FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


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

                  For the quarterly period ended June 30, 2000

                                       OR

|_|  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: 1-14323

                        ENTERPRISE PRODUCTS PARTNERS L.P.
             (Exact name of Registrant as specified in its charter)

        DELAWARE                                                76-0568219
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                              Identification No.)

                              2727 NORTH LOOP WEST
                                 HOUSTON, TEXAS
                                   77008-1037
               (Address of principal executive offices) (Zip code)

                                 (713) 880-6500
               (Registrant's telephone number including area code)


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


The registrant had 46,552,915 Common Units outstanding as of August 11, 2000.

<PAGE>

               ENTERPRISE PRODUCTS PARTNERS L.P. AND SUBSIDIARIES

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>


                                                                                          Page
                                                                                           No.
PART I.  FINANCIAL INFORMATION

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

ENTERPRISE PRODUCTS PARTNERS L.P. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS:

<S>                                                                                        <C>
         Consolidated Balance Sheets,  June 30, 2000 and December 31, 1999                 1

         Statements of Consolidated Operations
                  for the Three and Six Months ended June 30, 2000 and 1999                2

         Statements of Consolidated Cash Flows
                  for the Six Months ended June 30, 2000 and 1999                          3

         Notes to Unaudited Consolidated Financial Statements                              4

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS                                                             17

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                       30

PART II.  OTHER INFORMATION

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS.                                       32

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                              33

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K                                                 33

         Signature Page

</TABLE>
<PAGE>


                         PART 1. FINANCIAL INFORMATION.
                   ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.

                        ENTERPRISE PRODUCTS PARTNERS L.P.
                           CONSOLIDATED BALANCE SHEETS
                          (Dollar amounts in thousands)
<TABLE>
<CAPTION>
                                                                                  JUNE 30,
                                                                                    2000         DECEMBER 31,
                                   ASSETS                                       (UNAUDITED)          1999
                                                                              ----------------------------------
CURRENT ASSETS
<S>                                                                                 <C>               <C>
     Cash and cash equivalents                                                      $   87,135      $     5,230
     Accounts receivable - trade, net of allowance for doubtful accounts of
       $15,948 at June 30, 2000 and $15,871 at December 31, 1999                       192,569          262,348
     Accounts receivable - affiliates                                                   59,480           56,075
     Inventories                                                                       145,068           39,907
     Current maturities of participation in notes receivable from
       unconsolidated affiliates                                                             -            6,519
     Prepaid and other current assets                                                   11,849           14,459
                                                                              ----------------------------------
              Total current assets                                                     496,101          384,538
PROPERTY, PLANT AND EQUIPMENT, NET                                                     903,832          767,069
INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES                               287,918          280,606
INTANGIBLE ASSETS, NET OF ACCUMULATED AMORTIZATION OF $3,055 AT
     JUNE 30, 2000 AND $1,345 AT DECEMBER 31, 1999                                      63,975           61,619
OTHER ASSETS                                                                             3,898            1,120
                                                                              ----------------------------------
              TOTAL                                                                 $1,755,724      $ 1,494,952
                                                                              ==================================

                      LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
     Current maturities of long-term debt                                           $        -      $   129,000
     Accounts payable - trade                                                           44,959           69,294
     Accounts payable - affiliate                                                       24,552           64,780
     Accrued gas payables                                                              396,545          233,360
     Accrued expenses                                                                    4,812           16,510
     Other current liabilities                                                          24,080           18,176
                                                                              ----------------------------------
              Total current liabilities                                                494,948          531,120
LONG-TERM DEBT                                                                         404,000          166,000
OTHER LONG-TERM LIABILITIES                                                              6,060              296
MINORITY INTEREST                                                                        8,613            8,071
COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY
     Common Units  (45,552,915 Units outstanding at June 30, 2000
       and December 31, 1999)                                                          449,787          428,707
     Subordinated Units (21,409,870 Units outstanding at June 30, 2000
       and December 31, 1999)                                                          141,550          131,688
     Special Units (14,500,000 Units outstanding at June 30, 2000
       and December 31, 1999)                                                          247,025          225,855
     Treasury Units  acquired by Trust,  at cost (267,200  Units  outstanding at
       June 30, 2000 and December 31, 1999)                                             (4,727)          (4,727)
     General Partner                                                                     8,468            7,942
                                                                              ----------------------------------
              Total Partners' Equity                                                   842,103          789,465
                                                                              ----------------------------------
              TOTAL                                                                 $1,755,724      $ 1,494,952
                                                                              ==================================
</TABLE>

            See Notes to Unaudited Consolidated Financial Statements


                                       1
<PAGE>

                        ENTERPRISE PRODUCTS PARTNERS L.P.
                      STATEMENTS OF CONSOLIDATED OPERATIONS
                                   (UNAUDITED)
                 (Amounts in thousands, except per Unit amounts)
<TABLE>
<CAPTION>

                                                                     THREE MONTHS                      SIX MONTHS
                                                                    ENDED JUNE 30,                   ENDED JUNE 30,
                                                            -------------------------------  -------------------------------
                                                                 2000           1999              2000           1999
                                                            -------------------------------  -------------------------------

REVENUES
<S>                                                             <C>             <C>             <C>              <C>
Revenues from consolidated operations                           $  592,913      $  174,599      $ 1,339,194      $  321,913
Equity income in unconsolidated affiliates                          11,097           2,880           18,540           4,443
                                                            -------------------------------  -------------------------------
         Total                                                     604,010         177,479        1,357,734         326,356
                                                            -------------------------------  -------------------------------
COST AND EXPENSES
Operating costs and expenses                                       546,306         153,410        1,219,212         287,219
Selling, general and administrative                                  7,658           3,000           13,042           6,000
                                                            -------------------------------  -------------------------------
         Total                                                     553,964         156,410        1,232,254         293,219
                                                            -------------------------------  -------------------------------
OPERATING INCOME                                                    50,046          21,069          125,480          33,137
OTHER INCOME (EXPENSE)
Interest expense                                                    (8,070)         (2,129)         (15,844)         (4,392)
Interest income from unconsolidated affiliates                         126             292              270             689
Dividend income from unconsolidated affiliates                       2,761               -            3,995               -
Interest income - other                                              1,225             148            2,706             432
Other, net                                                             (62)            (30)            (425)             45
                                                            -------------------------------  -------------------------------
          Other income  (expense)                                   (4,020)         (1,719)          (9,298)         (3,226)
                                                            -------------------------------  -------------------------------
INCOME BEFORE MINORITY INTEREST                                     46,026          19,350          116,182          29,911
MINORITY INTEREST                                                     (466)           (196)          (1,175)           (302)
                                                            -------------------------------  -------------------------------
NET INCOME                                                      $   45,560      $   19,154      $   115,007      $   29,609
                                                            ===============================  ===============================

ALLOCATION OF NET INCOME TO:
Limited partners                                                $   45,104      $   18,962      $   113,857      $   29,313
                                                            ===============================  ===============================
General partner                                                 $      456      $      192      $     1,150      $      296
                                                            ===============================  ===============================

BASIC EARNINGS PER COMMON UNIT
Income before minority interest                                 $     0.68      $     0.29      $      1.72      $     0.44
                                                            ===============================  ===============================
Net income per common and subordinated unit                     $     0.68      $     0.28      $      1.71      $     0.44
                                                            ===============================  ===============================

