
beneficial ownership interest in the 8,986,711 Units held by Duncan Family Interests, Inc.(5)
    
    Mr. Duncan is deemed to be the beneficial owner of the Units owned by the Duncan Family
2000 Trust, the beneficiaries of which are the shareholders of EPCO.(6)
    
    DD Securities LLC is owned by Mr. Duncan.(7)
    
    Dan Duncan LLC is owned by Mr. Duncan. Dan Duncan LLC is the sole member of DFI
Holdings LLC, which is the 1% general partner of DFI GP Holdings L.P. (DFIGP), and owns a
4% limited partner interest in DFIGP. Therefore, Dan Duncan LLC has shared voting and
dispositive power over all of the 2,500,000 Units owned directly by DFIGP. Additionally,
Enterprise GP Holdings general partner is EPE Holdings, LLC, which is a wholly owned
subsidiary of Dan Duncan LLC. As a result, Dan Duncan has shared voting and dispositive
power over all of the 4,400,000 Units owned directly by Enterprise GP Holdings. 108




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##### Table of Contents



(8)
    
    As set forth above, DFIGP hold directly 2,500,000 Units. DFI Holdings LLC holds no
Units directly, but it is the 1% general partner of DFIGP, and as such has voting and
dispositive power over the 2,500,000 Units owned directly by DFIGP.(9)
    
    As set forth above, Enterprise GP Holdings holds directly 4,400,000 Units. EPE
Holdings, LLC holds no Units directly, but it is the 0.01% general partner of Enterprise GP
Holdings, and as such has voting and dispositive power over the 4,400,000 Units owned
directly by Enterprise GP Holdings.(10)
    
    The address for each beneficial owner listed under Arlen B. Cenac, Jr. is P.O. Box
2617, Houma, Louisiana, 70361. Security Ownership of Management
  Amount and Natureof Beneficial
    
    
    PercentageName
    
    Ownership (1)
    
    
    Owned (2)Michael B. Bracy
    
    
    4,000
    
    
    
    *Murray H. Hutchison
    
    
    
    
    
    
    Richard S. Snell
    
    
    
    
    
    
    Donald H. Daigle
    
    
    
    
    
    
    Jerry E. Thompson
    
    
    35,491
    
    
    
    *Samuel N. Brown
    
    
    3,000
    
    
    
    *J. Michael Cockrell
    
    
    9,200
    
    
    
    *John N. Goodpasture
    
    
    5,000
    
    
    
    *William G. Manias
    
    
    5,220
    
    
    
    *All directors and current executive officers (consisting of 10 people)
    
    
    65,181
    
    
    
    *
 
 (1)
    
    The persons named above have sole voting and investment power over the Units reported.(2)
    
    An asterisk in the column indicates that the beneficial owner holds less than 1% of the
class. Pledge of Interests of our Partnership
  109




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##### Table of Contents



Securities Authorized for Issuance Under Equity Compensation Plans
  Number ofUnitsremainingavailable forNumber of
    
    
    
    
    
    
    future issuanceUnits to
    
    
    Weighted-
    
    
    under equitybe issued
    
    
    average
    
    
    compensationupon exercise
    
    
    exercise price
    
    
    plans (excludingof outstanding
    
    
    of outstanding
    
    
    securitiesUnit
    
    
    Unit
    
    
    reflected inPlan Category
    
    options
    
    
    options
    
    
    column (a))(a)
    
    
    
    (b)
    
    
    
    (c)Equity compensation plans approved by unitholders:2006 LTIP (1)
    
    
    155,000
    
    
    $
    45.35
    
    
    
    4,782,600Equity compensation plans not approved by
unitholders:None
    
    
    
    
    
    
    
    
    
    
    Total for equity compensation plans
    
    
    155,000
    
    
    $
    45.35
    
    
    
    4,782,600
 
 (1)
    
    The 155,000 unit options outstanding at December 31, 2007 are exercisable in 2011. See
Note 4 in the Notes to Consolidated Financial Statements for additional information.  
 Item 13. Certain Relationships and Related Transactions, and Director Independence
    110




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##### Table of Contents



Interests of the General Partner in the Partnership
  GeneralUnitholders
    
    
    PartnerQuarterly Cash Distribution per Unit:Up to Minimum Quarterly Distribution ($0.275 per Unit)
    
    
    98 %
    
    
    
    2 %First Target  $0.276 per Unit up to $0.325 per Unit
    
    
    85 %
    
    
    
    15 %Over First Target  Cash distributions greater than $0.325 per Unit
    
    
    75 %
    
    
    
    25 %
  Relationship with EPCO and Affiliates
  
    
    EPCO and its consolidated private company subsidiaries;
    
    Texas Eastern Products Pipeline Company, LLC, our General Partner;
    
    Enterprise GP Holdings, which owns and controls our General Partner;
    
    Enterprise Products Partners, which is controlled by affiliates of EPCO,
including Enterprise GP Holdings;
    
    Duncan Energy Partners, which is controlled by affiliates of EPCO; and
    
    Enterprise Gas Processing, LLC, which is controlled by affiliates of EPCO and is
our joint venture partner in Jonah.
     111




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##### Table of Contents



Administrative Services Agreement
  
    
    EPCO provides administrative, management and operating services as may be
necessary to manage and operate our business, properties and assets (in accordance
with prudent industry practices). EPCO will employ or otherwise retain the
services of such personnel as may be necessary to provide such services.
    
    We are required to reimburse EPCO for its services in an amount equal to the sum
of all costs and expenses (direct and indirect) incurred by EPCO which are directly
or indirectly related to our business or activities (including EPCO expenses
reasonably allocated to us). In addition, we have agreed to pay all sales, use,
excise, value added or similar taxes, if any, that may be applicable from time to
time in respect of the services provided to us by EPCO.
    
    EPCO allows us to participate as named insureds in its overall insurance program
with the associated costs being allocated to us.
     112




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##### Table of Contents



Transactions between EPCO and affiliates and us
  Revenues from EPCO and affiliates:Sales of petroleum products (1)
    
    $
    320Transportation  NGLs (2)
    
    
    13,153Transportation  LPGs (3)
    
    
    5,191Other operating revenues (4)
    
    
    1,761Costs and Expenses from EPCO and affiliates:Purchases of petroleum products (5)
    
    
    61,596Operating expense (6)
    
    
    96,947General and administrative (7)
    
    
    25,500
 
 (1)
    
    Includes sales from LSI to Enterprise Products Partners and certain of its
subsidiaries.(2)
    
    Includes revenues from NGL transportation on the Chaparral and Panola NGL pipelines
from Enterprise Products Partners and certain of its subsidiaries.(3)
    
    Includes revenues from LPG transportation on the TE Products pipeline of $5.0 million
from Enterprise Products Partners and certain of its subsidiaries and $0.2 million from
Energy Transfer Equity, L.P. (see Relationship with Energy Transfer Equity below).(4)
    
    Includes other operating revenues on the TE Products pipeline and the Val Verde system
from Enterprise Products Partners and certain of its subsidiaries.(5)
    
    Includes TCO purchases of condensate and expenses related to LSIs use of an affiliate
of EPCO as a transporter.(6)
    
    Includes operating payroll, payroll related expenses and other operating expenses,
including reimbursements related to employee benefits and employee benefit plans, incurred
by EPCO in managing us and our subsidiaries in accordance with the ASA. Also includes
insurance expense for the year ended December 31, 2007 related to premiums paid by EPCO of
$13.6 million for the majority of our insurance coverage, including property, liability,
business interruption, auto and directors and officers liability insurance, which was
obtained through EPCO.(7)
    
    Includes administrative payroll, payroll related expenses and other administrative
expenses, including reimbursements related to employee benefits and employee benefit plans,
incurred by EPCO in managing and operating us and our subsidiaries in accordance with the
ASA.  Accounts receivable, related party (1)
    
    $
    492Accounts payable, related party (2)
    
    
    33,581
 
 (1)
    
    Relates to sales and transportation services provided to Enterprise Products Partners
and certain of its subsidiaries and EPCO and certain of its affiliates.(2)
    
    Relates to direct payroll, payroll related costs and other operational related charges
from Enterprise Products Partners and certain of its subsidiaries and EPCO and certain of
its affiliates. Sale of Pioneer Plant
  113




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##### Table of Contents



Jonah Joint Venture
   Sale of General Partner to Enterprise GP Holdings; Relationship with Energy Transfer Equity
   Other Transactions
  114




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##### Table of Contents



Acquisition of Marine Transportation Business
  Review and Approval of Transactions with Related Parties
   
    
    for which Board approval is required by our management authorization policy, as
such policy may be amended from time to time;
    
    where an officer or director of the General Partner or any of our subsidiaries
is a party;
    
    when requested to do so by management or the Board; or
    
    pursuant to our Partnership Agreement or the limited liability company agreement
of the General Partner, as such agreements may be amended from time to time.
   115




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##### Table of Contents



provided
  
    
    the relative interests of any party to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interest;
    
    the totality of the relationships between the parties involved (including other
transactions that may be particularly favorable or advantageous to us);
    
    any customary or accepted industry practices and any customary or historical
dealings with a particular person;
    
    any applicable generally accepted accounting or engineering practices or
principles; and
    
    such additional factors as the ACG Committee determines in its sole discretion
to be relevant, reasonable or appropriate under the circumstances.
  
    
    assessing the business rationale for the transaction;
    
    reviewing the terms and conditions of the proposed transaction, including
consideration and financing requirements, if any;
    
    assessing the effect of the transaction on our earnings and distributable cash
flow per Unit, and on our results of operations, financial condition, properties or
prospects;
    
    conducting due diligence, including by interviews and discussions with
management and other representatives and by reviewing transaction materials and
findings of management and other representatives;
    
    considering the relative advantages and disadvantages of the transactions to the
parties;
    
    engaging third party financial advisors to provide financial advice and
assistance, including by providing fairness opinions if requested;
    
    engaging legal advisors;
    
    evaluating and negotiating the transaction and recommending for approval or
approving the transaction, as the case may be.
  116




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Relationships with Unconsolidated Affiliates
  For Year EndedDecember 31,2007Revenues from unconsolidated affiliates:Other operating revenues (1)
    
    $
    351Costs and Expenses from unconsolidated affiliates:Purchases of petroleum products (2)
    
    
    5,493Operating expense (3)
    
    
    8,736
 
 (1)
    
    Includes management fees and rental revenues.(2)
    
    Includes pipeline transportation expense.(3)
    
    Includes rental expense and other operating expense.  December 31,2007Accounts receivable, related parties (1)
    
    $
    6,033Accounts payable, related parties (2)
    
    
    5,399
 
 (1)
    
    Receivable from Jonah which relates to payroll related costs and other operational
expenses we charge Jonah, partially offset by our purchases from Jonah.(2)
    
    Payable relates to direct transportation and other services provided by Centennial and
Seaway and advances from Seaway for operating expenses.  Director Independence
  
 Item 14. Principal Accounting Fees and Services
 Appointment of Independent Registered Public Accountant
  117




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Audit Fees
  For Year EndedDecember 31,Type of Fee
    
    2007
    
    
    2006Audit Fees (1)
    
    $
    1,947
    
    
    $
    1,706Audit Related Fees (2)
    
    
    
    
    
    
    Tax Fees (3)
    
    
    264
    
    
    
    107All Other Fees (4)
    
    
    
    
    
    
    Total
    
    $
    2,211
    
    
    $
    1,813
 
 (1)
    
    Audit fees include fees for the audits of the consolidated financial statements as well
as for the audit of internal control over financial reporting.(2)
    
    Audit related fees consist principally of fees for audits of financial statements of
certain employee benefit plans and certain internal control documentation assistance.(3)
    
    Tax fees consist of fees for consultation and tax compliance services.(4)
    
    All other fees represent amounts we were billed in each of the years presented for
services not classified under the other categories listed in the table above. No such
services were rendered by Deloitte & Touche during the last two years. Procedures for Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Registered Public Accountant
     118




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PART IV
 
 Item 15. Exhibits, Financial Statement Schedules.
 (a)
    
    The following documents are filed as a part of this Report:
 (1)
    
    Financial Statements: See Index to Consolidated Financial
Statements on page F-1 of this Report for financial statements filed as part of
this Report.(2)
    
    Financial Statement Schedules: (i) Consolidated Financial
Statements of Jonah Gas Gathering Company and Subsidiary as of and for the years
ended December 31, 2007 and 2006 and (ii) Financial Statements of LDH Energy
Mont Belvieu L.P. (formerly Mont Belvieu Storage Partners, L.P.) as of and for
the two months ended February 28, 2007 and the years ended December 31, 2006 and
2005.(3)
    
    Exhibits.
 ExhibitNumber
    
    Description3.1
    
    Certificate of Limited Partnership of TEPPCO Partners, L.P. (Filed as Exhibit
3.2 to the Registration Statement of TEPPCO Partners, L.P. (Commission File No.
33-32203) and incorporated herein by reference).3.2
    
    Fourth Amended and Restated Agreement of Limited Partnership of TEPPCO
Partners, L.P., dated December 8, 2006 (Filed as Exhibit 3 to the Current Report on
Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) filed on December 13,
2006).3.3
    
    Amended and Restated Limited Liability Company Agreement of Texas Eastern
Products Pipeline Company, LLC (Filed as Exhibit 3 to the Current Report on Form 8-K of
TEPPCO Partners, L.P. (Commission File No. 1-10403) filed on May 10, 2007 and
incorporated herein by reference).3.4
    
    First Amendment to Fourth Amended and Restated Partnership Agreement of TEPPCO
Partners, L.P. dated as of December 27, 2007 (Filed as Exhibit 3.1 to Current Report on
Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) filed December 28, 2007
and incorporated herein by reference).4.1
    
    Form of Certificate representing Limited Partner Units (Filed as Exhibit 4.1 to
the Registration Statement of TEPPCO Partners, L.P. (Commission File No. 33-32203) and
incorporated herein by reference).4.2
    
    Form of Certificate representing Class B Units (Filed as Exhibit 4.3 to Form
10-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended December
31, 1998 and incorporated herein by reference).4.3
    
    Form of Indenture between TEPPCO Partners, L.P., as issuer, TE Products
Pipeline Company, Limited Partnership, TCTM, L.P., TEPPCO Midstream Companies, L.P. and
Jonah Gas Gathering Company, as subsidiary guarantors, and First Union
National Bank,
NA, as trustee, dated as of February 20, 2002 (Filed as Exhibit 99.2 to Form 8-K of
TEPPCO Partners, L.P. (Commission File No. 1-10403) dated as of February 20, 2002 and
incorporated herein by reference).4.4
    
    First Supplemental Indenture between TEPPCO Partners, L.P., as issuer, TE
Products Pipeline Company, Limited Partnership, TCTM, L.P., TEPPCO Midstream Companies,
L.P. and Jonah Gas Gathering Company, as subsidiary guarantors, and First Union
 119




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##### Table of Contents



ExhibitNumber
    
    DescriptionNational Bank, NA, as trustee, dated as of February 20, 2002 (Filed as Exhibit 99.3 to
Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) dated as of February
20, 2002 and incorporated herein by reference).4.5
    
    Second Supplemental Indenture, dated as of June 27, 2002, among TEPPCO
Partners, L.P., as issuer, TE Products Pipeline Company, Limited Partnership, TCTM,
L.P., TEPPCO Midstream Companies, L.P., and Jonah Gas Gathering Company, as Initial
Subsidiary Guarantors, and Val Verde Gas Gathering Company, L.P., as New Subsidiary
Guarantor, and Wachovia Bank, National Association, formerly known as First Union
National Bank, as trustee (Filed as Exhibit 4.6 to Form 10-Q of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the quarter ended June 30, 2002 and incorporated
herein by reference).4.6
    
    Third Supplemental Indenture among TEPPCO Partners, L.P. as issuer, TE Products
Pipeline Company, Limited Partnership, TCTM, L.P., TEPPCO Midstream Companies, L.P.,
Jonah Gas Gathering Company and Val Verde Gas Gathering Company, L.P. as Subsidiary
Guarantors, and Wachovia Bank, National Association, as trustee, dated as of January
30, 2003 (Filed as Exhibit 4.7 to Form 10-K of TEPPCO Partners, L.P. (Commission File
No. 1-10403) for the year ended December 31, 2002 and incorporated herein by
reference).4.7
    
    Full Release of Guarantee dated as of July 31, 2006 by Wachovia Bank, National
Association, as trustee, in favor of Jonah Gas Gathering Company (Filed as Exhibit 4.8
to Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter
ended September 30, 2006 and incorporated herein by reference).4.8
    
    Indenture, dated as of May 14, 2007, by and among TEPPCO Partners, L.P., as
issuer, TE Products Pipeline Company, Limited Partnership, TCTM, L.P., TEPPCO Midstream
Companies, L.P. and Val Verde Gas Gathering Company, L.P., as subsidiary guarantors,
and The Bank of New York Trust Company, N.A., as trustee (Filed as Exhibit 99.1 to the
Current Report on Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) filed
on May 15, 2007 and incorporated herein by reference).4.9
    
    First Supplemental Indenture, dated as of May 18, 2007, by and among TEPPCO
Partners, L.P., as issuer, TE Products Pipeline Company, Limited Partnership, TCTM,
L.P., TEPPCO Midstream Companies, L.P. and Val Verde Gas Gathering Company, L.P., as
subsidiary guarantors, and The Bank of New York Trust Company, N.A., as trustee (Filed
as Exhibit 4.2 to the Current Report on Form 8-K of TEPPCO Partners, L.P. (Commission
File No. 1-10403) filed on May 18, 2007 and incorporated herein by reference).4.10
    
    Second Supplemental Indenture, dated as of June 30, 2007, by and among TEPPCO
Partners, L.P., as issuer, TE Products Pipeline Company, Limited Partnership, TCTM,
L.P., TEPPCO Midstream Companies, L.P. , Val Verde Gas Gathering Company, L.P., TE
Products Pipeline Company, LLC and TEPPCO Midstream Companies, LLC, as subsidiary
guarantors, and The Bank of New York Trust Company, N.A., as trustee (Filed as Exhibit
4.2 to the Current Report on Form 8-K of TE Products Pipeline Company, LLC (Commission
File No. 1-13603) filed on July 6, 2007 and incorporated herein by reference).4.11
    
    Fourth Supplemental Indenture, dated as of June 30, 2007, by and among TEPPCO
Partners, L.P., as issuer, TE Products Pipeline Company, Limited Partnership, TCTM,
L.P., TEPPCO Midstream Companies, L.P., Val Verde Gas Gathering Company, L.P., TE
Products Pipeline Company, LLC and TEPPCO Midstream Companies, LLC, as subsidiary
guarantors, and U.S. Bank National Association, as trustee (Filed as Exhibit 4.3 to the
Current Report on Form 8-K of TE Products Pipeline Company, LLC (Commission File No.
1-13603) filed on July 6, 2007 and incorporated herein by reference).4.12
    
    Fourth Amendment to Amended and Restated Credit Agreement and Waiver, dated as
of June 29, 2007, by and among TEPPCO Partners, L.P., the Borrower, several banks and
other financial institutions, the Lenders, SunTrust Bank, as the Administrative Agent
for the Lenders and as the LC Issuing Bank, Wachovia Bank, National Association, as
Syndication Agent, and BNP Paribas, JPMorgan Chase Bank, N.A., and The Royal Bank
 120




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ExhibitNumber
    
    Descriptionof
Scotland Plc, as Co-Documentation. (Filed as Exhibit 4.14 to Form 10-Q of TEPPCO
Partners, L.P. (Commision File No. 1-10403) for the quarter ended June 30, 2007 and
incorporated herein by reference).10.1+
    
    Duke Energy Corporation Executive Savings Plan (Filed as Exhibit 10.7 to Form
10-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended December
31, 1999 and incorporated herein by reference).10.2+
    
    Duke Energy Corporation Executive Cash Balance Plan (Filed as Exhibit 10.8 to
Form 10-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended
December 31, 1999 and incorporated herein by reference).10.3+
    
    Duke Energy Corporation Retirement Benefit Equalization Plan (Filed as Exhibit
10.9 to Form 10-K for TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year
ended December 31, 1999 and incorporated herein by reference).10.4+
    
    Texas Eastern Products Pipeline Company 1994 Long Term Incentive Plan executed
on March 8, 1994 (Filed as Exhibit 10.1 to Form 10-Q of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the quarter ended March 31, 1994 and incorporated
herein by reference).10.5+
    
    Texas Eastern Products Pipeline Company 1994 Long Term Incentive Plan,
Amendment 1, effective January 16, 1995 (Filed as Exhibit 10.12 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the quarter ended June 30, 1999 and
incorporated herein by reference).10.6+
    
    Form of Employment Agreement between the Company and Thomas R. Harper, Charles
H. Leonard, James C. Ruth, John N. Goodpasture, Leonard W. Mallett, Stephen W. Russell,
C. Bruce Shaffer, and Barbara A. Carroll (Filed as Exhibit 10.20 to Form 10-K of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the year ended December 31, 1998 and
incorporated herein by reference).10.7
    
    Services and Transportation Agreement between TE Products Pipeline Company,
Limited Partnership and Fina Oil and Chemical Company, BASF Corporation and BASF Fina
Petrochemical Limited Partnership, dated February 9, 1999 (Filed as Exhibit 10.22 to
Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended
March 31, 1999 and incorporated herein by reference).10.8
    
    Call Option Agreement, dated February 9, 1999 (Filed as Exhibit 10.23 to Form
10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended March
31, 1999 and incorporated herein by reference).10.9+
    
    Form of Employment and Non-Compete Agreement between the Company and
J. Michael Cockrell effective January 1, 1999 (Filed as Exhibit 10.29 to Form 10-Q
of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended September
30, 1999 and incorporated herein by reference).10.10+
    
    Texas Eastern Products Pipeline Company Non-employee Directors Unit Accumulation
Plan, effective April 1, 1999 (Filed as Exhibit 10.30 to Form 10-Q of TEPPCO Partners,
L.P. (Commission File No. 1-10403) for the quarter ended September 30, 1999 and
incorporated herein by reference).10.11+
    
    Texas Eastern Products Pipeline Company Non-employee Directors Deferred Compensation
Plan, effective November 1, 1999 (Filed as Exhibit 10.31 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the quarter ended September 30, 1999
and incorporated herein by reference).10.12+
    
    Texas Eastern Products Pipeline Company Phantom Unit Retention Plan, effective August
25, 1999 (Filed as Exhibit 10.32 to Form 10-Q of TEPPCO Partners, L.P. (Commission File
No. 1-10403) for the quarter ended September 30, 1999 and incorporated herein by
reference).10.13+
    
    Texas Eastern Products Pipeline Company, LLC 2000 Long Term Incentive Plan, Amendment
and Restatement, effective January 1, 2000 (Filed as Exhibit 10.28 to Form 10-K of
TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended December 31,
2000 and incorporated herein by reference).10.14+
    
    TEPPCO Supplemental Benefit Plan, effective April 1, 2000 (Filed as Exhibit 10.29 to
Form 10-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended
December 31, 2000 and incorporated herein by reference).
 121




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ExhibitNumber
    
    Description10.15
    
    Contribution, Assignment and Amendment Agreement among TEPPCO Partners, L.P.,
TE Products Pipeline Company, Limited Partnership, TCTM, L.P., Texas Eastern Products
Pipeline Company, LLC, and TEPPCO GP, Inc., dated July 26, 2001 (Filed as Exhibit 3.6
to Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter
ended June 30, 2001 and incorporated herein by reference).10.16
    
    Certificate of Formation of TEPPCO Colorado, LLC (Filed as Exhibit 3.2 to Form
10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended March
31, 1998 and incorporated herein by reference).10.17
    
    Unanimous Written Consent of the Board of Directors of TEPPCO GP, Inc. dated
February 13, 2002 (Filed as Exhibit 10.41 to Form 10-K of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the year ended December 31, 2001 and incorporated
herein by reference).10.18
    
    Purchase and Sale Agreement between Burlington Resources Gathering Inc. as
Seller and TEPPCO Partners, L.P., as Buyer, dated May 24, 2002 (Filed as Exhibit 99.1
to Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) dated as of July
2, 2002 and incorporated herein by reference).10.19
    
    Agreement of Limited Partnership of Val Verde Gas Gathering Company, L.P.,
dated May 29, 2002 (Filed as Exhibit 10.48 to Form 10-Q of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the quarter ended June 30, 2002 and incorporated
herein by reference).10.20+
    
    Texas Eastern Products Pipeline Company, LLC 2002 Phantom Unit Retention Plan,
effective June 1, 2002 (Filed as Exhibit 10.49 to Form 10-Q of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the quarter ended June 30, 2002 and incorporated
herein by reference).10.21+
    
    Amended and Restated TEPPCO Supplemental Benefit Plan, effective November 1, 2002
(Filed as Exhibit 10.44 to Form 10-K of TEPPCO Partners, L.P. (Commission File No.
1-10403) for the year ended December 31, 2002 and incorporated herein by reference).10.22+
    
    Texas Eastern Products Pipeline Company, LLC 2000 Long Term Incentive Plan, Second
Amendment and Restatement, effective January 1, 2003 (Filed as Exhibit 10.45 to Form
10-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended December
31, 2002 and incorporated herein by reference).10.23+
    
    Amended and Restated Texas Eastern Products Pipeline Company, LLC Management
Incentive Compensation Plan, effective January 1, 2003 (Filed as Exhibit 10.46 to Form
10-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended December
31, 2002 and incorporated herein by reference).10.24+
    
    Amended and Restated TEPPCO Retirement Cash Balance Plan, effective January 1, 2002
(Filed as Exhibit 10.47 to Form 10-K of TEPPCO Partners, L.P. (Commission File No.
1-10403) for the year ended December 31, 2002 and incorporated herein by reference).10.25
    
    Formation Agreement between Panhandle Eastern Pipe Line Company and Marathon
Ashland Petroleum LLC and TE Products Pipeline Company, Limited Partnership, dated as
of August 10, 2000 (Filed as Exhibit 10.48 to Form 10-K of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the year ended December 31, 2002 and incorporated
herein by reference).10.26
    
    Amended and Restated Limited Liability Company Agreement of Centennial
Pipeline LLC dated as of August 10, 2000 (Filed as Exhibit 10.49 to Form 10-K of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the year ended December 31, 2002 and
incorporated herein by reference).10.27
    
    Guaranty Agreement, dated as of September 27, 2002, between TE Products
Pipeline Company, Limited Partnership and Marathon Ashland Petroleum LLC for Note
Agreements of Centennial Pipeline LLC (Filed as Exhibit 10.50 to Form 10-K of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the year ended December 31, 2002 and
incorporated herein by reference).10.28
    
    LLC Membership Interest Purchase Agreement By and Between CMS Panhandle
Holdings, LLC, As Seller and Marathon Ashland Petroleum LLC and TE Products Pipeline
Company, Limited Partnership, Severally as Buyers, dated February 10, 2003
 122




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##### Table of Contents



ExhibitNumber
    
    Description(Filed as
Exhibit 10.51 to Form 10-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) for
the year ended December 31, 2002 and incorporated herein by reference).10.29
    
    Amended and Restated Credit Agreement among TEPPCO Partners, L.P., as
Borrower, SunTrust Bank, as Administrative Agent and LC Issuing Bank and The Lenders
Party Hereto, as Lenders dated as of October 21, 2004 ($600,000,000 Revolving Facility)
(Filed as Exhibit 99.1 to Form 8-K of TEPPCO Partners, L.P. (Commission File No.
1-10403) dated as of October 21, 2004 and incorporated herein by reference).10.30+
    
    Texas Eastern Products Pipeline Company Amended and Restated Non-employee Directors
Deferred Compensation Plan, effective April 1, 2002 (Filed as Exhibit 10.42 to Form
10-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended December
31, 2004 and incorporated herein by reference).10.31+
    
    Texas Eastern Products Pipeline Company Second Amended and Restated Non-employee
Directors Unit Accumulation Plan, effective January 1, 2004 (Filed as Exhibit 10.41 to
Form 10-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended
December 31, 2004 and incorporated herein by reference).10.32+
    
    Texas Eastern Products Pipeline Company, LLC 2005 Phantom Unit Plan, dated February
23, 2005, but effective as of January 1, 2005 (Filed as Exhibit 10.4 to Form 10-Q/A of
TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended June 30, 2005
and incorporated herein by reference).10.33
    
