##### 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, 2006
 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
 o
  þ 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
    
    
    1PART IITEMS 1
    
    Business and Properties
    
    
    2AND 2.ITEM 1A.
    
    Risk Factors
    
    
    26ITEM 1B.
    
    Unresolved Staff Comments
    
    
    40ITEM 3.
    
    Legal Proceedings
    
    
    40ITEM 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    43PART IIITEM 5.
    
    Market for Registrants Units and Related Unitholder Matters and Issuer Purchases of Equity Securities
    
    
    44ITEM 6.
    
    Selected Financial Data
    
    
    46ITEM 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    47ITEM 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    77ITEM 8.
    
    Financial Statements and Supplementary Data
    
    
    79ITEM 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    79ITEM 9A.
    
    Controls and Procedures
    
    
    80ITEM 9B.
    
    Other Information
    
    
    82PART IIIITEM 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    82ITEM 11.
    
    Executive Compensation
    
    
    88ITEM 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    102ITEM 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    105ITEM 14.
    
    Principal Accounting Fees and Services
    
    
    111PART IVITEM 15.
    
    Exhibits, Financial Statement Schedules.
    
    
    113Form of Supplemental AgreementForm of Retention AgreementAmended Agreement of Limited PartnershipSecond Amended Agreement of Limited PartnershipThird Amended Agreement of Limited PartnershipStatement of Computation of Ratio of Earnings to Fixed ChargesSubsidiariesConsent 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 Pursuant to Section 1350Certification Pursuant to Section 1350
  i




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SIGNIFICANT RELATIONSHIPS REFERENCED IN THIS ANNUAL REPORT
 we us our TEPPCO
 General Partner
 TE Products, TCTM TEPPCO Midstream Operating
Partnerships.
 TEPPCO GP
 Enterprise
 Enterprise Products GP
 Enterprise GP Holdings
 EPE Holdings
 EPCO
 DFI
 DEP
  
 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
 1




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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 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. 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. 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 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
  
    
    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
 2




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/d
    
    =
    
    per dayBBtus
    
    =
    
    billion British Thermal unitsBcf
    
    =
    
    billion cubic feetMMBtus
    
    =
    
    million British Thermal unitsMMcf
    
    =
    
    million cubic feetMcf
    
    =
    
    thousand cubic feetMMBbls
    
    =
    
    million barrels
 Business Strategy
  
    
    Focus on internal growth prospects in order to increase the 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 growth potential;
    
    Maintain a balanced mix of assets; and
    
    Operate in a safe, efficient, compliant and environmentally responsible manner.
  
    
    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 that refined products imports to the U.S. will increase.
    
    We expect to see changes in commercial terminal ownership and operations.
    
    Standards for use of ethanol and other renewable fuels are currently mandated to
double from 2005 to 2012; under federal legislation, renewable fuels will comprise
increasing percentages of U.S. fuel supply, with a fuel standard of 7.5 billion
gallons for such fuels set for 2012.
    
    We expect to see continued natural gas gathering and related service
opportunities in the Jonah, Pinedale and San Juan Basin areas.
 3




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Financial Information by Business Segment
  2006 Developments
 Growth Projects, Acquisitions and Dispositions
     Sale of Pioneer Silica Gel Plant
  Jonah Joint Venture
  4




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Special Unitholder Meeting
  
    
    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;
    
    a reduction in the percentage of holders of outstanding Units necessary to
constitute a quorum 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 Partnerships;
    
    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.
  Public Offering
  5




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##### Table of Contents



Downstream Segment  Transportation and Storage of Refined Products, LPGs and Petrochemicals
  
    
    TE Products;
    
    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, and TG Pipeline, L.P. (TG Pipeline), which owns a 90-mile pipeline and
storage facilities;
    
    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);
    
    our 50% equity investment in Centennial; and
    
    our 50% equity investment in MB Storage.
 Properties and Operations
     6




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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
    %MB Storage (2)
    
    
    50
    %
 
 (1)
    
    Accounted for as an equity investment.(2)
    
    Accounted for as an equity investment. We expect to sell our ownership interest in MB
Storage during the first quarter of 2007.  For Year Ended December 31,2006
    
    2005
    
    2004Refined
Products Deliveries: (1)Gasoline
    
    
    94.9
    
    
    
    92.4
    
    
    
    89.3Jet Fuels
    
    
    25.5
    
    
    
    25.4
    
    
    
    25.6Distillates (2)
    
    
    44.9
    
    
    
    42.9
    
    
    
    37.5Subtotal
    
    
    165.3
    
    
    
    160.7
    
    
    
    152.4LPGs Deliveries:Propane
    
    
    36.5
    
    
    
    35.6
    
    
    
    34.3Butanes (includes isobutane)
    
    
    8.5
    
    
    
    9.4
    
    
    
    9.7Subtotal
    
    
    45.0
    
    
    
    45.0
    
    
    
    44.0Petrochemical Deliveries (3)
    
    
    21.6
    
    
    
    25.4
    
    
    
    25.5Total Product Deliveries
    
    
    231.9
    
    
    
    231.1
    
    
    
    221.9Centennial Product Deliveries
    
    
    44.8
    
    
    
    50.6
    
    
    
    41.2
 
 (1)
    
    Includes volumes on terminals not connected to the mainline system.(2)
    
    Primarily diesel fuel, heating oil and other middle distillates.(3)
    
    Includes Dean North refinery grade propylene volumes and petrochemical volumes on
pipelines between Mont Belvieu and Port Arthur, Texas. Refined Products, LPGs and Petrochemical Pipeline Systems
  7




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8




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Centennial Pipeline Equity Investment
   Mont Belvieu Storage Equity Investment
   9




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Seasonality
  Major Business Sector Markets and Related Factors
     10




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For Year Ended December 31,2006
    
    2005
    
    2004Refined Products Deliveries:Central (1)
    
    
    74.6
    
    
    
    73.3
    
    
    
    69.0Midwest (2)
    
    
    66.6
    
    
    
    60.1
    
    
    
    53.5Ohio and Kentucky
    
    
    24.1
    
    
    
    27.3
    
    
    
    29.9Subtotal
    
    
    165.3
    
    
    
    160.7
    
    
    
    152.4LPGs Deliveries:Central, Midwest and Kentucky (1)(2)
    
    
    28.5
    
    
    
    26.3
    
    
    
    27.0Ohio and Northeast (3)
    
    
    16.5
    
    
    
    18.7
    
    
    
    17.0Subtotal
    
    
    45.0
    
    
    
    45.0
    
    
    
    44.0Petrochemical Deliveries (4)
    
    
    21.6
    
    
    
    25.4
    
    
    
    25.5Total Product Deliveries
    
    
    231.9
    
    
    
    231.1
    
    
    
    221.9Centennial Product Deliveries
    
    
    44.8
    
    
    
    50.6
    
    
    
    41.2
 
 (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. Customers
   11




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Competition
   Upstream Segment  Gathering, Transportation, Marketing and Storage of Crude Oil
  
    
    TCTM, our holding company for the Upstream Segment;
    
    TEPPCO Crude Pipeline, L.P. (TCPL), TEPPCO Crude Oil, L.P. (TCO) and
Lubrication Services, L.P. (LSI), wholly owned subsidiaries of TCTM; and
    
    our 50% equity investment in Seaway.
 Properties and Operations
    12




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For Year Ended December 31,2006
    
    2005
    
    2004Barrels Delivered:Crude oil transportation
    
    
    91.5
    
    
    
    94.7
    
    
    
    101.5Crude oil marketing
    
    
    222.1
    
    
    
    203.3
    
    
    
    177.3Crude oil terminaling
    
    
    126.0
    
    
    
    110.3
    
    
    
    113.2Lubricants and chemicals (total gallons)
    
    
    14.4
    
    
    
    14.8
    
    
    
    14.0Seaway Barrels Delivered:Long-haul
    
    
    88.4
    
    
    
    99.7
    
    
    
    94.3Short-haul
    
    
    223.4
    
    
    
    213.9
    
    
    
    215.8
 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
TexasSystem
    
    
    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;
275,000 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
    
    15 tanks with
1,875,000 barrels
of storage in
Cushing, OklahomaMidland Station
    
    
    100
    %
    
    TCPL
    
    11 tanks with
980,000 barrels of
storage in Midland,
TexasSeaway (2)
    
    50% general
partnership
interest
    
    TCPL
    
    500-mile, 30-inch
diameter pipeline;
6,836,000 barrels
of storage  Texas
Gulf Coast to
Cushing, Oklahoma;
30-mile Texas City
systemBasin
    
    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.  13




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Seaway Crude Pipeline Equity Investment
    Line Transfers, Pumpovers and Other
    Customers
  14




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Competition
  Midstream Segment  Gathering of Natural Gas, Transportation of NGLs and Fractionation of NGLs
  
    
    our equity ownership in Jonah Gas Gathering Company, which gathers, purchases
and sells natural gas;
    
    Val Verde Gas Gathering Company, L.P. (Val Verde), which gathers and treats natural gas for
carbon dioxide removal;
    
    TEPPCO Midstream and its wholly owned subsidiaries, Chaparral Pipeline Company,
L.P. and Quanah Pipeline Company, L.P. (collectively referred to as Chaparral or
Chaparral NGL system), Panola Pipeline Company, L.P. (Panola Pipeline), Dean
Pipeline Company, L.P. (Dean Pipeline) and Wilcox Pipeline Company, L.P. (Wilcox
Pipeline), which transport NGLs; and
    
    TEPPCO Colorado, LLC (TEPPCO Colorado), which fractionates NGLs.
 Properties and Operations
   For Year Ended December 31,2006
    
    2005
    
    2004Gathering  Natural Gas  Jonah (Bcf) (1)
    
    
    472.9
    
    
    
    415.2
    
    
    
    354.5Gathering  Natural Gas  Val Verde (Bcf)
    
    
    181.9
    
    
    
    180.7
    
    
    
    144.5Transportation  NGLs (MMBbls)
    
    
    69.7
    
    
    
    61.1
    
    
    
    59.5Fractionation  NGLs (MMBbls)
    
    
    4.4
    
    
    
    4.4
    
    
    
    4.1
 
 (1)
    
    Effective August 1, 2006, with the formation of a joint venture with Enterprise, Jonah
was deconsolidated and operating results after August 1, 2006, are included in equity
earnings. However, this table includes Jonahs gathering volumes for the full years ended
December 31, 2006, 2005 and 2004. Jonah Gas Gathering Joint Venture
   15




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Jonah Gas Gathering System Business .
   16




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
    
    The Phase I expansion was completed in May 2002, at a cost of approximately
$25.0 million and increased system capacity by 62%, from approximately 450 MMcf/d
to approximately 730 MMcf/d.
    
    In October 2002, the Phase II expansion project was completed at a cost of
approximately $35.3 million, which increased the capacity of the Jonah system from
730 MMcf/d to approximately 880 MMcf/d.
    
    In 2003, the Jonah system was again expanded by the Phase III project to include
an 80-mile pipeline loop and 3,700 horsepower of new compression on the system and
the building of a new 300 MMcf/d gas processing plant near Opal, Wyoming. Phase
III was substantially completed during the fourth quarter of 2003, with system
capacity increasing to 1,180 MMcf/d at a cost of approximately $53.4 million.
    
    Additional capacity of 100 MMcf/d was completed during the fourth quarter of
2004, at a cost of approximately $13.0 million.
    
    The Phase IV expansion project was completed in February 2006, at a cost of
approximately $116.0 million and increased system capacity to 1.5 Bcf/d with the
addition of 33,000 horsepower of compression and approximately 50 miles of
pipeline.
    
    Through the joint venture with Enterprise, a Phase V expansion project is
expected to increase the system capacity of the Jonah system from 1.5 Bcf/d to
approximately 2.3 Bcf/d and to significantly reduce system operating pressures,
which is anticipated to lead to increased production rates and ultimate reserve
recoveries. The first portion of the expansion, which is expected to increase the
system gathering capacity to approximately 2.0 Bcf/d, is scheduled to be completed
in the second quarter of 2007. The pipeline looping part of the first portion of
the expansion, which included the addition of 75 miles of 36-inch diameter pipe and
12 miles of 24-inch diameter pipe, was completed in December 2006. The second
portion of the expansion is expected to be completed by the end of 2007. The
anticipated cost of the Phase V expansion is expected to be approximately $444.0
million.
 Pioneer Plant
 Val Verde Gas Gathering System
   17




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NGL Transportation and Fractionation
  PhysicalCapacityNGL Pipeline
    
    (barrels/day)
    
    DescriptionChaparral (1)
    
    
    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 (2)
    
    
    46,000
    
    
    189 miles of pipeline  Carthage,
Texas to Mont Belvieu, TexasSan Jacinto (2)
    
    
    12,000
    
    
    34 miles of pipeline  Carthage, Texas
to Longview, TexasThe southern
portion of the Dean
Pipeline (3)
    
    
    10,000
    
    
    155 miles of pipeline  South Texas to
Point Comfort, TexasWilcox (4)
    
    
    7,500
    
    
    103 miles of pipeline  Southeast Texas
 
 (1)
    
    The Chaparral NGL system, including the Quanah Pipeline, extends from West Texas and New
Mexico to Mont Belvieu. Shippers on Chaparral pay a posted tariff. The rates are adjusted
each July based upon a government approved Producer Price Index.(2)
    
    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.(3)
    
    The southern portion of the Dean Pipeline originates in South Texas and transports NGLs
for one customer into the customer owned pipeline at Point Comfort, Texas.(4)
    
    The Wilcox Pipeline transported NGLs for a customer from its natural gas processing
plant on a throughput agreement. The customer provided notice to terminate this service,
and the Wilcox Pipeline was idled in December 2006. We are in the process of identifying
an alternate use for the pipeline.  18




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Seasonality
  Customers
   Competition
   Title to Properties
  19




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Capital Expenditures
  SustainingRevenue
    
    
    Existing
    
    
    System
    
    
    CapitalizedGenerating
    
    
    Operations
    
    
    Upgrades
    
    
    Interest
    
    
    TotalDownstream Segment
    
    $
    30.7
    
    
    $
    20.5
    
    
    $
    19.1
    
    
    $
    5.0
    
    
    $
    75.3Midstream Segment
    
    
    39.8
    
    
    
    0.2
    
    
    
    1.0
    
    
    
    1.9
    
    
    
    42.9Upstream Segment
    
    
    25.6
    
    
    
    16.3
    
    
    
    4.3
    
    
    
    2.2
    
    
    
    48.4Other
    
    
    
    
    
    
    3.0
    
    
    
    0.4
    
    
    
    
    
    
    
    3.4Total
    
    $
    96.1
    
    
    $
    40.0
    
    
    $
    24.8
    
    
    $
    9.1
    
    
    $
    170.0
    20




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Regulation
   i.e
    21




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22




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Environmental and Safety Matters
   Water
   23




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Air Emissions
    Risk Management Plans
  Solid Waste
  Environmental Remediation
  24




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DOT Pipeline Compliance Matters
    Safety Matters
   25




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Antitrust Matters
  Employees
  Available Information
   
 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.
  26




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Our future debt level may limit our future financial and operating flexibility.
  
    
    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.
   27




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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 sole discretion.
  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.
  28




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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.
     Our partnership status may be a disadvantage to us in calculating our cost of service for
rate-making purposes.
  Competition could adversely affect our operating results.
  29




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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.
  Our pipelines are dependent on their interconnections with other pipelines to reach their
destination markets.
  30




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Reduced demand could affect shipments on our pipelines.
  
    
    Demand for gasoline, which has in recent years accounted for approximately 45%
of our refined products transportation revenues, 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.
  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.
 
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In accordance with industry practice, we do not obtain independent 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.
  Our pipeline integrity program may impose significant costs and liabilities on us.
  32




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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.
      Terrorist attacks aimed at our facilities could adversely affect our business.
  33




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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.
  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 on our
pipelines, thereby reducing the amount of cash we generate.
  34




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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.
  
    
    Enterprise, 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 EPCO or its
affiliates (other than our General Partner) to pursue a business strategy that
favors us. Directors and officers of EPCO and the general partner of Enterprise
and their affiliate have a fiduciary duty to make decisions in the best interest of
their shareholders or unitholders, 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 EPCO, Enterprise 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 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 will be 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.
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
    
    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
 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.
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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, 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 in the absence of bad faith by the audit and conflicts committee of the
board of directors of our General Partner or our General Partner, the resolution,
action or terms made, taken or provided in connection with a potential conflict of
interest transaction will be conclusive and binding on all person (including all
partners) and will not constitute a breach of the Partnership Agreement or any
standard of care or duty imposed by law;
    
    Provides 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;
    
    Generally provides that affiliate transactions and resolutions of conflicts of
interest not approved by the audit and conflicts committee of the board of
directors of our General Partner must be on terms no less favorable to us than
those generally provided to or available from unrelated third parties or otherwise
be fair and reasonable to us;
    
    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
    
    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.
  37




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
    
    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.
    Control of our General Partner may be transferred to a third party without unitholder consent.
  Tax Risks to Unitholders
 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 Internal
Revenue Service (IRS) treats us as a corporation or we become subject to a material amount of
entity-level taxation for state tax purposes.
   38




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A successful IRS contest of the federal income tax positions we take may adversely affect the
market for our Units, and the cost of any 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 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.
  39




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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 state and local taxes and return filing requirements.
  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
 Ryan E. McCleery and Marcia S.
McCleery, et al. and Michael and Linda Robson, et al. v. Texas Eastern Corporation, et al. Michael and
Linda Robson, et al. v. Texas Eastern Corporation, et al
 40




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##### Table of Contents



Rebecca L. Grisham et al. v. TE Products Pipeline
Company, Limited Partnership
 Jimmy R. Green, et al. v. Cities
Service Refinery, et al. th
    41




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Item 4. Submission of Matters to a Vote of Security Holders
  
    
    Four proposals by which we amended and restated our Partnership Agreement (the
Amendment Proposals):
 a)
    
    A proposal to revise certain provisions of our
Partnership Agreement that relate to distributions and capital
contributions, including reduction of our General Partners maximum
percentage interest in our quarterly distributions from 50% to 25% (the
IDR Reduction Amendment), elimination of our General Partners
requirement to make capital contributions to us to maintain a 2% capital
account, and adjustment of our minuimum quarterly distribution and target
distribution levels for entity-level taxes (51,875,620 For, 3,812,756
Against, 1,288,075 Abstain).b)
    
    A proposal to change various voting percentage
requirements of our Partnership Agreement, in most cases from 66 2/3% of
outstanding Units to a majority of outstanding Units (50,912,506 For,
4,702,226 Against, 1,361,719 Abstain).c)
    
    A proposal to supplement and revise certain provisions
of our Partnership Agreement that relate to conflicts of interest and
fiduciary duties (50,909,929 For, 4,155,340 Against, 1,911,182
Abstain).d)
    
    A proposal to make additional amendments to our
Partnership Agreement to provide for certain registration rights of our
General Partner, for the maintenance of the separateness of our partnership
from any other person or entity and other miscellaneous matters (51,735,496
For, 3,661,239 Against, 1,579,716 Abstain).
 
    
    A proposal to issue Units to our General Partner as consideration for the IDR
Reduction Amendment (the Issuance Proposal) (50,103,934 For, 5,096,150
Against, 1,776,366 Abstain).
    
    A proposal to approve the terms of the EPCO, Inc. 2006 TPP Long-Term Incentive
Plan (49,567,252 For, 5,589,417 Against, 1,818,781 Abstain).
    