DILUTED EARNINGS PER COMMON UNIT
Income before minority interest                                 $     0.56      $     0.29      $      1.42      $     0.44
                                                            ===============================  ===============================
Net income per common, subordinated and special unit            $     0.56      $     0.28      $      1.40      $     0.44
                                                            ===============================  ===============================
</TABLE>
            See Notes to Unaudited Consolidated Financial Statements


                                       2
<PAGE>
                                         ENTERPRISE PRODUCTS PARTNERS L.P
                                         STATEMENTS OF CONSOLIDATED CASH FLOWS
                                                 (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                            SIX MONTHS ENDED
                                                                                JUNE 30,
                                                                  -------------------------------------
                                                                         2000              1999
                                                                  -------------------------------------
OPERATING ACTIVITIES
<S>                                                                       <C>               <C>
Net income                                                                $  115,007         $  29,609
Adjustments to reconcile net income to cash flows provided by
      (used for) operating activities:
      Depreciation and amortization                                           18,347             9,790
      Equity in income of unconsolidated affiliates                          (18,540)           (4,443)
      Leases paid by EPCO                                                      5,270             5,278
      Minority interest                                                        1,175               302
      Loss on sale of assets                                                   2,303               124
      Net effect of changes in operating accounts                             54,062          (26,417)
                                                                  -------------------------------------
Operating activities cash flows                                              177,624            14,243
                                                                  -------------------------------------
INVESTING ACTIVITIES
Capital expenditures                                                        (154,246)           (2,513)
Proceeds from sale of assets                                                      52                 7
Collection of notes receivable from unconsolidated affiliates                  6,519             7,369
Unconsolidated affiliates:
      Investments in and advances to                                          (3,040)          (40,432)
      Distributions received                                                  14,268             3,991
                                                                  -------------------------------------
Investing activities cash flows                                             (136,447)          (31,578)
                                                                  -------------------------------------
FINANCING ACTIVITIES
Long-term debt borrowings                                                    464,000            85,000
Long-term debt repayments                                                   (355,000)          (30,000)
Cash dividends paid to partners                                              (67,639)          (52,718)
Cash dividends paid to minority interest by Operating Partnership               (690)             (538)
Units acquired by consolidated trust                                               -            (4,607)
Cash contributions from EPCO to minority interest                                 57                54
                                                                  -------------------------------------
Financing activities cash flows                                               40,728            (2,809)
                                                                  -------------------------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS                                       81,905           (20,144)
CASH AND CASH EQUIVALENTS, JANUARY 1                                           5,230            24,103
                                                                  -------------------------------------
CASH AND CASH EQUIVALENTS, JUNE 30                                        $   87,135         $   3,959
                                                                  =====================================
</TABLE>
            See Notes to Unaudited Consolidated Financial Statements


                                       3
<PAGE>
                        ENTERPRISE PRODUCTS PARTNERS L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


1.   GENERAL

In the  opinion of  Enterprise  Products  Partners  L.P.  (the  "Company"),  the
accompanying unaudited consolidated financial statements include all adjustments
consisting of normal recurring accruals necessary for a fair presentation of the
Company's  consolidated  financial  position as of June 30,  2000,  consolidated
results of  operations  for the three and six month  periods ended June 30, 2000
and 1999 and  consolidated  cash flows for the six month  periods ended June 30,
2000 and 1999.  Although the Company believes the disclosures in these financial
statements  are  adequate  to make the  information  presented  not  misleading,
certain  information  and  footnote  disclosures  normally  included  in  annual
financial  statements  prepared in accordance with generally accepted accounting
principles have been condensed or omitted  pursuant to the rules and regulations
of the Securities and Exchange Commission.  These unaudited financial statements
should be read in  conjunction  with the financial  statements and notes thereto
included in the Company's  Annual Report on Form 10-K (File No. 1-14323) for the
year ended December 31, 1999.

The results of  operations  for the three and six month  periods  ended June 30,
2000 are not  necessarily  indicative of the results to be expected for the full
year.

Certain reclassifications have been made to prior years' financial statements to
conform to the presentation of the current period financial statements.

Dollar amounts presented in the tabulations within the notes to the consolidated
financial  statements  are stated in  thousands  of  dollars,  unless  otherwise
indicated.


2.   INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES

At June 30, 2000, the Company's significant  unconsolidated affiliates accounted
for by the equity method included the following:

Belvieu  Environmental  Fuels ("BEF") - a 33.33%  economic  interest in a Methyl
Tertiary Butyl Ether ("MTBE") production facility located in southeast Texas.

Baton Rouge  Fractionators LLC ("BRF") - an approximate 32.25% economic interest
in a natural gas liquid ("NGL")  fractionation  facility located in southeastern
Louisiana.

Baton Rouge Propylene Concentrator,  LLC ("BRPC") - a 30.0% economic interest in
a propylene  concentration  unit located in  southeastern  Louisiana that became
operational in July 2000.

EPIK Terminalling L.P. and EPIK Gas Liquids, LLC (collectively,  "EPIK") - a 50%
aggregate  economic  interest  in a  refrigerated  NGL marine  terminal  loading
facility located in southeast Texas.

Wilprise  Pipeline  Company,  LLC ("Wilprise") - a 33.33% economic interest in a
NGL pipeline system located in southeastern Louisiana.

Tri-States  NGL  Pipeline LLC  ("Tri-States")  - an  aggregate  33.33%  economic
interest  in a NGL  pipeline  system  located  in  Louisiana,  Mississippi,  and
Alabama.

Belle Rose NGL Pipeline LLC ("Belle Rose") - a 41.7% economic  interest in a NGL
pipeline system located in south Louisiana.

K/D/S Promix LLC ("Promix") - a 33.33% economic  interest in a NGL fractionation
facility  and  related  storage  facilities  located  in  south  Louisiana.


                                       4
<PAGE>

The Company's  investments  in and advances to  unconsolidated  affiliates  also
includes  Venice Energy  Services  Company,  LLC  ("VESCO")  and Dixie  Pipeline
Company ("Dixie"). The VESCO investment consists of a 13.1% economic interest in
a LLC owning a natural gas processing plant, fractionation facilities,  storage,
and gas gathering  pipelines in Louisiana.  The Dixie investment  consists of an
11.5%  interest in a corporation  owning a 1,301-mile  propane  pipeline and the
associated  facilities  extending  from Mont Belvieu,  Texas to North  Carolina.
These investments are accounted for using the cost method.

During the third quarter of 1999, the Company acquired the remaining interest in
Mont  Belvieu  Associates,  51%,  ("MBA")  and Entell NGL  Services,  LLC,  50%,
("Entell").  Accordingly,  after the acquisition of the remaining interests, MBA
terminated  and Entell  became a wholly owned  subsidiary  of the Company and is
included as a consolidated entity from that point forward.