    First Amendment to Amended and Restated Credit Agreement, dated as of February
23, 2005, by and among TEPPCO Partners, L.P., the Borrower, several banks and other
financial institutions, the Lenders, SunTrust Bank, as the Administrative Agent for the
Lenders, Wachovia Bank, National Association, as Syndication Agent, and BNP Paribas,
JPMorgan Chase Bank, N.A. and KeyBank, N.A. as Co-Documentation Agents (Filed as
Exhibit 99.1 to Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) dated
as of February 24, 2005 and incorporated herein by reference).10.34+
    
    Supplemental Agreement to Employment and Non-Compete Agreement between the Company
and J. Michael Cockrell dated as of February 23, 2005 (Filed as Exhibit 10.2 to Form
10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended March
31, 2005 and incorporated herein by reference).10.35+
    
    Supplemental Form Agreement to Form of Employment Agreement between the Company and
John N. Goodpasture, Stephen W. Russell, C. Bruce Shaffer and Barbara A. Carroll dated
as of February 23, 2005 (Filed as Exhibit 10.3 to Form 10-Q of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the quarter ended March 31, 2005 and incorporated
herein by reference).10.36+
    
    Supplemental Form Agreement to Form of Employment and Agreement between the Company
and Thomas R. Harper, Charles H. Leonard, James C. Ruth and Leonard W. Mallett dated as
of February 23, 2005 (Filed as Exhibit 10.4 to Form 10-Q of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the quarter ended March 31, 2005 and incorporated
herein by reference).10.37+
    
    Amendments to the TEPPCO Retirement Cash Balance Plan and the TEPPCO Supplemental
Benefit Plan dated as of May 27, 2005 (Filed as Exhibit 10.1 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the quarter ended June 30, 2005 and
incorporated herein by reference).10.38
    
    Second Amendment to Amended and Restated Credit Agreement, dated as of
December 13, 2005, by and among TEPPCO Partners, L.P., the Borrower, several banks and
other financial institutions, the Lenders, SunTrust Bank, as the Administrative Agent
for the Lenders, Wachovia Bank, National Association, as Syndication Agent, and BNP
Paribas, JPMorgan Chase Bank, N.A. and KeyBank, N.A., as Co-Documentation Agents
(Filed as Exhibit 99.1 to Form 8-K of TEPPCO Partners, L.P. (Commission File No.
1-10403) dated as of December 13, 2005 and incorporated herein by reference).10.39+
    
    Texas Eastern Products Pipeline Company, LLC 2000 Long Term Incentive Plan Notice of
2006 Award (Filed as Exhibit 10.1 to Form 10-Q of TEPPCO Partners, L.P. (Commission
File No. 1-10403) for the quarter ended June 30, 2006 and incorporated herein by
reference).
 123




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ExhibitNumber
    
    Description10.40+
    
    Texas Eastern Products Pipeline Company, LLC 2005 Phantom Unit Plan Notice of 2006
Award (Filed as Exhibit 10.2 to Form 10-Q of TEPPCO Partners, L.P. (Commission File No.
1-10403) for the quarter ended June 30, 2006 and incorporated herein by reference).10.41
    
    Third Amendment to Amended and Restated Credit Agreement, dated as of July 31,
2006, by and among TEPPCO Partners, L.P., the Borrower, several banks and other
financial institutions, the Lenders, SunTrust Bank, as the Administrative Agent for the
Lenders and as the LC Issuing Bank, Wachovia Bank, National Association, as Syndication
Agent, and BNP Paribas, JPMorgan Chase Bank, N.A., and The Royal Bank of Scotland Plc,
as Co-Documentation Agents (Filed as Exhibit 10.3 to Current Report on Form 8-K of
TEPPCO Partners, L.P. (Commission File No. 1-10403) dated as of August 3, 2006 and
incorporated herein by reference).10.42
    
    Amended and Restated Partnership Agreement of Jonah Gas Gathering Company
dated as of August 1, 2006 (Filed as Exhibit 10.1 to Current Report on Form 8-K of
TEPPCO Partners, L.P. (Commission File No. 1-10403) dated as of August 3, 2006 and
incorporated herein by reference).10.43
    
    Contribution Agreement among TEPPCO GP, Inc., TEPPCO Midstream Companies, L.P.
and Enterprise Gas Processing, LLC dated as of August 1, 2006 (Filed as Exhibit 10.2 to
Current Report on Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403)
dated as of August 3, 2006 and incorporated herein by reference).10.44
    
    Transaction Agreement by and between TEPPCO Partners, L.P. and Texas Eastern
Products Pipeline Company, LLC dated as of September 5, 2006 (Filed as Exhibit 10 to
Current Report on Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) filed
September 12, 2006 and incorporated herein by reference).10.45
    
    Fourth Amended and Restated Administrative Services Agreement by and among
EPCO, Inc., Enterprise Products Partners L.P., Enterprise Products Operating L.P.,
Enterprise Products GP, LLC, Enterprise Products OLPGP, Inc., Enterprise GP Holdings
L.P., Duncan Energy Partners L.P., DEP Holdings, LLC, DEP Operating Partnership, L.P.,
EPE Holdings, LLC, TEPPCO Partners, L.P., Texas Eastern Products Pipeline Company, LLC,
TE Products Pipeline Company, Limited Partnership, TEPPCO Midstream Companies, L.P.,
TCTM, L.P. and TEPPCO GP, Inc. dated January 30, 2007, but effective as of February 5,
2007 (Filed as Exhibit 10.18 to Current Report on Form 8-K of Duncan Energy Partners
L.P. (Commission File No. 1-33266) filed February 5, 2007 and incorporated herein by
reference).10.46+
    
    Form of Supplemental Agreement to Employment Agreement between Texas Eastern Products
Pipeline Company, LLC and assumed by EPCO, Inc., and John N. Goodpasture, Samuel N.
Brown and J. Michael Cockrell (Filed as Exhibit 10.62 to Form 10-K of TEPPCO Partners,
L.P. (Commission File No. 1-10403) for the year ended December 31, 2006 and
incorporated herein by reference).10.47+
    
    Form of Retention Agreement (Filed as Exhibit 10.63 to Form 10-K of TEPPCO Partners,
L.P. (Commission File No. 1-10403) for the year ended December 31, 2006 and
incorporated herein by reference).10.48
    
    Second Amended and Restated Agreement of Limited Partnership of TCTM, L.P. by
and between TEPPCO GP, Inc. and TEPPCO Partners, L.P. dated as of February 27, 2007
(Filed as Exhibit 10.65 to Form 10-K of TEPPCO Partners, L.P. (Commission File No.
1-10403) for the year ended December 31, 2006 and incorporated herein by reference).10.49
    
    First Amendment to the Fourth Amended and Restated Administrative Services
Agreement by and among EPCO, Inc., Enterprise Products Partners L.P., Enterprise
Products Operating L.P., Enterprise Products GP, LLC, Enterprise Products OLPGP, Inc.,
Enterprise GP Holdings L.P., Duncan Energy Partners L.P., DEP Holdings, LLC, DEP
Operating Partnership, L.P., EPE Holdings, LLC, TEPPCO Partners, L.P., Texas Eastern
Products Pipeline Company, LLC, TE Products Pipeline Company, Limited Partnership,
TEPPCO Midstream Companies, L.P., TCTM, L.P. and TEPPCO GP, Inc. dated February 28,
2007 (Filed as Exhibit 10.8 to Form 10-K of Enterprise Products Partners L.P.
(Commission File No. 1-14323) for the year ended December 31, 2006 and incorporated
herein by reference).
 124




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##### Table of Contents



ExhibitNumber
    
    Description10.50
    
    Replacement of Capital Covenant, dated May 18, 2007, executed by TEPPCO
Partners, L.P., TE Products Pipeline Company, Limited Partnership, TCTM, L.P., TEPPCO
Midstream Companies, L.P. and Val Verde Gas Gathering Company, L.P. in favor of the
covered debt holders described therein (Filed as Exhibit 99.1 to the Current Report on
Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) filed on May 18, 2007
and incorporated herein by reference).10.51
    
    Company Agreement of TE Products Pipeline Company, LLC by and between TEPPCO
GP, Inc. and TEPPCO Partners, L.P. dated as of June 30, 2007 (Filed as Exhibit 3.2 to
the Current Report on Form 8-K of TE Products Pipeline Company, LLC (Commission File
No. 1-13603) filed on July 6, 2007 and incorporated herein by reference).10.52
    
    Company Agreement of TEPPCO Midstream Companies, LLC by and between TEPPCO GP,
Inc. and TEPPCO Partners, L.P. dated as of June 30, 2007 (Filed as Exhibit 10.5 to Form
10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended June
30, 2007 and incorporated herein by reference).10.53
    
    Second Amendment to Fourth Amended and Restated Administrative Services
Agreement dated August 7, 2007, but effective as of May 7, 2007 (Filed as Exhibit 10.1
to Form 10-Q of Duncan Energy Partners L.P. (Commission File No. 1-33266) for the
quarter ended June 30, 2007 and incorporated herein by reference).10.54
    
    Assignment, Assumption and Amendment No. 2 to Guaranty Agreement, dated as of
May 21, 2007, by and among TE Products Pipeline Company, Limited Partnership, Marathon
Petroleum Company, LLC and Marathon Oil Corporation (Filed as Exhibit 10.7 to Form 10-Q
of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended June 30,
2007 and incorporated herein by reference).10.55+
    
    Form of TPP Employee Unit Appreciation Right Grant of Texas Eastern Products Pipeline
Company, LLC under the EPCO, Inc. 2006 TPP Long-Term Incentive Plan (Filed as Exhibit
10.1 to the Current Report on Form 8-K of TEPPCO Partners, L.P. (Commission File No.
1-10403) filed on May 25, 2007 and incorporated herein by reference).10.56+
    
    Form of TPP Director Unit Appreciation Right Grant of Texas Eastern Products Pipeline
Company, LLC under the EPCO, Inc. 2006 TPP Long-Term Incentive Plan (Filed as Exhibit
10.8 to Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the
quarter ended March 31, 2007 and incorporated herein by reference).10.57+
    
    Form of Phantom Unit Grant for Directors, as amended, of Texas Eastern Products
Pipeline Company, LLC under the EPCO, Inc. TPP Long-Term Incentive Plan (Filed as
Exhibit 10.3 to Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for
the quarter ended June 30, 2007 and incorporated herein by reference).10.58+
    
    Form of TPP Employee Restricted Unit Grant, as amended, of Texas Eastern Products
Pipeline Company, LLC under the EPCO, Inc. 2006 TPP Long-Term Incentive Plan (Filed as
Exhibit 10.1 to Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for
the quarter ended September 30, 2007 and incorporated herein by reference).10.59+
    
    Form of TPP Employee Option Grant, as amended, of Texas Eastern Products Pipeline
Company, LLC under the EPCO, Inc. 2006 TPP Long-Term Incentive Plan (Filed as Exhibit
10.2 to Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the
quarter ended September 30, 2007 and incorporated herein by reference).10.60
    
    Fifth Amendment to Amended and Restated Credit Agreement, dated as of December
18, 2007, by and among TEPPCO Partners, L.P., the Borrower, the several banks and other
financial institutions party thereto and SunTrust Bank, as the administrative agent for
the lenders (Filed as Exhibit 10.1 to Current Report on Form 8-K of TEPPCO Partners,
L.P. (Commission File No. 1-10403) filed December 21, 2007 and incorporated herein by
reference).10.61
    
    Term Credit Agreement dated as of December 21, 2007, by and among TEPPCO
Partners, L.P., the banks and other financial institutions party thereto and SunTrust
Bank, as the administrative agent for the lenders (Filed as Exhibit 10.1 to Current
Report on Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) filed
December 28, 2007 and incorporated herein by reference).
 125




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##### Table of Contents



ExhibitNumber
    
    Description10.62
    
    Amended and Restated Guaranty Agreement, dated as of January 17, 2008, by and
among The Prudential Insurance Company of America, TCTM, L.P., TEPPCO Midstream
Companies, LLC, TEPPCO Partners, L.P. and TE Products Pipeline Company, LLC (Filed as
Exhibit 10.1 to Current Report on Form 8-K of TEPPCO Partners, L.P. (Commission File
No. 1-10403) filed January 24, 2008 and incorporated herein by reference).10.63
    
    Asset Purchase Agreement, dated February 1, 2008, by and among TEPPCO Marine
Services, LLC, TEPPCO Partners, L.P., Cenac Towing Co., Inc., Cenac Offshore, L.L.C.
and Mr. Arlen B. Cenac, Jr. (Filed as Exhibit 2 to Current Report on Form 8-K of TEPPCO
Partners, L.P. (Commission File No. 1-10403) filed February 7, 2008 and incorporated
herein by reference).10.64
    
    Transitional Operating Agreement, dated February 1, 2008, by and among TEPPCO
Marine Services, LLC, Cenac Towing Co., Inc., Cenac Offshore, L.L.C. and Mr. Arlen B.
Cenac, Jr. (Filed as Exhibit 10 to Current Report on Form 8-K of TEPPCO Partners, L.P.
(Commission File No. 1-10403) filed February 7, 2008 and incorporated herein by
reference).12.1*
    
    Statement of Computation of Ratio of Earnings to Fixed Charges.16
    
    Letter from KPMG LLP to the Securities and Exchange Commission dated April 11,
2006 (Filed as Exhibit 16.1 to Current Report on Form 8-K of TEPPCO Partners, L.P.
(Commission File No. 1-10403) filed April 11, 2006 and incorporated herein by
reference).21*
    
    Subsidiaries of TEPPCO Partners, L.P.23.1*
    
    Consent of Deloitte & Touche LLP  TEPPCO Partners, L.P. and subsidiaries.23.2*
    
    Consent of Deloitte & Touche LLP  Jonah Gas Gathering Company and subsidiary.23.3*
    
    Consent of Deloitte & Touche LLP  LDH Energy Mont Belvieu L.P. (formerly Mont
Belvieu Storage Partners, L.P.)23.4*
    
    Consent of KPMG LLP.24*
    
    Powers of Attorney.31.1*
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule
15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.31.2*
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule
15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.32.1**
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.32.2**
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith.**
    
    Furnished herewith pursuant to Item 601(b)-(32) of Regulation S-K.+
    
    A management contract or compensation plan or arrangement. 126




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##### Table of Contents



SIGNATURES
  TEPPCO Partners, L.P.By:
    
    /s/ JERRY E. THOMPSONJerry E. Thompson,Date: February 28, 2008
    
    President and Chief Executive Officer of
Texas Eastern Products Pipeline Company, LLC, General PartnerBy:
    
    /s/ WILLIAM G. MANIASWilliam G. Manias,Date: February 28, 2008
    
    Vice President and Chief Financial Officer of 

Texas Eastern Products Pipeline Company, LLC, General Partner
  Signature
    
    Title
    
    Date/s/ JERRY E. THOMPSON

Jerry E. Thompson
    
    President and Chief Executive Officer of
Texas Eastern Products Pipeline Company, LLC

(Principal Executive Officer )
    
    February 28, 2008/s/ WILLIAM G. MANIAS

William G. Manias
    
    Vice President and Chief Financial Officer of
Texas 
Eastern Products Pipeline Company, LLC

(Principal Financial and Accounting Officer)
    
    February 28, 2008MICHAEL B. BRACY*

Michael B. Bracy
    
    Director of Texas Eastern 
Products
Pipeline Company, LLC
    
    February 28, 2008RICHARD S. SNELL*

Richard S. Snell
    
    Director of Texas Eastern
Products
Pipeline Company, LLC
    
    February 28, 2008MURRAY H. HUTCHISON*

Murray H. Hutchison
    
    Chairman of the Board of Texas Eastern
Products
Pipeline Company, LLC
    
    February 28, 2008DONALD H. DAIGLE*

Donald H. Daigle
    
    Director of Texas Eastern
Products
Pipeline Company, LLC
    
    February 28, 2008
 
 *
    
    Signed on behalf of the Registrant and each of these persons pursuant to Powers of Attorney filed
as Exhibit 24: By:
    
    /s/ WILLIAM G. MANIAS(William G. Manias, Attorney-in-fact)
 127




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageReports of Independent Registered Public Accounting Firms
    
    
    F-2Consolidated Balance Sheets as of December 31, 2007 and 2006
    
    
    F-4Statements of Consolidated Income and Comprehensive Income for the Years Ended
December 31, 2007, 2006 and 2005
    
    
    F-5Statements of Consolidated Cash Flows for the Years Ended December 31, 2007, 2006
and 2005
    
    
    F-7Statements of Consolidated Partners Capital for the Years Ended December 31, 2007,
2006 and 2005
    
    
    F-8Notes to Consolidated Financial Statements
    
    
    F-9Note 1. Partnership Organization
    
    
    F-9Note 2. Summary of Significant Accounting Policies
    
    
    F-10Note 3. Recent Accounting Developments
    
    
    F-20Note 4. Accounting for Unit-Based Awards
    
    
    F-22Note 5. Employee Benefit Plans
    
    
    F-26Note 6. Financial Instruments
    
    
    F-29Note 7. Inventories
    
    
    F-32Note 8. Property, Plant and Equipment
    
    
    F-33Note 9. Investments in Unconsolidated Affiliates
    
    
    F-35Note 10. Acquisitions, Dispositions and Discontinued Operations
    
    
    F-38Note 11. Intangible Assets and Goodwill
    
    
    F-41Note 12. Debt Obligations
    
    
    F-44Note 13. Partners Capital and Distributions
    
    
    F-48Note 14. Business Segments
    
    
    F-52Note 15. Related Party Transactions
    
    
    F-56Note 16. Earnings per Unit
    
    
    F-61Note 17. Commitments and Contingencies
    
    
    F-63Note 18. Concentrations of Credit Risk
    
    
    F-69Note 19. Supplemental Cash Flow Information
    
    
    F-70Note 20. Selected Quarterly Data (Unaudited)
    
    
    F-71Note 21. Supplemental Condensed Consolidating Financial Information
    
    
    F-71Note 22. Subsequent Events
    
    
    F-75
 F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
 F-2




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
 F-3




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 
 CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
 December 31,2007
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    23
    
    
    $
    70Accounts receivable, trade (net of
allowance for doubtful accounts of
$125 and $100)
    
    
    1,381,871
    
    
    
    852,816Accounts receivable, related parties
    
    
    6,525
    
    
    
    11,788Inventories
    
    
    80,299
    
    
    
    72,193Other
    
    
    47,271
    
    
    
    29,843Total current assets
    
    
    1,515,989
    
    
    
    966,710Property,
plant and equipment, at cost (net of accumulated depreciation of
$582,225 and $509,889)
    
    
    1,793,634
    
    
    
    1,642,095Equity investments
    
    
    1,146,995
    
    
    
    1,039,710Intangible assets
    
    
    164,681
    
    
    
    185,410Goodwill
    
    
    15,506
    
    
    
    15,506Other assets
    
    
    113,252
    
    
    
    72,661Total assets
    
    $
    4,750,057
    
    
    $
    3,922,092LIABILITIES AND PARTNERS CAPITAL
 Current liabilities:Senior notes
    
    $
    353,976
    
    
    $
    Accounts payable and accrued liabilities
    
    
    1,413,447
    
    
    
    855,306Accounts payable, related parties
    
    
    38,980
    
    
    
    34,461Accrued interest
    
    
    35,491
    
    
    
    35,523Other accrued taxes
    
    
    20,483
    
    
    
    14,482Other
    
    
    84,848
    
    
    
    36,776Total current liabilities
    
    
    1,947,225
    
    
    
    976,548Long-term debt:Senior notes
    
    
    721,545
    
    
    
    1,113,287Junior subordinated notes
    
    
    299,538
    
    
    
    Other long-term debt
    
    
    490,000
    
    
    
    490,000Total long-term debt
    
    
    1,511,083
    
    
    
    1,603,287Deferred tax liability
    
    
    
    
    
    
    652Other liabilities and deferred credits
    
    
    27,122
    
    
    
    19,461Other liabilities, related party
    
    
    
    
    
    
    1,814Commitments and contingenciesPartners capital:Limited partners interests:Limited partner units (89,849,132 and 89,804,829 units outstanding)
    
    
    1,394,812
    
    
    
    1,405,559Restricted limited partner units (62,400 and 0 units outstanding)
    
    
    338
    
    
    
    General partners interest
    
    
    (87,966
    )
    
    
    (85,655
    )Accumulated other comprehensive (loss) income
    
    
    (42,557
    )
    
    
    426Total partners capital
    
    
    1,264,627
    
    
    
    1,320,330Total liabilities and partners capital
    
    $
    4,750,057
    
    
    $
    3,922,092
  F-4




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 
 STATEMENTS OF CONSOLIDATED INCOME AND COMPREHENSIVE INCOME
(Dollars in thousands
 For Year Ended December 31,2007
    
    
    2006
    
    
    2005Operating revenues:Sales of petroleum products
    
    $
    9,147,104
    
    
    $
    9,080,516
    
    
    $
    8,061,808Transportation  Refined products
    
    
    170,231
    
    
    
    152,552
    
    
    
    144,552Transportation  LPGs
    
    
    101,076
    
    
    
    89,315
    
    
    
    96,297Transportation  Crude oil
    
    
    45,952
    
    
    
    38,822
    
    
    
    37,614Transportation  NGLs
    
    
    46,542
    
    
    
    43,838
    
    
    
    43,915Gathering  Natural gas
    
    
    61,634
    
    
    
    123,933
    
    
    
    152,797Other
    
    
    85,521
    
    
    
    78,509
    
    
    
    68,051Total operating revenues
    
    
    9,658,060
    
    
    
    9,607,485
    
    
    
    8,605,034Costs and expenses:Purchases of petroleum products
    
    
    9,017,109
    
    
    
    8,967,062
    
    
    
    7,986,438Operating expense
    
    
    191,697
    
    
    
    203,015
    
    
    
    185,777Operating fuel and power
    
    
    61,458
    
    
    
    57,450
    
    
    
    48,972General and administrative
    
    
    33,657
    
    
    
    31,348
    
    
    
    33,143Depreciation and amortization
    
    
    105,225
    
    
    
    108,252
    
    
    
    110,729Taxes  other than income taxes
    
    
    18,012
    
    
    
    17,983
    
    
    
    20,610Gains on sales of assets
    
    
    (18,653
    )
    
    
    (7,404
    )
    
    
    (668
    )Total costs and expenses
    
    
    9,408,505
    
    
    
    9,377,706
    
    
    
    8,385,001Operating income
    
    
    249,555
    
    
    
    229,779
    
    
    
    220,033Other income (expense):Interest expense  net
    
    
    (101,223
    )
    
    
    (86,171
    )
    
    
    (81,861
    )Gain on sale of ownership interest in Mont Belvieu Storage
Partners, L.P.
    
    
    59,628
    
    
    
    
    
    
    
    Equity earnings
    
    
    68,755
    
    
    
    36,761
    
    
    
    20,094Interest income
    
    
    1,676
    
    
    
    2,077
    
    
    
    687Other income  net
    
    
    1,346
    
    
    
    888
    
    
    
    448Income before provision for income taxes
    
    
    279,737
    
    
    
    183,334
    
    
    
    159,401Provision for income taxes
    
    
    557
    
    
    
    652
    
    
    
    Income from continuing operations
    
    
    279,180
    
    
    
    182,682
    
    
    
    159,401Income from discontinued operations
    
    
    
    
    
    
    1,497
    
    
    
    3,150Gain on sale of discontinued operations
    
    
    
    
    
    
    17,872
    
    
    
    Discontinued operations
    
    
    
    
    
    
    19,369
    
    
    
    3,150Net income
    
    $
    279,180
    
    
    $
    202,051
    
    
    $
    162,551Changes in fair values of interest rate cash flow hedges
and treasury locks
    
    
    (23,668
    )
    
    
    (248
    )
    
    
    Changes in fair values of crude oil cash flow hedges
    
    
    (19,382
    )
    
    
    730
    
    
    
    11Changes in plan assets and projected benefit obligation
    
    
    (67
    )
    
    
    
    
    
    
    Comprehensive income
    
    $
    236,063
    
    
    $
    202,533
    
    
    $
    162,562
 F-5




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 STATEMENTS OF CONSOLIDATED INCOME AND COMPREHENSIVE INCOME  (Continued)
(Dollars in thousands, except per Unit amounts
 For Year Ended December 31,2007
    
    
    2006
    
    
    2005Net Income Allocation:Limited Partner Unitholders:Income from continuing operations
    
    $
    233,193
    
    
    $
    130,483
    
    
    $
    112,744Income from discontinued operations
    
    
    
    
    
    
    13,835
    
    
    
    2,228Total Limited Partner Unitholders net income allocation
    
    
    233,193
    
    
    
    144,318
    
    
    
    114,972General Partner:Income from continuing operations
    
    
    45,987
    
    
    
    52,199
    
    
    
    46,657Income from discontinued operations
    
    
    
    
    
    
    5,534
    
    
    
    922Total General Partner net income allocation
    
    
    45,987
    
    
    
    57,733
    
    
    
    47,579Total net income allocated
    
    $
    279,180
    
    
    $
    202,051
    
    
    $
    162,551Basic and diluted net income per Limited Partner Unit:Continuing operations
    
    $
    2.60
    
    
    $
    1.77
    
    
    $
    1.67Discontinued operations
    
    
    
    
    
    
    0.19
    
    
    
    0.04Basic and diluted net income per Limited Partner Unit
    
    $
    2.60
    
    
    $
    1.96
    
    
    $
    1.71Weighted average limited partner units outstanding
    
    
    89,850
    
    
    
    73,657
    
    
    
    67,397
  F-6




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 
 STATEMENTS OF CONSOLIDATED CASH FLOWS
(Dollars in thousands)
 For Year Ended December 31,2007
    
    
    2006
    
    
    2005Operating activities:Net income
    
    $
    279,180
    
    
    $
    202,051
    
    
    $
    162,551Adjustments to reconcile net income to cash provided by continuing
operating activities:Income from discontinued operations
    
    
    
    
    
    
    (19,369
    )
    
    
    (3,150
    )Deferred income taxes
    
    
    (679
    )
    
    
    652
    
    
    
    Depreciation and amortization
    
    
    105,225
    
    
    
    108,252
    
    
    
    110,729Amortization of deferred compensation
    
    
    830
    
    
    
    
    
    
    
    Earnings in equity investments
    
    
    (68,755
    )
    
    
    (36,761
    )
    
    
    (20,094
    )Distributions from equity investments
    
    
    122,900
    
    
    
    63,483
    
    
    
    37,085Gains on sales of assets
    
    
    (18,653
    )
    
    
    (7,404
    )
    
    
    (668
    )Gain on sale of ownership interest in Mont Belvieu Storage
Partners, L.P.
    
    
    (59,628
    )
    
    
    
    
    
    
    Loss on early extinguishment of debt
    
    
    1,356
    
    
    
    
    
    
    
    Non-cash portion of interest expense
    
    
    1,441
    
    
    
    1,676
    
    
    
    1,624Net effect of changes in operating accounts
    
    
    (12,645
    )
    
    
    (41,028
    )
    
    
    (37,354
    )Net cash provided by continuing operating activities
    
    
    350,572
    
    
    
    271,552
    
    
    
    250,723Net cash provided by discontinued operations
    
    
    
    
    
    
    1,521
    
    
    
    3,782Net cash provided by operating activities
    
    
    350,572
    
    
    
    273,073
    
    
    
    254,505Investing activities:Proceeds from sales of assets
    
    
    27,784
    
    
    
    51,558
    
    
    
    510Proceeds from sale of ownership interest
    
    
    137,326
    
    
    
    
    
    
    
    Purchase of assets
    
    
    (12,909
    )
    
    
    (20,473
    )
    
    
    (112,231
    )Investment in Mont Belvieu Storage Partners, L.P.
    