    A proposal to approve the terms of the EPCO, Inc. TPP Employee Unit Purchase
Plan (50,613,444 For, 4,478,510 Against, 1,884,497 Abstain).
 43




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PART II
 
 Item 5. Market for Registrants Units and Related Unitholder Matters and Issuer Purchases of
Equity Securities
  2006
    
    2005Quarter
    
    High
    
    Low
    
    High
    
    LowFirst
    
    $
    39.00
    
    
    $
    35.29
    
    
    $
    45.45
    
    
    $
    38.53Second
    
    
    38.49
    
    
    
    35.20
    
    
    
    44.72
    
    
    
    39.85Third
    
    
    37.65
    
    
    
    34.44
    
    
    
    42.75
    
    
    
    39.61Fourth
    
    
    41.86
    
    
    
    36.90
    
    
    
    41.15
    
    
    
    33.15
   AmountRecord Date
    
    Payment Date
    
    Per UnitApril 29, 2005
    
    May 6, 2005
    
    $
    0.6625July 29, 2005
    
    August 5, 2005
    
    
    0.675October 31, 2005
    
    November 7, 2005
    
    
    0.675January 31, 2006
    
    February 7, 2006
    
    
    0.675April 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
    
    
    0.675
   44




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Recent Sales of Unregistered Securities
  Units Authorized for Issuance Under Equity Compensation Plan
  Issuer Purchases of Equity Securities
  45




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Item 6. Selected Financial Data
  For Year Ended December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    

2002 (1)(in thousands, except per Unit amounts)Income Statement Data:Operating revenues:Sales of petroleum products
    
    $
    9,080,516
    
    
    $
    8,061,808
    
    
    $
    5,426,832
    
    
    $
    3,766,651
    
    
    $
    2,823,800Transportation  Refined products
    
    
    152,552
    
    
    
    144,552
    
    
    
    148,166
    
    
    
    138,926
    
    
    
    123,476Transportation  LPGs
    
    
    89,315
    
    
    
    96,297
    
    
    
    87,050
    
    
    
    91,787
    
    
    
    74,577Transportation  Crude oil
    
    
    38,822
    
    
    
    37,614
    
    
    
    37,177
    
    
    
    29,057
    
    
    
    27,414Transportation  NGLs
    
    
    43,838
    
    
    
    43,915
    
    
    
    41,204
    
    
    
    39,837
    
    
    
    38,870Gathering  Natural gas
    
    
    123,933
    
    
    
    152,797
    
    
    
    140,122
    
    
    
    135,144
    
    
    
    90,053Mont Belvieu operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,238Other revenues
    
    
    78,509
    
    
    
    68,051
    
    
    
    67,539
    
    
    
    54,430
    
    
    
    48,735Total operating revenues
    
    
    9,607,485
    
    
    
    8,605,034
    
    
    
    5,948,090
    
    
    
    4,255,832
    
    
    
    3,242,163Purchases of petroleum products
    
    
    8,967,062
    
    
    
    7,986,438
    
    
    
    5,367,027
    
    
    
    3,711,207
    
    
    
    2,772,328Operating expenses (2)
    
    
    278,448
    
    
    
    255,359
    
    
    
    257,372
    
    
    
    235,028
    
    
    
    197,726General and administrative expenses
    
    
    31,348
    
    
    
    33,143
    
    
    
    28,016
    
    
    
    20,409
    
    
    
    15,830Depreciation and amortization
    
    
    108,252
    
    
    
    110,729
    
    
    
    112,284
    
    
    
    100,728
    
    
    
    86,032Gains on sales of assets
    
    
    (7,404
    )
    
    
    (668
    )
    
    
    (1,053
    )
    
    
    (3,948
    )
    
    
    Operating income
    
    
    229,779
    
    
    
    220,033
    
    
    
    184,444
    
    
    
    192,408
    
    
    
    170,247Interest expense  net
    
    
    (86,171
    )
    
    
    (81,861
    )
    
    
    (72,053
    )
    
    
    (84,250
    )
    
    
    (66,192
    )Equity earnings
    
    
    36,761
    
    
    
    20,094
    
    
    
    22,148
    
    
    
    12,874
    
    
    
    8,853Other income  net (including interest income)
    
    
    2,965
    
    
    
    1,135
    
    
    
    1,320
    
    
    
    748
    
    
    
    1,827Income before deferred income tax expense
    
    
    183,334
    
    
    
    159,401
    
    
    
    135,859
    
    
    
    121,780
    
    
    
    114,735Deferred income tax expense
    
    
    652
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income from continuing operations
    
    
    182,682
    
    
    
    159,401
    
    
    
    135,859
    
    
    
    121,780
    
    
    
    114,735Discontinued operations (3)
    
    
    19,369
    
    
    
    3,150
    
    
    
    2,689
    
    
    
    
    
    
    
    Net income
    
    $
    202,051
    
    
    $
    162,551
    
    
    $
    138,548
    
    
    $
    121,780
    
    
    $
    114,735
 For Year Ended December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    

2002 (1)(in thousands, except per Unit amounts)Basic and diluted income per Unit: (4)Continuing operations
    
    $
    1.77
    
    
    $
    1.67
    
    
    $
    1.53
    
    
    $
    1.47
    
    
    $
    1.74Discontinued operations (3)
    
    
    0.19
    
    
    
    0.04
    
    
    
    0.03
    
    
    
    
    
    
    
    Net income per Unit
    
    $
    1.96
    
    
    $
    1.71
    
    
    $
    1.56
    
    
    $
    1.47
    
    
    $
    1.74
 46




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December 31,2006
    
    2005
    
    2004
    
    2003
    

2002 (1)(in thousands)Balance Sheet Data:Property, plant and equipment  net
    
    $
    1,642,095
    
    
    $
    1,960,068
    
    
    $
    1,703,702
    
    
    $
    1,619,163
    
    
    $
    1,587,824Total assets
    
    
    3,922,092
    
    
    
    3,680,538
    
    
    
    3,186,284
    
    
    
    2,934,480
    
    
    
    2,765,900Total debt
    
    
    1,603,287
    
    
    
    1,525,021
    
    
    
    1,480,226
    
    
    
    1,339,650
    
    
    
    1,377,692Class B Units held by related party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    103,234Partners capital
    
    
    1,320,330
    
    
    
    1,201,370
    
    
    
    1,011,103
    
    
    
    1,102,809
    
    
    
    889,449
 For Year Ended December 31,2006
    
    2005
    
    2004
    
    2003
    
    2002 (1)(in thousands, except per Unit amounts)Cash Flow Data:Net cash provided by continuing operating
activities (3)
    
    $
    271,552
    
    
    $
    250,723
    
    
    $
    263,896
    
    
    $
    242,424
    
    
    $
    234,917Net cash provided by operating activities
    
    
    273,073
    
    
    
    254,505
    
    
    
    267,167
    
    
    
    242,424
    
    
    
    234,917Capital expenditures to sustain existing
operations (5)
    
    
    (39,966
    )
    
    
    (40,783
    )
    
    
    (41,733
    )
    
    
    (32,864
    )
    
    
    (21,978
    )Capital expenditures
    
    
    (170,046
    )
    
    
    (220,553
    )
    
    
    (156,749
    )
    
    
    (126,707
    )
    
    
    (133,372
    )Distributions paid
    
    
    (278,566
    )
    
    
    (251,101
    )
    
    
    (233,057
    )
    
    
    (202,498
    )
    
    
    (151,853
    )Distributions paid per Unit (4)
    
    $
    2.70
    
    
    $
    2.68
    
    
    $
    2.64
    
    
    $
    2.50
    
    
    $
    2.35
 
 (1)
    
    Data reflects the operations of the Chaparral and Val Verde assets acquired on March 1,
2002 and June 30, 2002, respectively.(2)
    
    Includes operating fuel and power and taxes  other than income taxes.(3)
    
    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.(4)
    
    Per Unit calculation includes 13,359,597 Units issued in 2002 and 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
the IDR Reduction Amendment.(5)
    
    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.
  47




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/d
    
    =
    
    per dayBBtus
    
    =
    
    billion British Thermal unitsBcf
    
    =
    
    billion cubic feetMMBtus
    
    =
    
    million British Thermal unitsMMcf
    
    =
    
    million cubic feetMcf
    
    =
    
    thousand cubic feetMMBbls
    
    =
    
    million barrels
 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
   48




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Upstream Segment
     Midstream Segment
  49




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Business Trends
  
    
    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.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
Cushing, Oklahoma, acquired storage and newly constructed storage for
mid-continent refineries.
 
    
    We expect that refined products imports to the U.S. will increase.
 o
    
    Acquire or develop facilities to take advantage of these increased volumes.o
    
    Enhance refined products storage business.
 
    
    We expect to see changes 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.
 
    
    Standards for use of ethanol and other renewable fuels are currently mandated to
double from 2005 to 2012; under federal legislation, renewable fuels will comprise
increasing percentages of U.S. fuel supply, with a fuel standard of 7.5 billion
gallons for such fuels set for 2012.
 o
    
    Participate in the aggregation, terminaling and transportation
associated with the overall supply and distribution of ethanol.
 
    
    We expect to see continued natural gas gathering and related service
opportunities in the Jonah, Pinedale and San Juan Basin areas.
 o
    
    Continued development and expansion of the Jonah system which
serves the Jonah and Pinedale fields in our Midstream Segment. Through
additional Jonah expansions, which should be completed in the fourth quarter of
2007, we expect to increase the capacity to 2.3 billion cubic feet per day.o
    
    Adding new volumes and improving 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.
 50




---



##### Table of Contents



o
    
    Capitalize on our assets that are positioned in active
producing areas important to future domestic gas supply.
   Critical Accounting Policies and Estimates
   Revenue and Expense Accruals
   51




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Reserves for Environmental Matters
  Depreciation Methods and Estimated Useful Lives of Property, Plant and Equipment
  Accounting for the Impairment or Disposal of Long-Lived
Assets.
 52




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##### Table of Contents



Goodwill and Intangible Assets
  Goodwill and Other Intangible Assets
   53




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##### Table of Contents



Results of Operations
  For Year Ended December 31,2006
    
    
    2005
    
    
    2004Operating revenues:Downstream Segment
    
    $
    304,301
    
    
    $
    287,191
    
    
    $
    279,400Upstream Segment
    
    
    9,109,629
    
    
    
    8,110,239
    
    
    
    5,475,995Midstream Segment (1)
    
    
    201,269
    
    
    
    211,171
    
    
    
    195,902Intersegment eliminations
    
    
    (7,714
    )
    
    
    (3,567
    )
    
    
    (3,207
    )Total operating revenues
    
    
    9,607,485
    
    
    
    8,605,034
    
    
    
    5,948,090Operating income:Downstream Segment
    
    
    91,262
    
    
    
    88,143
    
    
    
    71,263Upstream Segment
    
    
    70,840
    
    
    
    33,174
    
    
    
    32,265Midstream Segment (1)
    
    
    65,499
    
    
    
    98,716
    
    
    
    80,916Intersegment eliminations
    
    
    2,178
    
    
    
    
    
    
    
    Total operating income
    
    
    229,779
    
    
    
    220,033
    
    
    
    184,444Equity earnings (losses):Downstream Segment
    
    
    (8,018
    )
    
    
    (2,984
    )
    
    
    (6,544
    )Upstream Segment
    
    
    11,905
    
    
    
    23,078
    
    
    
    28,692Midstream Segment (1)
    
    
    35,052
    
    
    
    
    
    
    
    Intersegment eliminations
    
    
    (2,178
    )
    
    
    
    
    
    
    Total equity earnings
    
    
    36,761
    
    
    
    20,094
    
    
    
    22,148Earnings before interest:Downstream Segment
    
    
    84,746
    
    
    
    85,914
    
    
    
    65,506Upstream Segment
    
    
    83,540
    
    
    
    56,408
    
    
    
    61,363Midstream Segment (1)
    
    
    101,219
    
    
    
    98,940
    
    
    
    81,043Interest expense
    
    
    (96,852
    )
    
    
    (88,620
    )
    
    
    (76,280
    )Interest capitalized
    
    
    10,681
    
    
    
    6,759
    
    
    
    4,227Income before deferred income tax expense
    
    
    183,334
    
    
    
    159,401
    
    
    
    135,859Deferred income tax expense
    
    
    652
    
    
    
    
    
    
    
    Income from continuing operations
    
    
    182,682
    
    
    
    159,401
    
    
    
    135,859Discontinued operations
    
    
    19,369
    
    
    
    3,150
    
    
    
    2,689Net income
    
    $
    202,051
    
    
    $
    162,551
    
    
    $
    138,548
 
 (1)
    
    Effective August 1, 2006, with the formation of a joint venture with Enterprise, Jonah
was deconsolidated and has been subsequently accounted for as an equity investment (see
Note 9 in the Notes to the Consolidated Financial Statements).  54




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Downstream Segment
  For Year Ended December 31,
    
    
    Increase (Decrease)2006
    
    
    2005
    
    
    2004
    
    
    2006-2005
    
    
    2005-2004Operating revenues:Sales of petroleum products
    
    $
    5,800
    
    
    $
    
    
    
    $
    
    
    
    $
    5,800
    
    
    $
    Transportation  Refined products
    
    
    152,552
    
    
    
    144,552
    
    
    
    148,166
    
    
    
    8,000
    
    
    
    (3,614
    )Transportation  LPGs
    
    
    89,315
    
    
    
    96,297
    
    
    
    87,050
    
    
    
    (6,982
    )
    
    
    9,247Other
    
    
    56,634
    
    
    
    46,342
    
    
    
    44,184
    
    
    
    10,292
    
    
    
    2,158Total operating revenues
    
    
    304,301
    
    
    
    287,191
    
    
    
    279,400
    
    
    
    17,110
    
    
    
    7,791Costs and expenses:Purchases of petroleum products
    
    
    5,526
    
    
    
    
    
    
    
    
    
    
    
    5,526
    
    
    
    Operating expense
    
    
    106,455
    
    
    
    98,534
    
    
    
    108,021
    
    
    
    7,921
    
    
    
    (9,487
    )Operating fuel and power
    
    
    38,354
    
    
    
    32,500
    
    
    
    31,706
    
    
    
    5,854
    
    
    
    794General and administrative
    
    
    17,085
    
    
    
    17,653
    
    
    
    16,884
    
    
    
    (568
    )
    
    
    769Depreciation and amortization
    
    
    41,405
    
    
    
    39,403
    
    
    
    43,135
    
    
    
    2,002
    
    
    
    (3,732
    )Taxes  other than income taxes
    
    
    8,437
    
    
    
    11,097
    
    
    
    8,917
    
    
    
    (2,660
    )
    
    
    2,180Gains on sales of assets
    
    
    (4,223
    )
    
    
    (139
    )
    
    
    (526
    )
    
    
    (4,084
    )
    
    
    387Total costs and expenses
    
    
    213,039
    
    
    
    199,048
    
    
    
    208,137
    
    
    
    13,991
    
    
    
    (9,089
    )Operating income
    
    
    91,262
    
    
    
    88,143
    
    
    
    71,263
    
    
    
    3,119
    
    
    
    16,880Equity losses
    
    
    (8,018
    )
    
    
    (2,984
    )
    
    
    (6,544
    )
    
    
    (5,034
    )
    
    
    3,560Interest income
    
    
    1,008
    
    
    
    477
    
    
    
    309
    
    
    
    531
    
    
    
    168Other income  net
    
    
    494
    
    
    
    278
    
    
    
    478
    
    
    
    216
    
    
    
    (200
    )Earnings before interest
    
    $
    84,746
    
    
    $
    85,914
    
    
    $
    65,506
    
    
    $
    (1,168
    )
    
    $
    20,408
  PercentageFor Year Ended December 31,
    
    Increase (Decrease)2006
    
    2005
    
    2004
    
    2006-2005
    
    2005-2004Volumes Delivered:Refined products
    
    
    165,269
    
    
    
    160,667
    
    
    
    152,437
    
    
    
    3
    %
    
    
    5
    %LPGs
    
    
    44,997
    
    
    
    45,061
    
    
    
    43,982
    
    
    
    
    
    
    
    2
    %Total
    
    
    210,266
    
    
    
    205,728
    
    
    
    196,419
    
    
    
    2
    %
    
    
    5
    %Average Tariff per Barrel:Refined products (1)
    
    $
    0.92
    
    
    $
    0.90
    
    
    $
    0.97
    
    
    
    2
    %
    
    
    (7
    %)LPGs
    
    
    1.98
    
    
    
    2.14
    
    
    
    1.98
    
    
    
    (7
    %)
    
    
    8
    %Average system
tariff per barrel
    
    $
    1.15
    
    
    $
    1.17
    
    
    $
    1.20
    
    
    
    (2
    %)
    
    
    (3
    %)
 
 (1)
    
    The 2004 period includes $4.1 million of deferred revenue related to the expiration of
two customer transportation agreements, which increased the refined products average tariff
for the year ended December 31, 2004, by $0.02 per barrel, or 2%. Year Ended December 31, 2006 Compared with Year Ended December 31, 2005
  55




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56




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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
    )
    Year Ended December 31, 2005 Compared with Year Ended December 31, 2004
  57




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58




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For Year EndedDecember 31,
    
    
    Increase2005
    
    
    2004
    
    
    (Decrease)Centennial
    
    $
    (10,727
    )
    
    $
    (14,379
    )
    
    $
    3,652MB Storage
    
    
    7,715
    
    
    
    7,874
    
    
    
    (159
    )Other
    
    
    28
    
    
    
    (39
    )
    
    
    67Total equity losses
    
    $
    (2,984
    )
    
    $
    (6,544
    )
    
    $
    3,560
  59




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Upstream Segment
  For Year Ended December 31,
    
    
    Increase (Decrease)2006
    
    
    2005
    
    
    2004
    
    
    2006-2005
    
    
    2005-2004Operating revenues: (1)Sales of petroleum products (2) (3)
    
    $
    9,060,782
    
    
    $
    8,062,131
    
    
    $
    5,426,832
    
    
    $
    998,651
    
    
    $
    2,635,299Transportation  Crude oil
    
    
    38,822
    
    
    
    37,614
    
    
    
    37,177
    
    
    
    1,208
    
    
    
    437Other
    
    
    10,025
    
    
    
    10,494
    
    
    
    11,986
    
    
    
    (469
    )
    
    
    (1,492
    )Total operating revenues
    
    
    9,109,629
    
    
    
    8,110,239
    
    
    
    5,475,995
    
    
    
    999,390
    
    
    
    2,634,244Costs and
expenses: (1)Purchases of petroleum products
(2) (3)
    
    
    8,953,407
    
    
    
    7,989,682
    
    
    
    5,370,234
    
    
    
    963,725
    
    
    
    2,619,448Operating expense
    
    
    54,422
    
    
    
    52,808
    
    
    
    45,990
    
    
    
    1,614
    
    
    
    6,818Operating fuel and power
    
    
    6,989
    
    
    
    5,122
    
    
    
    5,490
    
    
    
    1,867
    
    
    
    (368
    )General and administrative
    
    
    5,986
    
    
    
    7,077
    
    
    
    5,434
    
    
    
    (1,091
    )
    
    
    1,643Depreciation and amortization
    
    
    14,400
    
    
    
    17,161
    
    
    
    13,130
    
    
    
    (2,761
    )
    
    
    4,031Taxes  other than income taxes
    
    
    5,390
    
    
    
    5,333
    
    
    
    3,979
    
    
    
    57
    
    
    
    1,354Gains on sales of assets
    
    
    (1,805
    )
    
    
    (118
    )
    
    
    (527
    )
    
    
    (1,687
    )
    
    
    409Total costs and expenses
    
    
    9,038,789
    
    
    
    8,077,065
    
    
    
    5,443,730
    
    
    
    961,724
    
    
    
    2,633,335Operating income
    
    
    70,840
    
    
    
    33,174
    
    
    
    32,265
    
    
    
    37,666
    
    
    
    909Equity earnings
    
    
    11,905
    
    
    
    23,078
    
    
    
    28,692
    
    
    
    (11,173
    )
    
    
    (5,614
    )Interest income
    
    
    407
    
    
    
    
    
    
    
    43
    
    
    
    407
    
    
    
    (43
    )Other income  net
    
    
    388
    
    
    
    156
    
    
    
    363
    
    
    
    232
    
    
    
    (207
    )Earnings before interest
    
    $
    83,540
    
    
    $
    56,408
    
    
    $
    61,363
    
    
    $
    27,132
    
    
    $
    (4,955
    )
 
 (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)
    
    Amounts for the period from April 1, 2006 through December 31, 2006 have been fully
adjusted for the impact of adopting Emerging Issues Task Force (EITF) 04-13. The period
from January 1, 2006 through March 31, 2006 and the 2005 and 2004 periods 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).  60




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PercentageFor Year Ended December 31,
    
    
    Increase (Decrease)2006
    
    
    2005
    
    
    2004
    
    
    2006-2005
    
    
    2005-2004Margins: (1)Crude oil marketing
    
    $
    58,358
    
    
    $
    30,597
    
    
    $
    22,468
    
    
    
    91
    %
    
    
    36
    %Lubrication oil sales
    
    
    8,565
    
    
    
    7,455
    
    
    
    6,494
    
    
    
    15
    %
    
    
    15
    %Revenues: (1)Crude oil transportation
    
    
    67,439
    
    
    
    61,611
    
    
    
    55,425
    
    
    
    9
    %
    
    
    11
    %Crude oil terminaling
    
    
    11,835
    
    
    
    10,400
    
    
    
    9,388
    
    
    
    14
    %
    
    
    11
    %Total margin/revenues
    
    $
    146,197
    
    
    $
    110,063
    
    
    $
    93,775
    
    
    