The  following  table  shows  investments  in  and  advances  to  unconsolidated
affiliates at:



                                                JUNE 30,        DECEMBER 31,
                                                  2000              1999
                                           -------------------------------------
Accounted for on equity basis:
    BEF                                           $   67,665         $   63,004
    Promix                                            50,991             50,496
    BRF                                               30,767             36,789
    Tri-States                                        27,808             28,887
    EPIK                                              16,869             15,258
    Belle Rose                                        11,926             12,064
    BRPC                                              19,707             11,825
    Wilprise                                           9,185              9,283
Accounted for on cost basis:
    VESCO                                             33,000             33,000
    Dixie                                             20,000             20,000
                                           -------------------------------------
Total                                             $  287,918         $  280,606
                                           =====================================


The following table shows equity in income (loss) of  unconsolidated  affiliates
for the three and six month periods ended June 30, 2000 and 1999:

                For Three Months Ended              For Six Months Ended
                       June 30,                           June 30,
             -----------------------------   -------------------------------
                    2000            1999             2000             1999
             -----------------------------   -------------------------------
BEF             $   8,307       $   1,936       $   10,812        $   2,237
MBA                     -             424                -            1,184
BRF                   208            (143)             737             (286)
BRPC                  (29)              -              (19)               -
EPIK                  178            (220)           1,970              177
Wilprise               74               -              162                -
Tri-States            843               -            1,521                -
Promix              1,546               -            3,208                -
Belle Rose            (30)              -              149                -
Other                   -             883                -            1,131
             -----------------------------  --------------------------------
Total           $  11,097       $   2,880       $   18,540        $   4,443
             =============================  ================================

                                       5
<PAGE>

BEF

BEF is a partnership  that owns the MTBE production  facility located within the
Company's Mont Belvieu  complex.  The production of MTBE is driven by oxygenated
fuels  programs  enacted under the federal Clean Air Act  Amendments of 1990 and
other legislation. Any changes to these programs that enable localities to elect
not to participate in these programs,  lessen the requirements for oxygenates or
favor the use of non-isobutane based oxygenated fuels reduce the demand for MTBE
and could have an adverse effect on the Company's results of operations.

In recent years,  MTBE has been detected in water supplies.  The major source of
the ground  water  contamination  appears to be leaks from  underground  storage
tanks.  Although  these  detections  have been limited and the great majority of
these  detections  have been well below levels of public health  concern,  there
have been actions calling for the phase-out of MTBE in motor gasoline in various
federal and state governmental agencies.

In light of these  developments,  the Company is formulating a contingency  plan
for use of the BEF  facility  if MTBE were  banned or  significantly  curtailed.
Management  is exploring a possible  conversion  of the BEF  facility  from MTBE
production  to  alkylate  production.  At  present  the  forecast  cost  of this
conversion would be in the $20 million to $25 million range,  with the Company's
share being $6.7 million to $8.3 million.


3.  ACQUISITIONS

Effective  August 1, 1999, the Company  acquired Tejas Natural Gas Liquids,  LLC
("TNGL")  from a subsidiary  of Tejas  Energy,  LLC, now Coral  Energy,  LLC, an
affiliate  of Shell  Oil  Company  ("Shell")  for $166  million  in cash and the
issuance of 14.5 million  non-distribution  bearing,  convertible Special Units.
All references  hereafter to "Shell",  unless the context  indicates  otherwise,
shall refer collectively to Shell Oil Company,  its subsidiaries and affiliates.
TNGL engages in natural gas  processing and NGL  fractionation,  transportation,
storage and marketing in Louisiana  and  Mississippi.  TNGL's  assets  include a
20-year  natural  gas  processing   agreement  with  Shell  ("Shell   Processing
Agreement") and varying interests in eleven natural gas processing plants,  four
NGL  fractionation  facilities;  four NGL storage  facilities and  approximately
1,500 miles in pipelines.

In  addition  to  the   Special   Units,   Shell  may  be  granted  6.0  million
non-distribution  bearing,  convertible  Contingency Units provided that certain
performance criteria are met in calendar years 2000 and 2001 (see Note 5). Under
terms  of  the  agreement  with  Shell,  the  Company  will  issue  3.0  million
Contingency  Units in 2000 and an additional  3.0 million  Contingency  Units in
2001 provided the  performance  tests are  successfully  completed.  On June 28,
2000, Shell met the performance  criteria outlined for calendar year 2000 and in
accordance  with an  agreement  with Shell,  the Company  issued the 3.0 million
Contingency  Units  (deemed  "Special  Units" once they are issued) on August 1,
2000.

The value of these new Special  Units is currently  estimated  at $55.2  million
using present value techniques. In August 2000, the purchase price and the value
of the natural gas processing agreement will be increased by the estimated $55.2
million value of the Units. If the remainder of the Contingency Units are issued
in 2001 (or at such later date as agreed to by the parties),  the purchase price
and value of the natural gas processing agreement will be adjusted accordingly.

Effective July 1, 1999, the Company  acquired  Kinder Morgan  Operating LP "A"'s
25% indirect ownership interest and Enterprise  Products Company's ("EPCO") 0.5%
indirect  ownership  interest  in a  210,000  barrel  per day NGL  fractionation
facility located in Mont Belvieu,  Texas for  approximately  $42 million in cash
and the assumption of approximately $4 million in debt.

Both  acquisitions  were accounted for using the purchase  method of accounting,
and  accordingly,  the purchase  price of each has been  allocated to the assets
purchased and  liabilities  assumed based on their  estimated  fair value at the
effective date of each transaction.

                                       6
<PAGE>

PRO FORMA EFFECT OF ACQUISITIONS

The following table presents  unaudited pro forma  information for the three and
six month periods ended June 30, 1999 as if the  acquisition  of TNGL from Shell
and the Mont Belvieu NGL fractionation  facility from Kinder Morgan and EPCO had
been made as of January 1, 1999:


                                                    Three                Six
                                                    Months              Months
                                                    Ended               Ended
                                                --------------------------------
                                                          June 30, 1999
                                                --------------------------------
Revenues                                           $  343,990        $  644,500
                                                ================================
Net income                                         $   26,831        $   40,112
                                                ================================
Allocation of net income to
      Limited partners                             $   26,562        $   39,711
                                                ================================
      General Partner                              $      268        $      401
                                                ================================
Units used in earning per Unit calculations
      Basic                                            66,725            66,725
                                                ================================
      Diluted                                          81,225            81,225
                                                ================================
Income per Unit before minority interest
      Basic                                        $     0.40        $     0.60
                                                ================================
      Diluted                                      $     0.33        $     0.49
                                                ================================
Net income per Unit
      Basic                                        $     0.40        $     0.60
                                                ================================
      Diluted                                      $     0.33        $     0.49
                                                ================================

Diluted  earnings per Unit do not include the pro rata effect of the 3.0 million
Contingency Units issued on August 1, 2000.


4.   LONG-TERM DEBT

GENERAL. Long-term debt at June 30, 2000 was comprised of $350 million in 5-year
public  Senior Notes (the "$350  Million  Senior  Notes")  issued by  Enterprise
Products Operating L.P. (the "Operating  Partnership") and a 10-year $54 million
loan agreement with the Mississippi Business Finance Corporation ("MBFC" and the
"$54  Million  MBFC  Loan").  The  issuance  of the $350  Million  Senior  Notes
represented a partial takedown of the $800 million universal shelf  registration
(the  "Registration  Statement") that was filed with the Securities and Exchange
Commission in December 1999. The proceeds from the $350 Million Senior Notes and
the $54 Million MBFC Loan were used to extinguish all outstanding  balances owed
under the $200  Million  Bank Credit  Facility  and the $350 Million Bank Credit
Facility.


