UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d)

of the Security Exchange Act of 1934

 

Date of report (Date of earliest event reported): October 25, 2007

 

DUNCAN ENERGY PARTNERS L.P.

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02. Results of Operations and Financial Condition.

 

On October 25, 2007, Duncan Energy Partners L.P. (“Duncan Energy Partners”) issued a press release announcing its financial results for the three and nine months ended September 30, 2007 and 2006, and held a webcast conference call discussing those results. A copy of the earnings press release is filed as Exhibit 99.1 to this report, which is hereby incorporated by reference into this Item 2.02. The webcast conference call will be available for replay on Duncan Energy Partners’ website at www.deplp.com. The conference call will be archived on our website for 90 days.

 

Significant Relationships Referenced in this Current Report on Form 8-K

 

Duncan Energy Partners did not own any assets prior to February 5, 2007, which was the date it completed its initial public offering of common units. The historical business and operations of Duncan Energy Partners prior to February 5, 2007 are referred to as “Duncan Energy Partners Predecessor” or “Predecessor.” Unless the context requires otherwise, references to “we,” “us,” “our,” “the Partnership” or “Duncan Energy Partners” are intended to mean the business and operations of Duncan Energy Partners L.P. and its consolidated subsidiaries since February 5, 2007. When used in a historical context (i.e. prior to February 5, 2007), these terms are intended to mean the combined business and operations of Duncan Energy Partners Predecessor. For financial reporting purposes, the effective date of the closing of our initial public offering and related transactions was February 1, 2007.

 

References to “DEP GP” mean DEP Holdings, LLC, which is our general partner.

 

References to “DEP Operating Partnership” mean DEP Operating Partnership, L.P., which is a wholly owned subsidiary of Duncan Energy Partners that conducts substantially all of its business.

 

References to “Enterprise Products Partners” mean Enterprise Products Partners L.P., which owns Enterprise Products Operating LLC. Enterprise Products Partners is a publicly traded partnership, the limited partner interests of which are listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “EPD.”

 

References to “EPO” mean Enterprise Products Operating LLC, which is our Parent, and its consolidated subsidiaries. EPO owns the controlling interest in the Partnership’s general partner, DEP GP, and is a significant owner of the Partnership’s common units.

 

References to “TEPPCO” mean TEPPCO Partners, L.P., a publicly traded affiliate, the limited partner interests of which are listed on the NYSE under the ticker symbol “TPP.” References to “TEPPCO GP” refer to Texas Eastern Products Pipeline Company, LLC, which is the general partner of TEPPCO and is wholly owned by Enterprise GP Holdings.

 

References to “Enterprise GP Holdings” mean Enterprise GP Holdings L.P., which owns Enterprise Products GP and TEPPCO GP and limited partner interests in Enterprise Products Partners and TEPPCO.

 

References to “EPE Holdings” mean EPE Holdings, LLC, which is the general partner of Enterprise GP Holdings.

 

References to “EPCO” mean EPCO, Inc., which is a related party affiliate to all of the foregoing named entities.

 

All of the aforementioned entities are affiliates and under common control of Dan L. Duncan, the Chairman and controlling shareholder of EPCO.

 

 

Basis of Financial Statement Presentation

 

Our results of operations since the completion of our initial public offering are not necessarily indicative of results expected for the full year.

 

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Except per unit amounts, dollar amounts presented in the tabular data within this Current Report on Form 8-K are stated in thousands of dollars.

 

The financial information and related discussion included in the press release and this Current Report on Form 8-K that pertain to periods prior to our initial public offering reflect the assets, liabilities and operations contributed to us by EPO at the closing of our initial public offering on February 5, 2007. We refer to these historical assets, liabilities and operations as the assets, liabilities and operations of Duncan Energy Partners Predecessor. We have elected February 1, 2007 as the effective closing date for financial accounting and reporting purposes with respect to Duncan Energy Partners Predecessor.

 

The financial information of Duncan Energy Partners Predecessor reflects EPO’s historical ownership of these assets, liabilities and operations. The principal business entities included in the historical combined financial statements of Duncan Energy Partners Predecessor are (on a 100% basis): (i) Mont Belvieu Caverns, LLC (“Mont Belvieu Caverns”), a Delaware limited liability company; (ii) Acadian Gas, LLC (“Acadian Gas”), a Delaware limited liability company; (iii) Enterprise Lou-Tex Propylene Pipeline L.P. (“Lou-Tex Propylene”), a Delaware limited partnership, including its general partner; (iv) Sabine Propylene Pipeline L.P. (“Sabine Propylene”), a Delaware limited partnership, including its general partner; and (v) South Texas NGL Pipelines, LLC (“South Texas NGL”), a Delaware limited liability company. EPO contributed a 66% equity interest in each of these five entities to us on February 5, 2007. EPO retained the remaining 34% equity interests in each of these subsidiaries.