    33
    %
    
    
    17
    %Total barrels/gallons:Crude oil marketing (barrels) (1)
    
    
    222,069
    
    
    
    203,325
    
    
    
    177,273
    
    
    
    9
    %
    
    
    15
    %Lubrication oil volume (gallons)
    
    
    14,444
    
    
    
    14,844
    
    
    
    13,964
    
    
    
    (3
    %)
    
    
    6
    %Crude oil
transportation (barrels)
    
    
    91,487
    
    
    
    94,743
    
    
    
    101,462
    
    
    
    (3
    %)
    
    
    (7
    %)Crude oil terminaling (barrels)
    
    
    125,974
    
    
    
    110,254
    
    
    
    113,197
    
    
    
    14
    %
    
    
    (3
    %)Margin per barrel or gallon:Crude oil
marketing (per barrel) (1)
    
    $
    0.263
    
    
    $
    0.150
    
    
    $
    0.127
    
    
    
    75
    %
    
    
    18
    %Lubrication oil margin (per gallon)
    
    
    0.593
    
    
    
    0.502
    
    
    
    0.465
    
    
    
    18
    %
    
    
    8
    %Average tariff per barrel:Crude oil transportation
    
    $
    0.737
    
    
    $
    0.650
    
    
    $
    0.546
    
    
    
    13
    %
    
    
    19
    %Crude oil terminaling
    
    
    0.094
    
    
    
    0.094
    
    
    
    0.083
    
    
    
    
    
    
    
    13
    %
 
 (1)
    
    Amounts in this table are presented prior to the eliminations of intercompany sales,
revenues and purchases between TCO and TCPL. 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 31,2006
    
    
    2005
    
    
    2004Sales of petroleum products
    
    $
    9,060,782
    
    
    $
    8,062,131
    
    
    $
    5,426,832Transportation  Crude oil
    
    
    38,822
    
    
    
    37,614
    
    
    
    37,177Less: Purchases of petroleum products
    
    
    (8,953,407
    )
    
    
    (7,989,682
    )
    
    
    (5,370,234
    )Total margin/revenues
    
    
    146,197
    
    
    
    110,063
    
    
    
    93,775Other operating revenues
    
    
    10,025
    
    
    
    10,494
    
    
    
    11,986Net operating revenues
    
    
    156,222
    
    
    
    120,557
    
    
    
    105,761Operating expense
    
    
    54,422
    
    
    
    52,808
    
    
    
    45,990Operating fuel and power
    
    
    6,989
    
    
    
    5,122
    
    
    
    5,490General and administrative expense
    
    
    5,986
    
    
    
    7,077
    
    
    
    5,434Depreciation and amortization
    
    
    14,400
    
    
    
    17,161
    
    
    
    13,130Taxes  other than income taxes
    
    
    5,390
    
    
    
    5,333
    
    
    
    3,979Gains on sales of assets
    
    
    (1,805
    )
    
    
    (118
    )
    
    
    (527
    )Operating income
    
    $
    70,840
    
    
    $
    33,174
    
    
    $
    32,265
 Accounting for Purchases and Sales of Inventory with
the Same Counterparty
 61




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Year Ended December 31, 2006 Compared with Year Ended December 31, 2005
    62




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Year Ended December 31, 2005 Compared with Year Ended December 31, 2004
  63




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64




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Midstream Segment
  For Year Ended December 31,
    
    
    Increase (Decrease)2006
    
    
    2005
    
    
    2004
    
    
    2006-2005
    
    
    2005-2004Operating revenues:Sales of petroleum products
    
    $
    18,766
    
    
    $
    
    
    
    $
    
    
    
    $
    18,766
    
    
    $
    Gathering  Natural gas (1)
    
    
    123,933
    
    
    
    152,797
    
    
    
    140,122
    
    
    
    (28,864
    )
    
    
    12,675Transportation  NGLs
    
    
    43,838
    
    
    
    43,915
    
    
    
    41,204
    
    
    
    (77
    )
    
    
    2,711Other
    
    
    14,732
    
    
    
    14,459
    
    
    
    14,576
    
    
    
    273
    
    
    
    (117
    )Total operating revenues
    
    
    201,269
    
    
    
    211,171
    
    
    
    195,902
    
    
    
    (9,902
    )
    
    
    15,269Costs and expenses: (1)Purchases of petroleum products
    
    
    17,272
    
    
    
    
    
    
    
    
    
    
    
    17,272
    
    
    
    Operating expense
    
    
    42,887
    
    
    
    34,758
    
    
    
    37,882
    
    
    
    8,129
    
    
    
    (3,124
    )Operating fuel and power
    
    
    12,107
    
    
    
    11,350
    
    
    
    10,943
    
    
    
    757
    
    
    
    407General and administrative expense
    
    
    8,277
    
    
    
    8,413
    
    
    
    5,698
    
    
    
    (136
    )
    
    
    2,715Depreciation and amortization
    
    
    52,447
    
    
    
    54,165
    
    
    
    56,019
    
    
    
    (1,718
    )
    
    
    (1,854
    )Taxes  other than income taxes
    
    
    4,156
    
    
    
    4,180
    
    
    
    4,444
    
    
    
    (24
    )
    
    
    (264
    )Gains on sales of assets
    
    
    (1,376
    )
    
    
    (411
    )
    
    
    
    
    
    
    (965
    )
    
    
    (411
    )Total costs and expenses
    
    
    135,770
    
    
    
    112,455
    
    
    
    114,986
    
    
    
    23,315
    
    
    
    (2,531
    )Operating income
    
    
    65,499
    
    
    
    98,716
    
    
    
    80,916
    
    
    
    (33,217
    )
    
    
    17,800Equity earnings (1)
    
    
    35,052
    
    
    
    
    
    
    
    
    
    
    
    35,052
    
    
    
    Interest income
    
    
    662
    
    
    
    210
    
    
    
    115
    
    
    
    452
    
    
    
    95Other income  net
    
    
    6
    
    
    
    14
    
    
    
    12
    
    
    
    (8
    )
    
    
    2Earnings before interest
    
    $
    101,219
    
    
    $
    98,940
    
    
    $
    81,043
    
    
    $
    2,279
    
    
    $
    17,897
 
 (1)
    
    Effective August 1, 2006, with the formation of a joint venture with Enterprise, 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 the Consolidated
Financial Statements). 65




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##### Table of Contents



PercentageFor Year Ended December 31,
    
    Increase (Decrease)2006
    
    2005
    
    2004
    
    2006-2005
    
    2005-2004Gathering  Natural Gas  Jonah: (1)MMcf
    
    
    472,868
    
    
    
    415,181
    
    
    
    354,546
    
    
    
    14
    %
    
    
    17
    %BBtus
    
    
    521,723
    
    
    
    458,159
    
    
    
    392,154
    
    
    
    14
    %
    
    
    17
    %Average fee per MMBtu
    
    $
    0.203
    
    
    $
    0.188
    
    
    $
    0.194
    
    
    
    8
    %
    
    
    (3
    %)Gathering  Natural Gas  Val Verde:MMcf
    
    
    181,928
    
    
    
    180,699
    
    
    
    144,539
    
    
    
    1
    %
    
    
    25
    %BBtus
    
    
    160,929
    
    
    
    159,398
    
    
    
    122,706
    
    
    
    1
    %
    
    
    30
    %Average fee per MMBtu
    
    $
    0.406
    
    
    $
    0.418
    
    
    $
    0.523
    
    
    
    (3
    %)
    
    
    (20
    %)Transportation  NGLs:Thousand barrels
    
    
    69,746
    
    
    
    61,051
    
    
    
    59,549
    
    
    
    14
    %
    
    
    3
    %Average rate per barrel
    
    $
    0.629
    
    
    $
    0.719
    
    
    $
    0.692
    
    
    
    (13
    %)
    
    
    4
    %Natural Gas Sales:BBtu
    
    
    10,206
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Average fee per MMBtu
    
    $
    4.984
    
    
    $
    
    
    
    $
    
    
    
    
    
    
    
    
    Fractionation  NGLs:Thousand barrels
    
    
    4,406
    
    
    
    4,431
    
    
    
    4,149
    
    
    
    (1
    %)
    
    
    7
    %Average rate per barrel
    
    $
    1.662
    
    
    $
    1.747
    
    
    $
    1.797
    
    
    
    (5
    %)
    
    
    (3
    %)Sales  Condensate: (1)Thousand barrels
    
    
    87.6
    
    
    
    62.1
    
    
    
    84.4
    
    
    
    41
    %
    
    
    (26
    %)Average rate per barrel
    
    $
    61.42
    
    
    $
    52.21
    
    
    $
    37.99
    
    
    
    18
    %
    
    
    37
    %
 
 (1)
    
    Effective August 1, 2006, with the formation of a joint venture with Enterprise, Jonah
was deconsolidated and operating results after August 1, 2006 are included in equity
earnings (see Note 9 in the Notes to the Consolidated Financial Statements). However, the
table includes Jonahs volume and average rate information for the full years ended
December 31, 2006, 2005 and 2004.  Year Ended December 31, 2006 Compared with Year Ended December 31, 2005
  66




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67




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Year Ended December 31, 2005 Compared with Year Ended December 31, 2004
     68




---



##### Table of Contents



Discontinued Operations
   For Year EndedDecember 31,2006
    
    
    2005
    
    
    2004Operating revenues:Sales of petroleum products
    
    $
    3,828
    
    
    $
    10,479
    
    
    $
    7,295Other
    
    
    932
    
    
    
    2,975
    
    
    
    2,807Total operating revenues
    
    
    4,760
    
    
    
    13,454
    
    
    
    10,102Costs and expenses:Purchases of petroleum products
    
    
    3,000
    
    
    
    8,870
    
    
    
    5,944Operating expense
    
    
    182
    
    
    
    692
    
    
    
    738Depreciation and amortization
    
    
    51
    
    
    
    612
    
    
    
    610Taxes  other than income taxes
    
    
    30
    
    
    
    130
    
    
    
    121Total costs and expenses
    
    
    3,263
    
    
    
    10,304
    
    
    
    7,413Income from discontinued operations
    
    $
    1,497
    
    
    $
    3,150
    
    
    $
    2,689
  69




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##### Table of Contents



Interest Expense and Capitalized Interest
 Year Ended December 31, 2006 Compared with Year Ended December 31, 2005
   Year Ended December 31, 2005 Compared with Year Ended December 31, 2004
   Deferred Income Tax Expense  Texas Margin Tax
   Accounting for Income Taxes
 70




---



##### Table of Contents



Financial Condition and Liquidity
  For Year Ended December 31,2006
    
    2005
    
    2004Cash provided by (used in):Operating activities
    
    $
    273.1
    
    
    $
    254.5
    
    
    $
    267.2Investing activities
    
    
    (273.7
    )
    
    
    (350.9
    )
    
    
    (190.2
    )Financing activities
    
    
    0.6
    
    
    
    80.1
    
    
    
    (90.1
    )
 Operating Activities
  For Year Ended December 31,2006
    
    
    2005
    
    
    2004Net income
    
    $
    202.1
    
    
    $
    162.6
    
    
    $
    138.5Income from discontinued operations
    
    
    (19.4
    )
    
    
    (3.2
    )
    
    
    (2.7
    )Deferred income tax expense
    
    
    0.7
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    108.3
    
    
    
    110.7
    
    
    
    112.3Earnings in equity investments
    
    
    (36.8
    )
    
    
    (20.1
    )
    
    
    (22.1
    )Distributions from equity investments
    
    
    63.5
    
    
    
    37.1
    
    
    
    47.2Gains on sales of assets
    
    
    (7.4
    )
    
    
    (0.7
    )
    
    
    (1.1
    )Non-cash portion of interest expense
    
    
    1.7
    
    
    
    1.6
    
    
    
    (0.4
    )Cash used in working capital and other
    
    
    (41.1
    )
    
    
    (37.3
    )
    
    
    (7.8
    )Net cash provided by continuing operating activities
    
    
    271.6
    
    
    
    250.7
    
    
    
    263.9Cash flows from discontinued operations
    
    
    1.5
    
    
    
    3.8
    
    
    
    3.3Net cash provided by operating activities
    
    $
    273.1
    
    
    $
    254.5
    
    
    $
    267.2
  71




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Investing Activities
  Financing Activities
  72




---



##### Table of Contents



Other Considerations
 Universal Shelf
  73




---



##### Table of Contents



Credit Facilities
   
    
    The maturity date of the credit facility was extended from December 13, 2010 to
December 13, 2011. Also under the terms of the amendment, we may request up to two
one-year extensions of the maturity date. These extensions, if requested, will
become effective subject to lender approval and satisfaction of certain other
conditions.
    
    The amendment releases Jonah as a guarantor of the Revolving Credit Facility and
restricts the amount of outstanding debt of the Jonah joint venture to debt owing
to the owners of its partnership interests and other third-party debt in the
principal aggregate amount of $50.0 million.
    
    The amendment modifies the financial covenants to, among other things, allow us
to include in the calculation of our Consolidated EBITDA (as defined in the
Revolving Credit Facility) pro forma adjustments for material capital projects.
    
    The amendment allows for the issuance of Hybrid Securities (as defined in the
Revolving Credit Facility) of up to 15% of our Consolidated Total Capitalization
(as defined in the Revolving Credit Facility).
  Treasury Locks
   Future Capital Needs and Commitments
  74




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Liquidity Outlook
  Off-Balance Sheet Arrangements
     75




---



##### Table of Contents



Contractual Obligations
  Amount of Commitment Expiration Per PeriodLess than
    
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    5 YearsRevolving Credit Facility, due 2011
    
    $
    490.0
    
    
    $
    
    
    
    $
    
    
    
    $
    490.0
    
    
    $
    6.45% Senior Notes due 2008 (1) (2)
    
    
    180.0
    
    
    
    
    
    
    
    180.0
    
    
    
    
    
    
    
    7.625% Senior Notes due 2012 (2)
    
    
    500.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    500.06.125% Senior Notes due 2013 (2)
    
    
    200.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200.07.51% Senior Notes due 2028 (1) (2)
    
    
    210.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    210.0Interest payments (3)
    
    
    790.6
    
    
    
    106.9
    
    
    
    196.5
    
    
    
    189.5
    
    
    
    297.7Debt and interest subtotal
    
    
    2,370.6
    
    
    
    106.9
    
    
    
    376.5
    
    
    
    679.5
    
    
    
    1,207.7Operating leases (4)
    
    
    69.7
    
    
    
    18.7
    
    
    
    20.5
    
    
    
    13.6
    
    
    
    16.9Purchase obligations (5)
    
    
    15.0
    
    
    
    12.9
    
    
    
    1.9
    
    
    
    0.1
    
    
    
    0.1Contributions to Jonah (6)
    
    
    151.0
    
    
    
    151.0
    
    
    
    
    
    
    
    
    
    
    
    Contributions to Centennial
    
    
    11.1
    
    
    
    11.1
    
    
    
    
    
    
    
    
    
    
    
    Capital expenditure obligations (7)
    
    
    9.5
    
    
    
    9.5
    
    
    
    
    
    
    
    
    
    
    
    Standby letter of credit (8)
    
    
    8.7
    
    
    
    8.7
    
    
    
    
    
    
    
    
    
    
    
    Other liabilities and deferred credits (9)
    
    
    5.2
    
    
    
    
    
    
    
    3.5
    
    
    
    0.3
    
    
    
    1.4Total
    
    $
    2,640.8
    
    
    $
    318.8
    
    
    $
    402.4
    
    
    $
    693.5
    
    
    $
    1,226.1
 
 (1)
    
    Obligations of TE Products.(2)
    
    Our TE Products subsidiary entered into an interest rate swap agreement to hedge its
exposure to changes in the fair value of its 7.51% Senior Notes due 2028. At December 31,
2006, the 7.51% Senior Notes include an adjustment to decrease the fair value of the debt
by $2.6 million related to this interest rate swap agreement. We also entered into
interest rate swap agreements to hedge our exposure to changes in the fair value of our
7.625% Senior Notes due 2012. At December 31, 2006, the 7.625% Senior Notes include a
deferred gain, net of amortization, from previous interest rate swap terminations of $28.0
million. At December 31, 2006, our 6.45% Senior Notes, our 7.625% Senior Notes and our
6.125% Senior Notes include $2.1 million of unamortized debt discounts. The fair value
adjustments, the deferred gain adjustment and the unamortized debt discounts are excluded
from this table.(3)
    
    Includes interest payments due on our Senior 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.(4)
    
    Includes a pipeline capacity lease with Centennial. In January 2003, TE Products
entered into a pipeline capacity lease agreement with Centennial for a period of five years
that contains a minimum throughput requirement. For the year ended December 31, 2006, TE
Products exceeded the minimum throughput requirements on the lease agreement.(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, 2006.(6)
    
    Expected contributions to Jonah in 2007 for our share of the Phase V expansion and
other capital expenditures. 76




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##### Table of Contents



(7)
    
    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.(8)
    
    At December 31, 2006, we had outstanding an $8.7 million standby letter of credit in
connection with crude oil purchased during the fourth quarter of 2006. The payable related
to these purchases of crude oil is expected to be paid during the first quarter of 2007.(9)
    
    Excludes 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 $4.2
million related to our estimated long-term portion of our obligation under a catastrophic
event guarantee for Centennial. The amount of commitment by year is our best estimate of
projected payments of these long-term liabilities.    Recent Accounting Pronouncements
  
 Item 7A . Quantitative and Qualitative Disclosures About Market Risk
  Commodity Risk
 Accounting for
Derivative Instruments and Hedging Activities Accounting for Certain Derivative
Instruments and Certain Hedging Activities, an amendment of FASB Statement No. 133
 77




---



##### Table of Contents



Interest Rate Risk
   78




---



##### Table of Contents



Fair ValueFace
    
    December 31,Value
    
    2006
    
    20056.45% TE Products Senior Notes, due January 2008
    
    $
    180.0
    
    
    $
    181.6
    
    
    $
    183.77.625% Senior Notes, due February 2012
    
    
    500.0
    
    
    
    537.1
    
    
    
    552.06.125% Senior Notes, due February 2013
    
    
    200.0
    
    
    
    201.6
    
    
    
    205.67.51% TE Products Senior Notes, due January 2028
    
    
    210.0
    
    
    
    221.5
    
    
    
    224.1
   
 Item 8. Financial Statements and Supplementary Data
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
   79




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##### Table of Contents



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.
  80




---



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/s/ JERRY E. THOMPSON
    
    
    
    /s/ WILLIAM G. MANIASJerry E. Thompson
    
    
    
    William G. ManiasPresident and Chief Executive Officer
    
    
    
    Vice President and Chief Financial Officer of ourof our General Partner,
    
    
    
    General Partner,Texas Eastern Products Pipeline Company, LLC
    
    
    
    Texas Eastern Products Pipeline Company, LLC
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    81




---



##### Table of Contents



,
  
 
 Item 9B. Other Information
  
 PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
 Partnership Management
   82




---



##### 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. 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 common units to be
immaterial.
    
    Until November 2006, Mr. Snell owned 4,557 Enterprise common units, options to purchase
40,000 Enterprise common units; his wife owned 1,100 Enterprise common units; and Mr. Snell
and his wife as tenants in common, owned 7,500 common units of Enterprise GP Holdings,
which owns the general partner of Enterprise. Mr. Snell is the trustee of family trusts
that own a total of 6,000 Enterprise 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
 83




---



##### Table of Contents



no longer own directly any Enterprise 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 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 and certain affiliates of Enterprise. 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 Ethics, Corporate Governance Guidelines and Charter of the Audit and Conflicts Committee
 www.teppco.com
 www.teppco.com
 Committees of the Board of Directors
 Audit, Conflicts and Governance Committee
   84




---



##### Table of Contents



NYSE Corporate Governance Listing Standards
 Annual CEO Certification
  Executive Sessions of Non-Management Directors
   85




---



##### Table of Contents



Directors and Executive Officers
  Name
    
    Age
    
    Position with Our General PartnerMichael B. Bracy
    
    
    65
    
    
    Director, Member of Audit and Conflicts Committee*Murray H. Hutchison
    
    
    68
    
    
    Chairman of the Board, Member of the Audit and Conflicts CommitteeRichard S. Snell
    
    
    64
    
    
    Director, Member of the Audit and Conflicts CommitteeJerry E. Thompson
    
    
    57
    
    
    President, Chief Executive Officer and DirectorJ. Michael Cockrell+
    
    
    60
    
    
    Senior Vice President, Commercial UpstreamWilliam G. Manias
    
    
    45
    
    
    Vice President and Chief Financial OfficerJohn N. Goodpasture+
    
    
    58
    
    
    Vice President, Corporate DevelopmentSamuel N. Brown+
    
    
    50
    
    
    Vice President of Commercial DownstreamPatricia A. Totten
    
    
    56
    
    
    Vice President, General Counsel and Secretary
 
 *
    
    Chairman of committee+
    
    See  Employment Agreements. Michael B. Bracy
 Murray H. Hutchison
 Richard S. Snell
 Jerry E. Thompson
 J. Michael Cockrell
 86




---



##### Table of Contents



William G. Manias
 John N. Goodpasture
 Samuel N. Brown
 Patricia A. Totten
  Section 16(a) Beneficial Ownership Reporting Compliance
  87




---



##### Table of Contents








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.