                                       7
<PAGE>


The following table summarizes long-term debt at:

                                                    JUNE 30,        DECEMBER 31,
                                                     2000              1999
                                              ----------------------------------
Borrowings under:
     $200 Million Bank Credit Facility                              $   129,000
     $350 Million Bank Credit Facility                                  166,000
     $350 Million Senior Notes                    $   350,000
     $54  Million MBFC Loan                            54,000
                                              ----------------------------------
              Total                                   404,000           295,000
Less current maturities of long-term debt                   -           129,000
                                              ----------------------------------
               Long-term debt                     $   404,000       $   166,000
                                              ==================================


At June 30,  2000,  the  Operating  Partnership  had a total of $40  million  of
standby letters of credit  available of which  approximately  $13.3 million were
outstanding under letter of credit agreements with the banks.

$200 MILLION  BANK CREDIT  FACILITY.  In July 1998,  the  Operating  Partnership
entered  into a $200 million bank credit  facility  that  included a $50 million
working  capital  facility and a $150 million  revolving term loan facility.  On
March 15, 2000, the Operating Partnership used $169 million of the proceeds from
the issuance of the $350 Million Senior Notes to retire this credit  facility in
accordance with its agreement with the banks.

$350 MILLION  BANK CREDIT  FACILITY.  In July 1999,  the  Operating  Partnership
entered  into a $350 Million Bank Credit  Facility  that  includes a $50 million
working capital  facility and a $300 million  revolving term loan facility.  The
$300 million revolving term loan facility includes a sublimit of $40 million for
letters of credit.  Borrowings  under the $350 Million Bank Credit Facility will
bear  interest at either the bank's prime rate or the  Eurodollar  rate plus the
applicable margin as defined in the facility.  The Operating  Partnership elects
the basis for the interest rate at the time of each borrowing.

This  facility  is  scheduled  to expire in July 2001 and all  amounts  borrowed
thereunder  shall be due and  payable  at that  time.  There  must be no  amount
outstanding  under the working capital facility for at least 15 consecutive days
during each fiscal year.  In March 2000,  the  Operating  Partnership  used $179
million of the proceeds  from the issuance of the $350 Million  Senior Notes and
$47 million from the $54 Million MBFC Loan to payoff the outstanding  balance on
this credit facility.  No amount was outstanding on this credit facility at June
30, 2000.

The  credit  agreement  relating  to this  facility  contains a  prohibition  on
distributions  on, or purchases or  redemptions of Units if any event of default
is  continuing.   In  addition,   the  bank  credit  facility  contains  various
affirmative  and negative  covenants  applicable to the ability of the Operating
Partnership to, among other things, (i) incur certain  additional  indebtedness,
(ii) grant certain  liens,  (iii) sell assets in excess of certain  limitations,
(iv) make investments, (v) engage in transactions with affiliates and (vi) enter
into a  merger,  consolidation,  or sale of  assets.  The bank  credit  facility
requires  that  the  Operating   Partnership  satisfy  the  following  financial
covenants at the end of each fiscal quarter: (i) maintain  Consolidated Tangible
Net Worth (as defined in the bank credit  facility) of at least $250.0  million,
(ii)  maintain a ratio of EBITDA (as  defined in the bank  credit  facility)  to
Consolidated  Interest  Expense (as defined in the bank credit facility) for the
previous  12-month  period of at least 3.5 to 1.0 and (iii)  maintain a ratio of
Total Indebtedness (as defined in the bank credit facility) to EBITDA of no more
than  3.0  to  1.0.  The  Operating  Partnership  was  in  compliance  with  the
restrictive covenants at June 30, 2000.

$350  MILLION  SENIOR  NOTES.  On March  13,  2000,  the  Operating  Partnership
completed  a public  offering  of $350  million  in  principal  amount  of 8.25%
fixed-rate  Senior  Notes due March 15, 2005 at a price to the public of 99.948%
per  Senior  Note.  The  Operating   Partnership   received  proceeds,   net  of
underwriting  discounts and commissions,  of approximately  $347.7 million.  The
proceeds were used to pay the entire $169 million outstanding  principal balance
on the $200  Million  Bank Credit  Facility and $179 million of the $226 million
outstanding principal balance on the $350 Million Bank Credit Facility.

                                       8
<PAGE>

The $350 Million  Senior Notes are subject to a make-whole  redemption  right by
the  Operating  Partnership.  The  notes  are  an  unsecured  obligation  of the
Operating  Partnership  and rank equally with its existing and future  unsecured
and   unsubordinated   indebtedness  and  senior  to  any  future   subordinated
indebtedness.  The notes are guaranteed by the Company  through an unsecured and
unsubordinated  guarantee and were issued under an indenture  containing certain
restrictive  covenants.  These covenants restrict the ability of the Company and
the Operating  Partnership,  with certain  exceptions,  to incur debt secured by
liens and engage in sale and leaseback  transactions.  The Company and Operating
Partnership were in compliance with the restrictive covenants at June 30, 2000.

Settlement  was  completed on March 15,  2000.  The issuance of the $350 Million
Senior  Notes was a  takedown  under the  Company's  $800  million  Registration
Statement;  therefore, the amount of securities available under the Registration
Statement have been reduced to $450 million.

$54 MILLION MBFC LOAN. On March 27, 2000, the Operating  Partnership  executed a
$54 million loan agreement with the MBFC which was funded with proceeds from the
sale of Taxable Industrial Revenue Bonds ("Bonds") by the MBFC. The Bonds issued
by the MBFC are 10-year  bonds with a maturity  date of March 1, 2010 and bear a
fixed rate interest coupon of 8.70%. The Operating Partnership received proceeds
from the sale of the Bonds, net of underwriting  discounts and  commissions,  of
approximately  $53.6  million.  The proceeds  were used to pay the remaining $47
million  outstanding  principal balance on the $350 Million Bank Credit Facility
and for working capital and other general partnership  purposes. In general, the
proceeds of the Bonds were used to reimburse the Operating Partnership for costs
incurred in acquiring and constructing the Pascagoula,  Mississippi  natural gas
processing plant.

The Bonds were issued at par and are subject to a make-whole redemption right by
the Operating  Partnership.  The Bonds are guaranteed by the Company  through an
unsecured and  unsubordinated  guarantee.  The loan agreement  contains  certain
covenants  including   maintaining   appropriate  levels  of  insurance  on  the
Pascagoula natural gas processing  facility and restrictions  regarding mergers.
The Company was in compliance with the restrictive covenants at June 30, 2000.


5.  CAPITAL STRUCTURE AND EARNINGS PER UNIT

SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF THE COMPANY. The
Second Amended and Restated Agreement of Limited Partnership of the Company (the
"Partnership  Agreement") sets forth the calculation to be used to determine the
amount  and  priority  of  cash  distributions  that  the  Common   Unitholders,
Subordinated  Unitholders and the General Partner will receive.  The Partnership
Agreement also contains provisions for the allocation of net earnings and losses
to the Unitholders and the General Partner.  For purposes of maintaining partner
capital accounts,  the Partnership  Agreement specifies that items of income and
loss shall be allocated among the partners in accordance  with their  respective
percentage  interests.  Normal allocations according to percentage interests are
done only, however,  after giving effect to priority earnings  allocations in an
amount  equal to  incentive  cash  distributions  allocated  100% to the General
Partner. As an incentive, the General Partner's percentage interest in quarterly
distributions  is increased after certain  specified target levels are met. When
quarterly  distributions  exceed $0.506 per Unit, the General Partner receives a
percentage  of the excess  between the actual  distribution  rate and the target
level  ranging  from  approximately  15% to 50%  depending  on the target  level
achieved.