    
    
    
    
    
    (4,767
    )
    
    
    (4,233
    )Investment in Centennial Pipeline LLC
    
    
    (11,081
    )
    
    
    (2,500
    )
    
    
    Investment in Jonah Gas Gathering Company
    
    
    (187,547
    )
    
    
    (121,035
    )
    
    
    Capitalized costs incurred to develop identifiable intangible assets
    
    
    (3,283
    )
    
    
    
    
    
    
    Cash paid for linefill on assets owned
    
    
    (39,418
    )
    
    
    (6,453
    )
    
    
    (14,408
    )Capital expenditures
    
    
    (228,272
    )
    
    
    (170,046
    )
    
    
    (220,553
    )Net cash used in investing activities
    
    
    (317,400
    )
    
    
    (273,716
    )
    
    
    (350,915
    )Financing activities:Proceeds from revolving credit facility
    
    
    1,305,750
    
    
    
    924,125
    
    
    
    657,757Repayments on revolving credit facility
    
    
    (1,305,750
    )
    
    
    (840,025
    )
    
    
    (604,857
    )Redemption of portion of 7.51% Senior Notes
    
    
    (36,138
    )
    
    
    
    
    
    
    Issuance of Limited Partner Units, net
    
    
    1,696
    
    
    
    195,060
    
    
    
    278,806Issuance of Junior Subordinated Notes
    
    
    299,517
    
    
    
    
    
    
    
    Debt issuance costs
    
    
    (4,052
    )
    
    
    
    
    
    
    (498
    )Proceeds from termination of treasury locks
    
    
    1,443
    
    
    
    
    
    
    
    Payment for termination of interest rate swap
    
    
    (1,235
    )
    
    
    
    
    
    
    Distributions paid
    
    
    (294,450
    )
    
    
    (278,566
    )
    
    
    (251,101
    )Net cash provided by (used in) financing activities
    
    
    (33,219
    )
    
    
    594
    
    
    
    80,107Net change in cash and cash equivalents
    
    
    (47
    )
    
    
    (49
    )
    
    
    (16,303
    )Cash and cash equivalents, January 1
    
    
    70
    
    
    
    119
    
    
    
    16,422Cash and cash equivalents, December 31
    
    $
    23
    
    
    $
    70
    
    
    $
    119
  F-7




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 
 STATEMENTS OF CONSOLIDATED PARTNERS CAPITAL
(Dollars in thousands, except Unit amounts)
 Outstanding
    
    
    
    
    
    
    
    
    
    
    AccumulatedLimited
    
    
    General
    
    
    Limited
    
    
    OtherPartner
    
    
    Partners
    
    
    Partners
    
    
    ComprehensiveUnits
    
    
    Interest
    
    
    Interests
    
    
    (Loss) Income
    
    
    TotalBalance, December 31, 2004
    
    
    62,998,554
    
    
    $
    (35,881
    )
    
    $
    1,046,984
    
    
    $
    
    
    
    $
    1,011,103Issuance of Limited Partner Units, net
    
    
    6,965,000
    
    
    
    
    
    
    
    278,806
    
    
    
    
    
    
    
    278,806Changes in fair values of crude oil
cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    112005 net income allocation
    
    
    
    
    
    
    47,579
    
    
    
    114,972
    
    
    
    
    
    
    
    162,5512005 cash distributions
    
    
    
    
    
    
    (73,185
    )
    
    
    (177,916
    )
    
    
    
    
    
    
    (251,101
    )Balance, December 31, 2005
    
    
    69,963,554
    
    
    
    (61,487
    )
    
    
    1,262,846
    
    
    
    11
    
    
    
    1,201,370Issuance of Limited Partner Units,
 net
    
    
    5,750,000
    
    
    
    
    
    
    
    195,060
    
    
    
    
    
    
    
    195,060Issuance of Limited Partner Units to
General Partner
    
    
    14,091,275
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2006 net income allocation
    
    
    
    
    
    
    57,733
    
    
    
    144,318
    
    
    
    
    
    
    
    202,0512006 cash distributions
    
    
    
    
    
    
    (81,901
    )
    
    
    (196,665
    )
    
    
    
    
    
    
    (278,566
    )Changes in fair values of crude oil
cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    730
    
    
    
    730Changes in fair values of interest
rate cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (248
    )
    
    
    (248
    )Adjustment to initially apply SFAS
No. 158
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (67
    )
    
    
    (67
    )Balance, December 31, 2006
    
    
    89,804,829
    
    
    
    (85,655
    )
    
    
    1,405,559
    
    
    
    426
    
    
    
    1,320,330Issuance of restricted units under
the 2006 LTIP
    
    
    62,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Limited Partner Units issued in
connection with the Employee Unit
Purchase Plan
    
    
    4,507
    
    
    
    
    
    
    
    180
    
    
    
    
    
    
    
    180Limited Partner Units issued in
connection with Distribution
Reinvestment Plan
    
    
    39,796
    
    
    
    
    
    
    
    1,516
    
    
    
    
    
    
    
    1,5162007 net income allocation
    
    
    
    
    
    
    45,987
    
    
    
    233,193
    
    
    
    
    
    
    
    279,1802007 cash distributions
    
    
    
    
    
    
    (48,298
    )
    
    
    (246,152
    )
    
    
    
    
    
    
    (294,450
    )Non-cash contribution
    
    
    
    
    
    
    
    
    
    
    426
    
    
    
    
    
    
    
    426Amortization of equity awards
    
    
    
    
    
    
    
    
    
    
    428
    
    
    
    
    
    
    
    428Changes in fair values of crude oil
cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,382
    )
    
    
    (19,382
    )Changes in fair values of interest
rate cash flow hedges and treasury
locks
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,668
    )
    
    
    (23,668
    )Pension benefit SFAS No. 158
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    67
    
    
    
    67Balance, December 31, 2007
    
    
    89,911,532
    
    
    $
    (87,966
    )
    
    $
    1,395,150
    
    
    $
    (42,557
    )
    
    $
    1,264,627
  F-8




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 NOTE 1. PARTNERSHIP ORGANIZATION
 Partnership Organization
     F-9




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Partnership Agreement
  
    
    changes to certain provisions that relate to distributions and capital
contributions, including the reduction in the General Partners incentive
distribution rights from 50% to 25% (IDR Reduction Amendment), elimination of the
General Partners requirement to make capital contributions to us to maintain a 2%
capital account, and adjustment of our minimum quarterly distribution and target
distribution levels for entity-level taxes;
    
    changes to various voting percentage requirements, in most
cases from 66
2/3% of
outstanding Units to a majority of outstanding Units;
    
    the percentage of holders of outstanding Units necessary to constitute a quorum
was reduced from 66 2/3% to a majority of the outstanding Units;
    
    removal of provisions requiring unitholder approval for specified actions with
respect to the Operating Companies;
    
    changes to supplement and revise certain provisions that relate to conflicts of
interest and fiduciary duties; and
    
    changes to provide for certain registration rights of the General Partner and
its affiliates (including with respect to the Units issued in respect of the IDR
Reduction Amendment, as described below), for the maintenance of the separateness
of us from any other person or entity and other miscellaneous matters.
    
 NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  F-10




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Business Segments
   Allowance for Doubtful Accounts
  For Year Ended December 31,2007
    
    
    2006
    
    
    2005Balance at January 1
    
    $
    100
    
    
    $
    250
    
    
    $
    112Charges to expense
    
    
    25
    
    
    
    64
    
    
    
    829Deductions and other
    
    
    
    
    
    
    (214
    )
    
    
    (691
    )Balance at December 31
    
    $
    125
    
    
    $
    100
    
    
    $
    250
 Asset Retirement Obligations
   F-11




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Basis of Presentation and Principles of Consolidation
  Cash and Cash Equivalents
   Capitalization of Interest
  F-12




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Consolidation Policy
    Contingencies
    Current Assets and Current Liabilities
  Dollar Amounts
  F-13




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Environmental Expenditures
   For Year Ended December 31,2007
    
    
    2006
    
    
    2005Balance at January 1
    
    $
    1,802
    
    
    $
    2,447
    
    
    $
    5,037Charges to expense
    
    
    3,402
    
    
    
    1,887
    
    
    
    2,530Deductions and other
    
    
    (1,202
    )
    
    
    (2,532
    )
    
    
    (5,120
    )Balance at December 31
    
    $
    4,002
    
    
    $
    1,802
    
    
    $
    2,447
 Estimates
  Fair Value of Current Assets and Current Liabilities
  Financial Instruments
 Accounting for Derivative Instruments and Hedging
Activities, Accounting for Certain Derivative Instruments and Certain Hedging
Activities, an amendment of FASB Statement No. 133.
  F-14




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
      Goodwill
  F-15




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Income Taxes
  Revised Texas Franchise Tax
    F-16




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Accounting for Income Taxes
  Accounting for Uncertainty in Income Taxes
 Accounting for Uncertainty in Income Taxes
 Intangible Assets and Excess Investments
     Inventories
  F-17




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Natural Gas Imbalances
  Net Income Per Unit
    Property, Plant and Equipment
  Accounting for
the Impairment or Disposal of Long-Lived Assets
 F-18




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Revenue Recognition
    Accounting for
Purchases and Sales of Inventory with the Same Counterparty
  F-19




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Unit-Based Awards
 Share-Based Payment
 
 NOTE 3. RECENT ACCOUNTING DEVELOPMENTS
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115
 Noncontrolling Interests in Consolidated
Financial Statements  an amendment of ARB No. 51
 F-20




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Business Combinations. Business Combinations
 
    
    recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any noncontrolling interests in the
acquiree.
    
    recognizes and measures the goodwill acquired in the business combination or a
gain from a bargain purchase. SFAS 141(R) defines a bargain purchase as a business
combination in which the total acquisition-date fair value of the identifiable net
assets acquired exceeds the fair value of the consideration transferred plus any
noncontrolling interest in the acquiree, and requires the acquirer to recognize
that excess in earnings as a gain attributable to the acquirer.
    
    determines what information to disclose to enable users of the financial
statements to evaluate the nature and financial effects of the business
combination.
  F-21




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 NOTE 4. ACCOUNTING FOR UNIT-BASED AWARDS
  For Year Ended December 31,2007
    
    
    2006
    
    
    2005Phantom Unit Plans (1):1994 Long-Term Incentive Plan (1994 LTIP) (2)
    
    $
    
    
    
    $
    4
    
    
    $
    71999 Phantom Unit Retention Plan
    
    
    865
    
    
    
    885
    
    
    
    42000 Long Term Incentive Plan
    
    
    397
    
    
    
    352
    
    
    
    1,4862002 Phantom Unit Retention Plan (3)
    
    
    
    
    
    
    
    
    
    
    8732005 Phantom Unit Plan
    
    
    976
    
    
    
    1,152
    
    
    
    714EPCO, Inc. 2006 TPP Long-Term Incentive Plan:Unit options
    
    
    65
    
    
    
    
    
    
    
    Restricted units (4)
    
    
    338
    
    
    
    
    
    
    
    Unit appreciation rights (UARs) (1)
    
    
    67
    
    
    
    
    
    
    
    Phantom units (1)
    
    
    12
    
    
    
    
    
    
    
    Compensation expense allocated under ASA (5)
    
    
    1,062
    
    
    
    201
    
    
    
    7Total compensation expense
    
    $
    3,782
    
    
    $
    2,594
    
    
    $
    3,091
 
 (1)
    
    These awards are accounted for as liability awards under the provisions of SFAS 123(R).
Accruals for plan award payouts are based on the Unit price (see discussion of plans
below).(2)
    
    The 1994 LTIP provided certain key employees with an incentive award whereby the
participant was granted an option to purchase Units and performance units. The 1994 LTIP
was terminated effective as of June 19, 2006.(3)
    
    The terms of the 2002 Phantom Unit Retention Plan were similar to the 1999 Plan
(discussed below), and the plan fully vested and paid out in 2005.(4)
    
    As used in the context of the 2006 LITP, the term restricted unit represents a
time-vested unit under SFAS 123(R). Such awards are non-vested until the required service
period expires.(5)
    
    Represents compensation expense under equity awards allocated to us from EPCO under the
ASA in connection with shared service employees working on TEPPCO. 1999 Plan
   F-22




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2000 LTIP
    2005 Phantom Unit Plan
    F-23




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  2006 LTIP
    Unit Options
  Weighted-Weighted-
    
    
    AverageAverage
    
    
    RemainingNumber
    
    
    Strike Price
    
    
    Contractualof Units
    
    
    (dollars/Unit)
    
    
    Term (in years)Unit Options:Outstanding at December 31, 2006
    
    
    
    
    
    $
    
    
    
    
    Granted in May 2007 (1)
    
    
    155,000
    
    
    
    45.35
    
    
    
    Outstanding at December 31, 2007
    
    
    155,000
    
    
    $
    45.35
    
    
    
    9.39Options exercisable at:December 31, 2007
    
    
    
    
    
    $
    
    
    
    
    
 
 (1)
    
    The total grant date fair value of these awards was $0.4 million based on the following
assumptions: (i) expected life of option of 7 years, (ii) risk-free interest rate of
4.78%; (iii) expected distribution yield on Units of 7.92%; and (iv) expected Unit price
volatility on Units of 18.03%. F-24




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Restricted Units
  Weighted-Average GrantNumber
    
    
    Date Fair Valueof Units
    
    

per Unit (1)Restricted Units at December 31, 2006
    
    
    Granted (2)
    
    
    62,900
    
    
    $
    37.64Forfeited
    
    
    (500
    )
    
    
    37.64Restricted Units at December 31, 2007
    
    
    62,400
    
    
    $
    37.64
 
 (1)
    
    Determined by dividing the aggregate grant date fair value of awards (including an
allowance for forfeitures) by the number of awards issued.(2)
    
    Aggregate grant date fair value of restricted unit awards issued during 2007 was $2.4
million based on a grant date market price of our Units of $45.35 per Unit and an estimated
forfeiture rate of 17%.  Phantom Units and UARs
    F-25




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  
 NOTE 5. EMPLOYEE BENEFIT PLANS
 Retirement Plans
   Employers Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits
 F-26




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  For Year Ended December 31,2007
    
    
    2006
    
    
    2005Service cost benefit earned during the year
    
    $
    
    
    
    $
    
    
    
    $
    4,393Interest cost on projected benefit obligation
    
    
    14
    
    
    
    891
    
    
    
    934Expected return on plan assets
    
    
    103
    
    
    
    (412
    )
    
    
    (671
    )Amortization of prior service cost
    
    
    
    
    
    
    
    
    
    
    5Recognized net actuarial loss
    
    
    38
    
    
    
    135
    
    
    
    129SFAS 88 curtailment charge
    
    
    
    
    
    
    
    
    
    
    50SFAS 88 settlement charge
    
    
    87
    
    
    
    3,545
    
    
    
    194Net pension benefits costs
    
    $
    242
    
    
    $
    4,159
    
    
    $
    5,034
   December 31,2007
    
    
    2006Change in benefit obligationBenefit obligation at beginning of year
    
    $
    477
    
    
    $
    22,111Interest cost
    
    
    14
    
    
    
    891Actuarial loss
    
    
    60
    
    
    
    152Benefits paid
    
    
    (534
    )
    
    
    (22,677
    )Impact of settlement
    
    
    (17
    )
    
    
    Benefit obligation at end of year
    
    $
    
    
    
    $
    477Change in plan assetsFair value of plan assets at beginning of year
    
    $
    1,311
    
    
    $
    23,104Actual return on plan assets
    
    
    (72
    )
    
    
    884Benefits paid
    
    
    (534
    )
    
    
    (22,677
    )Impact of settlement
    
    
    (46
    )
    
    
    Fair value of plan assets at end of year
    
    $
    659
    
    
    $
    1,311Funded status
    
    $
    659
    
    
    $
    834Amount Recognized in the Balance Sheet:Noncurrent assets
    
    $
    659
    
    
    $
    834Net pension asset at end of year
    
    $
    659
    
    
    $
    834Amount Recognized in Accumulated Other Comprehensive Income:Unrecognized actuarial loss
    
    $
    
    
    
    $
    67Amount Recognized in Other Comprehensive Income:Net actuarial loss (gain)
    
    $
    57
    
    
    $
    Amortization of net actuarial loss (gain)
    
    
    (124
    )
    
    
    Total recognized in other comprehensive income
    
    $
    (67
    )
    
    $
    
 F-27




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  December 31, 2006Before
    
    
    
    
    
    AfterApplication of
    
    
    
    
    
    Application ofSFAS No. 158
    
    Adjustments
    
    SFAS No. 158Prepaid pension cost (included in other current assets)
    
    $
    901
    
    
    $
    (901
    )
    
    $
    Other assets
    
    
    71,827
    
    
    
    834
    
    
    
    72,661Total assets
    
    
    3,922,159
    
    
    
    (67
    )
    
    
    3,922,092Accumulated other comprehensive income
    
    
    493
    
    
    
    (67
    )
    
    
    426Total partners capital
    
    
    1,320,397
    
    
    
    (67
    )
    
    
    1,320,330Total liabilities and partners capital
    
    
    3,922,159
    
    
    
    (67
    )
    
    
    3,922,092
 Plan Assets
  Other Postretirement Benefits
  Employers Accounting for Postretirement Benefits Other Than Pensions
  For Year Ended December 31,2007
    
    
    2006
    
    
    2005Service cost benefit earned during the year
    
    $
    
    
    
    $
    
    
    
    $
    81Interest cost on accumulated postretirement benefit obligation
    
    
    
    
    
    
    
    
    
    
    69Amortization of prior service cost
    
    
    
    
    
    
    
    
    
    
    53Recognized net actuarial loss
    
    
    
    
    
    
    
    
    
    
    4Curtailment credit
    
    
    
    
    
    
    
    
    
    
    (1,676
    )Settlement credit
    
    
    
    
    
    
    
    
    
    
    (4
    )Net postretirement benefits costs
    
    $
    
    
    
    $
    
    
    
    $
    (1,473
    )
  F-28




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Other Plans
   
 NOTE 6. FINANCIAL INSTRUMENTS
  December 31,2007
    
    2006Carrying
    
    Fair
    
    Carrying
    
    FairFinancial Instruments
    
    Value
    
    Value
    
    Value
    
    ValueFinancial assets:Cash and cash equivalents (1)
    
    $
    23
    
    
    $
    23
    
    
    $
    70
    
    
    $
    70Accounts receivable (1)
    
    
    1,381,871
    
    
    
    1,381,871
    
    
    
    852,816
    
    
    
    852,816Commodity financial instruments (2) (3)
    
    
    10,458
    
    
    
    10,458
    
    
    
    741
    
    
    
    741Interest rate swaps (3) (4)
    
    
    254
    
    
    
    254
    
    
    
    1,393
    
    
    
    1,393Treasury rate locks (3) (4)
    
    
    
    
    
    
    
    
    
    
    64
    
    
    
    64Financial liabilities:Accounts payable and accrued expenses (1)
    
    
    1,413,447
    
    
    
    1,413,447
    
    
    
    855,306
    
    
    
    855,306Fixed-rate debt (principal amount) (5)
    
    
    1,355,000
    
    
    
    1,370,830
    
    
    
    1,090,000
    
    
    
    1,141,789Variable-rate debt (6)
    
    
    490,000
    
    
    
    490,000
    
    
    
    490,000
    
    
    
    490,000Commodity financial instruments (2) (3)
    
    
    29,355
    
    
    
    29,355
    
    
    
    
    
    
    
    Interest rate swaps (3) (4)
    
    
    
    
    
    
    
    
    
    
    2,629
    
    
    
    2,629Treasury rate locks (3) (4)
    
    
    25,296
    
    
    
    25,296
    
    
    
    56
    
    
    
    56
 
 (1)
    
    Cash and cash equivalents, accounts receivable and accounts payable and accrued
expenses are carried at amounts which reasonably approximate their fair values due to their
short-term nature.(2)
    
    Represents commodity financial instrument transactions that either have not settled or
have settled and not been invoiced. Settled and invoiced transactions are reflected in
either accounts receivable or accounts payable depending on the outcome of the transaction.(3)
    
    The fair values associated with our interest rate and commodity hedging portfolios were
developed using available market information and appropriate valuation techniques. F-29




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 (4)
    
    Represents interest rate hedging financial instrument transactions that have not
settled. Settled transactions are reflected in either accounts receivable or accounts
payable depending on the outcome of the transaction.(5)
    
    The estimated fair values of our fixed rate debt are based on quoted market prices for
such debt or debt of similar terms and maturities (see Note 12).(6)
    
    The carrying amount of our variable rate debt obligation reasonably approximates its
fair value due to its variable interest rate.    Interest Rate Risk Hedging Program
  Interest Rate Swaps
  Number of
    
    Period Covered
    
    TerminationHedged Debt
    
    Swaps
    
    by Swaps
    
    Date of Swaps
    
    Rate Swaps
    
    Notional ValueRevolving Credit Facility,
due Dec. 2012
    
    4
    
    Jan. 2006 to 
Jan.
2008
    
    Jan. 2008
    
    Swapped 5.18%
floating rate for
fixed rates ranging
from 4.67% to
4.695% (1)
    
    $200.0 million
 
 (1)
    
    On June 30, 2007, these interest rate swap agreements were de-designated as cash flow
hedges and are now accounted for using mark-to-market accounting; thus, changes in the fair
value of these swaps are recognized in earnings. At December 31, 2007 and 2006, the fair
values of these interest rate swaps were assets of $0.3 million and $1.4 million,
respectively. F-30




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Interest Rate Swap Terminations.
  Treasury Locks
    F-31




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Commodity Risk Hedging Program
   
 NOTE 7. INVENTORIES
  December 31,2007
    
    
    2006Crude oil (1)
    
    $
    44,542
    
    
    $
    49,312Refined products and LPGs (2)
    
    
    18,616
    
    
    
    7,636Lubrication oils and specialty chemicals
    
    
    9,160
    
    
    
    7,500Materials and supplies
    
    
    7,178
    
    
    
    7,029NGLs
    
    
    803
    
    
    
    716Total
    
    $
    80,299
    
    
    $
    72,193
 
 (1)
    
    At December 31, 2007 and 2006, $16.5 million and $44.0 million, respectively, of our
crude oil inventory was subject to forward sales contracts.(2)
    
    Refined products and LPGs inventory is managed on a combined basis.Due to fluctuating commodity prices in the crude oil, refined products and LPG industries, we
recognize lower of cost or market (LCM) adjustments when the carrying value of our inventories
exceed their net realizable value. These non-cash charges are a component of costs and expenses in
the period they are recognized. For the years ended December 31, 2007, 2006 and 2005, we recognized
LCM adjustments of approximately $0.8 million, $1.7 million and $7 thousand, respectively. F-32




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 NOTE
8. PROPERTY, PLANT AND EQUIPMENT
  EstimatedUseful Life
    
    
    December 31,In Years
    
    
    2007
    
    
    2006Plants and pipelines (1)
    
    
    5-40
    (4)
    
    $
    1,810,195
    
    
    $
    1,615,867Underground and other storage facilities (2)
    
    
    5-40
    (5)
    
    
    254,677
    
    
    
    196,306Transportation equipment (3)
    
    
    5-10
    
    
    
    7,780
    
    
    
    8,200Land and right of way
    
    
    
    
    
    
    117,628
    
    
    
    128,791Construction work in progress
    
    
    
    
    
    
    185,579
    
    
    
    202,820Total property, plant and equipment
    
    
    
    
    
    
    2,375,859
    
    
    $
    2,151,984Less accumulated depreciation
    
    
    
    
    
    
    582,225
    
    
    
    509,889Property, plant and equipment, net
    
    
    
    
    
    $
    1,793,634
    
    
    $
    1,642,095
 
 (1)
    
    Plants and pipelines include refined products, LPGs, NGL, petrochemical, crude oil and
natural gas pipelines; terminal loading and unloading facilities; office furniture and
equipment; buildings, laboratory and shop equipment; and related assets.(2)
    
    Underground and other storage facilities include underground product storage caverns,
storage tanks and other related assets.(3)
    
    Transportation equipment includes vehicles and similar assets used in our operations.(4)
    
    The estimated useful lives of major components of this category are as follows:
pipelines, 20-40 years (with some equipment at 5 years); terminal facilities, 10-40 years;
office furniture and equipment, 5-10 years; buildings 20-40 years; and laboratory and shop
equipment, 5-40 years.(5)
    
    The estimated useful lives of major components of this category are as follows:
underground storage facilities, 20-40 years (with some components at 5 years) and storage
tanks, 20-30 years.  For Year Ended December 31,2007
    
    2006
    
    2005Depreciation expense (1)
    
    $
    81,093
    
    
    $
    78,888
    
    
    $
    80,205Capitalized interest (2)
    
    
    11,030
    
    
    
    10,681
    
    
    
    6,759
 
 (1)
    
    Depreciation expense is a component of depreciation and amortization expense as
presented in our statements of consolidated income.(2)
    
    Capitalized interest increases the carrying value of the associated asset and reduces
interest expense during the period it is recorded.   F-33




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Asset Retirement Obligations
   ARO liability balance, December 31, 2005
    
    $
    Liabilities incurred
    
    
    1,189Accretion expense
    
    
    39ARO liability balance, December 31, 2006
    
    
    1,228Liabilities incurred
    
    
    Accretion expense
    
    
    118ARO liability balance, December 31, 2007
    
    $
    1,346
  F-34




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 NOTE 9. INVESTMENTS IN UNCONSOLIDATED AFFILIATES
  Ownership
    
    
    Investments in unconsolidatedPercentage at
    
    
    affiliates atDecember 31,
    
    
    December 31,2007
    
    
    2007
    
    
    2006Downstream Segment:Centennial
    
    
    50.0
    %
    
    $
    78,962
    
    
    $
    62,321MB Storage (1)
    
    
    
    
    
    
    
    
    
    
    85,626Other
    
    
    25.0
    %
    
    
    362
    
    
    
    369Upstream Segment:Seaway
    
    
    50.0
    %
    
    
    188,650
    
    
    
    195,584Midstream Segment:Jonah
    
    
    80.64
    %
    
    
    879,021
    
    
    
    695,810Total
    
    
    
    
    
    $
    1,146,995
    
    
    $
    1,039,710
 
 (1)
    
    Refers to our ownership interests in Mont Belvieu Storage Partners, L.P. and Mont
Belvieu Venture, LLC (collectively, MB Storage). On March 1, 2007, we sold our
ownership interests in these entities.  For Year Ended December 31,2007
    
    
    2006
    
    
    2005Equity earnings (losses):Downstream Segment
    
    $
    (12,396
    )
    
    $
    (8,018
    )
    
    $
    (2,984
    )Upstream Segment
    
    
    2,602
    
    
    
    11,905
    
    
    
    23,078Midstream Segment
    
    
    83,060
    
    
    
    35,052
    
    
    
    Intersegment eliminations
    
    
    (4,511
    )
    
    
    (2,178
    )
    
    
    Total equity earnings
    
    $
    68,755
    
    
    $
    36,761
    
    
    $
    20,094
 Seaway
  F-35




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Centennial
  MB Storage
   Jonah
  F-36




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Summarized Financial Information of Unconsolidated Affiliates
  For Year Ended December 31,2007
    
    2006Operating
    
    Net
    
    
    
    
    
    Operating
    
    NetRevenues
    
    Income
    
    Income
    
    Revenues
    
    Income
    
    Income (Loss)Downstream Segment (1)
    
    $
    56,816
    
    
    $
    13,156
    
    
    $
    2,365
    
    
    $
    73,124
    
    
    $
    10,374
    
    
    $
    (538
    )Upstream Segment
    
    
    67,337
    
    
    
    21,266
    
    
    
    21,589
    
    
    
    87,284
    
    
    
    34,206
    
    
    
    34,608Midstream Segment (2)
    
    
    204,146
    
    
    
    92,212
    
    
    
    93,120
    
    
    
    79,618
    
    
    
    34,646
    
    
    
    34,743
 
 (1)
    
    On March 1, 2007, we sold our ownership interest in MB Storage to Louis Dreyfus.(2)
    
    Effective August 1, 2006, with the formation of a joint venture with Enterprise Products
Partners, Jonah was deconsolidated and has been subsequently accounted for as an equity
investment. F-37




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  December 31, 2007Current
    
    Noncurrent
    
    Current
    
    Long-term
    
    Noncurrent
    
    PartnersAssets
    
    Assets
    
    Liabilities
    
    Debt
    
    Liabilities
    
    CapitalDownstream Segment (1)
    
    $
    20,864
    
    
    $
    248,896
    
    
    $
    23,814
    
    
    $
    129,900
    
    
    $
    365
    
    
    $
    115,681Upstream Segment
    
    
    16,429
    
    
    
    251,635
    
    
    
    6,457
    
    
    
    
    
    
    
    38
    
    
    
    261,569Midstream Segment
    
    
    55,396
    
    
    
    1,065,304
    
    
    
    22,545
    
    
    
    
    
    
    
    264
    
    
    