 

We have presented our results of operations following the completion of our initial public offering separately from those pertaining to Duncan Energy Partners Predecessor. We acquired substantially all of the assets and operations of the Predecessor that are included in our consolidated financial statements. There are a number of agreements and other items that went into effect at the time of our initial public offering that affect the comparability of our current operating results with the historical operating results of Duncan Energy Partners Predecessor. These differences include:

 

 

 

 

 

As generally used in the energy industry and in this press release and accompanying exhibits, the identified terms have the following meanings:

 

 

Use of Non-GAAP financial measures

 

Our press release and/or the conference call discussions include the non-generally accepted accounting principle (“non-GAAP”) financial measures of gross operating margin, distributable cash flow, and EBITDA. The press release provides reconciliations of these non-GAAP financial measures to their most directly comparable

 

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financial measure calculated and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Our non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net income, operating income, cash flow from operating activities or any other GAAP measure of liquidity or financial performance.

 

Gross operating margin. We evaluate segment performance based on the non-GAAP financial measure of gross operating margin. Gross operating margin (either in total or by individual segment) is an important performance measure of the core profitability of our operations. This measure forms the basis of our internal financial reporting and is used by senior management in deciding how to allocate capital resources among business segments. We believe that investors benefit from having access to the same financial measures that our management uses in evaluating segment results. The GAAP measure most directly comparable to total segment gross operating margin is operating income. Our non-GAAP financial measure of total segment gross operating margin should not be considered as an alternative to GAAP operating income.

 

We define total (or combined) segment gross operating margin as operating income before: (i) depreciation, amortization and accretion expense; (ii) gains and losses on the sale of assets; and (iii) general and administrative expenses. Gross operating margin is exclusive of other income and expense transactions, provision for income taxes, extraordinary charges and the cumulative effect of changes in accounting principles. Gross operating margin by segment is calculated by subtracting segment operating costs and expenses (net of the adjustments noted above) from segment revenues, with both segment totals before the elimination of any intersegment and intrasegment transactions. In accordance with GAAP, intercompany accounts and transactions are eliminated in consolidation.

 

We include equity earnings from Evangeline Gas Pipeline Company, L.P. (“Evangeline”) in our measurement of segment gross operating margin and operating income. Our equity investment in Evangeline is a vital component of our business strategy and important to the operations of Acadian Gas. This method of operation enables us to achieve favorable economies of scale relative to the level of investment and business risk assumed versus what we could accomplish on a stand-alone basis. Evangeline performs complementary roles to the other business operations of Acadian Gas. As circumstances dictate, we may increase our ownership interest in Evangeline or make other equity method investments.

 

Distributable cash flow. We define distributable cash flow for Duncan Energy Partners as net income or loss plus: (i) depreciation, amortization and accretion expense; (ii) cash distributions received from our unconsolidated affiliate, if any, less equity in the earnings of such unconsolidated affiliate; (iii) the subtraction of sustaining capital expenditures; (iv) the addition of losses or subtraction of gains relating to the sale of assets; (v) cash proceeds from the sale of assets; (vi) gains or losses on monetization of financial instruments recorded in accumulated other comprehensive income less related amortization of such amounts to earnings; and (vii) other miscellaneous non-cash amounts affecting net income or loss for the period less parent interest in the above adjustments to net income or loss in deriving distributable cash flow. Sustaining capital expenditures are capital expenditures (as defined by GAAP) resulting from improvements to and major renewals of existing assets. Distributable cash flow is a significant liquidity metric used by our senior management to compare basic cash flows generated by us to the cash distributions we expect to pay our partners. Using this metric, our management can compute the coverage ratio of estimated cash flows to planned cash distributions.

 

Distributable cash flow is also an important non-GAAP financial measure for our limited partners since it serves as an indicator of our success in providing a cash return on investment. Specifically, this financial measure indicates to investors whether or not we are generating cash flows at a level that can sustain or support an increase in our quarterly cash distribution. Distributable cash flow is also a quantitative standard used by the investment community with respect to publicly traded partnerships because the value of a partnership unit is in part measured by its yield (which in turn is based on the amount of cash distributions a partnership pays to a unitholder). The GAAP measure most directly comparable to distributable cash flow is cash flows from operating activities.