88



---



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89




---



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Employment Arrangements and Termination or Change-in-Control Payments
   Chief Executive Officer Compensation
  Tax and Accounting Implications
 Nonqualified Deferred Compensation
  90




---



##### Table of Contents



Significant Accounting Considerations
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock-Based Compensation  Transition and Disclosure Accounting for Stock Issued to Employees
 Compensation Committee Report
  Submitted by:
    
    Jerry E. ThompsonMichael B. BracyRichard S. SnellMurray H. Hutchison
  91




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##### Table of Contents



Summary Compensation Table
  AllStock
    
    OtherName and
    
    Salary
    
    Bonus
    
    Awards
    
    Compensation
    
    TotalPrincipal Position
    
    ($)
    
    ($) (8)
    
    ($) (9)
    
    ($) (10)
    
    ($)Jerry E. Thompson (1)
    
    
    325,673
    
    
    
    770,000
    
    
    
    721,000
    
    
    
    58,007
    
    
    
    1,874,680President and Chief Executive OfficerWilliam G. Manias (2)
    
    
    192,825
    
    
    
    75,000
    
    
    
    37,059
    
    
    
    49,497
    
    
    
    354,381Vice President and Chief Financial OfficerLee W. Marshall, Sr. (3)
    
    
    87,500
    
    
    
    
    
    
    
    
    
    
    
    2,104
    
    
    
    89,604Chairman and Acting Chief Executive OfficerLeonard W. Mallett (4)
    
    
    197,739
    
    
    
    66,000
    
    
    
    92,204
    
    
    
    140,837
    
    
    
    496,780Acting
Chief Executive Officer and Senior Vice
President, OperationsTracy E. Ohmart (5)
    
    
    163,851
    
    
    
    42,000
    
    
    
    35,384
    
    
    
    62,343
    
    
    
    303,578Acting Chief Financial Officer and ControllerJ. Michael Cockrell
    
    
    255,628
    
    
    
    98,000
    
    
    
    119,706
    
    
    
    157,611
    
    
    
    630,945Senior Vice President, Commercial UpstreamSamuel N. Brown
    
    
    220,901
    
    
    
    75,000
    
    
    
    88,754
    
    
    
    129,822
    
    
    
    514,477Vice President, Commercial DownstreamJohn N. Goodpasture
    
    
    231,737
    
    
    
    62,000
    
    
    
    106,792
    
    
    
    107,397
    
    
    
    507,926Vice President, Corporate DevelopmentJames C. Ruth (6)
    
    
    40,572
    
    
    
    56,036
    
    
    
    
    
    
    
    1,329,977
    
    
    
    1,426,585Senior Vice President and General CounselC. Bruce Shaffer (7)
    
    
    130,044
    
    
    
    
    
    
    
    
    
    
    
    949,117
    
    
    
    1,079,161Vice President, Human Resources and
Ethics and Compliance Officer
 
 (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)
    
    Mr. Marshall served as Acting CEO effective December 31, 2005 until his passing on
March 3, 2006. Mr. Marshall was not compensated for his position as Acting CEO.
Compensation reflected in the table is for his service as a director and as Chairman of the
Board.(4)
    
    Mr. Mallett was Senior Vice President of Operations through July 25, 2006, when he
became Senior Vice President, Environmental, Health, Safety & Training of EPCO.
Additionally, Mr. Mallett served as Acting CEO for the period March 5, 2006, through April
5, 2006, when Mr. Thompson was appointed President and CEO. Mr. Mallett did not receive
additional compensation for his service as Acting CEO. Amounts presented reflect
compensation amounts allocated to us based on the percentage of time spent on our business
for the full year 2006.(5)
    
    Mr. Ohmart served as Acting CFO from July 12, 2005 through January 12, 2006, when Mr.
Manias was appointed Vice President and CFO of our General Partner.(6)
    
    Mr. Ruth retired effective February 28, 2006. He received a lump sum payment upon his
termination. See  Executive Employment Contracts and Termination of Employment
Arrangements for further information.(7)
    
    Mr. Shaffer retired effective August 31, 2006. He received a lump sum payment upon his
termination. See  Executive Employment Contracts and Termination of Employment
Arrangements for further information. 92




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##### Table of Contents



(8)
    
    Amounts represent discretionary annual cash awards accrued during the 2006 year.
Payments under the discretionary annual cash awards program are made in the subsequent
year.(9)
    
    Amounts represent accrued balances under the equity incentive plan awards granted to
the Named Executive Officers. These calculations are based on the assumptions that (i) the
closing price of a Unit at December 29, 2006 was $40.31; (ii) the performance percentage
applied to (a) the 1999 Plan is 100%, (b) the 2000 LTIP is
150%, (c) the 2005 Phantom Unit
Plan is 106.02%, and (iii) the percentage of the number of days of the performance period
to date compared to the total performance period. See discussion of the equity awards and
the 2006 grants from these equity incentive plans to the Named Executive Officers below.(10)
    
    Primary components include (i) EPCO matching contributions under funded, qualified,
defined contribution retirement plans; (ii) quarterly distribution equivalents paid on
equity incentive plan awards; (iii) payouts from the TEPPCO Retirement Cash Balance Plan
resulting from plan termination; (iv) for Mr. Ruth and Mr. Shaffer, severance payments,
including unused vacation days and COBRA insurance premiums and (v) the imputed value of
premiums paid by EPCO for Named Executive Officers life insurance. Components of All
Other Compensation for which $10,000 or more was paid to any Named Executive Officer as
set forth below for each Named Executive Officer are as follows: MatchingContributions
    
    QuarterlyUnder Funded
    
    DistributionQualified
    
    EquivalentsDefined
    
    Paid on
    
    Payouts fromContribution
    
    Equity
    
    TEPPCO
    
    
    
    
    
    
    
    
    
    TotalRetirement
    
    Incentive
    
    Retirement Cash
    
    Severance
    
    Other
    
    All OtherPlan
    
    Plan Awards
    
    Balance Plan
    
    Payments
    
    Compensation
    
    CompensationName
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    ($)Jerry E. Thompson
    
    
    3,750
    
    
    
    52,650
    
    
    
    
    
    
    
    
    
    
    
    1,607
    
    
    
    58,007William G. Manias
    
    
    15,400
    
    
    
    30,725
    
    
    
    
    
    
    
    
    
    
    
    3,372
    
    
    
    49,497Leonard W. Mallett
    
    
    13,552
    
    
    
    10,039
    
    
    
    116,143
    
    
    
    
    
    
    
    1,103
    
    
    
    140,837Tracy E. Ohmart
    
    
    13,867
    
    
    
    5,468
    
    
    
    42,550
    
    
    
    
    
    
    
    458
    
    
    
    62,343J. Michael Cockrell
    
    
    15,400
    
    
    
    13,028
    
    
    
    120,888
    
    
    
    
    
    
    
    8,295
    
    
    
    157,611Samuel N. Brown
    
    
    15,400
    
    
    
    9,518
    
    
    
    97,680
    
    
    
    
    
    
    
    7,224
    
    
    
    129,822John N. Goodpasture
    
    
    15,400
    
    
    
    11,610
    
    
    
    74,512
    
    
    
    
    
    
    
    5,875
    
    
    
    107,397James C. Ruth
    
    
    5,157
    
    
    
    1,620
    
    
    
    116,044
    
    
    
    1,206,773
    
    
    
    383
    
    
    
    1,329,977C. Bruce Shaffer
    
    
    12,059
    
    
    
    11,340
    
    
    
    13,549
    
    
    
    911,661
    
    
    
    508
    
    
    
    949,117
 93




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##### Table of Contents



Grants of Plan-Based Awards in Fiscal Year 2006
  Estimated Future PayoutsUnder Non-Equity Incentive
    
    Estimated Future Payouts UnderPlan Awards
    
    Equity Incentive Plan Awards (5)Grant
    
    Authorization
    
    Threshold
    
    Target
    
    Maximum
    
    Threshold
    
    Target
    
    MaximumName
    
    Date (6)
    
    Date (7)
    
    ($)
    
    ($)
    
    ($)
    
    (#) (8)
    
    (#) (9)
    
    (#) (10)Jerry E. Thompson (1)
    
    
    4/11/2006
    
    
    
    4/11/2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,000
    
    
    
    William G. Manias (1)
    
    
    1/1/2006
    
    
    
    4/1/2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,800
    
    
    
    Leonard W. Mallett (2)
    
    
    1/1/2006
    
    
    
    4/4/2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,700
    
    
    
    4,050Tracy E. Ohmart (3)
    
    
    1/1/2006
    
    
    
    4/4/2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,700
    
    
    
    4,0505/1/2006
    
    
    
    N/A
    
    
    
    
    
    
    
    58,240
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    J. Michael Cockrell (2)
    
    
    1/1/2006
    
    
    
    4/4/2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,100
    
    
    
    4,650John N. Goodpasture (2)
    
    
    1/1/2006
    
    
    
    4/4/2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,800
    
    
    
    4,250Samuel N. Brown (2)
    
    
    1/1/2006
    
    
    
    4/4/2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,700
    
    
    
    4,050C. Bruce Shaffer (2) (4)
    
    
    1/1/2006
    
    
    
    4/4/2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Amount represents an award of phantom units under the 1999 Plan.(2)
    
    Amount represents an award of phantom units under the 2000 LTIP.(3)
    
    Amount on January 1, 2006 represents an award under our 2005 Phantom Unit Plan and the
amount on May 1, 2006 represents a non-equity incentive cash payment awarded under a
retention agreement.(4)
    
    Mr. Shaffer was granted an award in 2006 of 2,400 phantom units under the 2000 LTIP;
however, that award was forfeited with termination of participation on August 31, 2006.(5)
    
    Phantom units will be settled in cash based upon the market price of the Units at the
end of the performance period (see  Summary of Long-Term
Incentive Plans of TEPPCO
below).(6)
    
    Grant Date is the first date of the performance period for awards under the 2000 LTIP
and the 2005 Phantom Unit Plan. For awards under the 1999 Plan and Mr. Ohmarts retention
agreement, Grant Date is the date the grant was awarded.(7)
    
    Authorization Date is the date the grant was formally awarded to the Named Executive
Officer.(8)
    
    No amounts will be payable for awards granted in 2006 unless Economic Value Added for
the three year performance period exceeds $85.8 million. For more information about
vesting of phantom units, see  Summary of Long-Term
Incentive Plans of TEPPCO and the
Outstanding Equity Awards at 2006 Fiscal Year-End table below.(9)
    
    Target represents number of phantom units. These amounts assume that the 13% increase
in Economic Value Added for 2006 as compared with 2005 is maintained for each of the three
years in the performance period. There can be no assurance that any specific amount of
Economic Value Added will be attained for such period.(10)
    
    The maximum potential payout under the 2000 LTIP and the 2005 Phantom Unit Plan is 150%
of phantom units awarded. Summary of Long-Term Incentive Plans of TEPPCO
  94




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##### Table of Contents



1999 Plan
   2000 LTIP
     95




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##### Table of Contents



2005 Phantom Unit Plan
   2006 LTIP
  96




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##### Table of Contents



Outstanding Equity Awards at 2006 Fiscal Year-End
  Unit AwardsEquityEquity
    
    IncentiveIncentive
    
    PlanPlan
    
    Awards:Awards:
    
    Market orNumber
    
    PayoutMarket
    
    of
    
    Value ofValue
    
    Unearned
    
    UnearnedNumber of
    
    of
    
    Shares,
    
    Shares,Shares
    
    Shares
    
    Units or
    
    Units oror Units
    
    or Units
    
    Other
    
    OtherThat
    
    That
    
    Rights
    
    RightsHave
    
    Have
    
    That Have
    
    That HaveNot
    
    Not
    
    Not
    
    Not
    
    VestingVested
    
    Vested
    
    Vested
    
    Vested
    
    Dates ofName
    
    (#)
    
    ($)
    
    (#) (1)
    
    ($) (2)
    
    AwardsJerry E. Thompson
    
    
    
    
    
    
    
    
    
    
    39,000
    
    
    
    1,572,090
    
    
    Various (3)William G. Manias
    
    
    
    
    
    
    
    
    
    
    2,800
    
    
    
    112,868
    
    
    
    1/1/2010Leonard W. Mallett
    
    
    
    
    
    
    
    
    
    
    4,900
    
    
    
    197,519
    
    
    
    (4
    )Tracy E. Ohmart
    
    
    
    
    
    
    
    
    
    
    2,700
    
    
    
    108,837
    
    
    
    12/31/2008J. Michael Cockrell
    
    
    
    
    
    
    
    
    
    
    5,600
    
    
    
    225,736
    
    
    
    (5
    )John N. Goodpasture
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    201,550
    
    
    
    (6
    )Samuel N. Brown
    
    
    
    
    
    
    
    
    
    
    4,200
    
    
    
    169,302
    
    
    
    (7
    )
 
 (1)
    
    Amount represents the number of phantom units awarded under the equity incentive plans
that have not vested because satisfaction of a performance condition is still pending.(2)
    
    Amount reflects the market value of the target at December 31, 2006, using the December
29, 2006 Unit price of $40.31 per Unit.(3)
    
    One-third of these phantom units will vest on April 11, 2007, one-third on April 11,
2008 and the remaining one-third on April 11, 2009.(4)
    
    2,200 phantom units vest on December 31, 2007 and 2,700 phantom units vest on December
31, 2008.(5)
    
    2,500 phantom units vest on December 31, 2007 and 3,100 phantom units vest on December
31, 2008.(6)
    
    2,200 phantom units vest on December 31, 2007 and 2,800 phantom units vest on December
31, 2008.(7)
    
    1,500 phantom units vest on December 31, 2007 and 2,700 phantom units vest on December
31, 2008.
 97




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##### Table of Contents



Option Exercises and Stock Vested Table
  Unit AwardsNumber ofUnits
    
    ValueAcquired
    
    RealizedOn
    
    OnVesting
    
    VestingName
    
    (#)
    
    ($) (1)James C. Ruth
    
    
    
    
    
    
    115,073C. Bruce Shaffer
    
    
    
    
    
    
    148,600
 
 (1)
    
    Amount represents the payout from the 2000 LTIP effective with the Named Executive
Officers respective retirement. Pension Benefits Table
  Number of
    
    Present
    
    PaymentsYears of
    
    Value of
    
    DuringPlan
    
    Credited
    
    Accumulated
    
    Last FiscalName
    
    Name
    
    Service
    
    Benefit
    
    Year (1)Leonard W. Mallett
    
    TEPPCO Retirement Cash Balance Plan
    
    
    
    
    
    
    
    
    
    $
    116,143Tracy E. Ohmart
    
    TEPPCO Retirement Cash Balance Plan
    
    
    
    
    
    
    
    
    
    
    42,550J. Michael Cockrell
    
    TEPPCO Retirement Cash Balance Plan
    
    
    
    
    
    
    
    
    
    
    120,888John N. Goodpasture
    
    TEPPCO Retirement Cash Balance Plan
    
    
    
    
    
    
    
    
    
    
    74,512Samuel N. Brown
    
    TEPPCO Retirement Cash Balance Plan
    
    
    
    
    
    
    
    
    
    
    97,680James C. Ruth
    
    TEPPCO Retirement Cash Balance Plan
    
    
    
    
    
    
    
    
    
    
    116,044C. Bruce Shaffer
    
    TEPPCO Retirement Cash Balance Plan
    
    
    
    
    
    
    
    
    
    
    13,549
 
 (1)
    
    Amount represents the 2006 payout from the TEPPCO Retirement Cash Balance Plan as a
result of the termination of the plan on December 31, 2005 (see Note 5 in the Notes to the
Consolidated Financial Statements). Nonqualified Deferred Compensation for the 2006 Fiscal Year
  Employment Arrangements and Potential Payments upon Termination or Change in Control
 2000 LTIP
  98




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##### Table of Contents



2006 Awards
  Employment Agreements
  99




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##### Table of Contents



Termination or Change in Control Payments
  Health
    
    
    
    
    
    Death
    
    Death orChange
    
    Care
    
    Death or
    
    Disability or
    
    DisabilityRetention
    
    in Control
    
    Benefits
    
    Disability
    
    Retirement
    
    AcceleratedAward
    
    Accelerated
    
    under 2007
    
    Accelerated
    
    Accelerated
    
    2005 PhantomUnder 2007
    
    2000 LTIP
    
    Supplements
    
    1999 Plan
    
    2000 LTIP
    
    Unit PlanName
    
    Supplements (1)
    
    Awards (2)
    
    (1) (4)
    
    Awards
    
    Awards
    
    AwardsJerry E. Thompson
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,572,090
    
    
    
    
    
    
    
    William G. Manias
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    112,868
    
    
    
    
    
    
    
    Leonard W. Mallett (3)
    
    
    268,905
    
    
    
    134,343
    
    
    
    50,017
    
    
    
    
    
    
    
    144,521
    
    
    
    Tracy E. Ohmart
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,279J. Michael Cockrell
    
    
    489,375
    
    
    
    152,663
    
    
    
    50,017
    
    
    
    
    
    
    
    164,876
    
    
    
    Samuel N. Brown
    
    
    241,920
    
    
    
    91,598
    
    
    
    50,017
    
    
    
    
    
    
    
    116,024
    
    
    
    John N. Goodpasture
    
    
    295,800
    
    
    
    134,343
    
    
    
    50,017
    
    
    
    
    
    
    
    146,556
    
    
    
    
 
 (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)
    
    Named Executive Officer is entitled to this payment in the event of termination without
cause or for good reason in connection with a change in control and, in certain cases, on
the occurrence of the change in control as described under the heading 2000 LTIP above.
These calculations are based on the assumptions that (i) the change in control was
effective December 31, 2006, (ii) the average of the closing price of a Unit over the ten
consecutive trading days immediately preceding December 31, 2006 was $40.71, and (iii) the
performance percentage applied is 150%. 100




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##### Table of Contents



(3)
    
    Amount of Retention Award presented reflects the amount of the total Retention Award
allocated to us.(4)
    
    Health care benefits are COBRA payments for 36 months as specified in the 2007
Supplement multiplied by an estimated monthly cost of the benefit. Director Compensation
  FeesEarnedor Paidin Cash
    
    TotalDirector
    
    ($)
    
    ($)Michael B. Bracy (1)
    
    
    60,000
    
    
    
    60,000Richard S. Snell
    
    
    50,000
    
    
    
    50,000Murray H. Hutchison (2)
    
    
    50,000
    
    
    
    50,000
 
 (1)
    
    Mr. Bracy is chairman of the AC Committee. On March 10, 2006, our Board elected Mr.
Bracy as non-executive Vice Chairman of the Board. He does not receive additional
compensation for his service as non-executive Vice Chairman.(2)
    
    On March 10, 2006, our Board elected Mr. Hutchison as non-executive Chairman of the
Board. He does not receive additional compensation for his service as non-executive
Chairman.  2007 Director Compensation
   101




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##### Table of Contents



Compensation Committee Interlocks and Insider Participation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
 Equity Compensation Plan Information
 EPCO, Inc. 2006 TPP Long-Term Incentive Plan
   EPCO, Inc. TPP Employee Unit Purchase Plan
   102




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##### Table of Contents



Security Ownership of Certain Beneficial Owners
  Amount and Natureof Beneficial
    
    PercentageName and Address of Beneficial Owner (1) (2)
    
    Ownership
    
    OwnedDan Duncan LLC (3)
    
    
    3,204,564
    
    
    
    3.6
    %DFI Holdings LLC (4)
    
    
    2,500,000
    
    
    
    2.8
    %DFI GP Holdings L.P. (5)
    
    
    2,500,000
    
    
    
    2.8
    %Duncan Family Interests, Inc. (6)
    
    
    13,386,711
    
    
    
    14.9
    %EPCO Holdings, Inc. (7)
    
    
    13,386,711
    
    
    
    14.9
    %EPCO, Inc. (8) (10)
    
    
    13,386,711
    
    
    