    1,097,891
 December 31, 2006Current
    
    Noncurrent
    
    Current
    
    Long-term
    
    Noncurrent
    
    PartnersAssets
    
    Assets
    
    Liabilities
    
    Debt
    
    Liabilities
    
    CapitalDownstream Segment
    
    $
    36,735
    
    
    $
    359,156
    
    
    $
    40,959
    
    
    $
    140,000
    
    
    $
    5,971
    
    
    $
    208,961Upstream Segment
    
    
    21,506
    
    
    
    256,634
    
    
    
    6,704
    
    
    
    
    
    
    
    84
    
    
    
    271,352Midstream Segment
    
    
    33,963
    
    
    
    800,591
    
    
    
    25,113
    
    
    
    
    
    
    
    191
    
    
    
    809,250
 
 (1)
    
    On March 1, 2007, we sold our ownership interest in MB Storage to Louis Dreyfus. 
 NOTE 10. ACQUISITIONS, DISPOSITIONS AND DISCONTINUED OPERATIONS
 Acquisitions
 Terminal Assets
  Refined Products Terminal
  Cavern Assets
  F-38




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Crude Oil Pipeline Assets
  Dispositions
 Crude Oil and Refined Products Assets
  MB Storage and Other Related Assets
   F-39




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Other Refined Products Assets
  Discontinued Operations
 Pioneer Plant
   For Year EndedDecember 31,2006
    
    
    2005Operating revenues:Sales of petroleum products
    
    $
    3,828
    
    
    $
    10,479Other
    
    
    932
    
    
    
    2,975Total operating revenues
    
    
    4,760
    
    
    
    13,454Costs and expenses:Purchases of petroleum products
    
    
    3,000
    
    
    
    8,870Operating expense
    
    
    182
    
    
    
    692Depreciation and amortization
    
    
    51
    
    
    
    612Taxes  other than income taxes
    
    
    30
    
    
    
    130Total costs and expenses
    
    
    3,263
    
    
    
    10,304Income from discontinued operations
    
    $
    1,497
    
    
    $
    3,150
 F-40




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  For Year EndedDecember 31,2006
    
    
    2005Cash flows from discontinued operations:Net income
    
    $
    19,369
    
    
    $
    3,150Depreciation and amortization
    
    
    51
    
    
    
    612Gain on sale of Pioneer plant
    
    
    (17,872
    )
    
    
    (Increase) decrease in inventories
    
    
    (27
    )
    
    
    20Net cash provided by discontinued operations
    
    $
    1,521
    
    
    $
    3,782
 
 NOTE 11. INTANGIBLE ASSETS AND GOODWILL
 Intangible Assets
  December 31, 2007
    
    
    December 31, 2006Gross Carrying
    
    
    Accumulated
    
    
    Gross Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationIntangible assets:Downstream Segment:Transportation agreements
    
    $
    1,000
    
    
    $
    (358
    )
    
    $
    1,000
    
    
    $
    (308
    )Other
    
    
    4,927
    
    
    
    (325
    )
    
    
    1,974
    
    
    
    (78
    )Subtotal
    
    
    5,927
    
    
    
    (683
    )
    
    
    2,974
    
    
    
    (386
    )Upstream Segment:Transportation agreements
    
    
    888
    
    
    
    (335
    )
    
    
    888
    
    
    
    (276
    )Other
    
    
    10,005
    
    
    
    (3,046
    )
    
    
    10,030
    
    
    
    (2,479
    )Subtotal
    
    
    10,893
    
    
    
    (3,381
    )
    
    
    10,918
    
    
    
    (2,755
    )Midstream Segment:Gathering agreements
    
    
    239,649
    
    
    
    (107,356
    )
    
    
    239,649
    
    
    
    (86,537
    )Fractionation agreements
    
    
    38,000
    
    
    
    (18,525
    )
    
    
    38,000
    
    
    
    (16,625
    )Other
    
    
    306
    
    
    
    (149
    )
    
    
    306
    
    
    
    (134
    )Subtotal
    
    
    277,955
    
    
    
    (126,030
    )
    
    
    277,955
    
    
    
    (103,296
    )Total intangible assets
    
    
    294,775
    
    
    
    (130,094
    )
    
    
    291,847
    
    
    
    (106,437
    )Excess investments: (1)Downstream Segment (2)
    
    
    33,390
    
    
    
    (21,861
    )
    
    
    33,390
    
    
    
    (16,579
    )Upstream Segment (3)
    
    
    26,908
    
    
    
    (5,135
    )
    
    
    26,908
    
    
    
    (4,450
    )Midstream Segment (4)
    
    
    6,988
    
    
    
    (95
    )
    
    
    2,924
    
    
    
    Subtotal
    
    
    67,286
    
    
    
    (27,091
    )
    
    
    63,222
    
    
    
    (21,029
    )Total intangible assets,
including excess investments
    
    $
    362,061
    
    
    $
    (157,185
    )
    
    $
    355,069
    
    
    $
    (127,466
    )
 
 (1)
    
    Excess investments are included in Equity Investments in our Consolidated Balance
Sheets.(2)
    
    Relates to our investment in Centennial Pipeline LLC. F-41




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (3)
    
    Relates to our investment in Seaway Crude Pipeline Company.(4)
    
    Relates to our investment in Jonah Gas Gathering Company.
  For Year Ended December 31,2007
    
    
    2006
    
    
    2005Intangible assets:Downstream Segment
    
    $
    628
    
    
    $
    59
    
    
    $
    66Upstream Segment
    
    
    652
    
    
    
    716
    
    
    
    992Midstream Segment
    
    
    22,734
    
    
    
    28,044
    
    
    
    29,466Subtotal
    
    
    24,014
    
    
    
    28,819
    
    
    
    30,524Excess investments: (1)Downstream Segment
    
    
    5,282
    
    
    
    3,632
    
    
    
    4,072Upstream Segment
    
    
    685
    
    
    
    686
    
    
    
    691Midstream Segment
    
    
    95
    
    
    
    
    
    
    
    Subtotal
    
    
    6,062
    
    
    
    4,318
    
    
    
    4,763Total amortization expense
    
    $
    30,076
    
    
    $
    33,137
    
    
    $
    35,287
 
 (1)
    
    Amortization of excess investments is included in equity earnings.     F-42




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Intangible Assets
    
    Excess Investments2008
    
    $
    21,825
    
    
    $
    5,0972009
    
    
    19,531
    
    
    
    3,4672010
    
    
    17,598
    
    
    
    3,1712011
    
    
    15,909
    
    
    
    1,0192012
    
    
    14,309
    
    
    
    947
 Goodwill
 Goodwill and Other Intangible Assets,
   Downstream
    
    Midstream
    
    Upstream
    
    SegmentsSegment
    
    Segment
    
    Segment
    
    TotalGoodwill:December 31, 2007
    
    $
    1,339
    
    
    $
    
    
    
    $
    14,167
    
    
    $
    15,506December 31, 2006
    
    
    1,339
    
    
    
    
    
    
    
    14,167
    
    
    
    15,506
 F-43




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 NOTE 12. DEBT OBLIGATIONS
  December 31,2007
    
    
    2006Short-term senior debt obligations:6.45% TE Products Senior Notes, due January 2008 (1)
    
    $
    180,000
    
    
    $
    7.51% TE Products Senior Notes, due January 2028 (1)
    
    
    175,000
    
    
    
    Total principal amount of short-term senior debt obligations
    
    
    355,000
    
    
    
    Adjustment to carrying value associated with hedges of
fair value and unamortized discounts (2)
    
    
    (1,024
    )
    
    
    Total short-term senior debt obligations
    
    $
    353,976
    
    
    $
    Long-term:Senior debt obligations:Revolving Credit Facility, due December 2012
    
    $
    490,000
    
    
    $
    490,0006.45% TE Products Senior Notes, due January 2008
    
    
    
    
    
    
    180,0007.625% Senior Notes, due February 2012
    
    
    500,000
    
    
    
    500,0006.125% Senior Notes, due February 2013
    
    
    200,000
    
    
    
    200,0007.51% TE Products Senior Notes, due January 2028 (1)
    
    
    
    
    
    
    210,000Total principal amount of long-term senior debt obligations
    
    
    1,190,000
    
    
    
    1,580,0007.000% Junior Subordinated Notes, due June 2067
    
    
    300,000
    
    
    
    Total principal amount of long-term debt obligations
    
    
    1,490,000
    
    
    
    1,580,000Adjustment to carrying value associated with hedges of fair value
and
unamortized discounts (3)
    
    
    21,083
    
    
    
    23,287Total long-term debt obligations
    
    
    1,511,083
    
    
    
    1,603,287Total Debt Instruments (3)
    
    $
    1,865,059
    
    
    $
    1,603,287Standby letter of credit outstanding (4)
    
    $
    23,494
    
    
    $
    8,700
 
 (1)
    
    On January 28, 2008, TE Products redeemed the remaining $175.0 million of 7.51% TE Products
Senior Notes at a redemption price of 103.755% of the principal amount plus accrued and
unpaid interest at the date of redemption. Additionally, the 6.45% TE Products Senior Notes
matured on January 15, 2008.(2)
    
    Includes $1.0 million related to fair value hedges and $2 thousand in unamortized discount.(3)
    
    We have entered into interest rate swap agreements to hedge our exposure to changes in the
fair value on a portion of the debt obligations presented above (see Note 6). At December
31, 2007 and 2006, amount includes $2.1 million and $2.0 million of unamortized discounts,
respectively, and $23.2 million and $25.3 million related to fair value hedges, respectively.(4)
    
    Letters of credit were issued in connection with crude oil purchased during the respective
year. Payables related to these purchases of crude oil are generally paid during the
following quarter. Revolving Credit Facility
  F-44




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Senior Notes
   F-45




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Junior Subordinated Notes
     F-46




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Fair Values
  Fair ValueDecember 31,Face Value
    
    2007
    
    20066.45% TE Products Senior Notes, due January 2008 (1)
    
    $
    180,000
    
    
    $
    179,982
    
    
    $
    181,6417.625% Senior Notes, due February 2012
    
    
    500,000
    
    
    
    536,765
    
    
    
    537,0676.125% Senior Notes, due February 2013
    
    
    200,000
    
    
    
    202,027
    
    
    
    201,6107.51% TE Products Senior Notes, due January 2028 (1)
    
    
    175,000
    
    
    
    181,571
    
    
    
    221,4717.000% Junior Subordinated Notes, due June 2067
    
    
    300,000
    
    
    
    270,485
    
    
    
    
 
 (1)
    
    In October 2007, TE Products redeemed $35.0 million principal amount of the 7.51% TE
Products Senior Notes for $36.1 million and accrued interest, and on January 28, 2008, TE
Products redeemed the remaining $175.0 million of 7.51% TE Products Senior Notes at a
redemption price of 103.755% of the principal amount plus accrued and unpaid interest at
the date of redemption. Additionally, the $180.0 million principal amount of 6.45% TE
Products Senior Notes matured and was repaid on January 15, 2008. We funded the retirement
of both series with borrowings under our term credit agreement (see Note 22). The face
value of the 7.51% TE Products Senior Notes at December 31, 2006 was $210.0 million. Short-Term Credit Facility
  F-47




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Debt Obligations of Unconsolidated Affiliates
  ScheduledMaturities of Debt2008
    
    $
    10,1002009
    
    
    9,9002010
    
    
    9,1002011
    
    
    9,0002012
    
    
    8,900After 2012
    
    
    93,000Total scheduled maturities of debt
    
    $
    140,000
   
 NOTE 13. PARTNERS CAPITAL AND DISTRIBUTIONS
    Equity Offerings and Registration Statements
  F-48




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
      Quarterly Distributions of Available Cash
  GeneralUnitholders
    
    PartnerQuarterly Cash Distribution per Unit:Up to Minimum Quarterly Distribution ($0.275 per Unit)
    
    
    98
    %
    
    
    2
    %First Target  $0.276 per Unit up to $0.325 per Unit
    
    
    85
    %
    
    
    15
    %Over First Target  Cash distributions greater than $0.325 per Unit
    
    
    75
    %
    
    
    25
    %
 F-49




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  For Year Ended December 31,2007
    
    
    2006
    
    
    2005Limited Partner Units (1)
    
    $
    246,152
    
    
    $
    196,665
    
    
    $
    177,916General Partner Ownership Interest
    
    
    5,024
    
    
    
    4,014
    
    
    
    3,630General Partner Incentive
    
    
    43,274
    
    
    
    77,887
    
    
    
    69,555Total Cash Distributions Paid
    
    $
    294,450
    
    
    $
    278,566
    
    
    $
    251,101Total Cash Distributions Paid Per Unit
    
    $
    2.74
    
    
    $
    2.70
    
    
    $
    2.68
 
 (1)
    
    The 2007 amount includes $38.6 million of distributions paid to affiliates of our
General Partner with respect to the 14.1 million Units we issued in December 2006.  Cash Distribution HistoryDistribution
    
    Record
    
    Paymentper Unit
    
    Date
    
    Date20061st Quarter
    
    $
    0.6750
    
    
    Apr. 28, 2006
    
    May 5, 20062nd Quarter
    
    
    0.6750
    
    
    Jul. 31, 2006
    
    Aug. 7, 20063rd Quarter
    
    
    0.6750
    
    
    Oct. 31, 2006
    
    Nov. 7, 20064th Quarter
    
    
    0.6750
    
    
    Jan. 31, 2007
    
    Feb. 7, 200720071st Quarter
    
    $
    0.6850
    
    
    Apr. 28, 2007
    
    May 7, 20072nd Quarter
    
    
    0.6850
    
    
    Jul. 31, 2007
    
    Aug. 7, 20073rd Quarter
    
    
    0.6950
    
    
    Oct. 31, 2007
    
    Nov. 7, 20074th Quarter (1)
    
    
    0.6950
    
    
    Jan. 31, 2008
    
    Feb. 7, 2008
 
 (1)
    
    The fourth quarter 2007 cash distribution totaled approximately $74.9 million. EPCO, Inc. TPP Employee Unit Purchase Plan
   F-50




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   General Partners Interest
    Accumulated Other Comprehensive Income (Loss)
 Reporting Comprehensive Income
 F-51




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Balance at December 31, 2004
    
    $
    Change in fair value of cash flow hedge
    
    
    11Balance at December 31, 2005
    
    
    11Transferred to earnings
    
    
    2,255Changes in fair values of interest rate cash flow hedges
    
    
    (2,503
    )Changes in fair values of crude oil cash flow hedges
    
    
    730Adjustment to initially apply SFAS No. 158
    
    
    (67
    )Balance at December 31, 2006
    
    
    426Changes in fair values of interest rate cash flow hedges and
transfer of interest rate swaps to earnings
    
    
    249Changes in fair values of crude oil cash flow hedges
    
    
    (19,382
    )Proceeds from termination of treasury locks
    
    
    1,443Amortization of treasury lock proceeds into earnings
    
    
    (64
    )Changes in fair values of treasury locks
    
    
    (25,296
    )Pension benefit SFAS No. 158 adjustment
    
    
    67Balance at December 31, 2007
    
    $
    (42,557
    )
 
 NOTE 14. BUSINESS SEGMENTS
  
    
    Our Downstream Segment, which is engaged in the transportation, marketing and
storage of refined products, LPGs and petrochemicals;
    
    Our Upstream Segment, which is engaged in the gathering, transportation,
marketing and storage of crude oil and distribution of lubrication oils and
specialty chemicals; and
    
    Our Midstream Segment, which is engaged in the gathering of natural gas,
fractionation of NGLs and transportation of NGLs.
    F - 52




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    For Year Ended December 31,2007
    
    
    2006
    
    
    2005Total operating revenues
    
    $
    9,658,060
    
    
    $
    9,607,485
    
    
    $
    8,605,034Less: Total costs and expenses
    
    
    9,408,505
    
    
    
    9,377,706
    
    
    
    8,385,001Operating income
    
    
    249,555
    
    
    
    229,779
    
    
    
    220,033Add: Gain on sale of ownership interest in MB Storage
    
    
    59,628
    
    
    
    
    
    
    
    Equity earnings
    
    
    68,755
    
    
    
    36,761
    
    
    
    20,094Interest income
    
    
    1,676
    
    
    
    2,077
    
    
    
    687Other income  net
    
    
    1,346
    
    
    
    888
    
    
    
    448Earnings before interest expense, provision for income
taxes and discontinued operations
    
    $
    380,960
    
    
    $
    269,505
    
    
    $
    241,262
 F - 53




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  For Year Ended December 31,2007
    
    
    2006
    
    
    2005Earnings before interest expense, provision for income
taxes and discontinued operations
    
    $
    380,960
    
    
    $
    269,505
    
    
    $
    241,262Interest expense  net
    
    
    (101,223
    )
    
    
    (86,171
    )
    
    
    (81,861
    )Income before provision for income taxes
    
    
    279,737
    
    
    
    183,334
    
    
    
    159,401Provision for income taxes
    
    
    557
    
    
    
    652
    
    
    
    Income from continuing operations
    
    
    279,180
    
    
    
    182,682
    
    
    
    159,401Discontinued operations
    
    
    
    
    
    
    19,369
    
    
    
    3,150Net income
    
    $
    279,180
    
    
    $
    202,051
    
    
    $
    162,551
  Downstream
    
    
    Upstream
    
    
    Midstream
    
    
    PartnershipSegment
    
    
    Segment
    
    
    Segment
    
    
    and Other
    
    
    ConsolidatedRevenues from third parties:Year ended December 31, 2007
    
    $
    355,495
    
    
    $
    9,172,707
    
    
    $
    109,082
    
    
    $
    
    
    
    $
    9,637,284Year ended December 31, 2006
    
    
    298,866
    
    
    
    9,108,283
    
    
    
    181,486
    
    
    
    
    
    
    
    9,588,635Year ended December 31, 2005
    
    
    280,565
    
    
    
    8,106,781
    
    
    
    194,648
    
    
    
    
    
    
    
    8,581,994Revenues from related parties:Year ended December 31, 2007
    
    $
    7,196
    
    
    $
    896
    
    
    $
    13,153
    
    
    $
    (469
    )
    
    $
    20,776Year ended December 31, 2006
    
    
    5,435
    
    
    
    598
    
    
    
    13,137
    
    
    
    (320
    )
    
    
    18,850Year ended December 31, 2005
    
    
    6,626
    
    
    
    3,135
    
    
    
    13,279
    
    
    
    
    
    
    
    23,040Intersegment and intrasegment revenues:Year ended December 31, 2007
    
    $
    
    
    
    $
    80
    
    
    $
    
    
    
    $
    (80
    )
    
    $
    Year ended December 31, 2006
    
    
    
    
    
    
    748
    
    
    
    6,646
    
    
    
    (7,394
    )
    
    
    Year ended December 31, 2005
    
    
    
    
    
    
    323
    
    
    
    3,244
    
    
    
    (3,567
    )
    
    
    Total revenues:Year ended December 31, 2007
    
    $
    362,691
    
    
    $
    9,173,683
    
    
    $
    122,235
    
    
    $
    (549
    )
    
    $
    9,658,060Year ended December 31, 2006
    
    
    304,301
    
    
    
    9,109,629
    
    
    
    201,269
    
    
    
    (7,714
    )
    
    
    9,607,485Year ended December 31, 2005
    
    
    287,191
    
    
    
    8,110,239
    
    
    
    211,171
    
    
    
    (3,567
    )
    
    
    8,605,034Depreciation and amortization:Year ended December 31, 2007
    
    $
    46,141
    
    
    $
    18,257
    
    
    $
    40,827
    
    
    $
    
    
    
    $
    105,225Year ended December 31, 2006
    
    
    41,405
    
    
    
    14,400
    
    
    
    52,447
    
    
    
    
    
    
    
    108,252Year ended December 31, 2005
    
    
    39,403
    
    
    
    17,161
    
    
    
    54,165
    
    
    
    
    
    
    
    110,729Operating income:Year ended December 31, 2007
    
    $
    135,055
    
    
    $
    84,222
    
    
    $
    25,767
    
    
    $
    4,511
    
    
    $
    249,555Year ended December 31, 2006
    
    
    91,262
    
    
    
    70,840
    
    
    
    65,499
    
    
    
    2,178
    
    
    
    229,779Year ended December 31, 2005
    
    
    88,143
    
    
    
    33,174
    
    
    
    98,716
    
    
    
    
    
    
    
    220,033Equity earnings (losses):Year ended December 31, 2007
    
    $
    (12,396
    )
    
    $
    2,602
    
    
    $
    83,060
    
    
    $
    (4,511
    )
    
    $
    68,755Year ended December 31, 2006
    
    
    (8,018
    )
    
    
    11,905
    
    
    
    35,052
    
    
    
    (2,178
    )
    
    
    36,761Year ended December 31, 2005
    
    
    (2,984
    )
    
    
    23,078
    
    
    
    
    
    
    
    
    
    
    
    20,094
 F - 54




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Downstream
    
    
    Upstream
    
    
    Midstream
    
    
    PartnershipSegment
    
    
    Segment
    
    
    Segment
    
    
    and Other
    
    
    ConsolidatedEarnings before interest expense,
provision for income taxes and
discontinued operations:Year ended December 31, 2007
    
    $
    184,251
    
    
    $
    87,246
    
    
    $
    109,463
    
    
    $
    
    
    
    $
    380,960Year ended December 31, 2006
    
    
    84,746
    
    
    
    83,540
    
    
    
    101,219
    
    
    
    
    
    
    
    269,505Year ended December 31, 2005
    
    
    85,914
    
    
    
    56,408
    
    
    
    98,940
    
    
    
    
    
    
    
    241,262Segment assets:At December 31, 2007
    
    $
    1,221,316
    
    
    $
    2,084,830
    
    
    $
    1,512,621
    
    
    $
    (68,710
    )
    
    $
    4,750,057At December 31, 2006
    
    
    1,160,929
    
    
    
    1,504,699
    
    
    
    1,335,502
    
    
    
    (79,038
    )
    
    
    3,922,092At December 31, 2005
    
    
    1,056,217
    
    
    
    1,353,492
    
    
    
    1,280,548
    
    
    
    (9,719
    )
    
    
    3,680,538Capital expenditures:At December 31, 2007
    
    $
    165,353
    
    
    $
    54,583
    
    
    $
    7,412
    
    
    $
    924
    
    
    $
    228,272At December 31, 2006
    
    
    75,344
    
    
    
    48,351
    
    
    
    42,929
    
    
    
    3,422
    
    
    
    170,046At December 31, 2005
    
    
    58,609
    
    
    
    40,954
    
    
    
    119,837
    
    
    
    1,153
    
    
    
    220,553Investments in unconsolidated affiliates:At December 31, 2007
    
    $
    79,324
    
    
    $
    188,650
    
    
    $
    879,021
    
    
    $
    
    
    
    $
    1,146,995At December 31, 2006
    
    
    148,316
    
    
    
    195,584
    
    
    
    695,810
    
    
    
    
    
    
    
    1,039,710At December 31, 2005
    
    
    157,335
    
    
    
    202,321
    
    
    
    
    
    
    
    
    
    
    
    359,656Intangible assets:At December 31, 2007
    
    $
    5,244
    
    
    $
    7,512
    
    
    $
    151,925
    
    
    $
    
    
    
    $
    164,681At December 31, 2006
    
    
    2,588
    
    
    
    8,163
    
    
    
    174,659
    
    
    
    
    
    
    
    185,410At December 31, 2005
    
    
    1,001
    
    
    
    8,441
    
    
    
    367,466
    
    
    
    
    
    
    
    376,908Goodwill:At December 31, 2007
    
    $
    1,339
    
    
    $
    14,167
    
    
    $
    
    
    
    $
    
    
    
    $
    15,506At December 31, 2006
    
    
    1,339
    
    
    
    14,167
    
    
    
    
    
    
    
    
    
    
    
    15,506At December 31, 2005
    
    
    
    
    
    
    14,167
    
    
    
    2,777
    
    
    
    
    
    
    
    16,944
 F - 55




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 NOTE
15. RELATED PARTY TRANSACTIONS
  For Year Ended December 31,2007
    
    2006
    
    2005Revenues from EPCO and affiliates (1):Sales of petroleum products (2)
    
    $
    320
    
    
    $
    3,165
    
    
    $
    11Transportation  NGLs (3)
    
    
    13,153
    
    
    
    10,225
    
    
    
    7,433Transportation  LPGs (4)
    
    
    5,191
    
    
    
    3,648
    
    
    
    4,292Other operating revenues (5)
    
    
    1,761
    
    
    
    1,517
    
    
    
    259Revenues from unconsolidated affiliates:Other operating revenues (6)
    
    
    351
    
    
    
    295
    
    
    
    312Costs and Expenses from EPCO and affiliates (1):Purchases of petroleum products (7)
    
    
    61,596
    
    
    
    52,982
    
    
    
    65,716Operating expense (8)
    
    
    96,947
    
    
    
    103,924
    
    
    
    3,397General and administrative (9)
    
    
    25,500
    
    
    
    21,709
    
    
    
    12,250Costs and Expenses from unconsolidated affiliates:Purchases of petroleum products (10)
    
    
    5,493
    
    
    
    2,987
    
    
    
    1,507Operating expense (11)
    
    
    8,736
    
    
    
    5,094
    
    
    
    5,635Revenues from DCP and affiliates (12):Sales of petroleum products
    
    
    
    
    
    
    
    
    
    
    4,335Transportation  NGLs
    
    
    
    
    
    
    
    
    
    
    2,810Gathering  Natural gas  Jonah
    
    
    
    
    
    
    
    
    
    
    529Transportation  LPGs
    
    
    
    
    
    
    
    
    
    
    732Other operating revenues
    
    
    
    
    
    
    
    
    
    
    2,327Costs and Expenses from DCP and affiliates (12):Purchases of petroleum products (13)
    
    
    
    
    
    
    
    
    
    
    38,533Operating expense (14) (15) (16)
    
    
    
    
    
    
    
    
    
    
    17,294
 
 (1)
    
    Operating revenues earned and expenses incurred from activities with EPCO and its
affiliates are considered related party transactions beginning February 24, 2005, as a
result of the change in ownership of the General Partner.(2)
    
    Include sales from Lubrication Services, LLC (LSI) to Enterprise Products Partners
and certain of its subsidiaries. In addition, 2006 includes Jonah NGL sales through July
31, 2006 of $2.9 million to Enterprise Gas Processing, LLC.(3)
    
    Includes revenues from NGL transportation on the Chaparral and Panola NGL pipelines
from Enterprise Products Partners and certain of its subsidiaries.(4)
    
    Includes revenues from LPG transportation on the TE Products pipeline of $5.0 million
from Enterprise Products Partners and certain of its subsidiaries and $0.2 million from
Energy Transfer Equity, L.P. (see further discussion below).(5)
    
    Includes other operating revenues on the TE Products pipeline and the Val Verde system
from Enterprise Products Partners and certain of its subsidiaries.(6)
    
    Includes management fees and rental revenues.(7)
    
    Includes TCO purchases of condensate of $45.1 million, $41.6 million and $3.3 million
for the years ended December 31, 2007, 2006 and 2005, respectively, and expenses related to
LSIs use of an affiliate of EPCO as a transporter. In addition, 2006 includes $0.1
million of Jonah processing fees through July 31, 2006.(8)
    
    Includes operating payroll, payroll related expenses and other operating expenses,
including reimbursements related to employee benefits and employee benefit plans, incurred
by EPCO in managing us and our subsidiaries in accordance with the ASA. Also includes
insurance expense for the years ended December 31, 2007, 2006 and 2005, related to F - 56




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 premiums paid by EPCO of $13.6 million, $15.8 million and $9.8 million, respectively.
Beginning February 24, 2005, the majority of our insurance coverage, including property,
liability, business interruption, auto and directors and officers liability insurance, was
obtained through EPCO.(9)
    
    Includes administrative payroll, payroll related expenses and other administrative
expenses, including reimbursements related to employee benefits and employee benefit plans,
incurred by EPCO in managing and operating us and our subsidiaries in accordance with the
ASA.(10)
    
    Includes pipeline transportation expense.(11)
    
    Includes rental expense and other operating expense.(12)
    
    Operating revenues earned and expenses incurred from activities with DCP and its
affiliates are considered related party transactions prior to February 23, 2005, at which
time a change in ownership of the General Partner occurred.(13)
    
    Includes TCO purchases of condensate of $37.7 million and Jonahs Pioneer plant
purchases of $0.8 million, which is classified as income from discontinued operations in
the consolidated financial statements.(14)
    
    Includes operating costs and expenses related to DCP managing and operating the Jonah
and Val Verde systems and the Chaparral NGL pipeline on our behalf under contractual
agreements established at the time of acquisition of each asset. In connection with the
change in ownership of our General Partner, we or EPCO have assumed these activities.(15)
    
    Includes administrative costs related to payroll, payroll related expenses and
administrative expenses incurred in managing us and our subsidiaries.(16)
    
    Includes insurance expense related to premiums paid to Bison Insurance Company Limited
(Bison), a wholly owned subsidiary of Duke Energy, of $1.2 million. Through February 23,
2005, we contracted with Bison for a majority of our insurance coverage, including
property, liability, auto and directors and officers liability insurance.The following table summarizes the related party balances at December 31, 2007 and 2006: December 31,2007
    
    2006Accounts receivable, related parties (1)
    
    $
    6,525
    
    
    $
    11,788Gas imbalance receivable
    
    
    
    
    
    
    1,278Accounts payable, related parties (2)
    
    
    38,980
    
    
    
    34,461Deferred revenue, related parties
    
    
    
    
    
    
    252Other liabilities, related party (3)
    
    
    
    
    
    
    1,814
 
 (1)
    
    Relates to sales and transportation services provided to Enterprise Products Partners
and certain of its subsidiaries and EPCO and certain of its affiliates and direct payroll,
payroll related costs and other operational expenses charged to unconsolidated affiliates.(2)
    
    Relates to direct payroll, payroll related costs and other operational related charges
from Enterprise Products Partners and certain of its subsidiaries and EPCO and certain of
its affiliates, transportation and other services provided by unconsolidated affiliates and
advances from Seaway for operating expenses.(3)
    
    Relates to our share of EPCOs Oil Insurance Limited insurance program retrospective
premiums obligation. Relationship with EPCO and Affiliates
  
    
    EPCO and its consolidated private company subsidiaries;
    
    Texas Eastern Products Pipeline Company, LLC, our General Partner;
    
    Enterprise GP Holdings, which owns and controls our General Partner;
 F - 57




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
    
    Enterprise Products Partners, which is controlled by affiliates of EPCO,
including Enterprise GP Holdings;
    
    Duncan Energy Partners, which is controlled by affiliates of EPCO; and
    
    Enterprise Gas Processing, LLC, which is controlled by affiliates of EPCO and is
our joint venture partner in Jonah.
      Administrative Services Agreement
  
    
    EPCO provides administrative, management and operating services as may be
necessary to manage and operate our business, properties and assets (in accordance
with prudent industry practices). EPCO will employ or otherwise retain the
services of such personnel as may be necessary to provide such services.
    