 

EBITDA. We define EBITDA as net income or loss plus interest expense, provision for income taxes and depreciation, accretion and amortization expense, with all amounts net of the Parent Interest. EBITDA is commonly used as a supplemental financial measure by management and by external users of our financial statements, such as investors, commercial banks, research analysts and rating agencies, to assess: (i) the financial performance of our

 

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assets without regard to financing methods, capital structures or historical cost basis; (ii) the ability of our assets to generate cash sufficient to pay interest cost and support our indebtedness; (iii) our operating performance and return on capital as compared to those of other companies in the midstream energy industry, without regard to financing and capital structure; and (iv) the viability of projects and the overall rates of return on alternative investment opportunities. Because EBITDA excludes some, but not all, items that affect net income or loss and because these measures may vary among other companies, the EBITDA data presented in the press release may not be comparable to similarly titled measures of other companies. The GAAP measure most directly comparable to EBITDA is cash flow from operating activities.

 

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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SIGNATURES

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Exhibit Index

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Exhibit 99.1

 

 

Duncan Energy Partners Reports Third Quarter Results

 

Houston, Texas (October 25, 2007) - Duncan Energy Partners L.P. (NYSE: “DEP”) today announced its financial results for the three and eight months ended September 30, 2007. The eight-month period ended September 30, 2007 reflects operations since the completion of the initial public offering (“IPO”) of Duncan Energy Partners on February 5, 2007. For financial reporting purposes, the effective date of the IPO was February 1, 2007. The partnership reported net income of $4.5 million for the third quarter of 2007, or $0.22 per common unit on a fully diluted basis.

 

Results of operations following the completion of the IPO are reported separately from those of the predecessor of Duncan Energy Partners (“Duncan Energy Partners Predecessor”). There are a number of agreements and other items that went into effect at the time of Duncan Energy Partners’ IPO that affect the comparability of its operating results with the historical operating results of Duncan Energy Partners Predecessor. See “Basis of Presentation of Financial Information” within this release for a summary of these differences.

 

Distributable cash flow for the third quarter of 2007 was $8.7 million. On October 16, 2007, the Board of Directors of the general partner of Duncan Energy Partners increased the partnership’s quarterly cash distribution rate to its limited partners from $0.40 per common unit to $0.41 per common unit, or $1.64 per unit on an annualized basis. Distributable cash flow for the third quarter of 2007 provided 1.0 times coverage of the quarterly cash distribution. Distributable cash flow is a non-generally accepted accounting principle (or “non-GAAP”) financial measure that is defined and reconciled later in this press release to its most directly comparable GAAP financial measure, net cash flows provided by operating activities.

 

“We are pleased to increase the cash distribution rate to our partners this quarter for the first time since our IPO in February,” said Richard H. Bachmann, president and chief executive officer of the general partner of Duncan Energy Partners. “Future increases in the quarterly cash distribution rate are expected as the distributable cash flow from our commercial businesses, whether from our existing assets or the acquisition and/or construction of new assets, warrant.”

 

Revenue for the third quarter of 2007 was $220.6 million compared to $236.3 million for the third quarter of 2006 as reported by Duncan Energy Partners Predecessor. Gross operating margin for third quarter 2007 decreased to $19.1 million from $22.5 million recorded for the same quarter of 2006 for Duncan Energy Partners Predecessor. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) were $12.6 million for the third quarter of 2007. Gross operating margin and EBITDA are non-GAAP financial measures that are defined and reconciled later in this press release to their most directly comparable GAAP financial measure.

 

“Distributable cash flow for the third quarter of 2007 was impacted again by higher than expected sustaining capital expenditures, the majority of which was due to a Louisiana regulatory requirement to have half of all pipeline integrity assessment work in highly populated areas completed by mid-December. We do not expect this relatively high level of sustaining capital expenditures to continue into 2008,” continued Bachmann.

 

 

 

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Review of Segment Quarterly Performance

 

The results reported below reflect operations for Duncan Energy Partners for the three months ended September 30, 2007, compared to operating results of Duncan Energy Partners Predecessor for the comparable three-month period in 2006.