The Partnership Agreement generally authorizes the Company to issue an unlimited
number of additional  limited partner  interests and other equity  securities of
the Company for such  consideration and on such terms and conditions as shall be
established by the General Partner in its sole  discretion  without the approval
of the Unitholders.  During the Subordination  Period,  however,  the Company is
limited with regards to the number of equity  securities  that it may issue that
rank  senior to Common  Units  (except  for  Common  Units  upon  conversion  of
Subordinated  Units,  pursuant to employee benefit plans, upon conversion of the
general partner interest as a result of the withdrawal of the General Partner or
in connection with acquisitions or capital  improvements that are accretive on a
per Unit basis) or an equivalent  number of securities  ranking on a parity with
the  Common  Units,  without  the  approval  of the  holders  of at least a Unit
Majority.  A Unit Majority is defined as at least a majority of the  outstanding
Common Units (during the Subordination  Period),  excluding Common Units held by
the  General  Partner  and  its  affiliates,  and at  least  a  majority  of the
outstanding Common Units (after the Subordination Period).

                                       9
<PAGE>

In April 2000,  the Company mailed a Proxy  Statement to its public  Unitholders
asking  them to  consider  and vote for a  proposal  to  amend  the  Partnership
Agreement to increase the number of  additional  Common Units that may be issued
during the  Subordination  Period  without the approval of a Unit  Majority from
22,775,000  Common Units to 47,775,000  Common Units. The primary purpose of the
requested  increase  was to improve  the  future  financial  flexibility  of the
Company since 20,500,000  Common Units of the 22,775,000  Common Units available
to the partnership during the Subordination Period were reserved for issuance in
connection  with the TNGL  acquisition.  At a special meeting of the Unitholders
and General Partner held on June 9, 2000, this proposal was approved by 90.7% of
the public  Unitholders.  The  amendment  increases  the number of Common  Units
available  (and  unreserved)  to the Company for  general  partnership  purposes
during the Subordination Period from 2,275,000 to 27,275,000.

SUBORDINATED UNITS. The Subordinated Units have no voting rights until converted
into Common Units at the end of the Subordination Period (as defined below). The
Subordination  Period for the Subordinated Units will generally extend until the
first day of any quarter  beginning after June 30, 2003 when the Conversion Test
has been satisfied. Generally, the Conversion Test will have been satisfied when
the  Company  has paid  from  Operating  Surplus  and  generated  from  Adjusted
Operating  Surplus the minimum  quarterly  distribution on all Units for each of
the three preceding  four-quarter  periods. Upon expiration of the Subordination
Period,  all  remaining  Subordinated  Units will convert into Common Units on a
one-for-one basis and will thereafter participate pro rata with the other Common
Units in distributions of Available Cash.

If the Conversion  Test has been met for any quarter ending on or after June 30,
2001,  25% of the  Subordinated  Units will  convert into Common  Units.  If the
Conversion  Test has been met for any quarter  ending on or after June 30, 2002,
an additional 25% of the Subordinated  Units will convert into Common Units. The
early conversion of the second 25% of Subordinated  Units may not occur until at
least one year following the early  conversion of the first 25% of  Subordinated
Units.

SPECIAL UNITS. The 14.5 million Special Units issued do not accrue distributions
and are not entitled to cash  distributions  until their  conversion into Common
Units, which occurs automatically with respect to 1.0 million Units on August 1,
2000,  5.0 million  Units on August 1, 2001 and 8.5  million  Units on August 1,
2002.

On June 28,  2000,  Shell met certain  year 2000  performance  criteria  for the
issuance of 3.0 million non-distribution bearing,  convertible Contingency Units
(hereafter referred to as Special Units once they are issued).  Per an agreement
with Shell,  the Company issued these Special Units on August 1, 2000. Shell has
the  opportunity  to earn an additional  3.0 million  non-distribution  bearing,
convertible Contingency Units based on certain performance criteria for calendar
year  2001.  Specifically,  Shell  will earn  another  3.0  million  convertible
Contingency  Units if at any point  during  calendar  year  2001 (or  extensions
thereto due to force majeure  events) gas  production by Shell from its offshore
Gulf of Mexico producing properties and leases is 900 million cubic feet per day
for  180  not-necessarily-consecutive  days  or  350  billion  cubic  feet  on a
cumulative  basis.  If the year  2001  performance  test is not met but  Shell's
offshore  Gulf of Mexico gas  production  reaches  725  billion  cubic feet on a
cumulative  basis in calendar years 2000 and 2001 (or extensions  thereto due to
force  majeure  events),  Shell  would  still  earn an  additional  3.0  million
non-distribution   bearing,   convertible  Contingency  Units.  If  all  of  the
Contingency Units are earned,  1.0 million  Contingency Units would convert into
Common Units on August 1, 2002 and 5.0 million  Contingency  Units would convert
into  Common  Units on August  1,  2003.  The  Contingency  Units do not  accrue
distributions and are not entitled to cash  distributions  until conversion into
Common Units.

Under the rules of the New York Stock Exchange,  conversion of the Special Units
into Common Units requires approval of the Company's  Unitholders.  EPC Partners
II,  Inc.  ("EPC  II"),  which owns in excess of 81% of the  outstanding  Common
Units,  has voted its  Units in favor of  conversion,  which  will  provide  the
necessary votes for approval.

UNITS  ACQUIRED  BY  TRUST.  During  the  first  quarter  of 1999,  the  Company
established a revocable  grantor trust (the "Trust") to fund future  liabilities
of a long-term incentive plan. At June 30, 2000, the Trust had purchased a total
of 267,200  Common Units (the "Trust Units") which are accounted for in a manner
similar to treasury stock under the cost method of  accounting.  The Trust Units
are considered  outstanding and will receive  distributions;  however,  they are
excluded from the calculation of net income per Unit.

                                       10
<PAGE>

On May 12, 2000, the Company filed a Registration  Statement with the Securities
and Exchange  Commission for the transfer of up to (i) 1,000,000 Common Units to
fund a long-term  incentive  plan  established  by the General  Partner and (ii)
1,000,000  Common  Units  to fund a  long-term  incentive  plan  established  by
Enterprise Products Company.

EARNINGS PER UNIT.  The Company has no dilutive  securities  that would  require
adjustment to net income for the  computation of diluted  earnings per Unit. The
following is a reconciliation  of the number of units used in the computation of
basic and diluted earnings per Unit for all periods presented.


<TABLE>
<CAPTION>
                                                       For Three Months Ended                For Six Months Ended
                                                             At June 30,                          At June 30,
                                                        2000             1999                2000             1999
                                                  ----------------------------------   ----------------------------------
<S>                                                     <C>              <C>                 <C>              <C>
Weighted average number of Common
     and Subordinated Units outstanding                 66,696           66,696              66,696           66,725
Weighted average number of Special
     Units to be converted to Common Units              14,500                               14,500
                                                  ----------------------------------   ----------------------------------
Units used to compute diluted
     earnings per Unit                                  81,196           66,696              81,196           66,725
                                                  ==================================   ==================================
</TABLE>

The  Contingency  Units  (described  above) to be issued upon achieving  certain
performance  criteria have been excluded from diluted  earnings per Unit because
such tests have either not been met at June 30, 2000 or have not been issued per
agreement with Shell.