    We are required to reimburse EPCO for its services in an amount equal to the sum
of all costs and expenses (direct and indirect) incurred by EPCO which are directly
or indirectly related to our business or activities (including EPCO expenses
reasonably allocated to us). In addition, we have agreed to pay all sales, use,
excise, value added or similar taxes, if any, that may be applicable from time to
time in respect of the services provided to us by EPCO.
    
    EPCO allows us to participate as named insureds in its overall insurance program
with the associated costs being allocated to us.
 F - 58




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     Sale of Pioneer Plant
  Jonah Joint Venture
   F - 59




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Sale of General Partner to Enterprise GP Holdings; Relationship with Energy Transfer Equity
   Other Transactions
    F - 60




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Relationship with Unconsolidated Affiliates
  
 NOTE 16. EARNINGS PER UNIT
    F - 61




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  For Year Ended December 31,2007
    
    
    2006
    
    
    2005Income from continuing operations
    
    $
    279,180
    
    
    $
    182,682
    
    
    $
    159,401Discontinued operations
    
    
    
    
    
    
    19,369
    
    
    
    3,150Net income
    
    
    279,180
    
    
    
    202,051
    
    
    
    162,551General Partners interest in net income
    
    
    16.47
    %
    
    
    28.57
    %
    
    
    29.27
    %Earnings allocated to General Partner:Income from continuing operations
    
    $
    45,987
    
    
    $
    52,199
    
    
    $
    46,657Discontinued operations
    
    
    
    
    
    
    5,534
    
    
    
    922Net income allocated
    
    
    45,987
    
    
    
    57,733
    
    
    
    47,579BASIC EARNINGS PER UNIT:Numerator:Income from continuing operations
    
    $
    233,193
    
    
    $
    130,483
    
    
    $
    112,744Discontinued operations
    
    
    
    
    
    
    13,835
    
    
    
    2,228Limited partners interest in net income
    
    $
    233,193
    
    
    $
    144,318
    
    
    $
    114,972Denominator:Units
    
    
    89,812
    
    
    
    73,657
    
    
    
    67,397Time-vested restricted Units
    
    
    38
    
    
    
    
    
    
    
    Total Weighted average Units outstanding
    
    
    89,850
    
    
    
    73,657
    
    
    
    67,397Basic earnings per Unit:Income from continuing operations
    
    $
    2.60
    
    
    $
    1.77
    
    
    $
    1.67Discontinued operations
    
    
    
    
    
    
    0.19
    
    
    
    0.04Limited partners interest in net income
    
    $
    2.60
    
    
    $
    1.96
    
    
    $
    1.71DILUTED EARNINGS PER UNIT:Numerator:Income from continuing operations
    
    $
    233,193
    
    
    $
    130,483
    
    
    $
    112,744Discontinued operations
    
    
    
    
    
    
    13,835
    
    
    
    2,228Limited partners interest in net income
    
    $
    233,193
    
    
    $
    144,318
    
    
    $
    114,972Denominator:Units
    
    
    89,812
    
    
    
    73,657
    
    
    
    67,397Time-vested restricted Units
    
    
    38
    
    
    
    
    
    
    
    Total Weighted average Units outstanding
    
    
    89,850
    
    
    
    73,657
    
    
    
    67,397Diluted earnings per Unit:Income from continuing operations
    
    $
    2.60
    
    
    $
    1.77
    
    
    $
    1.67Discontinued operations
    
    
    
    
    
    
    0.19
    
    
    
    0.04Limited partners interest in net income
    
    $
    2.60
    
    
    $
    1.96
    
    
    $
    1.71
  F - 62




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  
 NOTE 17. COMMITMENTS AND CONTINGENCIES
 Litigation
 Rebecca L. Grisham et al. v. TE Products Pipeline
Company, Limited Partnership
 Jimmy R. Green, et al. v. Cities
Service Refinery, et al. th
   F - 63




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Regulatory Matters
   F - 64




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TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
       F - 65




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Contractual Obligations
  Payment or Settlement due by PeriodTotal
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    ThereafterMaturities of long-term debt (1) (2)
    
    $
    1,845,000
    
    
    $
    355,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    990,000
    
    
    $
    500,000Interest payments (3)
    
    $
    1,633,447
    
    
    $
    105,634
    
    
    $
    99,354
    
    
    $
    99,354
    
    
    $
    99,354
    
    
    $
    79,126
    
    
    $
    1,150,625Operating leases (4)
    
    $
    64,915
    
    
    $
    13,397
    
    
    $
    11,543
    
    
    $
    9,883
    
    
    $
    8,899
    
    
    $
    8,227
    
    
    $
    12,966Purchase obligations (5):Product purchase commitments:Estimated payment obligation:Crude oil
    
    $
    387,210
    
    
    $
    387,210
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Other
    
    $
    3,971
    
    
    $
    2,199
    
    
    $
    871
    
    
    $
    325
    
    
    $
    291
    
    
    $
    267
    
    
    $
    18Underlying
major volume commitments:Crude oil (in barrels)
    
    
    4,492
    
    
    
    4,492
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Service
payment commitments
    
    $
    8,974
    
    
    $
    4,499
    
    
    $
    4,131
    
    
    $
    344
    
    
    $
    
    
    
    $
    
    
    
    $
    Capital expenditure obligations (6)
    
    $
    11,335
    
    
    $
    11,335
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Other liabilities and deferred credits (7)
    
    $
    27,122
    
    
    $
    
    
    
    $
    2,418
    
    
    $
    2,417
    
    
    $
    2,367
    
    
    $
    1,892
    
    
    $
    18,028
 
 (1)
    
    We have long-term payment obligations under our Revolving Credit Facility, our Senior
Notes and our Junior Subordinated Notes. Amounts shown in the table represent our
scheduled future maturities of long-term debt principal for the periods indicated (see Note
12 for additional information regarding our consolidated debt obligations).(2)
    
    On January 28, 2008, TE Products redeemed the remaining $175.0 million of 7.51% TE
Products Senior Notes at a redemption price of 103.755% of the principal amount plus
accrued and unpaid interest at the date of redemption. The 6.45% TE Products Senior Notes
matured on January 15, 2008. Retirement of these series of notes was funded with
borrowings under our Term Credit Agreement (see Note 22).(3)
    
    Includes interest payments due on our Senior Notes and junior subordinated notes and
interest payments and commitment fees due on our Revolving Credit Facility. The interest
amount calculated on the Revolving Credit Facility is based on the assumption that the
amount outstanding and the interest rate charged both remain at their current levels. F - 66




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 (4)
    
    We lease property, plant and equipment under noncancelable and cancelable operating
leases. Amounts shown in the table represent minimum cash lease payment obligations under
our operating leases with terms in excess of one year for the periods indicated. Lease
expense is charged to operating costs and expenses on a straight line basis over the period
of expected economic benefit. Contingent rental payments are expensed as incurred. Total
rental expense for the years ended December 31, 2007, 2006 and 2005, was $22.1 million,
$25.3 million and $24.0 million, respectively.(5)
    
    We have long and short-term purchase obligations for products and services with
third-party suppliers. The prices that we are obligated to pay under these contracts
approximate current market prices. The preceding table shows our commitments and estimated
payment obligations under these contracts for the periods indicated. Our estimated future
payment obligations are based on the contractual price under each contract for products and
services at December 31, 2007. The majority of contractual commitments we make for the
purchase of crude oil range in term from a thirty-day evergreen to one year. A substantial
portion of the contracts for the purchase of crude oil that extend beyond thirty days
include cancellation provisions that allow us to cancel the contract with thirty days
written notice.(6)
    
    We have short-term payment obligations relating to capital projects we have initiated.
These commitments represent unconditional payment obligations that we have agreed to pay
vendors for services rendered or products purchased.(7)
    
    Includes approximately $10.1 million of long-term deferred revenue payments, which are
being transferred to income over the term of the respective revenue contracts and $12.8
million related to our estimated long-term portions of our liabilities under our guarantees
to Centennial for its credit agreement and for a catastrophic event. The amount of
commitment by year is our best estimate of projected payments of these long-term
liabilities. Other
    F - 67




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     Insurance
  F - 68




---



##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Commitments under our EPCO equity compensation plan
   
 NOTE 18. CONCENTRATIONS OF CREDIT RISK
   F - 69




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 NOTE 19. SUPPLEMENTAL CASH FLOW INFORMATION
  For Year Ended December 31,2007
    
    
    2006
    
    
    2005Decrease (increase) in:Accounts receivable, trade
    
    $
    (529,055
    )
    
    $
    (67,317
    )
    
    $
    (249,745
    )Accounts receivable, related parties
    
    
    (5,986
    )
    
    
    1,736
    
    
    
    6,638Inventories
    
    
    (8,255
    )
    
    
    (45,002
    )
    
    
    (970
    )Other current assets
    
    
    (7,356
    )
    
    
    25,552
    
    
    
    (19,088
    )Other
    
    
    (27,244
    )
    
    
    (9,906
    )
    
    
    (4,371
    )Increase (decrease) in:Accounts payable and accrued expenses
    
    
    558,111
    
    
    
    44,348
    
    
    
    254,251Accounts payable, related parties
    
    
    3,374
    
    
    
    15,696
    
    
    
    (12,817
    )Other
    
    
    3,766
    
    
    
    (6,135
    )
    
    
    (11,252
    )Net effect of changes in operating accounts
    
    $
    (12,645
    )
    
    $
    (41,028
    )
    
    $
    (37,354
    )Non-cash investing activities:Net assets transferred to Mont Belvieu Storage Partners, L.P.
    
    $
    
    
    
    $
    
    
    
    $
    1,429Net assets transferred to Jonah Gas Gathering Company
    
    $
    
    
    
    $
    572,609
    
    
    $
    Payable to Enterprise Gas Processing, LLC for spending
for Phase V expansion of Jonah Gas Gathering Company
    
    $
    9,878
    
    
    $
    8,732
    
    
    $
    Supplemental disclosure of cash flows:Cash paid for interest (net of amounts capitalized)
    
    $
    104,220
    
    
    $
    88,107
    
    
    $
    82,315
 F - 70




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 NOTE
20. SELECTED QUARTERLY DATA (UNAUDITED)
 First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter2007:Operating revenues
    
    $
    1,978,429
    
    
    $
    2,049,436
    
    
    $
    2,580,657
    
    
    $
    3,049,538Operating income
    
    
    83,434
    
    
    
    50,729
    
    
    
    54,719
    
    
    
    60,673Net income
    
    
    138,191
    
    
    
    47,760
    
    
    
    47,631
    
    
    
    45,598Basic and diluted net income per Limited
Partner Unit (1) (2)
    
    $
    1.29
    
    
    $
    0.44
    
    
    $
    0.44
    
    
    $
    0.42
 First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter2006:Operating revenues
    
    $
    2,536,369
    
    
    $
    2,425,052
    
    
    $
    2,570,045
    
    
    $
    2,076,019Operating income
    
    
    62,638
    
    
    
    58,170
    
    
    
    51,839
    
    
    
    57,132Income from continuing operations
    
    
    43,383
    
    
    
    41,586
    
    
    
    41,145
    
    
    
    56,568Income from discontinued operations
    
    
    19,491
    
    
    
    (122
    )
    
    
    
    
    
    
    Net income
    
    
    62,874
    
    
    
    41,464
    
    
    
    41,145
    
    
    
    56,568Basic and diluted net income per Limited Partner Unit: (1)Continuing operations
    
    $
    0.43
    
    
    $
    0.42
    
    
    $
    0.39
    
    
    $
    0.53Discontinued operations
    
    
    0.19
    
    
    
    
    
    
    
    
    
    
    
    Basic and diluted net income per Limited
Partner Unit
    
    $
    0.62
    
    
    $
    0.42
    
    
    $
    0.39
    
    
    $
    0.53
 
 (1)
    
    Per Unit calculations include 106,703 Units issued in 2007 (62,400 restricted units,
4,507 Units issued under the employee unit purchase plan and 39,796 Units issued under the
DRIP), 14,091,275 Units issued in December 2006 to our General Partner and 5,750,000 Units
issued in July 2006 in an underwritten public offering.(2)
    
    The sum of the four quarters does not equal the total year due to rounding. 
 NOTE 21. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
   F - 71




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  December 31, 2007TEPPCOTEPPCO
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Partners, L.P.Partners, L.P.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedAssetsCurrent assets
    
    $
    32,302
    
    
    $
    77,083
    
    
    $
    1,499,653
    
    
    $
    (93,049
    )
    
    $
    1,515,989Property, plant and equipment  net
    
    
    
    
    
    
    1,142,630
    
    
    
    651,004
    
    
    
    
    
    
    
    1,793,634Equity investments
    
    
    1,286,021
    
    
    
    1,347,313
    
    
    
    188,669
    
    
    
    (1,675,008
    )
    
    
    1,146,995Intercompany notes receivable
    
    
    1,511,168
    
    
    
    
    
    
    
    
    
    
    
    (1,511,168
    )
    
    
    Intangible assets
    
    
    
    
    
    
    136,050
    
    
    
    28,631
    
    
    
    
    
    
    
    164,681Other assets
    
    
    8,580
    
    
    
    34,839
    
    
    
    85,401
    
    
    
    (62
    )
    
    
    128,758Total assets
    
    $
    2,838,071
    
    
    $
    2,737,915
    
    
    $
    2,453,358
    
    
    $
    (3,279,287
    )
    
    $
    4,750,057Liabilities and partners capitalCurrent liabilities
    
    $
    61,926
    
    
    $
    493,184
    
    
    $
    1,485,164
    
    
    $
    (93,049
    )
    
    $
    1,947,225Long-term debt
    
    
    1,511,083
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,511,083Intercompany notes payable
    
    
    
    
    
    
    1,006,801
    
    
    
    504,367
    
    
    
    (1,511,168
    )
    
    
    Other long term liabilities
    
    
    435
    
    
    
    24,466
    
    
    
    2,283
    
    
    
    (62
    )
    
    
    27,122Total partners capital
    
    
    1,264,627
    
    
    
    1,213,464
    
    
    
    461,544
    
    
    
    (1,675,008
    )
    
    
    1,264,627Total liabilities and partners capital
    
    $
    2,838,071
    
    
    $
    2,737,915
    
    
    $
    2,453,358
    
    
    $
    (3,279,287
    )
    
    $
    4,750,057
 December 31, 2006TEPPCOTEPPCO
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Partners, L.P.Partners, L.P.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedAssetsCurrent assets
    
    $
    37,534
    
    
    $
    149,056
    
    
    $
    894,916
    
    
    $
    (114,796
    )
    
    $
    966,710Property, plant and equipment  net
    
    
    
    
    
    
    958,266
    
    
    
    683,829
    
    
    
    
    
    
    
    1,642,095Equity investments
    
    
    1,320,672
    
    
    
    1,317,671
    
    
    
    195,606
    
    
    
    (1,794,239
    )
    
    
    1,039,710Intercompany notes receivable
    
    
    1,215,132
    
    
    
    
    
    
    
    
    
    
    
    (1,215,132
    )
    
    
    Intangible assets
    
    
    
    
    
    
    153,803
    
    
    
    31,607
    
    
    
    
    
    
    
    185,410Other assets
    
    
    5,769
    
    
    
    21,657
    
    
    
    60,741
    
    
    
    
    
    
    
    88,167Total assets
    
    $
    2,579,107
    
    
    $
    2,600,453
    
    
    $
    1,866,699
    
    
    $
    (3,124,167
    )
    
    $
    3,922,092Liabilities and partners capitalCurrent liabilities
    
    $
    40,578
    
    
    $
    161,101
    
    
    $
    889,665
    
    
    $
    (114,796
    )
    
    $
    976,548Long-term debt
    
    
    1,215,948
    
    
    
    387,339
    
    
    
    
    
    
    
    
    
    
    
    1,603,287Intercompany notes payable
    
    
    
    
    
    
    711,381
    
    
    
    503,751
    
    
    
    (1,215,132
    )
    
    
    Other long term liabilities
    
    
    2,251
    
    
    
    17,857
    
    
    
    1,819
    
    
    
    
    
    
    
    21,927Total partners capital
    
    
    1,320,330
    
    
    
    1,322,775
    
    
    
    471,464
    
    
    
    (1,794,239
    )
    
    
    1,320,330Total liabilities and partners capital
    
    $
    2,579,107
    
    
    $
    2,600,453
    
    
    $
    1,866,699
    
    
    $
    (3,124,167
    )
    
    $
    3,922,092
 F -72




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 For Year Ended December 31, 2007TEPPCOTEPPCO
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Partners, L.P.Partners, L.P.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedOperating revenues
    
    $
    
    
    
    $
    385,902
    
    
    $
    9,272,707
    
    
    $
    (549
    )
    
    $
    9,658,060Costs and expenses
    
    
    
    
    
    
    278,630
    
    
    
    9,153,588
    
    
    
    (5,060
    )
    
    
    9,427,158Gains on sales of assets
    
    
    
    
    
    
    (18,653
    )
    
    
    
    
    
    
    
    
    
    
    (18,653
    )Operating income
    
    
    
    
    
    
    125,925
    
    
    
    119,119
    
    
    
    4,511
    
    
    
    249,555Interest expense  net
    
    
    
    
    
    
    (72,705
    )
    
    
    (28,518
    )
    
    
    
    
    
    
    (101,223
    )Gain on sale of ownership interest in MB
Storage
    
    
    
    
    
    
    59,628
    
    
    
    
    
    
    
    
    
    
    
    59,628Equity earnings
    
    
    279,180
    
    
    
    164,107
    
    
    
    2,602
    
    
    
    (377,134
    )
    
    
    68,755Other income  net
    
    
    
    
    
    
    2,255
    
    
    
    767
    
    
    
    
    
    
    
    3,022Income before provision for income taxes
    
    
    279,180
    
    
    
    279,210
    
    
    
    93,970
    
    
    
    (372,623
    )
    
    
    279,737Provision for income taxes
    
    
    
    
    
    
    30
    
    
    
    527
    
    
    
    
    
    
    
    557Net income
    
    $
    279,180
    
    
    $
    279,180
    
    
    $
    93,443
    
    
    $
    (372,623
    )
    
    $
    279,180
 For Year Ended December 31, 2006TEPPCOTEPPCO
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Partners, L.P.Partners, L.P.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedOperating revenues
    
    $
    
    
    
    $
    352,844
    
    
    $
    9,263,451
    
    
    $
    (8,810
    )
    
    $
    9,607,485Costs and expenses
    
    
    
    
    
    
    278,973
    
    
    
    9,117,359
    
    
    
    (11,222
    )
    
    
    9,385,110Gains on sales of assets
    
    
    
    
    
    
    (1,415
    )
    
    
    (5,989
    )
    
    
    
    
    
    
    (7,404
    )Operating income
    
    
    
    
    
    
    75,286
    
    
    
    152,081
    
    
    
    2,412
    
    
    
    229,779Interest expense  net
    
    
    
    
    
    
    (52,980
    )
    
    
    (33,191
    )
    
    
    
    
    
    
    (86,171
    )Equity earnings
    
    
    202,051
    
    
    
    178,335
    
    
    
    11,896
    
    
    
    (355,521
    )
    
    
    36,761Other income  net
    
    
    
    
    
    
    1,545
    
    
    
    1,420
    
    
    
    
    
    
    
    2,965Income before provision for income taxes
    
    
    202,051
    
    
    
    202,186
    
    
    
    132,206
    
    
    
    (353,109
    )
    
    
    183,334Provision for income taxes
    
    
    
    
    
    
    135
    
    
    
    517
    
    
    
    
    
    
    
    652Income from continuing operations
    
    
    202,051
    
    
    
    202,051
    
    
    
    131,689
    
    
    
    (353,109
    )
    
    
    182,682Discontinued operations
    
    
    
    
    
    
    
    
    
    
    19,369
    
    
    
    
    
    
    
    19,369Net income
    
    $
    202,051
    
    
    $
    202,051
    
    
    $
    151,058
    
    
    $
    (353,109
    )
    
    $
    202,051
 For Year Ended December 31, 2005TEPPCOTEPPCO
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Partners, L.P.Partners, L.P.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedOperating revenues
    
    $
    
    
    
    $
    439,944
    
    
    $
    8,168,657
    
    
    $
    (3,567
    )
    
    $
    8,605,034Costs and expenses
    
    
    
    
    
    
    285,072
    
    
    
    8,104,164
    
    
    
    (3,567
    )
    
    
    8,385,669Gains on sales of assets
    
    
    
    
    
    
    (551
    )
    
    
    (117
    )
    
    
    
    
    
    
    (668
    )Operating income
    
    
    
    
    
    
    155,423
    
    
    
    64,610
    
    
    
    
    
    
    
    220,033Interest expense  net
    
    
    
    
    
    
    (54,011
    )
    
    
    (27,850
    )
    
    
    
    
    
    
    (81,861
    )Equity earnings
    
    
    162,551
    
    
    
    57,088
    
    
    
    23,078
    
    
    
    (222,623
    )
    
    
    20,094Other income  net
    
    
    
    
    
    
    901
    
    
    
    234
    
    
    
    
    
    
    
    1,135Income from continuing operations
    
    
    162,551
    
    
    
    159,401
    
    
    
    60,072
    
    
    
    (222,623
    )
    
    
    159,401Discontinued operations
    
    
    
    
    
    
    3,150
    
    
    
    
    
    
    
    
    
    
    
    3,150Net income
    
    $
    162,551
    
    
    $
    162,551
    
    
    $
    60,072
    
    
    $
    (222,623
    )
    
    $
    162,551
 F -73




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 For Year Ended December 31, 2007TEPPCOTEPPCO
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Partners, L.P.Partners, L.P.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedOperating activitiesNet income
    
    $
    279,180
    
    
    $
    279,180
    
    
    $
    93,443
    
    
    $
    (372,623
    )
    
    $
    279,180Adjustments to reconcile net income to net cash
from operating activities:Deferred income taxes
    
    
    
    
    
    
    (687
    )
    
    
    8
    
    
    
    
    
    
    
    (679
    )Depreciation and amortization
    
    
    
    
    
    
    75,377
    
    
    
    29,848
    
    
    
    
    
    
    
    105,225Earnings in equity investments, net of
distributions
    
    
    15,270
    
    
    
    33,217
    
    
    
    9,798
    
    
    
    (4,140
    )
    
    
    54,145Gains on sales of assets and ownership
interest
    
    
    
    
    
    
    (78,281
    )
    
    
    
    
    
    
    
    
    
    
    (78,281
    )Changes in assets and liabilities and other
    
    
    (299,736
    )
    
    
    (61,634
    )
    
    
    56,222
    
    
    
    296,130
    
    
    
    (9,018
    )Net cash from operating activities
    
    
    (5,286
    )
    
    
    247,172
    
    
    
    189,319
    
    
    
    (80,633
    )
    
    
    350,572Cash flows from investing activities
    
    
    
    
    
    
    (212,791
    )
    
    
    (104,609
    )
    
    
    
    
    
    
    (317,400
    )Cash flows from financing activities
    
    
    2,458
    
    
    
    (34,311
    )
    
    
    (84,758
    )
    
    
    83,392
    
    
    
    (33,219
    )Net change in cash and cash equivalents
    
    
    (2,828
    )
    
    
    70
    
    
    
    (48
    )
    
    
    2,759
    
    
    
    (47
    )Cash and cash equivalents, January 1
    
    
    10,975
    
    
    
    
    
    
    
    70
    
    
    
    (10,975
    )
    
    
    70Cash and cash equivalents, December 31
    
    $
    8,147
    
    
    $
    70
    
    
    $
    22
    
    
    $
    (8,216
    )
    
    $
    23
 For Year Ended December 31, 2006TEPPCOTEPPCO
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Partners, L.P.Partners, L.P.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedOperating activitiesNet income
    
    $
    202,051
    
    
    $
    202,051
    
    
    $
    151,058
    
    
    $
    (353,109
    )
    
    $
    202,051Adjustments to reconcile net income to net cash
from continuing operating activities:Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (19,369
    )
    
    
    
    
    
    
    (19,369
    )Deferred income taxes
    
    
    
    
    
    
    135
    
    
    
    517
    
    
    
    
    
    
    
    652Depreciation and amortization
    
    
    
    
    
    
    71,100
    
    
    
    37,152
    
    
    
    
    
    
    
    108,252Earnings in equity investments, net of
distributions
    
    
    76,515
    
    
    
    36,636
    
    
    
    8,613
    
    
    
    (95,042
    )
    
    
    26,722Gains on sales of assets
    
    
    
    
    
    
    (5,599
    )
    
    
    (1,805
    )
    
    
    
    
    
    
    (7,404
    )Changes in assets and liabilities and other
    
    
    (75,103
    )
    
    
    (47,167
    )
    
    
    (28,143
    )
    
    
    111,061
    
    
    
    (39,352
    )Net cash from continuing operating activities
    
    
    203,463
    
    
    
    257,156
    
    
    
    148,023
    
    
    
    (337,090
    )
    
    
    271,552Cash flows from discontinued operations
    
    
    
    
    
    
    
    
    
    
    1,521
    
    
    
    
    
    
    
    1,521Net cash from operating activities
    
    
    203,463
    
    
    
    257,156
    
    
    
    149,544
    
    
    
    (337,090
    )
    
    
    273,073Cash flows from investing activities
    
    
    (195,060
    )
    
    
    48,236
    
    
    
    (80,645
    )
    
    
    (46,247
    )
    
    
    (273,716
    )Cash flows from financing activities
    
    
    594
    
    
    
    (305,392
    )
    
    
    (68,936
    )
    
    
    374,328
    
    
    
    594Net change in cash and cash equivalents
    
    
    8,997
    
    
    
    
    
    
    
    (37
    )
    
    
    (9,009
    )
    
    
    (49
    )Cash and cash equivalents, January 1
    
    
    1,978
    
    
    
    
    
    
    
    107
    
    
    
    (1,966
    )
    
    
    119Cash and cash equivalents, December 31
    
    $
    10,975
    
    
    $
    
    
    
    $
    70
    
    
    $
    (10,975
    )
    