    14.9
    %Dan L. Duncan (9)
    
    
    16,691,550
    
    
    
    18.6
    %
 
 (1)
    
    The address for each beneficial owner listed is this table is 1100 Louisiana, Suite
1000, Houston, Texas 77002.(2)
    
    In connection with the IDR Amendment, we issued 14,091,275 Units to our General
Partner, who distributed the Units to its member, which in turn caused them to be
distributed to other affiliates of EPCO.(3)
    
    Dan Duncan LLC holds directly 704,564 Units, representing less than 1% of the
outstanding Units. Dan Duncan LLC is the sole member of DFI Holdings LLC, which is the 1%
general partner of DFI, and owns a 4% limited partner interest in DFI. Therefore, Dan
Duncan LLC has shared voting and dispositive power over all of the 2,500,000 Units owned
directly by DFI. Mr. Dan L. Duncan is the sole member of Dan Duncan LLC. Therefore, Mr.
Duncan has an indirect beneficial ownership interest in the 704,564 Units held directly and
the 2,500,000 Units beneficially owned indirectly by Dan Duncan LLC.(4)
    
    As set forth above, DFI Holdings LLC holds no Units directly, but it is the 1% general
partner of DFI, and as such has voting and dispositive power over the 2,500,000 Units
owned directly by DFI.(5)
    
    As set forth above, DFI holds directly 2,500,000 Units.(6)
    
    Duncan Family Interests, Inc. holds directly 13,386,711 Units; it 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 13,386,711 Units held by Duncan Family Interests, Inc. Mr. Duncan owns
approximately 50.4% of the voting stock of EPCO and, accordingly, exercises shared voting
and dispositive power with respect to the 13,386,711 Units beneficially owned by EPCO. The
remaining shares of EPCOs capital stock are owned primarily by trusts established for the
benefit of Mr. Duncans family. 103




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##### Table of Contents



(7)
    
    As set forth above, EPCO Holdings, Inc. has shared voting and dispositive power over
the 13,386,711 Units beneficially owned by Duncan Family Interests, Inc.(8)
    
    As set forth above, EPCO has shared voting and dispositive power over the 13,386,711
Units beneficially owned by Duncan Family Interests, Inc.(9)
    
    As set forth above, Mr. Duncan has shared voting and dispositive power over the
13,386,711 Units beneficially owned by EPCO and the 3,204,564 Units beneficially owned by
Dan Duncan LLC. Additionally, Mr. Duncan is deemed to be the beneficial owner of the
53,275 Units owned by the Duncan Family 2000 Trust, the beneficiaries of which are the
shareholders of EPCO. Mr. Duncan also owns 47,000 Units in his individual capacity.(10)
    
    The 13,386,711 Units beneficially owned by EPCO are pledged to the lenders under the
EPCO Holdings, Inc. credit facility as security. The EPCO Holdings, Inc. credit facility
contains customary and other events of default. Security Ownership of Management
  Amount andNature ofBeneficial
    
    PercentageName
    
    Ownership (1)
    
    Owned (2)Michael B. Bracy
    
    
    4,000
    
    
    
    *Murray H. Hutchison
    
    
    
    
    
    
    Richard S. Snell
    
    
    
    
    
    
    Jerry E. Thompson
    
    
    10,000
    
    
    
    *Samuel N. Brown
    
    
    
    
    
    
    J. Michael Cockrell
    
    
    5,000
    
    
    
    *John N. Goodpasture
    
    
    2,000
    
    
    
    *Leonard W. Mallet
    
    
    1,178
    
    
    
    *William G. Manias
    
    
    1,000
    
    
    
    *Lee W. Marshall, Sr. (3)
    
    
    
    
    
    
    Tracy E. Ohmart
    
    
    
    
    
    
    James C. Ruth (4)
    
    
    5,000
    
    
    
    *C. Bruce Shaffer (5)
    
    
    
    
    
    
    All directors and current executive officers (consisting of 9 people)
    
    
    22,050
    
    
    
    *
 
 (1)
    
    The persons named above have sole voting and investment power over the Units
reported. Includes Units that the named person has the right to acquire within 60 days.(2)
    
    An asterisk in the column indicates that the beneficial owner holds less than 1% of
the class.(3)
    
    Mr. Marshall passed away on March 3, 2006. Beneficial ownership is presented as of
December 31, 2005 for Mr. Marshall.(4)
    
    Mr. Ruth retired effectived February 28, 2006.(5)
    
    Mr. Shaffer retired effective August 31, 2006.
 104




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##### Table of Contents



Pledge of Interests of our General Partner
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence
    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 (1)
    
    
    75
    %
    
    
    25
    %
 
 (1)
    
    Effective December 8, 2006, upon approval of our unitholders, the 50%/50% distribution
tier was eliminated in exchange for the issuance of 14,091,275 Units to the General Partner
(see Items 1 and 2. Business and Properties,  2006 Developments).  General Partners Incentive Distribution Rights
  105




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Relationship with EPCO and Affiliates
  
    
    EPCO and its consolidated private company subsidiaries;
    
    Texas Eastern Products Pipeline Company, LLC, our General Partner;
    
    DFI, which owns and controls our General Partner;
    
    Enterprise Products Partners L.P., which is controlled by affiliates of EPCO;
    
    Duncan Energy Partners L.P., which is controlled by affiliates of EPCO; and
    
    Enterprise Gas Processing LLC, controlled by affiliates of EPCO, our joint
venture partner in Jonah.
     Administrative Services Agreement
  
    
    EPCO provides administrative, management, engineering 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.
  106




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Transactions between EPCO and affiliates and us
  Revenues from EPCO and affiliates:Sales of petroleum products (1)
    
    $
    3.2Transportation  NGLs (2)
    
    
    10.2Transportation  LPGs (3)
    
    
    3.6Other operating revenues (4)
    
    
    1.5Costs and Expenses from EPCO and affiliates:Payroll, administrative and other (5) (6)
    
    
    136.9Purchases of petroleum products (7)
    
    
    41.8
 
 (1)
    
    Includes Jonah NGL sales through July 31, 2006 of $2.9 million to Enterprise Gas
Processing, LLC and $0.3 million in sales from LSI to various EPCO affiliates.(2)
    
    Includes revenues from NGL transportation on the Chaparral and Panola NGL pipelines.(3)
    
    Includes revenues from LPG transportation on the TE Products pipeline.(4)
    
    Includes other operating revenues on the TE Products pipeline.(5)
    
    Includes payroll, payroll related expenses, administrative expenses, including
reimbursements related to employee benefits and employee benefit plans, incurred in
managing us and our subsidiaries in accordance with the ASA, and other operating expenses.(6)
    
    Includes $15.8 million of insurance expense allocated to us by EPCO. The majority of
our insurance coverage, including property, liability, business interruption, auto and
directors and officers liability insurance, was obtained through EPCO.(7)
    
    Includes TCO purchases of condensate of $41.6 million, Jonah processing fees through
July 31, 2006 of $0.1 million and $0.1 million of expenses related to LSIs use of an
affiliate of EPCO as a transporter.  Accounts receivable, related party (1)
    
    $
    0.3Gas imbalance receivable
    
    
    1.3Insurance reimbursement receivable
    
    
    1.4Accounts payable, related party (2)
    
    
    26.4Deferred revenue, related party
    
    
    0.3Long-term payable (3)
    
    
    1.8
 
 (1)
    
    Relates to sales and transportation services provided to EPCO and affiliates. 107




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##### Table of Contents



(2)
    
    Relates to direct payroll, payroll related costs and other operational related charges
from EPCO and afffiliates.(3)
    
    Relates to our share of EPCOs Oil Insurance Limited insurance program retrospective
premiums obligation. Sale of Pioneer Plant
  Jonah Joint Venture
    108




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Other Transactions
    Review and Approval of Transactions with Related Parties
   
    
    receive, consider, reject and pass on the fairness and reasonableness of any
transaction or matter involving a conflict of interest between our General Partner
and its affiliates, on the one hand, and us or our subsidiaries, on the other,
including without limitation asset sales, operating or support services agreements
and any other material contractual arrangements,
    
    evaluate the fairness and reasonableness to us and approve or reject the
issuance and pricing of any equity securities by us,
    
    establish procedures for determining the fairness and reasonableness of any
affiliate transactions involving product exchanges or loans, without direct AC
Committee action and
    
    ensure that we and the General Partner have an appropriate policy on potential
conflicts of interest, including, but not limited to, policies on (1) loans to
officers and employees (if allowed by law), (2) related-party transactions
(including any dealings with directors, officers or employees), and (3) such other
transactions that could have the appearance of a potential conflict of interest.
  109




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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 AC 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;
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##### Table of Contents




    
    engaging legal advisors;
    
    evaluating and negotiating the transaction and recommending for approval or
approving the transaction, as the case may be.
  Relationships with Unconsolidated Affiliates
  
    
    In January 2003, TE Products entered into a pipeline capacity lease agreement
with Centennial for a period of five years that contains a minimum throughput
requirement. For the year ended December 31, 2006, TE Products incurred $5.6
million of rental charges related to the lease of pipeline capacity on Centennial.
    
    We perform certain management services for Centennial, MB Storage and Seaway.
During 2006, these affiliates paid us $20.4 million for such services, including
payroll and payroll related expenses.
    
    TCO purchases NGLs from Jonah as part of its crude oil marketing activities.
For the year ended December 31, 2006, TCO incurred $2.2 million in purchases from
Jonah related to the crude oil marketing activities.
  Director Independence
  
 Item 14. Principal Accounting Fees and Services
 Appointment of Independent Registered Public Accountant
  111




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Audit Fees
  Deloitte & Touche
    
    
    KPMGFor Year Ended
    
    
    For Year EndedDecember 31,
    
    
    December 31,Type of Fee
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Audit Fees (1)
    
    $
    1,706
    
    
    $
    
    
    
    $
    266
    
    
    $
    1,773Audit Related Fees (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26Tax Fees (3)
    
    
    107
    
    
    
    
    
    
    
    
    
    
    
    All Other Fees (4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    1,813
    
    
    $
    
    
    
    $
    266
    
    
    $
    1,799
 
 (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 sales and use tax 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 and KPMG during the last two years. Procedures for Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Registered Public Accountant
     112




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PART IV
 
 Item 15. Exhibits, Financial Statement Schedules.
  (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: Consolidated Financial Statements
of Jonah Gas Gathering Company and Subsidiary as of and for the year ended
December 31, 2006.(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
    
    Third Amended and Restated Agreement of Limited Partnership of TEPPCO Partners,
L.P., dated September 21, 2001 (Filed as Exhibit 3.7 to Form 10-Q of TEPPCO Partners,
L.P. (Commission File No. 1-10403) for the quarter ended September 30, 2001 and
incorporated herein by reference).3.3
    
    Limited Liability Company Agreement of Texas Eastern Products Pipeline Company,
LLC, dated March 31, 2000 (Filed as Exhibit 3.3 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).3.4
    
    Amendment to Limited Liability Company Agreement of Texas Eastern Products
Pipeline Company, LLC, dated March 22, 2005 (Filed as Exhibit 3.4 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).3.5
    
    Amendment to Limited Liability Company Agreement of Texas Eastern Products
Pipeline Company, LLC, dated June 15, 2006, but effective as of February 24, 2005
(Filed as Exhibit 3.1 to the Current Report on Form 8-K of TEPPCO Partners, L.P.
(Commission File No. 1-10403) filed on June 16, 2006.3.6
    
    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).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 Indenture between TE Products Pipeline Company, Limited Partnership and
The Bank of New York, as Trustee, dated as of January 27, 1998 (Filed as Exhibit 4.3 to
TE Products Pipeline Company, Limited Partnerships Registration Statement on Form S-3
(Commission File No. 333-38473) and incorporated herein by reference).
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ExhibitNumber
    
    Description4.3
    
    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).4.4
    
    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).4.5
    
    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).4.6
    
    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).4.7
    
    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).4.8
    
    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).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).
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ExhibitNumber
    
    Description10.7
    
    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).10.15+
    
    Employment Agreement with Barry R. Pearl (Filed as Exhibit 10.30 to Form 10-Q of
TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended March 31,
2001 and incorporated herein by reference).10.16
    
    Second Amended and Restated Agreement of Limited Partnership of TE Products
Pipeline Company, Limited Partnership, dated September 21, 2001 (Filed as Exhibit 3.8
to Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter
ended September 30, 2001 and incorporated herein by reference).10.17
    
    Amended and Restated Agreement of Limited Partnership of TCTM, L.P., dated
September 21, 2001 (Filed as Exhibit 3.9 to Form 10-Q of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the quarter ended September 30, 2001 and incorporated
herein by reference).10.18
    
    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).10.19
    
    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).10.20
    
    Agreement of Limited Partnership of TEPPCO Midstream Companies, L.P., dated
September 24, 2001 (Filed as Exhibit 3.10 to Form 10-Q of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the quarter ended September 30, 2001 and incorporated
herein by reference).10.21
    
    Agreement of Partnership of Jonah Gas Gathering Company dated June 20, 1996 as
amended by that certain Assignment of Partnership Interests dated September 28, 2001
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##### Table of Contents



ExhibitNumber
    
    Description(Filed as Exhibit 10.40 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).10.22
    
    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).10.23
    
    Amended and Restated Credit Agreement among TEPPCO Partners, L.P. as Borrower,
SunTrust Bank, as Administrative Agent and LC Issuing Bank and Certain Lenders, as
Lenders dated as of March 28, 2002 ($500,000,000 Revolving Facility) (Filed as Exhibit
10.45 to Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the
quarter ended March 31, 2002 and incorporated herein by reference).10.24
    
    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).10.25
    
    Amendment, dated as of June 27, 2002 to the Amended and Restated Credit
Agreement among TEPPCO Partners, L.P., as Borrower, SunTrust Bank, as Administrative
Agent, and Certain Lenders, dated as of March 28, 2002 ($500,000,000 Revolving Credit
Facility) (Filed as Exhibit 99.3 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).10.26
    
    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).10.27+
    
    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).10.28+
    
    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).10.29+
    
    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).10.30+
    
    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).10.31+
    
    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).10.32
    
    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).10.33
    
    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).10.34
    
    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
 116




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ExhibitNumber
    
    DescriptionTEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended
December 31, 2002 and incorporated herein by reference).10.35
    
    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).10.36
    
    Joint Development Agreement between TE Products Pipeline Company, Limited
Partnership and Louis Dreyfus Plastics Corporation dated February 10, 2000 (Filed as
Exhibit 10.52 to Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for
the quarter ended March 31, 2003 and incorporated herein by reference).10.37
    
    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 June 27, 2003 ($550,000,000 Revolving Facility) (Filed as Exhibit 10.52 to
Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended
June 30, 2003 and incorporated herein by reference).10.38
    
    Agreement of Limited Partnership of Mont Belvieu Storage Partners, L.P. dated
effective January 21, 2003 (Filed as Exhibit 10.53 to Form 10-Q of TEPPCO Partners,
L.P. (Commission File No. 1-10403) for the quarter ended September 30, 2003 and
incorporated herein by reference).10.39
    
    Letter of Agreement Clarifying Rights and Obligations of the Parties Under the
Mont Belvieu Storage Partners, L.P., Partnership Agreement and the Mont Belvieu
Venture, LLC, LLC Agreement, dated October 25, 2003 (Filed as Exhibit 10.54 to Form
10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended
September 30, 2003 and incorporated herein by reference).10.40
    
    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).10.41+
    
    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).10.42+
    
    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).10.43
    
    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).10.44+
    
    Supplemental Agreement to Employment Agreement between the Company and Barry R. Pearl
dated as of February 23, 2005 (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, 2005 and
incorporated herein by reference).10.45+
    
    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).10.46+
    
    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
 117




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##### Table of Contents



ExhibitNumber
    
    DescriptionPartners, L.P. (Commission File No. 1-10403) for the quarter ended March 31,
2005 and incorporated herein by reference).10.47+
    
    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).10.48+
    
    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).10.49+
    
    Agreement and Release between Charles H. Leonard and Texas Eastern Products Pipeline
Company, LLC dated as of July 11, 2005 (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, 2005 and
incorporated herein by reference).10.50
    
    Third 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 and Enterprise Products OLPGP, Inc., Enterprise GP Holdings
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 August 15, 2005, but effective as
of February 24, 2005 (Filed as Exhibit 99.1 to Form 8-K of TEPPCO Partners, L.P.
(Commission File No. 1-10403) dated August 19, 2005 and incorporated herein by
reference).10.51
    
    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).10.52+
    
    Agreement and Release between Barry R. Pearl and Texas Eastern Products Pipeline
Company, LLC dated as of December 30, 2005 (Filed as Exhibit 10.52 to Form 10-K of
TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended December 31,
2005 and incorporated herein by reference).10.53+
    
    Agreement and Release between James C. Ruth and Texas Eastern Products Pipeline
Company, LLC dated as of January 25, 2006 (Filed as Exhibit 10.53 to Form 10-K of
TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended December 31,
2005 and incorporated herein by reference).10.54
    
    Letter of Intent between TEPPCO Partners, L.P. and Enterprise Products
Operating, L.P. dated February 13, 2006 (Filed as Exhibit 99.1 to Form 8-K of TEPPCO
Partners, L.P. (Commission File No. 1-10403) dated February 17, 2006 and incorporated
herein by reference).10.55+
    
    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).10.56+
    
    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).10.57
    
    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
 118




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##### Table of Contents



ExhibitNumber
    
    Descriptionfinancial 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).10.58
    
    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).10.59
    
    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).10.60
    
    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).10.61
    
    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).10.62+*
    
    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.10.63+*
    
    Form of Retention Agreement.10.64*
    
    Amended and Restated Agreement of Limited Partnership of TEPPCO Midstream Companies,
L.P. by and between TEPPCO GP, Inc. and TEPPCO Partners, L.P. dated as of February 27,
2007.10.65*
    
    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, 2007.10.66*
    
    Third Amended and Restated Agreement of Limited Partnership of TE Products Pipeline
Company, Limited Partnership by and between TEPPCO GP, Inc. and TEPPCO Partners, L.P.
dated as of February 27, 2007.10.67
    
    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).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.
 119




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##### Table of Contents



ExhibitNumber
    
    Description23.1*
    
    Consent of Deloitte & Touche LLP.23.2*
    
    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. SIGNATURES
  TEPPCO Partners, L.P.By:
    
    /s/ JERRY E. THOMPSONJerry E. Thompson,Date: February 28, 2007
    
    
    
    President and Chief Executive Officer ofTexas Eastern Products Pipeline Company, LLC, General PartnerBy:
    
    /s/ WILLIAM G. MANIASWilliam G. Manias,Date:
February 28, 2007
    
    
    
    Vice President and Chief Financial Officer ofTexas Eastern Products Pipeline Company, LLC, General Partner
 120




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##### Table of Contents



Signature
    
    Title
    
    DateJERRY E. THOMPSON

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

(Principal Executive Officer)
    
    February 28, 2007WILLIAM 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, 2007MICHAEL B. BRACY*

Michael B. Bracy
    
    Director of Texas Eastern Products
Pipeline Company, LLC
    
    February 28, 2007RICHARD S. SNELL*

Richard S. Snell
    
    Director of Texas Eastern Products
Pipeline Company, LLC
    
    February 28, 2007MURRAY H. HUTCHISON*

Murray H. Hutchison
    
    Chairman of the Board of Texas Eastern Products
Pipeline Company, LLC
    
    February 28, 2007
 
 *
    
    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)
 121




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##### Table of Contents



CONSOLIDATED FINANCIAL STATEMENTS
OF TEPPCO PARTNERS, L.P.
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageReports of Independent Registered Public Accounting Firms


F-2Consolidated Balance Sheets as of December 31, 2006 and 2005


F-4Statements of Consolidated Income and Comprehensive Income for the Years Ended
December 31, 2006, 2005 and 2004


F-5Statements of Consolidated Cash Flows for the Years Ended December 31, 2006, 2005
and 2004


F-7Statements of Consolidated Partners Capital for the Years Ended December 31, 2006,
2005 and 2004


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-19Note 4. Accounting for Equity Awards


F-21Note 5. Employee Benefit Plans


F-25Note 6. Financial Instruments  Interest Rate Swaps


F-29Note 7. Inventories


F-31Note 8. Property, Plant and Equipment


F-31Note 9. Investments in Unconsolidated Affiliates


F-33Note 10. Acquisitions


F-35Note 11. Dispositions and Discontinued Operations


F-37Note 12. Goodwill and Other Intangible Assets


F-38Note 13. Debt Obligations


F-40Note 14. Partners Capital and Distributions


F-43Note 15. Business Segments


F-45Note 16. Related Party Transactions


F-49Note 17. Earnings per Unit


F-55Note 18. Commitments and Contingencies


F-56Note 19. Concentrations of Credit Risk


F-62Note 20. Supplemental Cash Flow Information


F-63Note 21. Selected Quarterly Data (Unaudited)