6.  DISTRIBUTIONS

The Company  intends,  to the extent  there is  sufficient  available  cash from
Operating  Surplus,  as defined by the Partnership  Agreement,  to distribute to
each holder of Common Units at least a minimum  quarterly  distribution of $0.45
per Common Unit.  The minimum  quarterly  distribution  is not guaranteed and is
subject to adjustment as set forth in the Partnership Agreement. With respect to
each quarter  during the  subordination  period,  which will  generally  not end
before June 30, 2003,  the Common  Unitholders  will generally have the right to
receive the minimum quarterly distribution, plus any arrearages thereon, and the
General  Partner will have the right to receive the related  distribution on its
interest before any  distributions of available cash from Operating  Surplus are
made to the Subordinated  Unitholders.  As an incentive,  the General  Partner's
interest in quarterly  distributions is increased after certain specified target
levels are met (see Note 5 discussion  regarding  incentive  distributions under
the section titled Second Amended and Restated Agreement of Limited  Partnership
of the Company.) The Company made its first  incentive cash  distribution to the
General Partner on August 10, 2000 in the amount of $0.2 million.

On January 17,  2000,  the Company  declared an increase in its  quarterly  cash
distribution  to $0.50 per Unit.  This  amount  was raised to $0.525 per Unit on
July 17, 2000.

                                       11
<PAGE>

The following is a summary of cash distributions to partnership  interests since
the first quarter of 1999:
<TABLE>
<CAPTION>

                                              CASH DISTRIBUTIONS
                   --------------------------------------------------------------------------
                       PER COMMON     PER SUBORDINATED        RECORD            PAYMENT
                          UNIT              UNIT               DATE              DATE
                   --------------------------------------------------------------------------
1999
----
<S>                      <C>              <C>             <C>                 <C>
    First Quarter        $ 0.450          $ 0.450         January 29, 1999    February 11, 1999
    Second Quarter       $ 0.450          $ 0.070         April 30, 1999      May 12, 1999
    Third Quarter        $ 0.450          $ 0.370         July 30, 1999       August 11, 1999
    Fourth Quarter       $ 0.450          $ 0.450         October 29, 1999    November 10, 1999
2000
----
    First Quarter        $ 0.500          $ 0.500         January 31, 2000    February 10, 2000
    Second Quarter       $ 0.500          $ 0.500         April 28, 2000      May 10, 2000
    Third Quarter        $ 0.525          $ 0.525         July 31, 2000       August 10, 2000
      (through August 11, 2000)
</TABLE>

7.   SUPPLEMENTAL CASH FLOW DISCLOSURE

The net effect of changes in operating assets and liabilities is as follows:

                                                        SIX MONTHS ENDED
                                                            MARCH 31,
                                                --------------------------------
                                                     2000              1999
                                                --------------------------------
(Increase) decrease in:
      Accounts receivable                        $   66,374      $    (6,574)
      Inventories                                  (105,161)         (37,952)
      Prepaid and other current assets                2,610              970
      Other assets                                   (4,287)               -
Increase (decrease) in:
      Accounts payable                              (64,563)            (164)
      Accrued gas payable                           163,185           22,864
      Accrued expenses                              (11,698)          (1,949)
      Other current liabilities                       5,904           (3,612)
      Other liabilities                               1,698                -
                                                --------------------------------
Net effect of changes in operating accounts      $   54,062      $   (26,417)
                                                ================================


Capital  expenditures  for the first six  months  of 2000  were  $154.2  million
compared to $2.5 million for the same period in 1999.  Capital  expenditures  in
2000 included $99.6 million for the purchase of the Lou-Tex  Propylene  Pipeline
and related  assets,  $39.2  million in  construction  costs for the Lou-Tex NGL
Pipeline and $4.4 million in  construction  costs for the Neptune gas processing
facility.

The purchase of the Lou-Tex  Propylene  Pipeline and related  assets from Concha
Chemical Pipeline Company,  an affiliate of Shell, was completed on February 25,
2000.  The  effective  date of the  transaction  was March 1, 2000.  The Lou-Tex
Propylene  Pipeline is a 263-mile,  10" pipeline that transports  chemical grade
propylene from Sorrento, Louisiana to Mont Belvieu, Texas. Also acquired in this
transaction  was 27.5 miles of 6" ethane  pipeline  between  Sorrento and Norco,
Louisiana, and a 0.5 million barrel storage cavern at Sorrento, Louisiana.


8.   RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1999, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial  Accounting  Standard ("SFAS") No. 137,  "Accounting for Derivative
Instruments  and  Hedging  Activities-Deferral  of the  Effective  Date  of FASB


                                       12
<PAGE>

Statement No.  133-an  amendment of FASB  Statement  No. 133" which  effectively
delays the application of SFAS No. 133  "Accounting  for Derivative  Instruments
and Hedging  Activities"  for one year, to fiscal years beginning after June 15,
2000.  In June 2000,  the FASB  issued  SFAS No.  138,  "Accounting  for Certain
Derivative  Instruments  and Certain  Hedging  Activities - an amendment of FASB
Statement No. 133" which amends and supercedes various sections of SFAS No. 133.
Management  is  currently  studying  SFAS No. 133 and its  amendments  for their
possible impact on the consolidated  financial  statements when they are adopted
in January 2001.


9.   FINANCIAL INSTRUMENTS

The  Company  enters  into swaps and other  contracts  to hedge the price  risks
associated with inventories,  commitments and certain anticipated  transactions.
The Company does not currently hold or issue  financial  instruments for trading
purposes.  The swaps and other contracts are with  established  energy companies
and major  financial  institutions.  The  Company  believes  its credit  risk is
minimal  on these  transactions,  as the  counterparties  are  required  to meet
stringent credit standards. There is continuous day-to-day involvement by senior
management in the hedging decisions,  operating under resolutions adopted by the
board of directors.

INTEREST RATE SWAPS. The Company's  interest rate exposure results from variable
rate borrowings from commercial banks and fixed rate borrowings  pursuant to the
$350 Million Senior Notes and the $54 Million MBFC Loan. The company manages its
exposure to changes in interest  rates in its  consolidated  debt  portfolio  by
utilizing  interest rate swaps. An interest rate swap, in general,  requires one
party to pay a fixed rate on the  notional  amount  while the other party pays a
floating rate based on the notional amount.

In March 2000,  after the  issuance  of the $350  Million  Senior  Notes and the
execution  of the $54 Million  MBFC Loan,  100% of the  Operating  Partnership's
consolidated  debt were fixed rate  obligations.  To maintain a balance  between
variable rate and fixed rate exposure,  the Operating  Partnership  entered into
interest rate swap  agreements  with a notional  amount of $154 million by which
the Operating  Partnership  receives  payments based on a fixed rate and pays an
amount based on a floating rate. The Operating  Partnership's  consolidated debt
portfolio  interest rate exposure was 62 percent fixed and 38 percent  floating,
after considering the effect of the interest rate swap agreements.  The notional
amount does not represent  exposure to credit loss.  The  Operating  Partnership
monitors its positions and the credit ratings of its counterparties.  Management
believes  the risk of  incurring a credit  related  loss is remote,  and that if
incurred, such losses would be immaterial.