 

Duncan Energy Partners owns a 66 percent equity interest in the assets described below, and Enterprise Products Operating LLC (“EPO”) owns the remaining 34 percent equity interest. EPO is a wholly-owned subsidiary of Enterprise Products Partners L.P. and owns the general partner of Duncan Energy Partners. We account for EPO’s interest in our subsidiaries as “Parent Interest” in a manner similar to minority interest. However, from a gross operating margin standpoint, the amounts shown are on a 100 percent basis before the deduction for Parent Interest.

 

NGL & Petrochemical Storage Services – This segment consists of 33 underground salt dome caverns located at Mont Belvieu, Texas, with an underground storage capacity of approximately 100 million barrels (“MMBbls”), and certain other related assets. Gross operating margin for the third quarter of 2007 increased 24 percent to $7.7 million from $6.2 million in the third quarter of 2006.

 

Increased storage fees reflective of market rates charged to EPO effective with the Duncan Energy Partners IPO, accounted for an approximate $3.0 million increase in gross operating margin this quarter versus the same quarter last year. Partially offsetting this improvement was a $1.5 million increase in operating expenses, primarily due to higher mechanical integrity costs, repair and maintenance costs, ad valorem taxes and increased operational measurement losses. Also impacting gross operating margin this quarter were decreased storage volumes as a result of lower NGL import activity. With respect to operational measurement gains and losses, such charges are allocated to EPO and have no impact on Duncan Energy Partners’ net income.

 

Natural Gas Pipelines & Services – This segment includes the Acadian intrastate natural gas system that gathers, transports, stores and markets natural gas in Louisiana. In the aggregate, this system is comprised of over 1,000 miles of high-pressure transmission lines with a throughput capacity of 1 billion cubic feet (“Bcf”) per day and 3 Bcf of natural gas storage capacity. Gross operating margin for the third quarter of 2007 decreased to $3.3 million from $6.2 million in the third quarter of 2006, primarily as a result of higher expenses associated with pipeline integrity work. We expect this higher level of operating costs to decline in the future. Natural gas throughput volumes for the third quarter of 2007 were 761 billion British thermal units per day (“BBtus/d”) compared to 743 BBtus/d for the third quarter of 2006.

 

Petrochemical Pipeline Services – This segment consists of two petrochemical pipeline systems, aggregating 284 miles of pipeline that transport propylene in Texas and Louisiana. Gross operating margin decreased to $3.0 million in the third quarter of 2007 from $10.1 million in the third quarter of 2006. Approximately $6.1 million of this decrease is attributable to lower tariff rates period-to-period. Prior to our IPO, EPO paid the maximum tariff rate for the use of the Lou-Tex and Sabine Propylene Pipelines. In turn, EPO charged third parties a lower rate to ship volumes on these pipelines. The third party contracts were assigned to us at our IPO. Accordingly, we earn a lower transportation rate than that charged to EPO prior to February 2007. Petrochemical transportation volumes averaged 39,000 barrels per day (“BPD”) for the third quarter of 2007, compared to 38,000 BPD for the third quarter of 2006.

 

NGL Pipeline Services – This segment includes the partnership’s 286-mile, South Texas NGL Pipeline System that transports natural gas liquids (“NGLs”) from two fractionation facilities located in South Texas to Mont Belvieu, Texas. This system became operational in January 2007 and generated gross operating margin of $5.1 million during the third quarter of 2007 on 73,000 BPD of NGL transportation volumes. Volumes are based on NGL production from EPO’s Shoup and Armstrong fractionators.

 

 

Capitalization

 

Total debt outstanding at September 30, 2007 was $215 million. Duncan Energy Partners had total liquidity of $88 million from unrestricted cash and availability under its $300 million credit facility.

 

In the third quarter of 2007, in order to expedite the development of a natural gas storage facility at the Mont Belvieu complex from a regulatory perspective, Duncan Energy Partners sold land and regulatory permits to a

 

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wholly owned subsidiary of EPO for $3.2 million. Proceeds from this transaction were used to reduce borrowings under Duncan Energy Partners’ credit facility and are reflected as proceeds from the sale of assets in its distributable cash flow for the third quarter of 2007.

 

The third quarter results for Duncan Energy Partners will be discussed at 8:30 a.m. CDT this morning during the Enterprise Products Partners earnings conference call with analysts and investors. The call will be broadcast live over the Internet and may be accessed by visiting the partnership’s website at www.deplp.com.