F-64Note 22. Supplemental Condensed Consolidating Financial Information


F-64Note 23. Subsequent Events


F-68
 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 31,2006


2005ASSETSCurrent assets:Cash and cash equivalents

$
70


$
119Accounts receivable, trade (net of allowance for doubtful accounts of
$100 and $250)


852,816



803,373Accounts receivable, related parties


11,788



5,207Inventories


72,193



29,069Other


29,843



61,361Total current assets


966,710



899,129Property, plant and equipment, at cost(net of accumulated
depreciation and amortization of $509,889 and $474,332)


1,642,095



1,960,068Equity investments


1,039,710



359,656Intangible assets


185,410



376,908Goodwill


15,506



16,944Other assets


72,661



67,833Total assets

$
3,922,092


$
3,680,538LIABILITIES AND PARTNERS CAPITALCurrent liabilities:Accounts payable and accrued liabilities

$
855,306


$
800,033Accounts payable, related parties


34,461



11,836Accrued interest


35,523



32,840Other accrued taxes


14,482



16,532Other


36,776



75,970Total current liabilities


976,548



937,211Senior notes


1,113,287



1,119,121Other long-term debt


490,000



405,900Deferred tax liability


652



Other liabilities and deferred credits


19,461



16,936Other liabilities, related party


1,814



Commitments
and contingenciesPartners capital:Accumulated other comprehensive income


426



11General partners interest


(85,655
)


(61,487
)Limited partners interests


1,405,559



1,262,846Total partners capital


1,320,330



1,201,370Total liabilities and partners capital

$
3,922,092


$
3,680,538
  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 31,2006


2005


2004Operating revenues:Sales of petroleum products

$
9,080,516


$
8,061,808


$
5,426,832Transportation  Refined products


152,552



144,552



148,166Transportation  LPGs


89,315



96,297



87,050Transportation  Crude oil


38,822



37,614



37,177Transportation  NGLs


43,838



43,915



41,204Gathering  Natural gas


123,933



152,797



140,122Other


78,509



68,051



67,539Total operating revenues


9,607,485



8,605,034



5,948,090Costs and expenses:Purchases of petroleum products


8,967,062



7,986,438



5,367,027Operating expense


203,015



185,777



191,893Operating fuel and power


57,450



48,972



48,139General and administrative


31,348



33,143



28,016Depreciation and amortization


108,252



110,729



112,284Taxes  other than income taxes


17,983



20,610



17,340Gains on sales of assets


(7,404
)


(668
)


(1,053
)Total costs and expenses


9,377,706



8,385,001



5,763,646Operating income


229,779



220,033



184,444Other income (expense):Interest expense  net


(86,171
)


(81,861
)


(72,053
)Equity earnings


36,761



20,094



22,148Interest income


2,077



687



467Other income  net


888



448



853Income before deferred income tax expense


183,334



159,401



135,859Deferred income tax expense


652







Income from continuing operations


182,682



159,401



135,859Income from discontinued operations


1,497



3,150



2,689Gain on sale of discontinued operations


17,872







Discontinued operations


19,369



3,150



2,689Net income

$
202,051


$
162,551


$
138,548Changes in fair values of interest rate cash flow hedges


(248
)






Changes in fair values of crude oil cash flow hedges


730



11



Comprehensive income

$
202,533


$
162,562


$
138,548
 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 31,2006


2005


2004Net Income Allocation:Limited Partner Unitholders:Income from continuing operations

$
130,483


$
112,744


$
96,667Income from discontinued operations


13,835



2,228



1,913Total Limited Partner Unitholders net income allocation


144,318



114,972



98,580General Partner:Income from continuing operations


52,199



46,657



39,192Income from discontinued operations


5,534



922



776Total General Partner net income allocation


57,733



47,579



39,968Total net income allocated

$
202,051


$
162,551


$
138,548Basic and diluted net income per Limited Partner Unit:Continuing operations

$
1.77


$
1.67


$
1.53Discontinued operations


0.19



0.04



0.03Basic and diluted net income per Limited Partner Unit

$
1.96


$
1.71


$
1.56Weighted average Limited Partner Units outstanding


73,657



67,397



62,999
  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 31,2006


2005


2004Operating activities:Net income

$
202,051


$
162,551


$
138,548Adjustments to reconcile net income to cash provided by
continuing operating activities:Income from discontinued operations


(19,369
)


(3,150
)


(2,689
)Deferred income tax expense


652







Depreciation and amortization


108,252



110,729



112,284Earnings in equity investments


(36,761
)


(20,094
)


(22,148
)Distributions from equity investments


63,483



37,085



47,213Gains on sales of assets


(7,404
)


(668
)


(1,053
)Non-cash portion of interest expense


1,676



1,624



(391
)Net effect of changes in operating accounts


(41,028
)


(37,354
)


(7,868
)Net cash provided by continuing operating activities


271,552



250,723



263,896Net cash provided by discontinued operations


1,521



3,782



3,271Net cash provided by operating activities


273,073



254,505



267,167Investing activities:Proceeds from sales of assets


51,558



510



1,226Acquisition of assets


(20,473
)


(112,231
)


(3,421
)Investment in Centennial Pipeline LLC


(2,500
)






(1,500
)Investment in Mont Belvieu Storage Partners, L.P.


(4,767
)


(4,233
)


(21,358
)Investment in Jonah Gas Gathering Company


(121,035
)






Cash paid for linefill on assets owned


(6,453
)


(14,408
)


(957
)Capital expenditures


(170,046
)


(220,553
)


(156,749
)Net cash used in continuing investing activities


(273,716
)


(350,915
)


(182,759
)Net cash used in discontinued investing activities










(7,398
)Net cash used in investing activities


(273,716
)


(350,915
)


(190,157
)Financing activities:Proceeds from revolving credit facility


924,125



657,757



324,200Issuance of Limited Partner Units, net


195,060



278,806



Repayments on revolving credit facility


(840,025
)


(604,857
)


(181,200
)Debt issuance costs






(498
)


Distributions paid


(278,566
)


(251,101
)


(233,057
)Net cash provided by (used in) financing activities


594



80,107



(90,057
)Net change in cash and cash equivalents


(49
)


(16,303
)


(13,047
)Cash and cash equivalents, January 1


119



16,422



29,469Cash and cash equivalents, December 31

$
70


$
119


$
16,422
  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, 2003


62,998,554


$
(8,950
)

$
1,114,661


$
(2,902
)

$
1,102,809Adjustments to issuance of Limited
Partner Units, net










(99
)






(99
)Net income on cash flow hedge














2,902



2,9022004 net income allocation






39,968



98,580







138,5482004 cash distributions






(66,899
)


(166,158
)






(233,057
)Balance, December 31, 2004


62,998,554



(35,881
)


1,046,984







1,011,103Issuance of Limited Partner Units, net
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


$
1,320,330
  F-8




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 NOTE 1. PARTNERSHIP ORGANIZATION
      

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;
 
 F-9




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 

changes to various voting percentage requirements, in most cases from 66 2/3%
of outstanding Units to a majority of outstanding Units;

a reduction in 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 Partnerships;

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
  Business Segments
   F-10




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Allowance for Doubtful Accounts
  For Year Ended December 31,2006


2005


2004Balance at beginning of period

$
250


$
112


$
4,700Charges to expense


64



829



536Deductions and other


(214
)


(691
)


(5,124
)Balance at end of period

$
100


$
250


$
112
 Asset Retirement Obligations
     F-11




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Accounting for Asset Retirement Obligations Accounting for Conditional
Asset Retirement Obligations, an interpretation of FASB Statement No. 143,
 Basis of Presentation and Principles of Consolidation
  Cash and Cash Equivalents
  Capitalization of Interest
  Contingencies
   F-12




---



##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Dollar Amounts
  Environmental Expenditures
   For Year Ended December 31,2006


2005


2004Balance at beginning of period

$
2,447


$
5,037


$
7,639Charges to expense


1,887



2,530



5,178Deductions and other


(2,532
)


(5,120
)


(7,780
)Balance at end of period

$
1,802


$
2,447


$
5,037
 Estimates
  Fair Value of Current Assets and Current Liabilities
  Goodwill
  F-13




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Income Taxes
  Texas Margin Tax
   Accounting for Income Taxes
 F-14




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Intangible Assets and Excess Investments
      Inventories
  Natural Gas Imbalances
  F-15




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Net Income Per Unit
    Property, Plant and Equipment
  Accounting for
the Impairment or Disposal of Long-Lived Assets
 Revenue Recognition
  F-16




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     Unit Option Plan and Unit Purchase Plan
  Use of Derivatives
 Accounting
for Derivative Instruments and Hedging Activities, Accounting for Certain
Derivative Instruments and Certain Hedging Activities, an amendment of FASB Statement No. 133.
 F-17




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
      F-18




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 NOTE 3. RECENT ACCOUNTING DEVELOPMENTS
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock-Based Compensation  Transition and Disclosure Accounting for Stock Issued to Employees
 Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited
Partnership or Similar Entity When the Limited Partners Have Certain Rights
 Accounting Changes and Error Corrections Accounting
Changes Reporting Accounting Changes in Interim Periods
 Accounting for Purchases and
Sales of Inventory with the Same Counterparty Accounting for Nonmonetary Transactions
 F-19




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  How Taxes Collected from Customers and
Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross
versus Net Presentation)
 Accounting for Uncertainty in Income
Taxes Accounting for Income Taxes
 Fair Value Measurements
 Considering the Effects
of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements
 F-20




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Employers Accounting for Defined Benefit
Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and
132(R)
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115
 
 NOTE 4. ACCOUNTING FOR EQUITY AWARDS
 1994 Long Term Incentive Plan
   F-21




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  1999 and 2002 Phantom Unit Retention Plans
    2000 Long Term Incentive Plan
   F-22




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   2005 Phantom Unit Plan
   EPCO, Inc. 2006 TPP Long-Term Incentive Plan
  F-23




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   EPCO, Inc. TPP Employee Unit Purchase Plan
    F-24




---



##### 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-25




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  For Year Ended December 31,2006


2005


2004Service cost benefit earned during the year

$



$
4,393


$
3,653Interest cost on projected benefit obligation


891



934



719Expected return on plan assets


(412
)


(671
)


(878
)Amortization of prior service cost






5



7Recognized net actuarial loss


135



129



57SFAS 88 curtailment charge






50



SFAS 88 settlement charge


3,545



194



Net pension benefits costs

$
4,159


$
5,034


$
3,558
 Other Postretirement Benefits
  Employers Accounting for Postretirement Benefits Other Than Pensions
  For Year Ended December 31,2006


2005


2004Service cost benefit earned during the year

$



$
81


$
165Interest cost on accumulated postretirement benefit obligation






69



153Amortization of prior service cost






53



126Recognized net actuarial loss






4



1Curtailment credit






(1,676
)


Settlement credit






(4
)


Net postretirement benefits costs

$



$
(1,473
)

$
445
  F-26




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Pension Benefits

Other Postretirement 
Benefits2006

2005

2006

2005Discount rate


4.73
%


4.59
%






5.75
%Increase in compensation levels















  Pension Benefits

Other Postretirement Benefits2006

2005

2006

2005Discount rate (1)


4.59
%


5.75%/5.00
%






5.75%/5.00
%Increase in compensation levels






5.00%







Expected long-term rate of
return on plan assets (2)


2.00
%


8.00%/2.00
%







 
 (1)

Expense was remeasured on May 31, 2005, as a result of TEPPCO RCBP and TEPPCO SBP
amendments. The discount rate was decreased from 5.75% to 5% effective June 1, 2005, to
reflect rates of returns on bonds currently available to settle the liability.(2)

As a result of TEPPCO RCBP and TEPPCO SBP amendments, the expected return on assets was
changed from 8% to 2% due to the movement of plan funds from equity investments into
short-term money market funds, effective June 1, 2005. F-27




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Other PostretirementPension Benefits


Benefits2006


2005


2006


2005Change in benefit obligationBenefit obligation at beginning of year

$
22,111


$
15,940


$



$
2,964Service cost






4,393







81Interest cost


891



934







70Actuarial loss


152



2,740







76Retiree contributions














64Benefits paid


(22,677
)


(910
)






(80
)Impact of curtailment






(986
)






(3,575
)Settlement














400Benefit obligation at end of year

$
477


$
22,111


$



$
Change in plan assetsFair value of plan assets at beginning of year

$
23,104


$
14,969


$



$
Actual return on plan assets


884



20







Retiree contributions














64Employer contributions






9,025







16Benefits paid


(22,677
)


(910
)






(80
)Fair value of plan assets at end of year

$
1,311


$
23,104


$



$
Funded status

$
834


$
993


$



$
Amount Recognized in the Balance Sheet:Noncurrent assets

$
834


$



$



$
Net pension asset at end of year

$
834


$



$



$
Amount Recognized in Accumulated Other Comprehensive Income:Unrecognized actuarial loss (1)

$
67


$



$



$

 
 (1)

This amount will be amortized out of accumulated other comprehensive income into net
periodic benefit cost in 2007.  December 31, 2006AfterBefore Application





Application of SFASof SFAS No. 158

Adjustments

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
 F-28




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Pension Benefits

Other Postretirement Benefits2007

$
477


$

 Plan Assets
  Other Plans
   
 NOTE 6. FINANCIAL INSTRUMENTS  INTEREST RATE SWAPS
    F-29




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     F-30




---



##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 NOTE 7. INVENTORIES
  December 31,2006


2005Crude oil (1)

$
49,312


$
3,021Refined products and LPGs (2) (3)


7,636



11,864Lubrication oils and specialty chemicals


7,500



5,740Materials and supplies


7,029



8,203Other


716



241Total

$
72,193


$
29,069
 
 (1)

At December 31, 2006, the substantial majority of our crude oil inventory was subject to
forward sales contracts.(2)

Refined products and LPGs inventory is managed on a combined basis.(3)

At December 31, 2006, we recorded a $1.5 million lower of cost or market adjustment
related to our Downstream Segments inventory. 
 NOTE 8. PROPERTY, PLANT AND EQUIPMENT
  December 31,2006


2005Land and right of way

$
128,791


$
147,064Line pipe and fittings


1,218,226



1,434,392Storage tanks


196,306



189,054Buildings and improvements


58,973



51,596Machinery and equipment


346,868



370,439Construction work in progress


202,820



241,855Total property, plant and equipment

$
2,151,984


$
2,434,400Less accumulated depreciation and amortization


509,889



474,332Net property, plant and equipment

$
1,642,095


$
1,960,068
   F-31




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Asset Retirement Obligations
   Asset retirement obligation liability balance, December 31, 2005

$
Liabilities recorded


1,189Liabilities settled


Accretion


39Revision in estimates


Asset retirement obligation liability balance, December 31, 2006

$
1,228
  F-32




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 NOTE 9. INVESTMENTS IN UNCONSOLIDATED AFFILIATES
 Seaway
  Centennial
  MB Storage
   F-33




---



##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Summarized Financial Information for Seaway, Centennial and MB Storage
  For Year EndedDecember 31,2006

2005Revenues

$
160,408


$
164,494Net income


34,070



52,623
  December 31,2006

2005Current assets

$
58,241


$
60,082Noncurrent assets


615,790



630,212Current liabilities


37,663



32,242Long-term debt


150,000



150,000Noncurrent liabilities


6,055



13,626Partners capital


480,313



494,426
 Jonah
  F-34




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Revenues

$
79,618Net income


34,743
  Current assets

$
33,963Noncurrent assets


800,591Current liabilities


25,113Noncurrent liabilities


191Partners capital


809,250
 
 NOTE 10. ACQUISITIONS
 Mexia Pipeline
  F-35




---



##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Storage and Terminaling Assets
  Refined Products Terminal and Truck Rack
  Genco Assets
  Terminal Assets
  Refined Products Terminal
  F-36




---



##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Cavern Assets
  
 NOTE 11. DISPOSITIONS AND DISCONTINUED OPERATIONS
 Pioneer Plant
   For Year EndedDecember 31,2006


2005


2004Operating revenues:Sales of petroleum products

$
3,828


$
10,479


$
7,295Other


932



2,975



2,807Total operating revenues


4,760



13,454



10,102Costs and expenses:Purchases of petroleum products


3,000



8,870



5,944Operating expense


182



692



738Depreciation and amortization


51



612



610Taxes  other than income taxes


30



130



121Total costs and expenses


3,263



10,304



7,413Income from discontinued operations

$
1,497


$
3,150


$
2,689
  December 31,2005Inventories

$
7Property, plant and equipment, net


19,812Assets of discontinued operations

$
19,819
 F-37




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  For Year EndedDecember 31,2006


2005


2004Cash flows from discontinued operating activities:Net income

$
19,369


$
3,150


$
2,689Depreciation and amortization


51



612



610Gain on sale of Pioneer plant


(17,872
)






(Increase) decrease in inventories


(27
)


20



(28
)Net cash flows provided by discontinued operating
activities


1,521



3,782



3,271Cash flows from discontinued investing activities:Capital expenditures










(7,398
)Net cash flows used in discontinued investing activities










(7,398
)Net cash flows from discontinued operations

$
1,521


$
3,782


$
(4,127
)
 Crude oil and Refined Products Assets
  
 NOTE 12. GOODWILL AND OTHER INTANGIBLE ASSETS
 Goodwill
 Goodwill and Other Intangible Assets,
  F-38




---



##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Downstream

Midstream

Upstream

SegmentsSegment

Segment

Segment

TotalGoodwill:December 31, 2006 (1)

$
1,339


$



$
14,167


$
15,506December 31, 2005






2,777



14,167



16,944
 
 (1)

Effective August 1, 2006, with the formation of a joint venture with Enterprise, Jonah
was deconsolidated and has been subsequently accounted for as an equity investment (see
Note 9). On November 1, 2006, we acquired a refined products terminal, and recorded $1.3
million of goodwill. Other Intangible Assets
  December 31, 2006


December 31, 2005Gross Carrying


Accumulated


Gross Carrying


AccumulatedAmount


Amortization


Amount


AmortizationIntangible assets:Gathering and transportation agreements (1)

$
241,537


$
(87,121
)

$
464,337


$
(118,921
)Fractionation agreement


38,000



(16,625
)


38,000



(14,725
)Other


12,310



(2,691
)


10,226



(2,009
)Subtotal

$
291,847


$
(106,437
)

$
512,563


$
(135,655
)Excess investments:Centennial Pipeline LLC

$
33,390


$
(16,579
)

$
33,390


$
(12,947
)Seaway Crude Pipeline Company


26,908



(4,450
)


27,100



(3,764
)Jonah Gas Gathering Company


2,924











Subtotal

$
63,222


$
(21,029
)

$
60,490


$
(16,711
)Total intangible assets

$
355,069


$
(127,466
)

$
573,053


$
(152,366
)
 
 (1)

Effective August 1, 2006, with the formation of a joint venture with Enterprise, Jonah
was deconsolidated and has been subsequently accounted for as an equity investment (see
Note 9).   F-39




---



##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     Intangible Assets (1)

Excess Investments2007

$
23,194


$
4,4402008


20,664



4,5882009


18,053



4,7932010


18,034



3,5872011


18,026



885
 
 (1)

Excludes estimated amortization expense of Jonahs intangible assets as a result
of its deconsolidation effective August 1, 2006. 
 NOTE 13. DEBT OBLIGATIONS
  December 31,2006


2005Revolving Credit Facility, due December 2011

$
490,000


$
405,9006.45% TE Products Senior Notes, due January 2008


179,968



179,9377.625% Senior Notes, due February 2012


498,866



498,6596.125% Senior Notes, due February 2013


199,130



198,9887.51% TE Products Senior Notes, due January 2028


210,000



210,000Total borrowings


1,577,964



1,493,484Adjustment to carrying value associated with
hedges of
fair value


25,323



31,537Total Credit Facilities

$
1,603,287


$
1,525,021
 F-40




---



##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Revolving Credit Facility
   

The maturity date of the credit facility was extended from December 13, 2010 to
December 13, 2011. Also under the terms of the amendment, we may request up to two
one-year extensions of the maturity date. These extensions, if requested, will
become effective subject to lender approval and satisfaction of certain other
conditions.

The amendment releases Jonah as a guarantor of the Revolving Credit Facility and
restricts the amount of outstanding debt of the Jonah joint venture to debt owing
to the owners of its partnership interests and other third-party debt in the
principal aggregate amount of $50.0 million.