The effect of these swaps  (none of which are  leveraged)  was to  decrease  the
Company's  interest  expense by $3.2 million for the three months ended June 30,
2000 and $3.5  million  for the six months  ended June 30,  2000.  Following  is
selected  information on the Company's  portfolio of interest rate swaps at June
30, 2000:


INTEREST RATE SWAP PORTFOLIO AT JUNE 30, 2000 (1) :
(Dollars in millions)
                                                 Early             Fixed /
  Notional                                    Termination         Floating
   Amount            Period Covered             Date (2)          Rate (3)
--------------------------------------------------------------------------------

      $ 50.0 March 2000 - March 2005        March 2001         8.25% / 6.9500%
      $ 50.0 March 2000 - March 2005        March 2001         8.25% / 6.9550%
      $ 54.0 March 2000 - March 2010        March 2003         8.70% / 7.2575%

Notes:

(1)  All swaps outstanding at June 30, 2000 were entered into for the purpose of
     managing the Operating  Partnership's  exposure to  fluctuations  in market
     interest rates.
(2)  In each case,  the  counterparty  has the option to terminate  the interest
     rate swap on the Early Termination Date.
(3)  In each case, the Operating  Partnership is the  floating-price  payor. The
     floating rate was the rate in effect as of June 30, 2000.

                                       13
<PAGE>

10.  SEGMENT INFORMATION

The Company has five reportable  operating  segments:  Fractionation,  Pipeline,
Processing,   Octane   Enhancement   and  Other.   Fractionation   includes  NGL
fractionation,  polymer grade propylene  fractionation and butane  isomerization
(converting  normal  butane  into  high  purity  isobutane)  services.  Pipeline
consists of pipeline,  storage and import/export  terminal services.  Processing
includes  the  natural gas  processing  business  and its  related NGL  merchant
activities.   Octane  Enhancement  represents  the  Company's  33.33%  ownership
interest in a facility that produces motor gasoline  additives to enhance octane
(currently  producing MTBE).  The Other operating  segment consists of fee-based
marketing services and other plant support functions.

Operating  segments are components of a business about which separate  financial
information  is  available  that is evaluated  regularly by the chief  operating
decision  maker  in  deciding  how  to  allocate   resources  and  in  assessing
performance.  Generally, financial information is required to be reported on the
basis that it is used internally for evaluating segment performance and deciding
how to allocate resources to segments.

The  management of the Company  evaluates  segment  performance  on the basis of
gross  operating  margin.  Gross  operating  margin  reported  for each  segment
represents  earnings  before   depreciation  and  amortization,   lease  expense
obligations retained by EPCO, gains and losses on the sale of assets and general
and  administrative  expenses.  In addition,  segment gross operating  margin is
exclusive of interest expense,  interest income (from unconsolidated  affiliates
or others), dividend income from unconsolidated  affiliates,  minority interest,
extraordinary charges and other income and expense  transactions.  The Company's
equity  earnings from  unconsolidated  affiliates  are included in segment gross
operating margin.

Segment  assets  consists of  property,  plant and  equipment  and the amount of
investments  in  and  advances  to  unconsolidated   affiliates.  The  principal
reconciling item between consolidated property,  plant and equipment and segment
assets  is  construction-in-progress.   Segment  assets  are  defined  as  those
facilities and projects that generate segment gross margin amounts. Since assets
under construction do not generally contribute to segment earnings, these assets
are not included in the segment totals until they are deemed operational.

Segment gross  operating  margin is inclusive of  intersegment  revenues.  These
revenues have been eliminated from the consolidated totals.

                                       14
<PAGE>

Information  by  operating  segment,   together  with   reconciliations  to  the
consolidated totals, is presented in the following table:

<TABLE>
<CAPTION>
                                                                  Operating Segments                         Adjustments
                                           ------------------------------------------------------------------
                                                                                      Octane                   and      Consolidated
                                           Fractionation Pipelines    Processing   Enhancement   Other     Eliminations    Totals
                                           -----------------------------------------------------------------------------------------

Revenues from external customers
<S>                                            <C>          <C>           <C>          <C>         <C>        <C>          <C>
   Three months ended June 30, 2000            $103,741     $ 18,048      $478,244     $  8,307    $   751    $(5,081)     $604,010
   Three months ended June 30, 1999              64,453        4,360       120,638        1,936          -    (13,908)      177,479
   Six months ended June 30, 2000               202,566       27,862     1,125,101       10,812      1,266     (9,873)    1,357,734
   Six months ended June 30, 1999               118,149        8,101       223,511        2,237          -    (25,642)      326,356

Intersegment revenues
   Three months ended June 30, 2000              42,537       14,760       139,655            -         95   (197,047)            -
   Three months ended June 30, 1999              25,137        9,279            16            -        108    (34,540)            -
   Six months ended June 30, 2000                82,728       28,025       281,885            -        189   (392,827)            -
   Six months ended June 30, 1999                37,360       17,310            38            -        204    (54,912)            -

Total revenues
   Three months ended June 30, 2000             146,278       32,808       617,899        8,307        846   (202,128)      604,010
   Three months ended June 30, 1999              89,590       13,639       120,654        1,936        108    (48,448)      177,479
   Six months ended June 30, 2000               285,294       55,887     1,406,986       10,812      1,455   (402,700)    1,357,734
   Six months ended June 30, 1999               155,509       25,411       223,549        2,237        204    (80,554)      326,356

Gross operating margin by segment
   Three months ended June 30, 2000              29,591       14,192        18,486        8,307        872          -        71,448
   Three months ended June 30, 1999              26,491        4,350        (1,524)       1,936        277          -        31,530
   Six months ended June 30, 2000                63,922       28,827        58,040       10,812      1,426          -       163,027
   Six months ended June 30, 1999                42,813        8,851          (433        2,237        481          -        53,949

Segment assets
   At June 30, 2000                             360,410      357,107       125,642            -        111     60,562       903,832
   At December 31, 1999                         362,198      249,453       122,495            -         13     32,810       767,069

Investments in and advances
   to unconsolidated affiliates
   At June 30, 2000                             101,465       85,788        33,000       67,665          -          -       287,918
   At December 31, 1999                          99,110       85,492        33,000       63,004          -          -       280,606
</TABLE>

                                       15
<PAGE>
A reconciliation of segment gross operating margin to consolidated income before
minority interest follows:

<TABLE>
<CAPTION>
                                                           For Three Months Ended           For Six Months Ended
                                                                  June 30,                        June 30,
                                                        -----------------------------   -----------------------------
                                                               2000           1999             2000           1999
                                                        -----------------------------   -----------------------------
<S>                                                          <C>            <C>              <C>            <C>
Total segment gross operating margin                         $ 71,448       $ 31,530         $163,027       $ 53,949
     Depreciation and amortization                             (8,754)        (4,668)         (16,878)        (9,356)
     Retained lease expense, net                               (2,687)        (2,666)          (5,324)        (5,332)
     Loss on sale of assets                                    (2,303)          (127)          (2,303)          (124)
     Selling, general and administrative                       (7,658)        (3,000)         (13,042)        (6,000)
                                                        -----------------------------   -----------------------------
Consolidated operating income                                  50,046         21,069          125,480         33,137
     Interest expense                                          (8,070)        (2,129)         (15,844)        (4,392)
     Interest income from unconsolidated affiliates               126            292              270            689
     Dividend income from unconsolidated affiliates             2,761              -            3,995              -
     Interest income - other                                    1,225            148            2,706            432
     Other, net                                                   (62)           (30)            (425)            45
                                                        -----------------------------   -----------------------------
Consolidated income before minority interest                 $ 46,026       $ 19,350         $116,182       $ 29,911
                                                        =============================   =============================
</TABLE>

11.      SUBSEQUENT EVENTS

On July 27,  2000,  the Company  announced  that the Board of  Directors  of the
General  Partner had authorized the Company to purchase up to 1.0 million of the
outstanding  Common  Units over the next two years.  The Units may be  purchased
from time to time in the open market or in privately negotiated  transactions as
conditions  warrant.  The timing of any such purchases will be based on the Unit
price and other market factors.