    $
    70
 F -74




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 For Year Ended December 31, 2005TEPPCOTEPPCO
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Partners, L.P.Partners, L.P.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedOperating activitiesNet income
    
    $
    162,551
    
    
    $
    162,551
    
    
    $
    60,072
    
    
    $
    (222,623
    )
    
    $
    162,551Adjustments to reconcile net income to net cash
from continuing operating activities:Income from discontinued operations
    
    
    
    
    
    
    (3,150
    )
    
    
    
    
    
    
    
    
    
    
    (3,150
    )Depreciation and amortization
    
    
    
    
    
    
    82,536
    
    
    
    28,193
    
    
    
    
    
    
    
    110,729Earnings in equity investments, net of
distributions
    
    
    88,550
    
    
    
    14,598
    
    
    
    1,576
    
    
    
    (87,733
    )
    
    
    16,991Gains on sales of assets
    
    
    
    
    
    
    (551
    )
    
    
    (117
    )
    
    
    
    
    
    
    (668
    )Changes in assets and liabilities and other
    
    
    (54,540
    )
    
    
    (57,645
    )
    
    
    22,884
    
    
    
    53,571
    
    
    
    (35,730
    )Net cash from continuing operating activities
    
    
    196,561
    
    
    
    198,339
    
    
    
    112,608
    
    
    
    (256,785
    )
    
    
    250,723Cash flows from discontinued operations
    
    
    
    
    
    
    3,782
    
    
    
    
    
    
    
    
    
    
    
    3,782Net cash from operating activities
    
    
    196,561
    
    
    
    202,121
    
    
    
    112,608
    
    
    
    (256,785
    )
    
    
    254,505Cash flows from investing activities
    
    
    (278,806
    )
    
    
    (31,529
    )
    
    
    (180,486
    )
    
    
    139,906
    
    
    
    (350,915
    )Cash flows from financing activities
    
    
    80,107
    
    
    
    (184,126
    )
    
    
    65,097
    
    
    
    119,029
    
    
    
    80,107Net change in cash and cash equivalents
    
    
    (2,138
    )
    
    
    (13,534
    )
    
    
    (2,781
    )
    
    
    2,150
    
    
    
    (16,303
    )Cash and cash equivalents, January 1
    
    
    4,116
    
    
    
    13,596
    
    
    
    2,826
    
    
    
    (4,116
    )
    
    
    16,422Cash and cash equivalents, December 31
    
    $
    1,978
    
    
    $
    62
    
    
    $
    45
    
    
    $
    (1,966
    )
    
    $
    119
 
 NOTE 22. SUBSEQUENT EVENTS
 Debt Obligations and Treasury Locks
   Centennial Guaranty
  Chaparral Open Season
  F -75




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Acquisition
  Cash payment for Marine Transportation Business
    
    $
    256,593Fair value of our 4,854,899 Units
    
    
    186,558Other cash acquisition costs paid to third-parties
    
    
    672Total consideration
    
    $
    443,823
     F -76




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Property, plant and equipment
    
    $
    381,773Intangible assets
    
    
    37,148Total assets acquired
    
    
    418,921Long-term debt
    
    
    (63,157
    )Total liabilities assumed
    
    
    (63,157
    )Total assets acquired less liabilities assumed
    
    
    355,764Total consideration given
    
    
    443,823Goodwill
    
    $
    88,059
    F -77




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##### Table of Contents



Jonah Gas Gathering Company and Subsidiary
 (A Wyoming General Partnership)
 Consolidated Financial Statements for the Years Ended
December 31, 2007 and 2006
(With Independent Auditors Report)




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 TABLE OF CONTENTS
 PageIndependent Auditors Report
    
    
    1Consolidated Balance Sheets as of December 31, 2007 and 2006
    
    
    2Statements of Consolidated Income for the Years Ended December 31, 2007 and 2006
    
    
    3Statements of Consolidated Cash Flows for the Years Ended December 31, 2007 and 2006
    
    
    4Statements of Consolidated Partners Capital for the Years Ended December 31, 2007 and 2006
    
    
    5Notes to Consolidated Financial Statements
    
    
    6
 i




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##### Table of Contents



INDEPENDENT AUDITORS REPORT
 
     
 1




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 
 CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
 December 31,2007
    
    
    2006ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    11,459
    
    
    $
    Accounts receivable, trade
    
    
    35,236
    
    
    
    24,629Accounts receivable, related parties
    
    
    845
    
    
    
    2,492Inventories
    
    
    1,717
    
    
    
    1,319Other
    
    
    6,139
    
    
    
    5,523Total current assets
    
    
    55,396
    
    
    
    33,963PROPERTY, PLANT AND EQUIPMENT, NET
    
    
    910,398
    
    
    
    633,459INTANGIBLE ASSETS
    
    
    148,784
    
    
    
    160,313GOODWILL
    
    
    2,776
    
    
    
    2,776OTHER ASSETS
    
    
    3,346
    
    
    
    4,043Total assets
    
    $
    1,120,700
    
    
    $
    834,554LIABILITIES AND PARTNERS CAPITALCURRENT LIABILITIESAccounts payable and accrued liabilities
    
    $
    8,288
    
    
    $
    6,597Accounts payable, related parties
    
    
    6,973
    
    
    
    185Distribution payable
    
    
    
    
    
    
    11,716Accrued taxes other than income
    
    
    1,464
    
    
    
    1,160Other
    
    
    5,820
    
    
    
    5,455Total current liabilities
    
    
    22,545
    
    
    
    25,113OTHER LIABILITIES
    
    
    264
    
    
    
    191Total liabilities
    
    
    22,809
    
    
    
    25,304COMMITMENTS AND CONTINGENCIES(see Note 10)PARTNERS CAPITAL
    
    
    1,097,891
    
    
    
    809,250Total liabilities and partners capital
    
    $
    1,120,700
    
    
    $
    834,554
  2




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 
 STATEMENTS OF CONSOLIDATED INCOME
(Dollars in thousands)
 For Year EndedDecember 31,2007
    
    
    2006REVENUESGathering  Natural gas
    
    $
    135,583
    
    
    $
    104,415Sales of natural gas
    
    
    63,210
    
    
    
    50,866Other revenue
    
    
    5,353
    
    
    
    4,849Total revenues
    
    
    204,146
    
    
    
    160,130COSTS AND EXPENSESPurchases of natural gas
    
    
    57,189
    
    
    
    48,290Operating expenses
    
    
    19,303
    
    
    
    12,925General and administrative expenses
    
    
    917
    
    
    
    242Depreciation and amortization expense
    
    
    30,700
    
    
    
    19,647Taxes  other than income taxes
    
    
    3,825
    
    
    
    2,748Total costs and expenses
    
    
    111,934
    
    
    
    83,852OPERATING INCOME
    
    
    92,212
    
    
    
    76,278OTHER INCOME (EXPENSE)Interest expense  net
    
    
    
    
    
    
    (6,812
    )Other income
    
    
    908
    
    
    
    198Total other income (expense)
    
    
    908
    
    
    
    (6,614
    )INCOME FROM CONTINUING OPERATIONS
    
    
    93,120
    
    
    
    69,664DISCONTINUED OPERATIONSIncome from discontinued operations
    
    
    
    
    
    
    1,497Gain on sale of discontinued operations
    
    
    
    
    
    
    17,872Total discontinued operations
    
    
    
    
    
    
    19,369NET INCOME
    
    $
    93,120
    
    
    $
    89,033
  3




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 
 STATEMENTS OF CONSOLIDATED CASH FLOWS
(Dollars in thousands)
 For Year EndedDecember 31,2007
    
    
    2006OPERATING ACTIVITIESNet income
    
    $
    93,120
    
    
    $
    89,033Adjustments to reconcile net income to net cash provided by
continuing
operating activities:Income from discontinued operations
    
    
    
    
    
    
    (19,369
    )Depreciation and amortization
    
    
    30,700
    
    
    
    19,647Non-cash portion of interest expense
    
    
    
    
    
    
    174Net effect of changes in operating accounts
    
    
    (48
    )
    
    
    31,404Net cash provided by continuing operating activities
    
    
    123,772
    
    
    
    120,889Net cash provided by discontinued operations
    
    
    
    
    
    
    1,521Net cash provided by operating activities
    
    
    123,772
    
    
    
    122,410INVESTING ACTIVITIESProceeds from the sales of assets
    
    
    
    
    
    
    38,000Capital expenditures
    
    
    (37,199
    )
    
    
    (51,211
    )Net cash used in investing activities
    
    
    (37,199
    )
    
    
    (13,211
    )FINANCING ACTIVITIESProceeds from Note Payable, TEPPCO Midstream Companies, LLC
    
    
    
    
    
    
    66,375Repayments of Note Payable, TEPPCO Midstream Companies, LLC
    
    
    
    
    
    
    (96,990
    )Contributions from partners
    
    
    34,592
    
    
    
    20,000Distributions paid to partners
    
    
    (109,706
    )
    
    
    (98,646
    )Net cash used in financing activities
    
    
    (75,114
    )
    
    
    (109,261
    )NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    11,459
    
    
    
    (62
    )CASH AND CASH EQUIVALENTS, JANUARY 1
    
    
    
    
    
    
    62CASH AND CASH EQUIVALENTS, DECEMBER 31
    
    $
    11,459
    
    
    $
    
  4




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 
 STATEMENTS OF CONSOLIDATED PARTNERSCAPITAL
(Dollars in thousands)
 TEPPCO
    
    EnterpriseMidstream
    
    GasTEPPCO GP,
    
    Companies,
    
    Processing,Inc.
    
    LLC
    
    LLC
    
    TotalBALANCE AT DECEMBER 31, 2005
    
    $
    3
    
    
    $
    294,862
    
    
    $
    
    
    
    $
    294,865Net income
    
    
    1
    
    
    
    88,794
    
    
    
    238
    
    
    
    89,033Contributions from partners
    
    
    
    
    
    
    418,840
    
    
    
    116,874
    
    
    
    535,714Distributions to partners
    
    
    
    
    
    
    (110,162
    )
    
    
    (200
    )
    
    
    (110,362
    )Transfer of partnership interest
    
    
    (4
    )
    
    
    4
    
    
    
    
    
    
    
    BALANCE AT DECEMBER 31, 2006
    
    
    
    
    
    
    692,338
    
    
    
    116,912
    
    
    
    809,250Net income
    
    
    
    
    
    
    83,702
    
    
    
    9,418
    
    
    
    93,120Contributions from partners
    
    
    
    
    
    
    184,627
    
    
    
    108,884
    
    
    
    293,511Distributions to partners
    
    
    
    
    
    
    (88,539
    )
    
    
    (9,451
    )
    
    
    (97,990
    )BALANCE AT DECEMBER 31, 2007
    
    $
    
    
    
    $
    872,128
    
    
    $
    225,763
    
    
    $
    1,097,891
  5




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Organization
       Formation of Joint Venture
  6




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
      Note 2. Summary of Significant Accounting Policies
  7




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Accounts Receivable and Allowance for Doubtful Accounts
  Asset Retirement Obligations
  Basis of Presentation and Principles of Consolidation
  Cash and Cash Equivalents
   Contingencies
   8




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Dollar Amounts
  Estimates
  Fair Value of Current Assets and Current Liabilities
  Goodwill
   Income Taxes
  9




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Intangible Assets
  Natural Gas Imbalances
  Operating, General and Administrative Expenses
  Property, Plant and Equipment
  Accounting for the Impairment or Disposal of Long-Lived
Assets
 Revenue Recognition
  10




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Note 3. Recent Accounting Developments
 Fair
Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115
 Note 4. Goodwill and Intangible Assets
 Goodwill
 Goodwill and Other Intangible Assets
  11




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Other Intangible Assets
    2008
    
    $
    15,3102009
    
    
    17,1562010
    
    
    18,5012011
    
    
    18,6382012
    
    
    18,102
 Note 5. Related Party Transactions
   12




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  For Year EndedDecember 31,2007
    
    
    2006Revenues and Expenses from TEPPCO and affiliates:Sales of natural gas liquids (NGLs)(1)
    
    $
    
    
    
    $
    3,764Other operating revenues (2)
    
    
    5,341
    
    
    
    4,622Operating expense (3)
    
    
    501
    
    
    
    Revenues and Expenses from EPCO and affiliates:Sales of natural gas
    
    $
    4,887
    
    
    $
    8,585Purchases of natural gas (4)
    
    
    542
    
    
    
    251Gain on sale of Pioneer plant
    
    
    
    
    
    
    17,872Operating expense (5)
    
    
    8,965
    
    
    
    6,149
 
 (1)
    
    Includes NGL sales to TEPPCO Crude Oil, LLC (TCO) from our Pioneer processing plant
prior to its sale to an affiliate of Enterprise Products Partners. These sales are
classified as income from discontinued operations in the accompanying statements of
consolidated income.(2)
    
    Includes condensate sales to TCO.(3)
    
    Includes supplies purchased from Lubrication Services, LLC, a subsidiary of TEPPCO.(4)
    
    Includes processing fees paid to Enterprise Products Partners for processing services
performed at the Pioneer processing plant after its sale to a subsidiary of Enterprise
Products Partners.(5)
    
    Includes payroll, payroll related expenses, administrative expenses, including
reimbursements related to employee benefits and employee benefit plans, and other operating
expenses incurred in managing us and our subsidiary.  December 31, 2007
    
    
    December 31, 2006Other
    
    
    
    
    
    
    
    
    
    
    OtherAccounts
    
    
    Accounts
    
    
    Current
    
    
    Accounts
    
    
    Accounts
    
    
    CurrentReceivable
    
    
    Payable
    
    
    Liabilities (1)
    
    
    Receivable
    
    
    Payable
    
    
    Liabilities (1)Partners:TEPPCO
    
    $
    
    
    
    $
    6,033
    
    
    $
    
    
    
    $
    879
    
    
    $
    
    
    
    $
    Enterprise
Products
Partners and
affiliates
    
    
    845
    
    
    
    940
    
    
    
    1,625
    
    
    
    1,613
    
    
    
    185
    
    
    
    643Total
    
    $
    845
    
    
    $
    6,973
    
    
    $
    1,625
    
    
    $
    2,492
    
    
    $
    185
    
    
    $
    643
 
 (1)
    
    Relates to pipeline imbalances with a subsidiary Enterprise Products Partners. 13




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Note 6. Property, Plant and Equipment
  EstimatedUseful Life
    
    
    December 31,In Years
    
    
    2007
    
    
    2006Plants and pipelines
    
    
    5-40
    (1)
    
    $
    681,772
    
    
    $
    373,117Underground and other storage facilities
    
    
    20-40
    
    
    
    6,183
    
    
    
    5,718Transportation equipment
    
    
    
    
    
    
    590
    
    
    
    Land and right of way
    
    
    
    
    
    
    54,720
    
    
    
    20,893Construction work in progress
    
    
    
    
    
    
    228,686
    
    
    
    276,421Total property, plant and equipment
    
    
    
    
    
    $
    971,951
    
    
    $
    676,149Less accumulated depreciation
    
    
    
    
    
    
    61,553
    
    
    
    42,690Property, plant and
equipment, net
    
    
    
    
    
    $
    910,398
    
    
    $
    633,459
 
 (1)
    
    The estimated useful lives of major components of this category are as follows:
pipelines, 20-40 years (with some equipment at 5 years); office furniture and equipment,
5-10 years and buildings, 20-40 years.   Asset Retirement Obligations
  ARO liability balance, December 31, 2005
    
    $
    Liabilities incurred
    
    
    186Accretion expense
    
    
    5ARO liability balance, December 31, 2006
    
    
    191Liabilities incurred
    
    
    48Accretion expense
    
    
    25ARO liability balance, December 31, 2007
    
    $
    264
  14




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Note 7. Dispositions and Discontinued Operations
   For Year EndedDecember 31,2006Operating revenues:Sales of NGLs
    
    $
    3,828Other
    
    
    932Total operating revenues
    
    
    4,760Costs and expenses:Purchases of natural gas
    
    
    3,000Operating expense
    
    
    182Depreciation
    
    
    51Taxes  other than income taxes
    
    
    30Total costs and expenses
    
    
    3,263Income from discontinued operations
    
    $
    1,497
  For Year EndedDecember 31,2006Cash flows from discontinued operating activities:Net income
    
    $
    19,369Depreciation and amortization
    
    
    51Gain on sale of Pioneer plant
    
    
    (17,872
    )Increase in inventories
    
    
    (27
    )Net cash provided by discontinued operations
    
    $
    1,521
 Note 8. Debt Obligations
  15




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JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Note 9. Partners Capital and Distributions
     16




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JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Note 10. Commitments and Contingencies
 Legal Proceedings
   Contractual Obligations
  Payment or Settlement due by PeriodTotal
    
    2008
    
    2009
    
    2010
    
    2011
    
    2012
    
    ThereafterOperating leases (1)
    
    $
    167
    
    
    $
    89
    
    
    $
    78
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Purchase obligations (2)
    
    
    39
    
    
    
    4
    
    
    
    4
    
    
    
    4
    
    
    
    4
    
    
    
    4
    
    
    
    19Capital expenditure
obligations (3)
    
    
    178
    
    
    
    178
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    We use leased assets in several areas of our operations. Total rental expense for the
years ended December 31, 2007 and 2006, was $0.8 million and $1.0 million, respectively.(2)
    
    We have long and short-term purchase obligations for products and services with
third-party suppliers. The prices that we are obligated to pay under these contracts
approximate current market prices. The preceding table shows our commitments and estimated
payment obligations under these contracts for the periods indicated. Our estimated future
payment obligations are based on the contractual price under each contract for products and
services at December 31, 2007.(3)
    
    We have short-term payment obligations relating to capital projects we have initiated.
These commitments represent unconditional payment obligations that we have agreed to pay
vendors for services rendered or products purchased. Note 11. Concentrations of Credit Risk
  17




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JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Note 12. Supplemental Cash Flow Information
  For Year EndedDecember 31,2007
    
    
    2006Decrease (increase) in:Accounts receivable, trade
    
    $
    (10,607
    )
    
    $
    (6,232
    )Accounts receivable, related parties
    
    
    1,647
    
    
    
    (2,492
    )Inventories
    
    
    (398
    )
    
    
    254Other current assets
    
    
    (616
    )
    
    
    13,675Other
    
    
    697
    
    
    
    (662
    )Increase (decrease) in:Accounts payable and accrued expenses
    
    
    2,256
    
    
    
    (3,202
    )Accounts payable, related parties
    
    
    6,973
    
    
    
    30,113Other
    
    
    
    
    
    
    (50
    )Net effect of changes in operating accounts
    
    $
    (48
    )
    
    $
    31,404Non-cash financing activities:Non-cash contributions from partners for Phase V expansion
    
    $
    258,919
    
    
    $
    243,718Distributions payable to partners
    
    
    
    
    
    
    11,716Contribution of Note Payable, TEPPCO Midstream Companies, LLC
to partners capital
    
    
    
    
    
    
    231,220Contribution of accrued interest to partners capital
    
    
    
    
    
    
    19,900Contribution of accounts payable, related party to partners capital
    
    
    
    
    
    
    20,876Supplemental disclosure of cash flows:Cash paid for interest (net of amounts capitalized)
    
    $
    
    
    
    $
    6,188
  18




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##### Table of Contents



LDH Energy Mont
Belvieu L.P.
(Formerly Mont Belvieu
Storage Partners, L.P.)
 Financial Statements As of and for the Two
Months Ended February 28, 2007 and the
Years Ended December 31, 2006 and 2005,
and Independent Auditors Report




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##### Table of Contents



LDH ENERGY MONT BELVIEU L.P.
 TABLE OF CONTENTS
 PageINDEPENDENT AUDITORS REPORT
    
    1FINANCIAL STATEMENTS:Balance Sheets as of February 28,2007 and December 31, 2006
    
    2Statements of Income for the Two Months Ended February 28, 2007 and the Years Ended 

December 31, 2006 and 2005 (unaudited)
    
    3Statements of Cash Flows for the Two Months Ended February 28, 2007 and the Years Ended

December 31, 2006 and 2005 (unaudited)
    
    4Statements of Partners Equity for the Two Months Ended February 28, 2007 and the Years Ended

December 31, 2006 and 2005 (unaudited)
    
    5Notes to Financial Statements as of and for the Two Months Ended February 28, 2007 and the
Years Ended 
December 31, 2006 and 2005 (unaudited)
    
    615




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##### Table of Contents



INDEPENDENT AUDITORS REPORT
 
    
 - 1 -




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##### Table of Contents



LDH ENERGY MONT BELVIEU L.P.
 
 BALANCE SHEETS
FEBRUARY 28, 2007 AND DECEMBER 31, 2006
(Dollars in thousands)
 February 28,
    
    
    December 31,2007
    
    
    2006ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    18,993
    
    
    $
    12,599Accounts receivable  trade
    
    
    2,853
    
    
    
    2,746Accounts receivable  related parties
    
    
    127
    
    
    
    3,131Other current assets
    
    
    374
    
    
    
    516Total current assets
    
    
    22,347
    
    
    
    18,992PROPERTY, PLANT AND EQUIPMENT, AT COST (net of
accumulated depreciation of $16,403 and $15,651)
    
    
    90,144
    
    
    
    90,563INTANGIBLE ASSETS (net of accumulated amortization of
$7,531 and $7,325)
    
    
    10,332
    
    
    
    10,538OTHER LONG-TERM ASSETS
    
    
    1
    
    
    
    1TOTAL ASSETS
    
    $
    122,824
    
    
    $
    120,094LIABILITIES AND PARTNERS EQUITYCURRENT LIABILITIES:Accounts payable and accrued liabilities
    
    $
    2,900
    
    
    $
    464Accrued taxes other than income
    
    
    424
    
    
    
    1,652Total current liabilities
    
    
    3,324
    
    
    
    2,116COMMITMENTS AND CONTINGENCIES (NOTE 5)PARTNERS EQUITY
    
    
    119,500
    
    
    
    117,978TOTAL LIABILITIES AND PARTNERS EQUITY
    
    $
    122,824
    
    
    $
    120,094
  - 2 -




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##### Table of Contents



LDH ENERGY MONT BELVIEU L.P.
 
 STATEMENTS OF INCOME
FOR THE TWO MONTHS ENDED FEBRUARY 28, 2007
AND THE YEARS ENDED DECEMBER 31, 2006 AND 2005
(Dollars in thousands)
 February 28,
    
    
    December 31,2007
    
    
    2006
    
    
    2005(unaudited)OPERATING REVENUES:Storage revenue
    
    $
    3,000
    
    
    $
    17,200
    
    
    $
    16,029Shuttle revenue
    
    
    1,917
    
    
    
    6,865
    
    
    
    6,014Other
    
    
    2,076
    
    
    
    10,664
    
    
    
    9,872Total operating revenues
    
    
    6,993
    
    
    
    34,729
    
    
    
    31,915COSTS AND EXPENSES:Operating, general and administrative
    
    
    3,322
    
    
    
    6,611
    
    
    
    8,477Operating fuel and power
    
    
    851
    
    
    
    5,187
    
    
    
    2,915Depreciation and amortization
    
    
    958
    
    
    
    6,890
    
    
    
    7,512Taxes  other than income taxes
    
    
    390
    
    
    
    1,560
    
    
    
    1,895Total costs and expenses
    
    
    5,521
    
    
    
    20,248
    
    
    
    20,799OPERATING INCOME
    
    
    1,472
    
    
    
    14,481
    
    
    
    11,116OTHER INCOME
    
    
    127
    
    
    
    548
    
    
    
    440Income before provision for income taxes
    
    
    1,599
    
    
    
    15,029
    
    
    
    11,556PROVISION FOR INCOME TAXES
    
    
    77
    
    
    
    
    
    
    
    NET INCOME
    
    $
    1,522
    
    
    $
    15,029
    
    
    $
    11,556
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LDH ENERGY MONT BELVIEU L.P.
 
 STATEMENTS OF CASH FLOWS
FOR THE TWO MONTHS ENDED FEBRUARY 28, 2007
AND THE YEARS ENDED DECEMBER 31, 2006 AND 2005
(Dollars in thousands)
 February 28,
    
    
    December 31,2007
    
    
    2006
    
    
    2005(unaudited)OPERATING ACTIVITIES:Net income
    
    $
    1,522
    
    
    $
    15,029
    
    
    $
    11,556Adjustments to reconcile net income to cash provided by
operating activities:Depreciation and amortization
    
    
    958
    
    
    
    6,890
    
    
    
    7,512Net effect of changes in operating accounts:(Increase) decrease in accounts receivable  trade
    
    
    (9
    )
    
    
    426
    
    
    
    (682
    )Decrease (increase) in accounts receivable  related parties
    
    
    2,906
    
    
    
    (2,952
    )
    
    
    (61
    )Decrease (increase) in other current assets
    
    
    142
    
    
    
    676
    
    
    
    (778
    )Decrease (increase) in other long-term assets
    
    
    
    
    
    
    17
    
    
    
    (18
    )Increase (decrease) in accounts payable and accrued liabilities
    
    
    2,436
    
    
    
    (1,556
    )
    
    
    720(Decrease) increase in accounts payable, related parties
    
    
    
    
    
    
    (899
    )
    
    
    (428
    )(Decrease) increase in accrued taxes other than income
    
    
    (1,228
    )
    
    
    (217
    )
    
    
    1,684(Decrease) increase in long-term liabilities
    
    
    
    
    
    
    (330
    )
    
    
    182Net cash provided by operating activities
    
    
    6,727
    
    
    
    17,084
    
    
    
    19,687INVESTING ACTIVITIES:Capital expenditures
    
    
    (333
    )
    
    
    (4,794
    )
    
    
    (7,304
    )Net cash used in investing activities
    
    
    (333
    )
    
    
    (4,794
    )
    
    
    (7,304
    )FINANCING ACTIVITIES:Contributions
    
    
    
    
    
    
    5,347
    
    
    
    4,682Distributions
    
    
    
    
    
    
    (19,395
    )
    
    
    (17,895
    )Net cash used in financing activities
    
    
    
    
    
    
    (14,048
    )
    
    
    (13,213
    )NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    6,394
    
    
    
    (1,758
    )
    
    
    (830
    )CASH AND CASH EQUIVALENTS  January 1
    
    
    12,599
    
    
    
    14,357
    
    
    
    15,187CASH AND CASH EQUIVALENTS  February 28 and
December 31
    
    $
    18,993
    
    
    $
    12,599
    
    
    $
    14,357NON-CASH INVESTING ACTIVITIES:Net assets contributed from TE Products
    
    $
    
    
    
    $
    
    
    
    $
    1,429Net assets distributed to TE Products
    
    
    
    
    
    
    603
    
    
    
    
  - 4 -




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##### Table of Contents



LDH ENERGY MONT BELVIEU L.P.
 
 STATEMENTS OF PARTNERS EQUITY
FOR THE TWO MONTHS ENDED FEBRUARY 28, 2007
AND THE YEARS ENDED DECEMBER 31, 2006 AND 2005
(Dollars in thousands)
 TE Products
    
    
    Louis
    
    
    LDH EnergyPipeline
    
    
    Dreyfus
    
    
    MontCompany,
    
    
    Energy
    
    
    Belvieu GPLLC (1)
    
    
    Services L.P.
    
    
    LLC (2)
    
    
    TotalBALANCE  December 31, 2004 (unaudited)
    
    $
    84,330
    
    
    $
    32,854
    
    
    $
    644
    
    
    $
    117,828Net income
    
    
    7,402
    
    
    
    4,058
    
    
    
    96
    
    
    
    11,556Contributions
    
    
    5,663
    
    
    
    448
    
    
    
    
    
    
    
    6,111Distributions
    
    
    (12,382
    )
    
    
    (5,513
    )
    
    
    
    
    
    
    (17,895
    )BALANCE  December 31, 2005 (unaudited)
    
    
    85,013
    
    
    
    31,847
    
    
    
    740
    
    
    
    117,600Net income
    
    
    8,868
    
    
    
    6,028
    
    
    
    133
    
    
    
    15,029Contributions
    
    
    4,767
    
    
    
    580
    
    
    
    
    
    
    
    5,347Distributions
    
    
    (13,525
    )
    
    
    (6,473
    )
    
    
    
    
    
    
    (19,998
    )BALANCE  December 31, 2006
    
    
    85,123
    
    
    
    31,982
    
    
    
    873
    
    
    
    117,978Net income
    
    
    1,030
    
    
    
    481
    
    
    
    11
    
    
    
    1,522Contributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Distributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    BALANCE  February 28, 2007
    
    $
    86,153
    
    
    $
    32,463
    
    
    $
    884
    
    
    $
    119,500
 
 (1)
    
    Formerly TE Products Pipeline Company, Limited Partnership.(2)
    
    Formerly Mont Belvieu Venture, LLC.  - 5 -




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##### Table of Contents



LDH ENERGY MONT BELVIEU L.P.
 
 NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2007 AND DECEMBER 31, 2006 AND 2005 (Unaudited)
 1.
    
    ORGANIZATIONIn February 2000, TE Products Pipeline Company, LLC (formerly TE Products Pipeline Company,
Limited Partnership) (TE Products) entered into a joint development agreement (Development
Agreement) with Louis Dreyfus Plastics Corporation, now known as Louis Dreyfus Energy Services
L.P. (Louis Dreyfus), in which TE Products Mont Belvieu liquefied petroleum gas (LPG) storage
and shuttle transportation system was jointly marketed by Louis Dreyfus and TE Products under the
terms provided in the Development Agreement. The purpose of the Development Agreement was to expand
services to the upper Texas Gulf Coast energy marketplace by increasing pipeline throughput and the
mix of products handled through the existing system and by establishing new receipt and delivery
connections. The Development Agreement provided for a service-oriented, fee-based venture with no
commodity trading activity. TE Products operated the facilities under the Development Agreement.
The Development Agreement stipulated that if certain earnings thresholds were achieved, a
partnership between TE Products and Louis Dreyfus was to be created effective January 1, 2003. All
terms and earnings thresholds of the Development Agreement were met; therefore, as of January 1,
2003, TE Products and Louis Dreyfus formed LDH Energy Mont Belvieu L.P. (formerly Mont Belvieu
Storage Partners, L.P.) (the Partnership). The economic terms of the Partnership were the same
under the partnership agreement (Partnership Agreement) as those under the Development Agreement.
TE Products contributed property, plant, and equipment with a net book value of $67.0 million to
the Partnership. TE Products, a wholly owned subsidiary of TEPPCO Partners, L.P. (TEPPCO),
operated the facilities for the Partnership.Louis Dreyfus invested $6.1 million for expansion projects at Mont Belvieu that TE Products
was required to reimburse if the original Development Agreement was terminated by either party.
This deferred liability was also contributed and credited to the capital account of Louis Dreyfus
in the Partnership. TE Products and Louis Dreyfus each held a 49.5% interest in the Partnership as
a limited partner and a 50% interest in LDH Energy Mont Belvieu GP LLC (formerly Mont Belvieu
Venture, LLC,) the general partner (General Partner) of the Partnership; however, income and
distributions were shared as described in Note 11.The Partnership has approximately 36 million barrels of LPGs storage capacity and
approximately 7 million barrels of refined products storage capacity, including storage capacity
leased to outside parties, at the Mont Belvieu fractionation and storage complex. The Partnership
includes a short-haul transportation shuttle system, consisting of a complex system of pipelines
and interconnects, that ties Mont Belvieu, Texas to refinery and petrochemical facilities on the
upper Texas Gulf Coast. The Partnership also provides truck and rail car loading capability.
 6




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##### Table of Contents



2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESAccounts Receivable and Allowance for Doubtful Accounts The Partnerships customers
primarily consist of companies within the petroleum industry. The Partnership performs ongoing
credit evaluations of its customers and generally does not require material collateral. Trade
accounts receivable are recorded at the invoiced amount and do not bear interest. A provision for
losses on accounts receivable is established if it is determined that the Partnership will not
collect all or part of the outstanding balance. Collectibility is reviewed regularly, and an
allowance is established or adjusted, as necessary, using the specific identification method.Asset Retirement Obligations Asset retirement obligations (AROs) are legal obligations
associated with the retirement of tangible long-lived assets that result from its acquisition,
construction, development and/or normal operation. The Partnership records a liability for AROs
when incurred and capitalizes an increase in the carrying value of the related long-lived asset.
Over time, the liability is accreted to its present value each period, and
the capitalized cost is depreciated over the useful life of the related asset. The Partnership
will either settle its AROs at the recorded amount or incur a gain or loss upon settlement.The Partnerships assets consist primarily of a series of intrastate pipelines and storage
facilities along the upper Texas Gulf Coast. The Partnership has determined that it is obligated by
contractual or regulatory requirements to remove facilities or perform other remediation upon
retirement of the Partnership assets. However, the Partnership is not able to reasonably determine
the fair value of the AROs since future dismantlement and removal dates are indeterminate. It is
impossible to predict when demand for storage or transportation of the related products will cease.
The Partnership will record such AROs in the period in which more information becomes available for
the Partnership to reasonably estimate the settlement dates of the AROs.Cash and Cash Equivalents Cash and cash equivalents represent unrestricted cash on hand and
all highly liquid marketable securities with maturities of three months or less when purchased. The
carrying value of cash equivalents approximates fair value because of the short-term nature of
these investments.The Partnerships statements of cash flows are prepared using the indirect method. The
indirect method derives net cash flows from operating activities by adjusting net income to remove
(i) the effects of all deferrals of past operating cash receipts and payments, such as changes
during the period in inventory, deferred income and similar transactions, (ii) the effects of all
accruals of expected future operating cash receipts and cash payments, such as changes during the
period in receivables and payables, (iii) the effects of all items classified as investing or
financing cash flows, such as gains or losses on sale of property, plant and equipment or
extinguishment of debt, and (iv) other non-cash amounts such as depreciation, amortization and
changes in the fair market value of financial instruments.Contingencies Certain conditions may exist as of the date the Partnerships financial
statements are issued that may result in a loss to it, but which will only be resolved when one or
more future events occur or fail to occur. The Partnerships management and its legal counsel
assess such contingent liabilities, and such assessment inherently involves an exercise in
judgment. In assessing loss contingencies related to legal proceedings that are pending against the
Partnership or unasserted claims that may result in proceedings, the Partnerships legal counsel
evaluates the perceived merits of any legal proceedings or unasserted claims as well as the
perceived merits of the amount of relief sought or expected to be sought therein.If the assessment of a contingency indicates that it is probable that a material loss has been
incurred and the amount of liability can be estimated, then the estimated liability would be
accrued in the
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Partnerships financial statements. If the assessment indicates that a potentially
material loss contingency is not probable but is reasonably possible, or is probable but cannot be
estimated, then the nature of the contingent liability, together with an estimate of the range of
possible loss if determinable and material, is disclosed.Loss contingencies considered remote are generally not disclosed unless they involve
guarantees, in which case the guarantees would be disclosed. At February 28, 2007 and December 31,
2006, the Partnership had no liabilities for loss contingencies.Contribution of Assets Assets contributed to the Partnership are valued at the net book
value of the assets at the time of contribution.Estimates The preparation of financial statements in conformity with accounting principles
generally accepted in the United States (GAAP) requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting periods. Although
the Partnership believes these estimates are reasonable, actual results could differ from these
estimates.Fair Value of Current Assets and Current Liabilities The carrying amount of cash and cash
equivalents, accounts receivable, other current assets, accounts payable and accrued liabilities,
and other current liabilities approximates their fair value due to their short-term nature. The
fair values of these financial instruments are represented in the Partnerships balance sheets.Income Taxes The Partnership is a limited partnership. As such, the Partnership is not a
taxable entity for federal and state income tax purposes and does not directly pay federal and
state income tax. The Partnerships taxable income or loss, which may vary substantially from the
net income or net loss reported in the Partnerships statement of income, is includable in the
federal and state income tax returns of each partner. Accordingly, no recognition has been given to
federal or state income taxes for the Partnerships operations.Revised Texas Franchise Tax In May 2006, the State of Texas enacted a new business tax (the
Revised Texas Franchise Tax) that replaces its existing franchise tax. In general, legal
entities that do business in Texas are subject to the Revised Texas Franchise Tax. Limited
partnerships, limited liability companies, corporations, limited liability partnerships and joint
ventures are examples of the types of entities that are subject to the Revised Texas Franchise Tax.
As a result of the change in tax law, the Partnerships tax status in the state of Texas changed
from nontaxable to taxable. The Revised Texas Franchise Tax is considered an income tax for
purposes of adjustments to deferred tax liability, as the tax is determined by applying a tax rate
to a base that considers both revenues and expenses. The Revised Texas Franchise Tax becomes
effective for franchise tax reports due on or after January 1, 2008. The Revised Texas Franchise
Tax due in 2008 will be based on revenues earned during the 2007 fiscal year.The Revised Texas Franchise Tax is assessed at 1% of Texas-sourced taxable margin measured by
the ratio of gross receipts from business done in Texas to gross receipts from business done
everywhere. The taxable margin is computed as the lesser of (i) 70% of total revenue or (ii) total
revenues less (a) cost of goods sold or (b) compensation. The Revised Texas Franchise Tax is
calculated, paid and filed at an affiliated unitary group level. Generally, an affiliated group is
made up of one or more entities in which a controlling interest of more than 50% is owned by a
common owner or owners. Generally, a business is unitary if it is characterized by a sharing or
exchange of value between members of the group, and a synergy and mutual benefit all of the members
of the group achieved by working together.
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Since the Revised Texas Franchise Tax is determined by applying a tax rate to a base that
considers both revenues and expenses, it has characteristics of an income tax. Accordingly, the
Partnership determined the Revised Texas Franchise Tax should be accounted for as an income tax in
accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 109,
Accounting for Income Taxes.For the two months ended February 28, 2007, the Partnership recorded a $0.1 million current
tax liability. The offsetting charge is shown on the statement of income for the two months ended
February 28, 2007 as provision for income taxes.Accounting for Uncertainty in Income Taxes In accordance with Financial Accounting Standards
Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes, the Partnership
must recognize the tax effects of any uncertain tax positions it may adopt, if the position taken
by it is more likely than not sustainable. If a tax position meets such criteria, the tax effect
to be recognized by the Partnership would be the largest amount of benefit with more than a 50%
chance of being realized upon ultimate settlement with a taxing authority with full knowledge of
all relevant information. This guidance was effective January 1, 2007, and the adoption of this
guidance had no material impact on the Partnerships financial position, results of operations or
cash flows.Intangible Assets Intangible assets consist of contracts assumed in the acquisition of three
salt dome storage wells and other assets from ConocoPhillips on April 1, 2004. These contracts with
customers are for various fixed terms and have various evergreen renewal provisions. These
intangible assets are amortized on a straight-line basis, based upon the lives of the contracts
assuming the various renewals are exercised. The acquired intangible assets have various useful
lives ranging from 1 year to 11 years (see Note 8).Property, Plant, and Equipment The Partnership records property, plant, and equipment at
cost. Additions to property, plant and equipment, including major replacements or betterments, are
recorded at cost. The Partnership charges replacements and renewals of minor items of property that
do not materially increase values or extend useful lives to maintenance expense. Depreciation
expense is computed on the straight-line method using rates based upon expected useful lives of
various classes of assets (ranging from 2% to 20% per annum).The Partnership evaluates impairment of long-lived assets in accordance with SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets. Long-lived assets are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of the carrying amount of assets to be held and used is measured by a
comparison of the carrying amount of the asset to estimated future net cash flows expected to be
generated by the asset. If such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the assets exceeds the
estimated fair value of the assets. Assets to be disposed of would be separately presented in the
balance sheet and reported at the lower of the carrying amount or fair value less costs to sell,
and would no longer be depreciated. The assets and liabilities of a disposed group classified as
held for sale would be presented separately in the appropriate asset and liability sections of the
balance sheets.Revenue Recognition The Partnerships revenues are primarily earned from the storage and
shuttling of LPGs. In addition, the Partnership receives revenue from fees charged on butane
segregation, brine gathering, custody transfers, and other ancillary services. Storage revenues are
recognized based on volumes stored during the period, and shuttling revenues are recognized as LPGs
are out-loaded. Fee revenues are recognized when services are performed.
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3.
    
    RECENT ACCOUNTING DEVELOPMENTSIn September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS 157 defines
fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about
fair value measurements. SFAS 157 applies only to fair-value measurements that are already required
(or permitted) by other accounting standards and is expected to increase the consistency of those
measurements. SFAS 157 emphasizes that fair value is a market-based measurement that should be
determined based on the assumptions that market participants would use in pricing an asset or
liability. Companies will be required to disclose the extent to which fair value is used to measure
assets and liabilities, the inputs used to develop the measurements, and the effect of certain of
the measurements on earnings (or changes in net assets) for the period. Certain requirements of
SFAS 157 are effective for fiscal years beginning after November 15, 2007, and interim periods
within those fiscal years. The effective date for other requirements of SFAS 157 has been deferred
for one year. We adopted the provisions of SFAS 157 which are effective for fiscal years beginning
after November 15, 2007, and there was no impact on our financial statements. We are currently
evaluating the impact that the deferred provisions of SFAS 157 will have on the disclosures in our
financial statements in 2009.In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115. SFAS 159 permits entities
to choose to measure many financial assets and financial liabilities at fair value. Unrealized
gains and losses on items for which the fair value option has been elected would be reported in net
income. SFAS 159 also establishes presentation and disclosure requirements designed to draw
comparison between the different measurement attributes the company elects for similar types of
assets and liabilities. The Partnership adopted SFAS 159 on January 1, 2008. The Partnerships
adoption of this guidance did not have a material impact on its financial condition, results of
operations or cash flows since it did not elect to fair value any of its eligible financial assets
or liabilities.4.
    
    LEASE AGREEMENTS WITH CUSTOMERSThe Partnership has long-term storage contracts with various customers with terms ranging up
to five years. These noncancelable operating leases have varying annual monthly payments and
expiration dates. The Partnership recognized rental income from operating leases of $0.6 million,
$6.5 million and $8.1 million for the two months ended February 28, 2007 and the years ended
December 31, 2006 and 2005, respectively.The minimum future rentals to be received under noncancelable operating leases as of February
28, 2007 are as follows (in thousands):
 2007
    
    $
    3,8832008
    
    
    2,1952009
    
    
    1,9982010
    
    
    1,9982011
    
    
    540Thereafter
    
    
    Total
    
    $
    10,614
 5.
    
    COMMITMENTS AND CONTINGENCIESLegal Proceedings The Partnership is involved, from time to time, in various legal
proceedings arising in the ordinary course of business. While the ultimate results of these
proceedings cannot be
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predicted with certainty, the Partnership management believes these claims
will not have a material effect on the financial position, results of operations or cash flows. The
Partnership is not currently involved in any material claims or legal actions arising in the
ordinary course of business.Lease Commitments The Partnership recognized no rental expense for operating leases for the
two months ended February 28, 2007 and $0.2 million for each of the years ended December 31, 2006
and 2005. Commitments entered into prior to February 28, 2007 under noncancelable leases are
immaterial subsequent to February 28, 2007.6.
    
    RELATED-PARTY TRANSACTIONSThe Partnership has no employees and was managed by TE Products through February 28, 2007. TE
Products operated the Partnership and was reimbursed by the Partnership in accordance with the
terms of the Partnership Agreement for direct costs and expenses incurred on behalf of the
Partnership. Corporate overhead costs were not allocated to the Partnership as TE Products income
sharing participation was designed to reimburse TE Products for such overhead (see Note 11).For the two months ended February 28, 2007 and the years ended December 31, 2006 and 2005, the
Partnership has incurred $0.5 million, $2.9 million and $3.2 million, respectively, for direct
payroll and payroll-related expenses from TE Products. At February 28, 2007 and December 31, 2006,
the Partnership had a net receivable balance from TE Products of $0.2 million and $2.3 million,
respectively, for advances for operating costs, including payroll and related expenses for
operating the Partnership.Effective January 1, 2003, TE Products and the Partnership entered into a pipeline capacity
lease agreement, and for the two months ended February 28, 2007, the Partnership recognized a
nominal amount in rental expense related to this lease agreement. For each of the years ended
December 31, 2006 and 2005, the Partnership recognized $0.1 million in rental expense related to
this lease agreement.Effective January 1, 2003, the Partnership entered into an agreement with its affiliate, Louis
Dreyfus, to store one million barrels of low sulfur diesel fuel at the Mont Belvieu complex. At
February 28, 2007 and December 31, 2006, the Partnership had an outstanding receivable of $0.7
million and $0.8 million, respectively, from Louis Dreyfus related to this agreement.Per the terms of the Partnership Agreement, TE Products may store up to four million barrels,
9% of a total capacity of 43 million barrels, of product at Mont Belvieu at no cost. This agreement
was an accommodation to service TE Products need for storage from its mainline products pipeline
system, mainly for products owned by third-party customers in transit requiring temporary storage.
The four million barrels was estimated to be the maximum amount of storage TE Products would need
at any point both for its own products and products it was transporting for customers. Should TE
Products exceed the need for four million barrels of storage capacity, TE Products would pay the
market rate of storage for any excess barrels (see Note 12 regarding the sale of TE Products
interest in the Partnership).
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7.
    
    PROPERTY, PLANT, AND EQUIPMENTThe components of property, plant, and equipment at February 28, 2007 and December 31, 2006
were (in thousands):
 EstimatedUseful Life
    
    
    February 28,
    
    
    December 31,In Years
    
    
    2007
    
    
    2006Land
    
    
    
    
    
    $
    3,775
    
    
    $
    3,775Line pipe and fittings
    
    
    30-40
    
    
    
    36,180
    
    
    
    36,529Storage tanks and delivery facilities
    
    
    30-40
    
    
    
    38,326
    
    
    
    38,326Buildings and improvements
    
    
    30-40
    
    
    
    4,333
    
    
    
    4,333Machinery and equipment
    
    
    5-10
    
    
    
    16,888
    
    
    
    16,896Construction work in progress
    
    
    
    
    
    
    4,340
    
    
    
    4,734Other
    
    
    
    
    
    
    2,705
    
    
    
    1,621Total property, plant and equipment
    
    
    
    
    
    $
    106,547
    
    
    $
    106,214Less accumulated depreciation
    
    
    
    
    
    
    16,403
    
    
    
    15,651Net property, plant and equipment
    
    
    
    
    
    $
    90,144
    
    
    $
    90,563
 Depreciation expense on property, plant and equipment was $0.8 million, $5.0 million and $4.8
million for the two months ended February 28, 2007 and the years ended December 31, 2006 and 2005,
respectively.The Partnership regularly reviews its long-lived assets for impairment in accordance with
SFAS 144. The Partnership has identified no long-lived assets that would require impairment as of
February 28, 2007.8.
    
    INTANGIBLE ASSETSAt February 28, 2007 and December 31, 2006, the Partnerships intangible assets comprised of
customer contracts were (in thousands):
 February 28,
    
    
    December 31,2007
    
    
    2006Intangible assets
    
    $
    17,863
    
    
    $
    17,863Less accumulated amortization
    
    
    (7,531
    )
    
    
    (7,325
    )Net intangible assets
    
    $
    10,332
    
    
    $
    10,538
 SFAS No. 142, Goodwill and Other Intangible Assets,requires that intangible assets with
finite useful lives be amortized over their respective estimated useful lives. If an intangible
asset has a finite useful life, but the precise length of that life is not known, that intangible
asset shall be amortized over the best estimate of its useful life. At a minimum, the Partnership
will assess the useful lives and residual values of all intangible assets on an annual basis to
determine if adjustments are required. Amortization expense for amortizing intangible assets was
$0.2 million, $1.9 million and $2.7 million for the two months ended February 28, 2007 and the
years ended December 31, 2006 and 2005, respectively.
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Years EndingDecember 312007 (1)
    
    $
    1,2392008
    
    
    1,2392009
    
    
    1,2392010
    
    
    1,2392011
    
    
    1,239Thereafter
    
    
    4,343Total
    
    $
    10,538
 
 (1)
    
    Represents estimated amortization expense for the year ended December 31, 2007. Of
this amount, $0.2 million has been recognized through February 28, 2007. 9.
    
    OTHER OPERATING REVENUEThe components of other operating revenue for the two months ended February 28, 2007 and the
years ended December 31, 2006 and 2005 were (in thousands):
 February 28,
    
    
    December 31,2007
    
    
    2006
    
    
    2005(unaudited)Service revenue
    
    $
    317
    
    
    $
    2,221
    
    
    $
    1,904Butane segregation
    
    
    61
    
    
    
    361
    
    
    
    615Brine gathering fee
    
    
    635
    
    
    
    2,801
    
    
    
    1,941Custody transfers
    
    
    687
    
    
    
    2,534
    
    
    
    2,621Other
    
    
    376
    
    
    
    2,747
    
    
    
    2,791Total
    
    $
    2,076
    
    
    $
    10,664
    
    
    $
    9,872
 10.
    
    EMPLOYEE BENEFITSThe Partnership was charged for employee benefits costs related to the TEPPCO Retirement Cash
Balance Plan (TEPPCO RCBP) which was a noncontributory, trustee-administered pension plan,
and TEPPCOs plans for healthcare and life insurance benefits for retired employees, which were
on a contributory and noncontributory basis. Costs were allocated to the Partnership based on
the level of effort provided by TE Products employees. The TEPPCO RCBP plan was terminated
effective December 31, 2005 as a result of the acquisition of TEPPCOs general partner interest
by an affiliate of EPCO, Inc. (EPCO), and plan participants had the option to receive their
benefits either through a lump sum payment in 2006 or through an annuity. For those plan
participants who elected to receive an annuity, TEPPCO purchased an annuity contract from an
insurance company in which the plan participant owns the annuity, absolving TEPPCO of any
future obligation to the participant. EPCO maintained a 401(k) plan for the benefit of
employees providing services to the Partnership, and the Partnership reimbursed EPCO for the
cost of maintaining this plan.
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11.
    
    PARTNERS EQUITYAs specified in the Partnership Agreement, TE Products and Louis Dreyfus each held a 49.5%
interest in the Partnership as a limited partner and a 50% interest in the General Partner of
the Partnership. Capital accounts were the accounts established for TE Products, Louis Dreyfus,
and the General Partner (collectively, the Partners) for purposes of maintaining all items of
the Partnership income, gain, loss, deduction, and credit that was allocated among the Partners
as described below.Capital Contribution at Formation The General Partner was required to make a contribution to
the Partnership at formation, January 1, 2003, of $0.5 million of which TE Products and Louis
Dreyfus each contributed one half of the amount to the General Partner. TE Products contributed
property, plant, and equipment with a net book value of $67.0 million to the Partnership on
January 1, 2003. Additionally, Louis Dreyfus invested $6.1 million for expansion projects for
Mont Belvieu that TE Products was required to reimburse if either party terminated the original
Development Agreement. This deferred liability was also contributed and credited to the capital
account of Louis Dreyfus.Additional Capital Contributions Each Partner was required to contribute to the Partnership
the Partners sharing ratio of Discretionary Capital Expenditures. Discretionary Capital
Expenditures are expenditures that will enhance the productive capacity of the storage system
from its state just prior to the Development Agreement between TE Products and Louis Dreyfus.
Louis Dreyfus was required to make the first $5.0 million of Discretionary Capital
Expenditures, which Louis Dreyfus met through its $6.1 million investment for expansion
projects at Mont Belvieu as discussed above. Thereafter, each Partner contributed equally.Each quarter, TE Products was required to contribute an amount equal to the actual Mandatory
Capital Expenditures for the quarter. Mandatory Capital Expenditures are the capital
expenditures related to regulatory compliance, safety, or operational integrity of the
Partnerships assets that were originally contributed to the Partnership upon formation or as a
result of actions permitted in emergency situations per the Partnership Agreement.For the two months ended February 28, 2007, TE Products and Louis Dreyfus made no contributions
to the Partnership. For the years ended December 31, 2006 and 2005, TE Products contributed
$4.8 million and $5.7 million, respectively, and Louis Dreyfus contributed $0.6 million and
$0.4 million, respectively, to the Partnership. The 2005 contribution from TE Products includes
a combination of a noncash transfer of $1.4 million and cash contributions of $4.3 million.Loss Sharing TE Products was required to contribute an amount equal to any loss of the
Partnership, unless TE Products total capital contributions less total distributions was
greater than or equal to the maximum loss of $1.0 million. Thereafter, Louis Dreyfus shared
equally in losses in excess of $1.0 million.Income Sharing and Distributions Each partners share in the Partnerships earnings was
adjusted annually. For the two months ended February 28, 2007 and each of the years ended
December 31, 2006 and 2005, TE Products received the first $1.7 million per quarter (or
$6.78 million on an annual basis) of the Partnerships income before depreciation expense, as
defined in the Partnership Agreement. Any amount of the Partnerships annual income before
depreciation expense in excess of $6.78 million was allocated evenly between TE Products and
Louis Dreyfus. Depreciation expense on assets each party originally contributed to the
Partnership was allocated between TE Products and Louis Dreyfus based on the net book value of
the assets contributed. Depreciation expense on assets constructed or acquired by the
Partnership subsequent to formation was allocated evenly between TE Products and Louis Dreyfus.
For the two months ended February 28, 2007 and the years ended December 31, 2006 and 2005, TE
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Products, Louis Dreyfus, and the General Partners sharing ratios in the earnings of the
Partnership were 67.7%, 31.6%, and 0.7%, 59.0%, 40.1% and 0.9%, and 64.2%, 35.0% and 0.8%,
respectively.For the two months ended February 28, 2007, the Partnership made no distributions to TE
Products and Louis Dreyfus. For the years ended December 31, 2006 and 2005, the Partnership
distributed $13.5 million and $12.4 million to TE Products, respectively, and $6.5 million and
$5.5 million to Louis Dreyfus, respectively. The 2006 distributions to TE Products include a
combination of a noncash transfer of $0.6 million and cash distributions of $12.9 million.12.
    
    SUBSEQUENT EVENTSOn March 1, 2007, TE Products sold its interest in the Partnership and the General Partner to
Louis Dreyfus for approximately $137.3 million. In addition, TE Products received a
distribution from the Partnership of approximately $10.4 million related to prior earnings.
This sale was in compliance with an October 2006 order and consent agreement with the Bureau of
Competition of the Federal Trade Commission (FTC) and was completed in accordance with the
terms and conditions approved by the FTC in February 2007.In accordance with a transition services agreement between TE Products and Louis Dreyfus
effective as of March 1, 2007, TE Products will provide certain administrative services to the
Partnership for a period of up to two years after the sale, for a fee equal to 110% of the
direct costs and expenses TE Products and its affiliates incur to provide the transition
services to the Partnership. Payments for these services will be made according to the terms
specified in the transition services agreement.As stated in Note 6, under the terms of the Partnership Agreement, TE Products may store up to
four million barrels of product at Mont Belvieu at no cost. In connection with this sale,
beginning May 1, 2007 (with respect to propane) and beginning April 1, 2008 (with respect to
other products), TE Products rights to such storage at no cost are terminated. Should TE
Products need to use the Partnerships storage facilities for the storage of propane after
April 30, 2007 and for the storage of other products after March 31, 2008, it may be required
to pay the Partnership the market rate for storage.
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EXHIBIT INDEX
 ExhibitNumber
    
    Description3.1
    
    Certificate of Limited Partnership of TEPPCO Partners, L.P. (Filed as Exhibit
3.2 to the Registration Statement of TEPPCO Partners, L.P. (Commission File No.
33-32203) and incorporated herein by reference).3.2
    
    Fourth Amended and Restated Agreement of Limited Partnership of TEPPCO
Partners, L.P., dated December 8, 2006 (Filed as Exhibit 3 to the Current Report on
Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) filed on December 13,
2006).3.3
    
    Amended and Restated Limited Liability Company Agreement of Texas Eastern
Products Pipeline Company, LLC (Filed as Exhibit 3 to the Current Report on Form 8-K of
TEPPCO Partners, L.P. (Commission File No. 1-10403) filed on May 10, 2007 and
incorporated herein by reference).3.4
    
    First Amendment to Fourth Amended and Restated Partnership Agreement of TEPPCO
Partners, L.P. dated as of December 27, 2007 (Filed as Exhibit 3.1 to Current Report on
Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) filed December 28, 2007
and incorporated herein by reference).4.1
    
    Form of Certificate representing Limited Partner Units (Filed as Exhibit 4.1 to
the Registration Statement of TEPPCO Partners, L.P. (Commission File No. 33-32203) and
incorporated herein by reference).4.2
    
    Form of Certificate representing Class B Units (Filed as Exhibit 4.3 to Form
10-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended December
31, 1998 and incorporated herein by reference).4.3
    
    Form of Indenture between TEPPCO Partners, L.P., as issuer, TE Products
Pipeline Company, Limited Partnership, TCTM, L.P., TEPPCO Midstream Companies, L.P. and
Jonah Gas Gathering Company, as subsidiary guarantors, and First Union National Bank,
NA, as trustee, dated as of February 20, 2002 (Filed as Exhibit 99.2 to Form 8-K of
TEPPCO Partners, L.P. (Commission File No. 1-10403) dated as of February 20, 2002 and
incorporated herein by reference).4.4
    
    First Supplemental Indenture between TEPPCO Partners, L.P., as issuer, TE
Products Pipeline Company, Limited Partnership, TCTM, L.P., TEPPCO Midstream Companies,
L.P. and Jonah Gas Gathering Company, as subsidiary guarantors, and First Union
National Bank, NA, as trustee, dated as of February 20, 2002 (Filed as Exhibit 99.3 to
Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) dated as of February
20, 2002 and incorporated herein by reference).4.5
    
    Second Supplemental Indenture, dated as of June 27, 2002, among TEPPCO
Partners, L.P., as issuer, TE Products Pipeline Company, Limited Partnership, TCTM,
L.P., TEPPCO Midstream Companies, L.P., and Jonah Gas Gathering Company, as Initial
Subsidiary Guarantors, and Val Verde Gas Gathering Company, L.P., as New Subsidiary
Guarantor, and Wachovia Bank, National Association, formerly known as First Union
National Bank, as trustee (Filed as Exhibit 4.6 to Form 10-Q of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the quarter ended June 30, 2002 and incorporated
herein by reference).