The amendment modifies the financial covenants to, among other things, allow us
to include in the calculation of our Consolidated EBITDA (as defined in the
Revolving Credit Facility) pro forma adjustments for material capital projects.

The amendment allows for the issuance of Hybrid Securities (as defined in the
Revolving Credit Facility) of up to 15% of our Consolidated Total Capitalization
(as defined in the Revolving Credit Facility).
  Senior Notes
  F-41




---



##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 RedemptionYear

Price2008


103.755
%2009


103.380
%2010


103.004
%2011


102.629
%2012


102.253
%2013


101.878
%2014


101.502
%2015


101.127
%2016


100.751
%2017


100.376
%
      Fair ValueFace

December 31,Value

2006

20056.45% TE Products Senior Notes, due January 2008

$
180.0


$
181.6


$
183.77.625% Senior Notes, due February 2012


500.0



537.1



552.06.125% Senior Notes, due February 2013


200.0



201.6



205.67.51% TE Products Senior Notes, due January 2028


210.0



221.5



224.1
  F-42




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Letter of Credit
  
 NOTE 14. PARTNERS CAPITAL AND DISTRIBUTIONS
 Equity Offerings
   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
%Second Target  $0.326 per Unit up to $0.45 per Unit


75
%


25
%Over Second Target  Cash distributions greater than $0.45 per Unit (1)


50
%


50
%
 
 (1)

Effective December 8, 2006, upon approval of our unitholders, our Partnership Agreement
was amended and the 50%/50% distribution tier was eliminated in exchange for the issuance
of 14,091,275 Units to the General Partner (see Note 1). F-43




---



##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Years Ended December 31,2006


2005


2004Limited Partner Units

$
196,665


$
177,916


$
166,158General Partner Ownership Interest


4,014



3,630



3,391General Partner Incentive


77,887



69,555



63,508Total Cash Distributions Paid

$
278,566


$
251,101


$
233,057Total Cash Distributions Paid Per Unit

$
2.70


$
2.68


$
2.64
  General Partners Incentive Distribution Rights
  General Partners Interest
     F-44




---



##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Accumulated Other Comprehensive Income
 Reporting Comprehensive Income
  Balance at December 31, 2003

$
(2,902
)Transferred to earnings


2,939Change in fair value of cash flow hedge


(37
)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

$
426
 
 NOTE 15. 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-45




---



##### Table of Contents



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




---



##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  For Year Ended December 31, 2006Downstream


Upstream


Midstream


Segments


PartnershipSegment


Segment


Segment


Total


and Other


ConsolidatedSales of petroleum products (1)

$
5,800


$
9,060,782


$
18,766


$
9,085,348


$
(4,832
)

$
9,080,516Operating revenues


298,501



48,847



182,503



529,851



(2,882
)


526,969Purchases of petroleum products(1)


5,526



8,953,407



17,272



8,976,205



(9,143
)


8,967,062Operating expenses, including
power and taxes  other than
income taxes


153,246



66,801



59,150



279,197



(749
)


278,448General and administrative
expenses


17,085



5,986



8,277



31,348







31,348Depreciation and amortization
expense


41,405



14,400



52,447



108,252







108,252Gains on sales of assets


(4,223
)


(1,805
)


(1,376
)


(7,404
)






(7,404
)Operating income


91,262



70,840



65,499



227,601



2,178



229,779Equity earnings (losses)


(8,018
)


11,905



35,052



38,939



(2,178
)


36,761Interest income


1,008



407



662



2,077







2,077Other income, net


494



388



6



888







888Earnings before interest
expense, deferred income tax
expense and discontinued
operations

$
84,746


$
83,540


$
101,219


$
269,505


$



$
269,505
 
 (1)

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 for the years ended December 31, 2005 and 2004 have not been adjusted
for the adoption of EITF 04-13, as retroactive restatement was not permitted, which impacts
comparability (see Note 3 for further information). F-47




---



##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 For Year Ended December 31, 2005Downstream


Upstream


Midstream


Segments


PartnershipSegment


Segment


Segment


Total


and Other


ConsolidatedSales of petroleum products

$



$
8,062,131


$



$
8,062,131


$
(323
)

$
8,061,808Operating revenues


287,191



48,108



211,171



546,470



(3,244
)


543,226Purchases of petroleum products






7,989,682







7,989,682



(3,244
)


7,986,438Operating expenses, including
power and taxes  other than
income taxes


142,131



63,263



50,288



255,682



(323
)


255,359General and administrative
expenses


17,653



7,077



8,413



33,143







33,143Depreciation and amortization
expense


39,403



17,161



54,165



110,729







110,729Gains on sales of assets


(139
)


(118
)



(411
)


(668
)






(668
)Operating income


88,143



33,174



98,716



220,033







220,033Equity earnings (losses)


(2,984
)


23,078







20,094







20,094Interest income


477







210



687







687Other income, net


278



156



14



448







448Earnings before interest
expense, deferred income tax
expense and discontinued
operations

$
85,914


$
56,408


$
98,940


$
241,262


$



$
241,262
 For Year Ended December 31, 2004Downstream


Upstream


Midstream


Segments


PartnershipSegment


Segment


Segment


Total


and Other


ConsolidatedSales of petroleum products

$



$
5,426,832


$



$
5,426,832


$



$
5,426,832Operating revenues


279,400



49,163



195,902



524,465



(3,207
)


521,258Purchases of petroleum products






5,370,234







5,370,234



(3,207
)


5,367,027Operating expenses, including
power and taxes  other than
income taxes


148,644



55,459



53,269



257,372







257,372General and administrative
expenses


16,884



5,434



5,698



28,016







28,016Depreciation and amortization
expense


43,135



13,130



56,019



112,284







112,284Gains on sales of assets


(526
)


(527
)






(1,053
)






(1,053
)Operating income


71,263



32,265



80,916



184,444







184,444Equity earnings (losses)


(6,544
)


28,692







22,148







22,148Interest income


309



43



115



467







467Other income, net


478



363



12



853







853Earnings before interest
expense, deferred income tax
expense and discontinued
operations

$
65,506


$
61,363


$
81,043


$
207,912


$



$
207,912
 F-48




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Downstream

Upstream

Midstream

Segments

PartnershipSegment

Segment

Segment

Total

and Other

ConsolidatedDecember 31, 2006:Total assets

$
1,160,929


$
1,504,699


$
1,335,502


$
4,001,130


$
(79,038
)

$
3,922,092Capital expenditures


75,344



48,351



42,929



166,624



3,422



170,046Non-cash investing activities










581,341



581,341







581,341December 31, 2005:Total assets

$
1,056,217


$
1,353,492


$
1,280,548


$
3,690,257


$
(9,719
)

$
3,680,538Capital expenditures


58,609



40,954



119,837



219,400



1,153



220,553Non-cash investing activities


1,429











1,429







1,429December 31, 2004:Total assets

$
959,042


$
1,069,007


$
1,184,184


$
3,212,233


$
(25,949
)

$
3,186,284Capital expenditures


80,930



37,448



37,677



156,055



694



156,749Capital expenditures for
discontinued operations










7,398



7,398







7,398
  For Year Ended December 31,2006


2005


2004Earnings before interest expense, deferred income tax
expense and discontinued operations

$
269,505


$
241,262


$
207,912Interest expense  net


(86,171
)


(81,861
)


(72,053
)Income before deferred income tax expense


183,334



159,401



135,859Deferred income tax expense


652







Income from continuing operations


182,682



159,401



135,859Discontinued operations


19,369



3,150



2,689Net income

$
202,051


$
162,551


$
138,548
 
 NOTE 16. RELATED PARTY TRANSACTIONS
 EPCO and Affiliates and Duke Energy, DEFS and Affiliates
   F-49




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   

EPCO and its consolidated private company subsidiaries;

Texas Eastern Products Pipeline Company, LLC, our General Partner;

DFI, which owns and controls our General Partner;

Enterprise Products Partners L.P., which is controlled by affiliates of EPCO;

Duncan Energy Partners L.P., 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, engineering 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 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-50




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
     For Year Ended December 31,2006

2005

2004Revenues from EPCO and affiliates: (1)Sales of petroleum products (2)

$
3.2


$



$
Transportation  NGLs (3)


10.2



7.4



Transportation  LPGs(4)


3.6



4.3



Other operating revenues (5)


1.5



0.3



Costs and Expenses from EPCO and affiliates: (1)Payroll, administrative and other (6)(7)


136.9



78.0



Purchases of petroleum products (8)


41.8



3.4



Revenues from DEFS and affiliates: (9)Sales of petroleum products






4.3



23.2Transportation  NGLs






2.8



16.7Gathering  Natural gas  Jonah






0.5



3.3Transportation  LPGs






0.7



2.6Other operating revenues






2.4



14.0Costs and Expenses from DEFS and affiliates: (9)Payroll, administrative and other (10)(11)(12)






17.4



102.4Purchases of petroleum products (13)






38.5



146.4
 
 (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)

Includes Jonah NGL sales through July 31, 2006 of $2.9 million to Enterprise Gas
Processing, LLC and $0.3 million in sales from Lubrication Services, L.P. (LSI) to
various EPCO affiliates.(3)

Includes revenues from NGL transportation on the Chaparral and Panola NGL pipelines.(4)

Includes revenues from LPG transportation on the TE Products pipeline.(5)

Includes other operating revenues on the TE Products pipeline. F-51




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (6)

Includes payroll, payroll related expenses, administrative expenses, including
reimbursements related to employee benefits and employee benefit plans, incurred in
managing us and our subsidiaries in accordance with the ASA, and other operating expenses.(7)

Includes insurance expense for the years ended December 31, 2006 and 2005, related to
premiums paid by EPCO of $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.(8)

Includes TCO purchases of condensate of $41.6 million, Jonah processing fees through
July 31, 2006 of $0.1 million and $0.1 million of expenses related to LSIs use of an
affiliate of EPCO as a transporter.(9)

Operating revenues earned and expenses incurred from activities with DEFS 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.(10)

Includes operating costs and expenses related to DEFS 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.(11)

Includes costs related to payroll, payroll related expenses and administrative expenses
incurred in managing us and our subsidiaries.(12)

Includes insurance expense for the years ended December 31, 2005 and 2004, related to
premiums paid to Bison Insurance Company Limited (Bison), a wholly owned subsidiary of
Duke Energy, of $1.2 million and $6.5 million, respectively. 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.(13)

Includes TCO purchases of condensate and $0.8 million of purchases by Jonahs Pioneer
processing plant which is classified as income from discontinued operations in the
consolidated financial statements.
  December 31,2006

2005Accounts receivable, related party (1)

$
0.3


$
4.3Gas imbalance receivable


1.3



Insurance reimbursement receivable


1.4



1.3Accounts payable, related party (2)


26.4



9.8Deferred revenue, related party


0.3



Long-term payable (3)


1.8




 
 (1)

Relates to sales and transportation services provided to EPCO and affiliates.(2)

Relates to direct payroll, payroll related costs and other operational related charges
from EPCO and afffiliates.(3)

Relates to our share of EPCOs Oil Insurance Limited insurance program retrospective
premiums obligation. Sale of Pioneer plant
  F-52




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Jonah Joint Venture
   Other Transactions
    F-53




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Relationships with Unconsolidated Subsidiaries
 Centennial
    Jonah
  Seaway
  MB Storage
  F-54




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  
 NOTE 17. EARNINGS PER UNIT
   For Year Ended December 31,2006


2005


2004Income from continuing operations

$
182,682


$
159,401


$
135,859Discontinued operations


19,369



3,150



2,689Net income


202,051



162,551



138,548Multiplied by General Partner interest in net income


28.57
%


29.27
%


28.85
%Earnings allocated to General Partner:Income from continuing operations


52,199



46,657



39,192Discontinued operations


5,534



922



776Net income


57,733



47,579



39,968BASIC AND DILUTED EARNINGS PER UNIT:Numerator:Income from continuing operations


130,483



112,744



96,667Discontinued operations


13,835



2,228



1,913Limited partners interest in net income


144,318



114,972



98,580Denominator:Weighted average limited partner Units outstanding


73,657



67,397



62,999Basic and diluted earnings per Unit:Continuing operations

$
1.77


$
1.67


$
1.53Discontinued operations


0.19



0.04



0.03Limited partners interest in net income

$
1.96


$
1.71


$
1.56
  F-55




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  
 NOTE 18. COMMITMENTS AND CONTINGENCIES
 Litigation
 Ryan E. McCleery and Marcia S.
McCleery, et al. and Michael and Linda Robson, et al. v. Texas Eastern Corporation, et al. Michael and
Linda Robson, et al. v. Texas Eastern Corporation, et al
 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-56




---



##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
      Regulatory Matters
  F-57




---



##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
      F-58




---



##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
        F-59




---



##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Contractual Obligations
  Payment or Settlement due by PeriodTotal

2007

2008

2009

2010

2011

ThereafterMaturities of long-term debt (1)

$
1,580.0


$



$
180.0


$



$



$
490.0


$
910.0Operating leases (2)


69.7



18.7



11.7



8.8



7.3



6.3



16.9Purchase obligations (3)


15.0



12.9



1.4



0.5



0.1







0.1Capital expenditure
obligations (4)


9.5



9.5




















 
 (1)

We have long-term payment obligations under our Revolving Credit Facility and our Senior
Notes. Amounts shown in the table represent our scheduled future maturities of long-term
debt principal for the periods indicated (ee Note 13 for additional information regarding
our consolidated debt obligations).(2)

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, 2006, 2005 and 2004, was $25.3 million,
$24.0 million and $22.1 million, respectively.(3)

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, 2006.(4)

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. Other
   F-60




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
      F-61




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     
 NOTE 19. CONCENTRATIONS OF CREDIT RISK
   F-62




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 NOTE 20. SUPPLEMENTAL CASH FLOW INFORMATION
  For Year Ended December 31,2006


2005


2004Decrease (increase) in:Accounts receivable, trade

$
(67,317
)

$
(249,745
)

$
(181,690
)Accounts receivable, related parties


1,736



6,638



(14,693
)Inventories


(45,002
)


(970
)


(3,433
)Other current assets


25,552



(19,088
)


(9,926
)Other


(9,906
)


(4,371
)


(9,163
)Increase (decrease) in:Accounts payable and accrued expenses


44,348



254,251



186,942Accounts payable, related parties


15,696



(12,817
)


4,360Other


(6,135
)


(11,252
)


19,735Net effect of changes in operating accounts

$
(41,028
)

$
(37,354
)

$
(7,868
)Non-cash investing activities:Net assets transferred to Mont Belvieu Storage Partners, L.P.

$



$
1,429


$
Net 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

$
8,732


$



$
Supplemental disclosure of cash flows:Cash paid for interest (net of amounts capitalized)

$
88,107


$
82,315


$
77,510
 F-63




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 NOTE 21. SELECTED QUARTERLY DATA (UNAUDITED)
 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


$
0.532005:Operating revenues

$
1,523,791


$
2,087,385


$
2,500,127


$
2,493,731Operating income


61,232



53,817



43,378



61,606Income from continuing operations


46,305



40,076



28,883



44,137Income from discontinued operations


1,124



846



692



488Net income


47,429



40,922



29,575



44,625Basic and diluted net income per Limited Partner Unit: (1) (2)Continuing operations

$
0.53


$
0.42


$
0.29


$
0.45Discontinued operations


0.01



0.01



0.01



Basic and diluted net income per Limited
Partner Unit

$
0.54


$
0.43


$
0.30


$
0.45
 
 (1)

Per Unit calculation includes 14,091,275 Units issued in December 2006 to our General
Partner, 5,750,000 Units issued in July 2006 in an underwritten public offering and
6,965,000 Units issued in May and June 2005 in an underwritten public offering.(2)

The sum of the four quarters does not equal the total year due to rounding. 
 NOTE 22. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
  F-64




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##### Table of Contents



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


1,319,931



1,317,671



195,606



(1,793,498
)


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

$
2,578,366


$
2,600,453


$
1,866,699


$
(3,123,426
)

$
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


1,319,589



1,322,775



471,464



(1,793,498
)


1,320,330Total liabilities and
partners capital

$
2,578,366


$
2,600,453


$
1,866,699


$
(3,123,426
)

$
3,922,092
 December 31, 2005TEPPCOTEPPCO


Guarantor


Non-Guarantor


Consolidating


Partners, L.P.Partners, L.P.


Subsidiaries


Subsidiaries


Adjustments


ConsolidatedAssetsCurrent assets

$
40,977


$
107,692


$
789,486


$
(39,026
)

$
899,129Property, plant and equipment  net






1,335,724



624,344







1,960,068Equity investments


1,201,388



461,741



202,343



(1,505,816
)


359,656Intercompany notes receivable


1,134,093











(1,134,093
)


Intangible assets






345,005



31,903







376,908Other assets


5,532



22,170



57,075







84,777Total assets

$
2,381,990


$
2,272,332


$
1,705,151


$
(2,678,935
)

$
3,680,538Liabilities and partners capitalCurrent liabilities

$
43,236


$
140,743


$
793,683


$
(40,451
)

$
937,211Long-term debt


1,135,973



389,048











1,525,021Intercompany notes payable






635,263



498,832



(1,134,095
)


Other long term liabilities


1,422



14,564



950







16,936Total partners capital


1,201,359



1,092,714



411,686



(1,504,389
)


1,201,370Total liabilities
and partners capital

$
2,381,990


$
2,272,332


$
1,705,151


$
(2,678,935
)

$
3,680,538
 F-65




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 For Year Ended December 31, 2006TEPPCOTEPPCO


Guarantor


Non-Guarantor


Consolidating


Partners,Partners, L.P.


Subsidiaries


Subsidiaries


Adjustments


L.P. 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



176,267



11,905



(353,462
)


36,761Other income  net






1,545



1,420







2,965Income before deferred income
tax expense


202,051



200,118



132,215



(351,050
)


183,334Deferred income tax expense






135



517







652Income from continuing operations


202,051



199,983



131,698



(351,050
)


182,682Discontinued operations










19,369







19,369Net income

$
202,051


$
199,983


$
151,067


$
(351,050
)

$
202,051
 For Year Ended December 31, 2005TEPPCOTEPPCO


Guarantor


Non-Guarantor


Consolidating


Partners,Partners, L.P.


Subsidiaries


Subsidiaries


Adjustments


L.P. 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
 For Year Ended December 31, 2004TEPPCOTEPPCO


Guarantor


Non-Guarantor


Consolidating


Partners,Partners, L.P.


Subsidiaries


Subsidiaries


Adjustments


L.P. ConsolidatedOperating revenues

$



$
420,060


$
5,531,237


$
(3,207
)

$
5,948,090Costs and expenses






294,155



5,473,751



(3,207
)


5,764,699Gains on sales of assets






(526
)


(527
)






(1,053
)Operating income






126,431



58,013







184,444Interest expense  net






(48,902
)


(23,151
)






(72,053
)Equity earnings


138,548



57,454



28,692



(202,546
)


22,148Other income  net






876



444







1,320Income from continuing operations


138,548



135,859



63,998



(202,546
)


135,859Discontinued operations






2,689











2,689Net income

$
138,548


$
138,548


$
63,998


$
(202,546
)

$
138,548
 F-66




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 For Year Ended December 31, 2006TEPPCOTEPPCO


Guarantor


Non-Guarantor


Consolidating


Partners, L.P.Partners, L.P.


Subsidiaries


Subsidiaries


Adjustments


ConsolidatedCash flows from continuing operating 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 tax expense






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 at January 1


1,978







107



(1,966
)


119Cash and cash equivalents at December 31

$
10,975


$



$
70


$
(10,975
)

$
70
 For Year Ended December 31, 2005TEPPCOTEPPCO


Guarantor


Non-Guarantor


Consolidating


Partners, L.P.Partners, L.P.


Subsidiaries


Subsidiaries


Adjustments


ConsolidatedCash flows from continuing operating 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 increase in cash and cash equivalents


(2,138
)


(13,534
)


(2,781
)


2,150



(16,303
)Cash and cash equivalents at January 1


4,116



13,596



2,826



(4,116
)


16,422Cash and cash equivalents at December 31

$
1,978


$
62


$
45


$
(1,966
)

$
119
 F-67




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 For Year Ended December 31, 2004TEPPCOTEPPCO


Guarantor


Non-Guarantor


Consolidating


Partners, L.P.Partners, L.P.