 

Basis of Presentation of Financial Information  

 

We have presented our results of operations following the completion of our IPO separately from those pertaining to Duncan Energy Partners Predecessor. We acquired substantially all of the assets and operations of Duncan Energy Partners Predecessor that are included in our consolidated financial statements. There are a number of agreements and other items that went into effect at the time of our IPO that affect the comparability of our current operating results with the historical operating results of Duncan Energy Partners Predecessor. These differences include:

 

 

 

 

 

 

Use of Non-GAAP Financial Measures

 

This press release and accompanying schedules include non-GAAP financial measures of gross operating margin, distributable cash flow, and EBITDA. The press release provides reconciliations of these non-GAAP financial measures to their most directly comparable financial measure calculated and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Our non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net income, operating income, net cash flows provided from operating activities or any other GAAP measure of liquidity or financial performance.

 

Gross operating margin - We evaluate segment performance based on the non-GAAP financial measure of gross operating margin. Gross operating margin (either in total or by individual segment) is an important performance measure of the core profitability of our operations. This measure forms the basis of our internal financial reporting and is used by senior management in deciding how to allocate capital resources among business segments. We believe that investors benefit from having access to the same financial measures that our management uses in evaluating segment results. The GAAP measure most directly comparable to total segment gross operating margin is operating income. Our non-GAAP financial measure of total segment gross operating margin should not be considered as an alternative to GAAP operating income.

 

We define total (or combined) segment gross operating margin as operating income before: (i) depreciation, amortization and accretion expense; (ii) gains and losses on the sale of assets; and (iii) general and administrative expenses. Gross operating margin is exclusive of other income and expense transactions, provision for income taxes, extraordinary charges and the cumulative effect of changes in accounting principles. Gross operating margin by segment is calculated by subtracting segment operating costs and expenses (net of the adjustments noted above)

 

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from segment revenues, with both segment totals before the elimination of any intersegment and intrasegment transactions. In accordance with GAAP, intercompany accounts and transactions are eliminated in consolidation.

 

We include equity earnings from Evangeline Gas Pipeline Company L.P. and Evangeline Gas Corp. (collectively “Evangeline”) in our measurement of segment gross operating margin and operating income. Our equity investment in Evangeline is a vital component of our business strategy and important to the operations of our Acadian natural gas system. This method of operation enables us to achieve favorable economies of scale relative to the level of investment and business risk assumed versus what we could accomplish on a stand-alone basis. Evangeline performs complementary roles to the other business operations of Acadian Gas, LLC (“Acadian Gas”). As circumstances dictate, we may increase our ownership interest in Evangeline or make other equity method investments.

 

Distributable cash flow - We define distributable cash flow for Duncan Energy Partners as net income or loss plus: (i) depreciation, amortization and accretion expense; (ii) cash distributions received from unconsolidated affiliate, if any, less equity in the earnings of such unconsolidated affiliate; (iii) the subtraction of sustaining capital expenditures; (iv) the addition of losses or subtraction of gains relating to the sale of assets; (v) cash proceeds from the sale of assets; (vi) gains or losses on monetization of financial instruments recorded in accumulated other comprehensive income less related amortization of such amounts to earnings; and (vii) other miscellaneous non-cash amounts affecting net income or loss for the period less parent interest in the above adjustments to net income or loss in deriving distributable cash flow. Sustaining capital expenditures are capital expenditures (as defined by GAAP) resulting from improvements to and major renewals of existing assets. Distributable cash flow is a significant liquidity metric used by our senior management to compare basic cash flows generated by us to the cash distributions we expect to pay our partners. Using this metric, our management can compute the coverage ratio of estimated cash flows to planned cash distributions.

 

Distributable cash flow is also an important non-GAAP financial measure for our limited partners since it serves as an indicator of our success in providing a cash return on investment. Specifically, this financial measure indicates to investors whether or not we are generating cash flows at a level that can sustain or support an increase in our quarterly cash distribution. Distributable cash flow is also a quantitative standard used by the investment community with respect to publicly traded partnerships because the value of a partnership unit is in part measured by its yield (which in turn is based on the amount of cash distributions a partnership pays to a unitholder). The GAAP measure most directly comparable to distributable cash flow is net cash flows provided by operating activities.