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ExhibitNumber
    
    Description4.6
    
    Third Supplemental Indenture among TEPPCO Partners, L.P. as issuer, TE Products
Pipeline Company, Limited Partnership, TCTM, L.P., TEPPCO Midstream Companies, L.P.,
Jonah Gas Gathering Company and Val Verde Gas Gathering Company, L.P. as Subsidiary
Guarantors, and Wachovia Bank, National Association, as trustee, dated as of January
30, 2003 (Filed as Exhibit 4.7 to Form 10-K of TEPPCO Partners, L.P. (Commission File
No. 1-10403) for the year ended December 31, 2002 and incorporated herein by
reference).4.7
    
    Full Release of Guarantee dated as of July 31, 2006 by Wachovia Bank, National
Association, as trustee, in favor of Jonah Gas Gathering Company (Filed as Exhibit 4.8
to Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter
ended September 30, 2006 and incorporated herein by reference).4.8
    
    Indenture, dated as of May 14, 2007, by and among TEPPCO Partners, L.P., as
issuer, TE Products Pipeline Company, Limited Partnership, TCTM, L.P., TEPPCO Midstream
Companies, L.P. and Val Verde Gas Gathering Company, L.P., as subsidiary guarantors,
and The Bank of New York Trust Company, N.A., as trustee (Filed as Exhibit 99.1 to the
Current Report on Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) filed
on May 15, 2007 and incorporated herein by reference).4.9
    
    First Supplemental Indenture, dated as of May 18, 2007, by and among TEPPCO
Partners, L.P., as issuer, TE Products Pipeline Company, Limited Partnership, TCTM,
L.P., TEPPCO Midstream Companies, L.P. and Val Verde Gas Gathering Company, L.P., as
subsidiary guarantors, and The Bank of New York Trust Company, N.A., as trustee (Filed
as Exhibit 4.2 to the Current Report on Form 8-K of TEPPCO Partners, L.P. (Commission
File No. 1-10403) filed on May 18, 2007 and incorporated herein by reference).4.10
    
    Second Supplemental Indenture, dated as of June 30, 2007, by and among TEPPCO
Partners, L.P., as issuer, TE Products Pipeline Company, Limited Partnership, TCTM,
L.P., TEPPCO Midstream Companies, L.P. , Val Verde Gas Gathering Company, L.P., TE
Products Pipeline Company, LLC and TEPPCO Midstream Companies, LLC, as subsidiary
guarantors, and The Bank of New York Trust Company, N.A., as trustee (Filed as Exhibit
4.2 to the Current Report on Form 8-K of TE Products Pipeline Company, LLC (Commission
File No. 1-13603) filed on July 6, 2007 and incorporated herein by reference).4.11
    
    Fourth Supplemental Indenture, dated as of June 30, 2007, by and among TEPPCO
Partners, L.P., as issuer, TE Products Pipeline Company, Limited Partnership, TCTM,
L.P., TEPPCO Midstream Companies, L.P., Val Verde Gas Gathering Company, L.P., TE
Products Pipeline Company, LLC and TEPPCO Midstream Companies, LLC, as subsidiary
guarantors, and U.S. Bank National Association, as trustee (Filed as Exhibit 4.3 to the
Current Report on Form 8-K of TE Products Pipeline Company, LLC (Commission File No.
1-13603) filed on July 6, 2007 and incorporated herein by reference).4.12
    
    Fourth Amendment to Amended and Restated Credit Agreement and Waiver, dated as
of June 29, 2007, by and among TEPPCO Partners, L.P., the Borrower, several banks and
other financial institutions, the Lenders, SunTrust Bank, as the Administrative Agent
for the Lenders and as the LC Issuing Bank, Wachovia Bank, National Association, as
Syndication Agent, and BNP Paribas, JPMorgan Chase Bank, N.A., and The Royal Bank of
Scotland Plc, as Co-Documentation. (Filed as Exhibit 4.14 to Form 10-Q of TEPPCO
Partners, L.P. (Commision File No. 1-10403) for the quarter ended June 30, 2007 and
incorporated herein by reference).




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ExhibitNumber
    
    Description10.1+
    
    Duke Energy Corporation Executive Savings Plan (Filed as Exhibit 10.7 to Form
10-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended December
31, 1999 and incorporated herein by reference).10.2+
    
    Duke Energy Corporation Executive Cash Balance Plan (Filed as Exhibit 10.8 to
Form 10-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended
December 31, 1999 and incorporated herein by reference).10.3+
    
    Duke Energy Corporation Retirement Benefit Equalization Plan (Filed as Exhibit
10.9 to Form 10-K for TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year
ended December 31, 1999 and incorporated herein by reference).10.4+
    
    Texas Eastern Products Pipeline Company 1994 Long Term Incentive Plan executed
on March 8, 1994 (Filed as Exhibit 10.1 to Form 10-Q of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the quarter ended March 31, 1994 and incorporated
herein by reference).10.5+
    
    Texas Eastern Products Pipeline Company 1994 Long Term Incentive Plan,
Amendment 1, effective January 16, 1995 (Filed as Exhibit 10.12 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the quarter ended June 30, 1999 and
incorporated herein by reference).10.6+
    
    Form of Employment Agreement between the Company and Thomas R. Harper, Charles
H. Leonard, James C. Ruth, John N. Goodpasture, Leonard W. Mallett, Stephen W. Russell,
C. Bruce Shaffer, and Barbara A. Carroll (Filed as Exhibit 10.20 to Form 10-K of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the year ended December 31, 1998 and
incorporated herein by reference).10.7
    
    Services and Transportation Agreement between TE Products Pipeline Company,
Limited Partnership and Fina Oil and Chemical Company, BASF Corporation and BASF Fina
Petrochemical Limited Partnership, dated February 9, 1999 (Filed as Exhibit 10.22 to
Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended
March 31, 1999 and incorporated herein by reference).10.8
    
    Call Option Agreement, dated February 9, 1999 (Filed as Exhibit 10.23 to Form
10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended March
31, 1999 and incorporated herein by reference).10.9+
    
    Form of Employment and Non-Compete Agreement between the Company and
J. Michael Cockrell effective January 1, 1999 (Filed as Exhibit 10.29 to Form 10-Q
of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended September
30, 1999 and incorporated herein by reference).10.10+
    
    Texas Eastern Products Pipeline Company Non-employee Directors Unit Accumulation
Plan, effective April 1, 1999 (Filed as Exhibit 10.30 to Form 10-Q of TEPPCO Partners,
L.P. (Commission File No. 1-10403) for the quarter ended September 30, 1999 and
incorporated herein by reference).10.11+
    
    Texas Eastern Products Pipeline Company Non-employee Directors Deferred Compensation
Plan, effective November 1, 1999 (Filed as Exhibit 10.31 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the quarter ended September 30, 1999
and incorporated herein by reference).10.12+
    
    Texas Eastern Products Pipeline Company Phantom Unit Retention Plan, effective August
25, 1999 (Filed as Exhibit 10.32 to Form 10-Q of TEPPCO Partners, L.P. (Commission File
No. 1-10403) for the quarter ended September 30, 1999 and incorporated herein by
reference).10.13+
    
    Texas Eastern Products Pipeline Company, LLC 2000 Long Term Incentive Plan, Amendment
and Restatement, effective January 1, 2000 (Filed as Exhibit 10.28 to Form 10-K of
TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended December 31,
2000 and incorporated herein by reference).




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##### Table of Contents



ExhibitNumber
    
    Description10.14+
    
    TEPPCO Supplemental Benefit Plan, effective April 1, 2000 (Filed as Exhibit 10.29 to
Form 10-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended
December 31, 2000 and incorporated herein by reference).10.15
    
    Contribution, Assignment and Amendment Agreement among TEPPCO Partners, L.P.,
TE Products Pipeline Company, Limited Partnership, TCTM, L.P., Texas Eastern Products
Pipeline Company, LLC, and TEPPCO GP, Inc., dated July 26, 2001 (Filed as Exhibit 3.6
to Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter
ended June 30, 2001 and incorporated herein by reference).10.16
    
    Certificate of Formation of TEPPCO Colorado, LLC (Filed as Exhibit 3.2 to Form
10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended March
31, 1998 and incorporated herein by reference).10.17
    
    Unanimous Written Consent of the Board of Directors of TEPPCO GP, Inc. dated
February 13, 2002 (Filed as Exhibit 10.41 to Form 10-K of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the year ended December 31, 2001 and incorporated
herein by reference).10.18
    
    Purchase and Sale Agreement between Burlington Resources Gathering Inc. as
Seller and TEPPCO Partners, L.P., as Buyer, dated May 24, 2002 (Filed as Exhibit 99.1
to Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) dated as of July
2, 2002 and incorporated herein by reference).10.19
    
    Agreement of Limited Partnership of Val Verde Gas Gathering Company, L.P.,
dated May 29, 2002 (Filed as Exhibit 10.48 to Form 10-Q of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the quarter ended June 30, 2002 and incorporated
herein by reference).10.20+
    
    Texas Eastern Products Pipeline Company, LLC 2002 Phantom Unit Retention Plan,
effective June 1, 2002 (Filed as Exhibit 10.49 to Form 10-Q of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the quarter ended June 30, 2002 and incorporated
herein by reference).10.21+
    
    Amended and Restated TEPPCO Supplemental Benefit Plan, effective November 1, 2002
(Filed as Exhibit 10.44 to Form 10-K of TEPPCO Partners, L.P. (Commission File No.
1-10403) for the year ended December 31, 2002 and incorporated herein by reference).10.22+
    
    Texas Eastern Products Pipeline Company, LLC 2000 Long Term Incentive Plan, Second
Amendment and Restatement, effective January 1, 2003 (Filed as Exhibit 10.45 to Form
10-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended December
31, 2002 and incorporated herein by reference).10.23+
    
    Amended and Restated Texas Eastern Products Pipeline Company, LLC Management
Incentive Compensation Plan, effective January 1, 2003 (Filed as Exhibit 10.46 to Form
10-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended December
31, 2002 and incorporated herein by reference).10.24+
    
    Amended and Restated TEPPCO Retirement Cash Balance Plan, effective January 1, 2002
(Filed as Exhibit 10.47 to Form 10-K of TEPPCO Partners, L.P. (Commission File No.
1-10403) for the year ended December 31, 2002 and incorporated herein by reference).10.25
    
    Formation Agreement between Panhandle Eastern Pipe Line Company and Marathon
Ashland Petroleum LLC and TE Products Pipeline Company, Limited Partnership, dated as
of August 10, 2000 (Filed as Exhibit 10.48 to Form 10-K of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the year ended December 31, 2002 and incorporated
herein by reference).




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##### Table of Contents



ExhibitNumber
    
    Description10.26
    
    Amended and Restated Limited Liability Company Agreement of Centennial
Pipeline LLC dated as of August 10, 2000 (Filed as Exhibit 10.49 to Form 10-K of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the year ended December 31, 2002 and
incorporated herein by reference).10.27
    
    Guaranty Agreement, dated as of September 27, 2002, between TE Products
Pipeline Company, Limited Partnership and Marathon Ashland Petroleum LLC for Note
Agreements of Centennial Pipeline LLC (Filed as Exhibit 10.50 to Form 10-K of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the year ended December 31, 2002 and
incorporated herein by reference).10.28
    
    LLC Membership Interest Purchase Agreement By and Between CMS Panhandle
Holdings, LLC, As Seller and Marathon Ashland Petroleum LLC and TE Products Pipeline
Company, Limited Partnership, Severally as Buyers, dated February 10, 2003 (Filed as
Exhibit 10.51 to Form 10-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) for
the year ended December 31, 2002 and incorporated herein by reference).10.29
    
    Amended and Restated Credit Agreement among TEPPCO Partners, L.P., as
Borrower, SunTrust Bank, as Administrative Agent and LC Issuing Bank and The Lenders
Party Hereto, as Lenders dated as of October 21, 2004 ($600,000,000 Revolving Facility)
(Filed as Exhibit 99.1 to Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403)
dated as of October 21, 2004 and incorporated herein by reference).10.30+
    
    Texas Eastern Products Pipeline Company Amended and Restated Non-employee Directors
Deferred Compensation Plan, effective April 1, 2002 (Filed as Exhibit 10.42 to Form
10-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended December
31, 2004 and incorporated herein by reference).10.31+
    
    Texas Eastern Products Pipeline Company Second Amended and Restated Non-employee
Directors Unit Accumulation Plan, effective January 1, 2004 (Filed as Exhibit 10.41 to
Form 10-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended
December 31, 2004 and incorporated herein by reference).10.32+
    
    Texas Eastern Products Pipeline Company, LLC 2005 Phantom Unit Plan, dated February
23, 2005, but effective as of January 1, 2005 (Filed as Exhibit 10.4 to Form 10-Q/A of
TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended June 30, 2005
and incorporated herein by reference).10.33
    
    First Amendment to Amended and Restated Credit Agreement, dated as of February
23, 2005, by and among TEPPCO Partners, L.P., the Borrower, several banks and other
financial institutions, the Lenders, SunTrust Bank, as the Administrative Agent for the
Lenders, Wachovia Bank, National Association, as Syndication Agent, and BNP Paribas,
JPMorgan Chase Bank, N.A. and KeyBank, N.A. as Co-Documentation Agents (Filed as
Exhibit 99.1 to Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) dated
as of February 24, 2005 and incorporated herein by reference).10.34+
    
    Supplemental Agreement to Employment and Non-Compete Agreement between the Company
and J. Michael Cockrell dated as of February 23, 2005 (Filed as Exhibit 10.2 to Form
10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended March
31, 2005 and incorporated herein by reference).10.35+
    
    Supplemental Form Agreement to Form of Employment Agreement between the Company and
John N. Goodpasture, Stephen W. Russell, C. Bruce Shaffer and Barbara A. Carroll dated
as of February 23, 2005 (Filed as Exhibit 10.3 to Form 10-Q of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the quarter ended March 31, 2005 and incorporated
herein by reference).




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##### Table of Contents



ExhibitNumber
    
    Description10.36+
    
    Supplemental Form Agreement to Form of Employment and Agreement between the Company
and Thomas R. Harper, Charles H. Leonard, James C. Ruth and Leonard W. Mallett dated as
of February 23, 2005 (Filed as Exhibit 10.4 to Form 10-Q of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the quarter ended March 31, 2005 and incorporated
herein by reference).10.37+
    
    Amendments to the TEPPCO Retirement Cash Balance Plan and the TEPPCO Supplemental
Benefit Plan dated as of May 27, 2005 (Filed as Exhibit 10.1 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the quarter ended June 30, 2005 and
incorporated herein by reference).10.38
    
    Second Amendment to Amended and Restated Credit Agreement, dated as of
December 13, 2005, by and among TEPPCO Partners, L.P., the Borrower, several banks and
other financial institutions, the Lenders, SunTrust Bank, as the Administrative Agent
for the Lenders, Wachovia Bank, National Association, as Syndication Agent, and BNP
Paribas, JPMorgan Chase Bank, N.A. and KeyBank, N.A., as Co-Documentation Agents
(Filed as Exhibit 99.1 to Form 8-K of TEPPCO Partners, L.P. (Commission File No.
1-10403) dated as of December 13, 2005 and incorporated herein by reference).10.39+
    
    Texas Eastern Products Pipeline Company, LLC 2000 Long Term Incentive Plan Notice of
2006 Award (Filed as Exhibit 10.1 to Form 10-Q of TEPPCO Partners, L.P. (Commission
File No. 1-10403) for the quarter ended June 30, 2006 and incorporated herein by
reference).10.40+
    
    Texas Eastern Products Pipeline Company, LLC 2005 Phantom Unit Plan Notice of 2006
Award (Filed as Exhibit 10.2 to Form 10-Q of TEPPCO Partners, L.P. (Commission File No.
1-10403) for the quarter ended June 30, 2006 and incorporated herein by reference).10.41
    
    Third Amendment to Amended and Restated Credit Agreement, dated as of July 31,
2006, by and among TEPPCO Partners, L.P., the Borrower, several banks and other
financial institutions, the Lenders, SunTrust Bank, as the Administrative Agent for the
Lenders and as the LC Issuing Bank, Wachovia Bank, National Association, as Syndication
Agent, and BNP Paribas, JPMorgan Chase Bank, N.A., and The Royal Bank of Scotland Plc,
as Co-Documentation Agents (Filed as Exhibit 10.3 to Current Report on Form 8-K of
TEPPCO Partners, L.P. (Commission File No. 1-10403) dated as of August 3, 2006 and
incorporated herein by reference).10.42
    
    Amended and Restated Partnership Agreement of Jonah Gas Gathering Company
dated as of August 1, 2006 (Filed as Exhibit 10.1 to Current Report on Form 8-K of
TEPPCO Partners, L.P. (Commission File No. 1-10403) dated as of August 3, 2006 and
incorporated herein by reference).10.43
    
    Contribution Agreement among TEPPCO GP, Inc., TEPPCO Midstream Companies, L.P.
and Enterprise Gas Processing, LLC dated as of August 1, 2006 (Filed as Exhibit 10.2 to
Current Report on Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403)
dated as of August 3, 2006 and incorporated herein by reference).10.44
    
    Transaction Agreement by and between TEPPCO Partners, L.P. and Texas Eastern
Products Pipeline Company, LLC dated as of September 5, 2006 (Filed as Exhibit 10 to
Current Report on Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) filed
September 12, 2006 and incorporated herein by reference).




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##### Table of Contents



ExhibitNumber
    
    Description10.45
    
    Fourth Amended and Restated Administrative Services Agreement by and among
EPCO, Inc., Enterprise Products Partners L.P., Enterprise Products Operating L.P.,
Enterprise Products GP, LLC, Enterprise Products OLPGP, Inc., Enterprise GP Holdings
L.P., Duncan Energy Partners L.P., DEP Holdings, LLC, DEP Operating Partnership, L.P.,
EPE Holdings, LLC, TEPPCO Partners, L.P., Texas Eastern Products Pipeline Company, LLC,
TE Products Pipeline Company, Limited Partnership, TEPPCO Midstream Companies, L.P.,
TCTM, L.P. and TEPPCO GP, Inc. dated January 30, 2007, but effective as of February 5,
2007 (Filed as Exhibit 10.18 to Current Report on Form 8-K of Duncan Energy Partners
L.P. (Commission File No. 1-33266) filed February 5, 2007 and incorporated herein by
reference).10.46+
    
    Form of Supplemental Agreement to Employment Agreement between Texas Eastern Products
Pipeline Company, LLC and assumed by EPCO, Inc., and John N. Goodpasture, Samuel N.
Brown and J. Michael Cockrell (Filed as Exhibit 10.62 to Form 10-K of TEPPCO Partners,
L.P. (Commission File No. 1-10403) for the year ended December 31, 2006 and
incorporated herein by reference).10.47+
    
    Form of Retention Agreement (Filed as Exhibit 10.63 to Form 10-K of TEPPCO Partners,
L.P. (Commission File No. 1-10403) for the year ended December 31, 2006 and
incorporated herein by reference).10.48
    
    Second Amended and Restated Agreement of Limited Partnership of TCTM, L.P. by
and between TEPPCO GP, Inc. and TEPPCO Partners, L.P. dated as of February 27, 2007
(Filed as Exhibit 10.65 to Form 10-K of TEPPCO Partners, L.P. (Commission File No.
1-10403) for the year ended December 31, 2006 and incorporated herein by reference).10.49
    
    First Amendment to the Fourth Amended and Restated Administrative Services
Agreement by and among EPCO, Inc., Enterprise Products Partners L.P., Enterprise
Products Operating L.P., Enterprise Products GP, LLC, Enterprise Products OLPGP, Inc.,
Enterprise GP Holdings L.P., Duncan Energy Partners L.P., DEP Holdings, LLC, DEP
Operating Partnership, L.P., EPE Holdings, LLC, TEPPCO Partners, L.P., Texas Eastern
Products Pipeline Company, LLC, TE Products Pipeline Company, Limited Partnership,
TEPPCO Midstream Companies, L.P., TCTM, L.P. and TEPPCO GP, Inc. dated February 28,
2007 (Filed as Exhibit 10.8 to Form 10-K of Enterprise Products Partners L.P.
(Commission File No. 1-14323) for the year ended December 31, 2006 and
incorporated herein by reference).10.50
    
    Replacement of Capital Covenant, dated May 18, 2007, executed by TEPPCO
Partners, L.P., TE Products Pipeline Company, Limited Partnership, TCTM, L.P., TEPPCO
Midstream Companies, L.P. and Val Verde Gas Gathering Company, L.P. in favor of the
covered debt holders described therein (Filed as Exhibit 99.1 to the Current Report on
Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) filed on May 18, 2007
and incorporated herein by reference).10.51
    
    Company Agreement of TE Products Pipeline Company, LLC by and between TEPPCO
GP, Inc. and TEPPCO Partners, L.P. dated as of June 30, 2007 (Filed as Exhibit 3.2 to
the Current Report on Form 8-K of TE Products Pipeline Company, LLC (Commission File
No. 1-13603) filed on July 6, 2007 and incorporated herein by reference).10.52
    
    Company Agreement of TEPPCO Midstream Companies, LLC by and between TEPPCO GP,
Inc. and TEPPCO Partners, L.P. dated as of June 30, 2007 (Filed as Exhibit 10.5 to Form
10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended June
30, 2007 and incorporated herein by reference).




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##### Table of Contents



ExhibitNumber
    
    Description10.53
    
    Second Amendment to Fourth Amended and Restated Administrative Services
Agreement dated August 7, 2007, but effective as of May 7, 2007 (Filed as Exhibit 10.1
to Form 10-Q of Duncan Energy Partners L.P. (Commission File No. 1-33266) for the
quarter ended June 30, 2007 and incorporated herein by reference).10.54
    
    Assignment, Assumption and Amendment No. 2 to Guaranty Agreement, dated as of
May 21, 2007, by and among TE Products Pipeline Company, Limited Partnership, Marathon
Petroleum Company, LLC and Marathon Oil Corporation (Filed as Exhibit 10.7 to Form 10-Q
of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended June 30,
2007 and incorporated herein by reference).10.55+
    
    Form of TPP Employee Unit Appreciation Right Grant of Texas Eastern Products Pipeline
Company, LLC under the EPCO, Inc. 2006 TPP Long-Term Incentive Plan (Filed as Exhibit
10.1 to the Current Report on Form 8-K of TEPPCO Partners, L.P. (Commission File No.
1-10403) filed on May 25, 2007 and incorporated herein by reference).10.56+
    
    Form of TPP Director Unit Appreciation Right Grant of Texas Eastern Products Pipeline
Company, LLC under the EPCO, Inc. 2006 TPP Long-Term Incentive Plan (Filed as Exhibit
10.8 to Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the
quarter ended March 31, 2007 and incorporated herein by reference).10.57+
    
    Form of Phantom Unit Grant for Directors, as amended, of Texas Eastern Products
Pipeline Company, LLC under the EPCO, Inc. TPP Long-Term Incentive Plan (Filed as
Exhibit 10.3 to Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for
the quarter ended June 30, 2007 and incorporated herein by reference).10.58+
    
    Form of TPP Employee Restricted Unit Grant, as amended, of Texas Eastern Products
Pipeline Company, LLC under the EPCO, Inc. 2006 TPP Long-Term Incentive Plan (Filed as
Exhibit 10.1 to Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for
the quarter ended September 30, 2007 and incorporated herein by reference).10.59+
    
    Form of TPP Employee Option Grant, as amended, of Texas Eastern Products Pipeline
Company, LLC under the EPCO, Inc. 2006 TPP Long-Term Incentive Plan (Filed as Exhibit
10.2 to Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the
quarter ended September 30, 2007 and incorporated herein by reference).10.60
    
    Fifth Amendment to Amended and Restated Credit Agreement, dated as of December
18, 2007, by and among TEPPCO Partners, L.P., the Borrower, the several banks and other
financial institutions party thereto and SunTrust Bank, as the administrative agent for
the lenders (Filed as Exhibit 10.1 to Current Report on Form 8-K of TEPPCO Partners,
L.P. (Commission File No. 1-10403) filed December 21, 2007 and incorporated herein by
reference).10.61
    
    Term Credit Agreement dated as of December 21, 2007, by and among TEPPCO
Partners, L.P., the banks and other financial institutions party thereto and SunTrust
Bank, as the administrative agent for the lenders (Filed as Exhibit 10.1 to Current
Report on Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) filed
December 28, 2007 and incorporated herein by reference).10.62
    
    Amended and Restated Guaranty Agreement, dated as of January 17, 2008, by and
among The Prudential Insurance Company of America, TCTM, L.P., TEPPCO Midstream
Companies, LLC, TEPPCO Partners, L.P. and TE Products Pipeline Company, LLC (Filed as
Exhibit 10.1 to Current Report on Form 8-K of TEPPCO Partners, L.P. (Commission File
No. 1-10403) filed January 24, 2008 and incorporated herein by reference).




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##### Table of Contents



ExhibitNumber
    
    Description10.63
    
    Asset Purchase Agreement, dated February 1, 2008, by and among TEPPCO Marine
Services, LLC, TEPPCO Partners, L.P., Cenac Towing Co., Inc., Cenac Offshore, L.L.C.
and Mr. Arlen B. Cenac, Jr. (Filed as Exhibit 2 to Current Report on Form 8-K of TEPPCO
Partners, L.P. (Commission File No. 1-10403) filed February 7, 2008 and incorporated
herein by reference).10.64
    
    Transitional Operating Agreement, dated February 1, 2008, by and among TEPPCO
Marine Services, LLC, Cenac Towing Co., Inc., Cenac Offshore, L.L.C. and Mr. Arlen B.
Cenac, Jr. (Filed as Exhibit 10 to Current Report on Form 8-K of TEPPCO Partners, L.P.
(Commission File No. 1-10403) filed February 7, 2008 and incorporated herein by
reference).12.1*
    
    Statement of Computation of Ratio of Earnings to Fixed Charges.16
    
    Letter from KPMG LLP to the Securities and Exchange Commission dated April 11,
2006 (Filed as Exhibit 16.1 to Current Report on Form 8-K of TEPPCO Partners, L.P.
(Commission File No. 1-10403) filed April 11, 2006 and incorporated herein by
reference).21*
    
    Subsidiaries of TEPPCO Partners, L.P.23.1*
    
    Consent of Deloitte & Touche LLP  TEPPCO Partners, L.P. and subsidiaries.23.2*
    
    Consent of Deloitte & Touche LLP  Jonah Gas Gathering Company and subsidiary.23.3*
    
    Consent of Deloitte & Touche LLP  LDH Energy Mont Belvieu L.P. (formerly Mont
Belvieu Storage Partners, L.P.)23.4*
    
    Consent of KPMG LLP.24*
    
    Powers of Attorney.31.1*
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule
15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.31.2*
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule
15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.32.1**
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.32.2**
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith.**
    
    Furnished herewith pursuant to Item 601(b)-(32) of Regulation S-K.+
    
    A management contract or compensation plan or arrangement.