Subsidiaries


Subsidiaries


Adjustments


ConsolidatedCash flows from continuing operating activitiesNet income

$
138,548


$
138,548


$
63,998


$
(202,546
)

$
138,548Adjustments to reconcile net income to net cash
from continuing operating activities:Income from discontinued operations






(2,689
)










(2,689
)Depreciation and amortization






89,438



22,846







112,284Earnings in equity investments, net of
distributions


94,509



(130
)


8,208



(77,522
)


25,065Gains on sales of assets






(526
)


(527
)






(1,053
)Changes in assets and liabilities and other


(158,726
)


29,707



(30,930
)


151,690



(8,259
)Net cash from continuing operating activities


74,331



254,348



63,595



(128,378
)


263,896Cash flows from discontinued operations






3,271











3,271Net cash from operating activities


74,331



257,619



63,595



(128,378
)


267,167Cash flows from continuing investing activities


98



(26,662
)


(40,864
)


(115,331
)


(182,759
)Cash flows from discontinued investing activities






(7,398
)










(7,398
)Cash flows from investing activities


98



(34,060
)


(40,864
)


(115,331
)


(190,157
)Cash flows from financing activities


(90,057
)


(229,206
)


(25,575
)


254,781



(90,057
)Net decrease in cash and cash equivalents


(15,628
)


(5,647
)


(2,844
)


11,072



(13,047
)Cash and cash equivalents at January 1


19,744



19,243



5,670



(15,188
)


29,469Cash and cash equivalents at December 31

$
4,116


$
13,596


$
2,826


$
(4,116
)

$
16,422
 
 NOTE 23. SUBSEQUENT EVENTS
   F-68




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JONAH GAS GATHERING COMPANY AND SUBSIDIARY




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 TABLE OF CONTENTS
 PageReport of Independent Registered Public Accounting Firm
    
    
    1Consolidated Balance Sheet as of December 31, 2006
    
    
    2Statement of Consolidated Income for the Year Ended December 31, 2006
    
    
    3Statement of Consolidated Cash Flows for the Year Ended December 31, 2006
    
    
    4Statement of Consolidated Partners Capital for the Year Ended December 31, 2006
    
    
    5Notes to Consolidated Financial Statements
    
    
    6
 i




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
 1




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 
 CONSOLIDATED BALANCE SHEET
 (Dollars in thousands)
 December 31,2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    Accounts receivable, trade
    
    
    24,629Accounts receivable, related parties
    
    
    2,492Inventories
    
    
    1,319Other
    
    
    5,523Total current assets
    
    
    33,963Property, plant and equipment, at cost(net of accumulateddepreciation and amortization of $42,690)
    
    
    633,459Intangible assets
    
    
    160,313Goodwill
    
    
    2,776Other assets
    
    
    4,043Total assets
    
    $
    834,554LIABILITIES AND PARTNERS CAPITALCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    6,597Accounts payable, related parties
    
    
    185Distribution payable
    
    
    11,716Other accrued taxes
    
    
    1,160Other
    
    
    5,455Total current liabilities
    
    
    25,113Other liabilities and deferred credits
    
    
    191Commitments and contingencies (Note 10)Partners capital
    
    
    809,250Total liabilities and partners capital
    
    $
    834,554
  2




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##### Table of Contents



JONAH GATHERING COMPANY AND SUBSIDIARY
 
 STATEMENT OF CONSOLIDATED INCOME
 (Dollars in thousands)
 For Year EndedDecember 31,2006Operating revenues:Gathering  Natural gas
    
    $
    104,415Sales of natural gas
    
    
    50,866Other
    
    
    4,849Total operating revenues
    
    
    160,130Costs and expenses:Purchases of natural gas
    
    
    48,290Operating expense
    
    
    12,925General and administrative
    
    
    242Depreciation and amortization
    
    
    19,647Taxes  other than income taxes
    
    
    2,748Total costs and expenses
    
    
    83,852Operating income
    
    
    76,278Other income (expense):Interest expense  net
    
    
    (6,812
    )Other income  net
    
    
    198Income from continuing operations
    
    
    69,664Income from discontinued operations
    
    
    1,497Gain on sale of discontinued operations
    
    
    17,872Discontinued operations
    
    
    19,369Net income
    
    $
    89,033
  3




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##### Table of Contents



JONAH GATHERING COMPANY AND SUBSIDIARY
 
 STATEMENT OF CONSOLIDATED CASH FLOWS
 (Dollars in thousands)
 For Year EndedDecember 31,2006Operating activities:Net income
    
    $
    89,033Adjustments to reconcile net income to cash provided by continuing operating
activities:Income from discontinued operations
    
    
    (19,369
    )Depreciation and amortization
    
    
    19,647Non-cash portion of interest expense
    
    
    174Net effect of changes in operating accounts:Increase in accounts receivable, trade
    
    
    (6,232
    )Increase in accounts receivable, related parties
    
    
    (2,492
    )Decrease in inventories
    
    
    254Decrease in other current assets
    
    
    13,675Decrease in accounts payable and accrued expenses
    
    
    (3,202
    )Increase in accounts payable, related parties
    
    
    30,113Other
    
    
    (712
    )Net cash provided by continuing operating activities
    
    
    120,889Net cash provided by discontinued operations
    
    
    1,521Net cash provided by operating activities
    
    
    122,410Investing activities:Proceeds from the sales of assets
    
    
    38,000Capital expenditures
    
    
    (51,211
    )Net cash used in investing activities
    
    
    (13,211
    )Financing activities:Proceeds from Note Payable, TEPPCO Midstream Companies, L.P.
    
    
    66,375Repayments of Note Payable, TEPPCO Midstream Companies, L.P.
    
    
    (96,990
    )Contributions from partners
    
    
    20,000Distributions paid to partners
    
    
    (98,646
    )Net cash used in financing activities
    
    
    (109,261
    )Net decrease in cash and cash equivalents
    
    
    (62
    )Cash and cash equivalents, January 1
    
    
    62Cash and cash equivalents, December 31
    
    $
    Non-cash financing activities:Non-cash contributions from partners for Phase V expansion
    
    $
    243,718Distributions payable to partners
    
    
    11,716Contribution of Note Payable, TEPPCO Midstream Companies, L.P. 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
  4




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##### Table of Contents



JONAH GATHERING COMPANY AND SUBSIDIARY
 
 STATEMENT OF CONSOLIDATED PARTNERS CAPITAL
 (Dollars in thousands)
 TEPPCOMidstream
    
    
    Enterprise GasTEPPCO GP, Inc.
    
    
    Companies, L.P.
    
    
    Processing, LLC
    
    
    TotalBalance, December 31, 2005
    
    $
    3
    
    
    $
    294,862
    
    
    $
    
    
    
    $
    294,865Net income
    
    
    1
    
    
    
    88,794
    
    
    
    238
    
    
    
    89,033Contributions
    
    
    
    
    
    
    418,840
    
    
    
    116,874
    
    
    
    535,714Distributions
    
    
    
    
    
    
    (110,162
    )
    
    
    (200
    )
    
    
    (110,362
    )Transfer of partnership interest
    
    
    (4
    )
    
    
    4
    
    
    
    
    
    
    
    Balance, December 31, 2006
    
    $
    
    
    
    $
    692,338
    
    
    $
    116,912
    
    
    $
    809,250
  5




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Organization
      
    
    The Phase I expansion was completed in May 2002, at a cost of approximately
$25.0 million and increased system capacity by 62%, from approximately 450 million
cubic feet per day (MMcf/d) to approximately 730 MMcf/d.
    
    In October 2002, the Phase II expansion project was completed at a cost of
approximately $35.3 million, which increased the capacity of the Jonah system from
730 MMcf/d to approximately 880 MMcf/d.
    
    In 2003, the Jonah system was again expanded by the Phase III project to include
an 80-mile pipeline loop and 3,700 horsepower of new compression on the system and
the building of a new 300 MMcf/d gas processing plant near Opal, Wyoming. Phase
III was substantially completed during the fourth quarter of 2003, with system
capacity increasing to 1,180 MMcf/d at a cost of approximately $53.4 million. This
gas processing plant was sold to Enterprise Products Partners L.P. on March 31,
2006 (see Note 7).
    
    Additional capacity of 100 MMcf/d was completed during the fourth quarter of
2004, at a cost of approximately $13.0 million.
 6




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
    
    The Phase IV expansion project was completed in February 2006, at a cost of
approximately $116.0 million and increased system capacity to 1.5 billion cubic
feet per day (Bcf/d) with the addition of 33,000 horsepower of compression and
approximately 50 miles of pipeline.
 Formation of Joint Venture
       7




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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
 Accounts Receivable and Allowance for Doubtful Accounts
  Asset Retirement Obligations
 Accounting for Asset Retirement
Obligations Accounting for Conditional Asset Retirement Obligations, an
interpretation of FASB Statement No. 143
 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)
    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. Recently Issued Accounting Standards
 Share-Based Payment Accounting for
Stock-Based Compensation Accounting for Stock-Based Compensation 
Transition and Disclosure Accounting for Stock Issued to Employees
 Accounting Changes and Error Corrections Accounting
Changes Reporting Accounting Changes in Interim Periods
 Accounting for Purchases and
Sales of Inventory with the Same Counterparty Accounting for Nonmonetary Transactions
 How Taxes Collected from Customers and
Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross
versus Net Presentation)
 11




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Fair Value Measurements
 Considering the Effects
of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements
 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
  Other Intangible Assets
  12




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    2007
    
    $
    12,7482008
    
    
    15,0202009
    
    
    16,6212010
    
    
    16,1222011
    
    
    13,865
 Note 5. Related Party Transactions
   13




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  For Year EndedDecember 31,2006Revenues from TEPPCO and affiliates:Sales of natural gas liquids (NGLs)(1)
    
    $
    3,764Other operating revenues (2)
    
    
    4,622Revenues and Purchases from EPCO and affiliates:Sales of natural gas
    
    $
    8,585Purchases of natural gas (3)
    
    
    251Gain on sale of Pioneer plant
    
    
    17,872Operating expense (4)
    
    
    6,149
 
 (1)
    
    Includes NGL sales to TEPPCO Crude Oil, L.P. (TCO) from our Pioneer processing plant
prior to the sale of the plant to an affiliate of Enterprise Products. These sales are
classified as income from discontinued operations in the accompanying consolidated
financial statements.(2)
    
    Includes condensate sales to TCO.(3)
    
    Includes processing fees paid to Enterprise Products for processing services performed
at the Pioneer processing plant after the sale of the plant to an affiliate of Enterprise
Products.(4)
    
    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, 2006Accounts
    
    
    Accounts
    
    
    Other CurrentReceivable
    
    
    Payable
    
    
    Liabilities (1)Partners:TEPPCO
    
    $
    879
    
    
    $
    
    
    
    $
    Enterprise Products and affiliates
    
    
    1,613
    
    
    
    185
    
    
    
    643Total
    
    $
    2,492
    
    
    $
    185
    
    
    $
    643
 
 (1)
    
    Relates to pipeline imbalances with an affiliate of EPCO. 14




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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
  December 31,2006Land and right of way
    
    $
    20,893Line pipe and fittings
    
    
    295,482Storage tanks
    
    
    5,718Buildings and improvements
    
    
    3,239Machinery and equipment
    
    
    74,396Construction work in progress
    
    
    276,421Total property, plant and equipment
    
    $
    676,149Less accumulated depreciation and amortization
    
    
    42,690Net property, plant and equipment
    
    $
    633,459
   Asset Retirement Obligation
  Liabilities recorded
    
    $
    186Liabilities settled
    
    
    Accretion
    
    
    5Revision in estimates
    
    
    Asset retirement obligation liability balance, December 31, 2006
    
    $
    191
  Note 7. Dispositions and Discontinued Operations
  15




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   For Year EndedDecember 31,2006Operating revenues:Sales of NGLs
    
    $
    3,828Other
    
    
    932Total operating revenues
    
    
    4,760Costs and expenses:Purchases of petroleum products
    
    
    3,000Operating expense
    
    
    182Depreciation and amortization
    
    
    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 flows from discontinued operations
    
    $
    1,521
 Note 8. Debt Obligations
  16




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    
    
    Total bank commitments increased from $600.0 million to $700.0 million. The
amendment also provided that the commitments under the credit facility may be
increased up to a maximum of $850.0 million upon TEPPCOs request, subject to
lender approval and the satisfaction of certain other conditions.
    
    The facility fee and the borrowing rate currently in effect were reduced by
0.275%.
    
    The maturity date of the credit facility was extended from October 21, 2009, to
December 13, 2010. Also under the terms of the amendment, TEPPCO may request up to
two, one-year extensions of the maturity date. These extensions, if requested,
will become effective subject to lender approval and satisfaction of certain other
conditions.
    
    The amendment also removed the $100.0 million limit on the total amount of
standby letters of credit that can be outstanding under the credit facility.
  17




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 Note Payable, TEPPCO Midstream
  Note 9. Partners Capital and Distributions
     Note 10. Commitments and Contingencies
  Contractual Obligations
  18




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##### Table of Contents



JONAH GAS GATHERING COMPANY AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2007
    
    $
    8302008
    
    
    872009
    
    
    82$
    999
  Note 11. Employee Benefits
  19




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##### Table of Contents



INDEX TO EXHIBITS 3.1
    
    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
    
    Third Amended and Restated Agreement of Limited Partnership of TEPPCO Partners,
L.P., dated September 21, 2001 (Filed as Exhibit 3.7 to Form 10-Q of TEPPCO Partners,
L.P. (Commission File No. 1-10403) for the quarter ended September 30, 2001 and
incorporated herein by reference).3.3
    
    Limited Liability Company Agreement of Texas Eastern Products Pipeline Company,
LLC, dated March 31, 2000 (Filed as Exhibit 3.3 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).3.4
    
    Amendment to Limited Liability Company Agreement of Texas Eastern Products
Pipeline Company, LLC, dated March 22, 2005 (Filed as Exhibit 3.4 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).3.5
    
    Amendment to Limited Liability Company Agreement of Texas Eastern Products
Pipeline Company, LLC, dated June 15, 2006, but effective as of February 24, 2005
(Filed as Exhibit 3.1 to the Current Report on Form 8-K of TEPPCO Partners, L.P.
(Commission File No. 1-10403) filed on June 16, 2006.3.6
    
    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).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 Indenture between TE Products Pipeline Company, Limited Partnership and
The Bank of New York, as Trustee, dated as of January 27, 1998 (Filed as Exhibit 4.3 to
TE Products Pipeline Company, Limited Partnerships Registration Statement on Form S-3
(Commission File No. 333-38473) and incorporated herein by reference).




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##### Table of Contents



4.3
    
    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).4.4
    
    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).4.5
    
    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).4.6
    
    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).4.7
    
    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).4.8
    
    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).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).0.2+
    
    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).




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##### Table of Contents



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).10.15+
    
    Employment Agreement with Barry R. Pearl (Filed as Exhibit 10.30 to Form 10-Q of
TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended March 31,
2001 and incorporated herein by reference).10.16
    
    Second Amended and Restated Agreement of Limited Partnership of TE Products
Pipeline Company, Limited Partnership, dated September 21, 2001 (Filed as Exhibit 3.8
to Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter
ended September 30, 2001 and incorporated herein by reference).10.17
    
    Amended and Restated Agreement of Limited Partnership of TCTM, L.P., dated
September 21, 2001 (Filed as Exhibit 3.9 to Form 10-Q of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the quarter ended September 30, 2001 and incorporated
herein by reference).10.18
    
    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).10.19
    
    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).10.20
    
    Agreement of Limited Partnership of TEPPCO Midstream Companies, L.P., dated
September 24, 2001 (Filed as Exhibit 3.10 to Form 10-Q of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the quarter ended September 30, 2001 and incorporated
herein by reference).10.21
    
    Agreement of Partnership of Jonah Gas Gathering Company dated June 20, 1996 as
amended by that certain Assignment of Partnership Interests dated
September 28, 2001 (Filed as Exhibit 10.40 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).




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##### Table of Contents



10.22
    
    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).10.23
    
    Amended and Restated Credit Agreement among TEPPCO Partners, L.P. as Borrower,
SunTrust Bank, as Administrative Agent and LC Issuing Bank and Certain Lenders, as
Lenders dated as of March 28, 2002 ($500,000,000 Revolving Facility) (Filed as Exhibit
10.45 to Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the
quarter ended March 31, 2002 and incorporated herein by reference).10.24
    
    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).10.25
    
    Amendment, dated as of June 27, 2002 to the Amended and Restated Credit
Agreement among TEPPCO Partners, L.P., as Borrower, SunTrust Bank, as Administrative
Agent, and Certain Lenders, dated as of March 28, 2002 ($500,000,000 Revolving Credit
Facility) (Filed as Exhibit 99.3 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).10.26
    
    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).10.27+
    
    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).10.28+
    
    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).10.29+
    
    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).10.30+
    
    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).10.31+
    
    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).10.32
    
    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).10.33
    
    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).10.34
    
    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).




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##### Table of Contents



10.35
    
    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).10.36
    
    Joint Development Agreement between TE Products Pipeline Company, Limited
Partnership and Louis Dreyfus Plastics Corporation dated February 10, 2000 (Filed as
Exhibit 10.52 to Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for
the quarter ended March 31, 2003 and incorporated herein by reference).10.37
    
    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 June 27, 2003 ($550,000,000 Revolving Facility) (Filed as Exhibit 10.52 to
Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended
June 30, 2003 and incorporated herein by reference).10.38
    
    Agreement of Limited Partnership of Mont Belvieu Storage Partners, L.P. dated
effective January 21, 2003 (Filed as Exhibit 10.53 to Form 10-Q of TEPPCO Partners,
L.P. (Commission File No. 1-10403) for the quarter ended September 30, 2003 and
incorporated herein by reference).10.39
    
    Letter of Agreement Clarifying Rights and Obligations of the Parties Under the
Mont Belvieu Storage Partners, L.P., Partnership Agreement and the Mont Belvieu
Venture, LLC, LLC Agreement, dated October 25, 2003 (Filed as Exhibit 10.54 to Form
10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended
September 30, 2003 and incorporated herein by reference).10.40
    
    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).10.41+
    
    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).10.42+
    
    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).10.43
    
    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).10.44+
    
    Supplemental Agreement to Employment Agreement between the Company and Barry R. Pearl
dated as of February 23, 2005 (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, 2005 and
incorporated herein by reference).10.45+
    
    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).10.46+
    
    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



10.47+
    
    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).10.48+
    
    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).10.49+
    
    Agreement and Release between Charles H. Leonard and Texas Eastern Products Pipeline
Company, LLC dated as of July 11, 2005 (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, 2005 and
incorporated herein by reference).10.50
    
    Third 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 and Enterprise Products OLPGP, Inc., Enterprise GP Holdings
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 August 15, 2005, but effective as
of February 24, 2005 (Filed as Exhibit 99.1 to Form 8-K of TEPPCO Partners, L.P.
(Commission File No. 1-10403) dated August 19, 2005 and incorporated herein by
reference).10.51
    
    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).10.52+
    
    Agreement and Release between Barry R. Pearl and Texas Eastern Products Pipeline
Company, LLC dated as of December 30, 2005 (Filed as Exhibit 10.52 to Form 10-K of
TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended December 31,
2005 and incorporated herein by reference).10.53+
    
    Agreement and Release between James C. Ruth and Texas Eastern Products Pipeline
Company, LLC dated as of January 25, 2006 (Filed as Exhibit 10.53 to Form 10-K of
TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended December 31,
2005 and incorporated herein by reference).10.54
    
    Letter of Intent between TEPPCO Partners, L.P. and Enterprise Products
Operating, L.P. dated February 13, 2006 (Filed as Exhibit 99.1 to Form 8-K of TEPPCO
Partners, L.P. (Commission File No. 1-10403) dated February 17, 2006 and incorporated
herein by reference).10.55+
    
    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).10.56+
    
    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).10.57
    
    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




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##### Table of Contents



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).10.58
    
    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).10.59
    
    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).10.60
    
    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).10.61
    
    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).10.62+*
    
    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.10.63+*
    
    Form of Retention Agreement.10.64*
    
    Amended and Restated Agreement of Limited Partnership of TEPPCO Midstream Companies,
L.P. by and between TEPPCO GP, Inc. and TEPPCO Partners, L.P. dated as of February 27,
2007.10.65*
    
    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, 2007.10.66*
    
    Third Amended and Restated Agreement of Limited Partnership of TE Products Pipeline
Company, Limited Partnership by and between TEPPCO GP, Inc. and TEPPCO Partners, L.P.
dated as of February 27, 2007.10.67
    
    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).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.




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##### Table of Contents



23.1*
    
    Consent of Deloitte & Touche LLP.23.2*
    
    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.