 

EBITDA - We define EBITDA as net income or loss plus interest expense, provision for income taxes and depreciation, accretion and amortization expense, with all amounts net of the Parent Interest. EBITDA is commonly used as a supplemental financial measure by management and by external users of our financial statements, such as investors, commercial banks, research analysts and rating agencies, to assess: (i) the financial performance of our assets without regard to financing methods, capital structures or historical cost basis; (ii) the ability of our assets to generate cash sufficient to pay interest cost and support our indebtedness; (iii) our operating performance and return on capital as compared to those of other companies in the midstream energy industry, without regard to financing and capital structure; and (iv) the viability of projects and the overall rates of return on alternative investment opportunities. Because EBITDA excludes some, but not all, items that affect net income or loss and because these measures may vary among other companies, the EBITDA data presented in the press release may not be comparable to similarly titled measures of other companies. The GAAP measure most directly comparable to EBITDA is net cash flows provided by operating activities.

 

 

Company Information and Use of Forward Looking Statements

 

Duncan Energy Partners is a publicly traded partnership that provides midstream energy services, including gathering, transportation, marketing and storage of natural gas, in addition to transportation and storage of NGLs and petrochemicals. Duncan Energy Partners' assets, located primarily in the Gulf Coast region of Texas and Louisiana, include interests in more than 1,000 miles of natural gas pipelines with a transportation capacity of approximately 1 Bcf per day; nearly 600 miles of NGL and petrochemical pipelines featuring access to the world's

 

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largest fractionation complex at Mont Belvieu, Texas; and 33 underground salt dome caverns with about 100 MMBbls of NGL storage capacity.

 

This press release contains various forward-looking statements and information that are based on Duncan Energy Partners' beliefs and those of its general partner, as well as assumptions made by and information currently available to Duncan Energy Partners. When used in this press release, words such as "anticipate," "project," "expect," "plan," "goal," "forecast," "intend," "could," "believe," "may," and similar expressions and statements regarding the plans and objectives of Duncan Energy Partners for future operations, are intended to identify forward-looking statements. Although Duncan Energy Partners and its general partner believe that such expectations reflected in such forward-looking statements are reasonable, neither Duncan Energy Partners nor its general partner can give assurances that such expectations will prove to be correct. Such statements are subject to a variety of risks, uncertainties and assumptions. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, Duncan Energy Partners' actual results may vary materially from those it anticipated, estimated, projected or expected. Among the key risk factors that may have a direct bearing on Duncan Energy Partners ' results of operations and financial condition are:

 

 

 

 

 

 

 

 

Duncan Energy Partners has no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

 

Rick Rainey, Media Relations, (713) 381-3635

 

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Exhibit A

Duncan Energy Partners L.P.

Condensed Statements of Consolidated Operations – UNAUDITED

For the Three Months Ended September 30, 2007 and 2006

(Dollars in thousands, except per unit amounts)

 

 

 

 

 

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Exhibit A (continued)

Duncan Energy Partners L.P.

Condensed Statements of Consolidated Operations – UNAUDITED

For the Eight Months Ended September 30, 2007, January 2007 and Nine Months Ended September 30, 2006

(Dollars in thousands, except per unit amounts)

 

 

 

 

 

 

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Exhibit B

Duncan Energy Partners L.P.

Selected Financial and Operating Data

(Dollars in thousands, operating data as noted)

 

 

 

 

 

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Exhibit C

 

Duncan Energy Partners L.P.

Reconciliations of Unaudited Non-GAAP Financial Measures to Our GAAP Financial Measures

Distributable Cash Flow

For the Three and Eight Months Ended September 30, 2007

(Dollars in thousands)

 

The following tables presents our calculation of distributable cash flow for the periods indicated and reconciles these amounts to net cash flows provided by operating activities for the same periods.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Exhibit D

 

Duncan Energy Partners L.P.

Reconciliations of Unaudited Non-GAAP Financial Measures to Our GAAP Financial Measures – EBITDA

(Dollars in thousands)

 

The following tables presents our calculation of EBITDA for the periods indicated and reconciles these amounts to net cash flows provided by operating activities for the same periods.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Exhibit E

 

Duncan Energy Partners L.P.

Parent Interest Calculations

For the Three and Eight Months Ended September 30, 2007

(Dollars in thousands)

 

In connection with Duncan Energy Partners’ initial public offering, Enterprise Products Operating LLC (“EPO”) contributed to Duncan Energy Partners 66% of the equity interest in Mont Belvieu Caverns, Acadian Gas, Lou-Tex Propylene, Sabine Propylene and South Texas NGL. EPO retained the remaining 34% equity interest in each of these entities. We account for EPO’s share of our subsidiaries’ net assets and income as Parent interest in a manner similar to minority interest.

 

The following table presents our calculation of Parent interest in income of subsidiaries for the three months and eight months ended September 30, 2007:

 

 

 

 

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