                                       16
<PAGE>

       ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS.

              FOR THE INTERIM PERIODS ENDED JUNE 30, 2000 AND 1999

         The following  discussion  and analysis  should be read in  conjunction
with the  unaudited  consolidated  financial  statements  and notes  thereto  of
Enterprise  Products  Partners L.P.  ("Enterprise"  or the  "Company")  included
elsewhere herein.

THE COMPANY

         ENTERPRISE   PRODUCTS  PARTNERS  L.P.  (the  "Company")  is  a  leading
integrated North American provider of processing and transportation  services to
domestic  and foreign  producers  of natural  gas liquids  ("NGL" or "NGLs") and
other liquid  hydrocarbons and domestic and foreign consumers of NGLs and liquid
hydrocarbon  products.  The Company  manages a fully  integrated and diversified
portfolio  of  midstream  energy  assets and is engaged  in NGL  processing  and
transportation  through  direct and  indirect  ownership  and  operation  of NGL
fractionators.  It also  operates  and or  manages  NGL  processing  facilities,
storage facilities, pipelines, rail transportation facilities, a methyl tertiary
butyl  ether  ("MTBE")  facility,  a  propylene  production  complex  and  other
transportation  facilities in which it has a direct and indirect ownership. As a
result of acquisitions completed in 1999, the Company is also engaged in natural
gas processing.

         The Company is a publicly  traded  master  limited  partnership  (NYSE,
symbol "EPD") that conducts substantially all of its business through ENTERPRISE
PRODUCTS   OPERATING   L.P.  (the   "Operating   Partnership"),   the  Operating
Partnership's  subsidiaries,  and a  number  of  joint  ventures  with  industry
partners.  The Company was formed in April 1998 to acquire, own, and operate all
of the NGL processing and  distribution  assets of Enterprise  Products  Company
("EPCO").  The general partner of the Company,  Enterprise Products GP, LLC (the
"General  Partner"),  a majority-owned  subsidiary of EPCO, holds a 1.0% general
partner  interest in the Company and a 1.0101% general  partner  interest in the
Operating Partnership.

         The principal  executive office of the Company is located at 2727 North
Loop West, Houston, Texas,  77008-1038,  and the telephone number of that office
is 713-880-6500. References to, or descriptions of, assets and operations of the
Company in this  Quarterly  Report  include  the assets  and  operations  of the
Operating  Partnership and its  subsidiaries as well as the  predecessors of the
Company.

GENERAL

         The  Company  (i)  processes  natural  gas;  (ii)  fractionates  for  a
processing  fee mixed  NGLs  produced  as  by-products  of oil and  natural  gas
production into their component products:  ethane,  propane,  isobutane,  normal
butane and natural  gasoline;  (iii) converts normal butane to isobutane through
the process of  isomerization;  (iv) produces MTBE from  isobutane and methanol;
and (v)  transports  NGL  products to end users by  pipeline  and  railcar.  The
Company   also   separates   high   purity   propylene   from   refinery-sourced
propane/propylene   mix  and  transports  high  purity   propylene  to  plastics
manufacturers by pipeline.  Products processed by the Company generally are used
as  feedstocks  in  petrochemical  manufacturing,  in the  production  of  motor
gasoline and as fuel for residential and commercial heating.

         The Company's NGL operations are concentrated in the Texas,  Louisiana,
and  Mississippi  Gulf  Coast  area.  A large  portion is  concentrated  in Mont
Belvieu, Texas, which is the hub of the domestic NGL industry and is adjacent to
the largest  concentration of refineries and petrochemical  plants in the United
States. The facilities the Company operates at Mont Belvieu include:  (i) one of
the largest NGL  fractionation  facilities  in the United States with an average
production capacity of 210,000 barrels per day ("BPD");  (ii) the largest butane
isomerization  complex in the United States with an average isobutane production
capacity of 80,000 BPD; (iii) one of the largest MTBE  production  facilities in
the United  States with an average  production  capacity of 14,800 BPD; and (iv)
two propylene  fractionation  units with an average combined production capacity
of 31,000 BPD. The Company  owns all of the assets at its Mont Belvieu  facility
except for the NGL fractionation  facility,  in which it owns an effective 62.5%
economic interest; one of the propylene  fractionation units, in which it owns a
54.6% interest and controls the remaining  interest  through a long-term  lease;
the MTBE production facility, in which it owns a 33.33% interest; and one of its


                                       17
<PAGE>

three isomerization units and one deisobutanizer  which are held under long-term
leases  with  purchase  options.  The  Company's  operations  in  Louisiana  and
Mississippi  include varying  interests in eleven natural gas processing  plants
with a combined  capacity of 11.0  billion  cubic feet per day  ("Bcfd") and net
capacity of 3.1 Bcfd and four NGL fractionation facilities with a combined gross
capacity  of 281,000  BPD and net  capacity of 131,500  BPD.  In  addition,  the
Company owns and  operates a NGL  fractionation  facility in Petal,  Mississippi
with an average production capacity of 7,000 BPD.

         The  Company  owns and  operates  approximately  28 million  barrels of
storage  capacity at Mont Belvieu and 7 million  barrels of storage  capacity in
Petal,  Mississippi that are an integral part of its processing operations.  The
Company  has  interests  in  four  NGL  storage   facilities  in  Louisiana  and
Mississippi  with  approximately  28.8 million barrels of gross capacity and 8.8
million  barrels of net  capacity.  The Company  also leases and operates one of
only two commercial NGL import/export terminals on the Gulf Coast.

         Lastly, the Company has operating and non-operating ownership interests
in over 2,400 miles of NGL  pipelines  along the Gulf Coast  (including an 11.5%
interest in the 1,301 mile Dixie Pipeline).

         Industry Environment

         Because  certain NGL  products  compete  with other  refined  petroleum
products in the fuel and petrochemical feedstock markets, NGL product prices are
set by or in competition with refined petroleum products.  Increased  production
and  importation  of NGLs and NGL products in the United States may decrease NGL
product  prices in  relation  to  refined  petroleum  alternatives  and  thereby
increase  consumption of NGL products as NGL products are  substituted for other
more  expensive  refined  petroleum  products.  Conversely,  a  decrease  in the
production  and  importation of NGLs and NGL products could increase NGL product
prices in  relation to refined  petroleum  product  prices and thereby  decrease
consumption  of NGLs.  However,  because  of the  relationship  of crude oil and
natural gas production to NGL production,  the Company believes any imbalance in
the prices of NGLs and NGL products and alternative products would be temporary.

         Due to higher  crude oil prices in the first six months of 2000  versus
the same period in 1999, the demand for NGLs in petrochemical  manufacturing was
strong. The increased use of NGLs in petrochemical manufacturing resulted in the
increasing of both production and pricing of NGLs. In the NGL industry, revenues
and cost of goods sold can fluctuate  significantly  up or down based on current
NGL prices. However, operating margins will generally remain constant except for
the effect of inventory price adjustments or increased operating expenses.

RESULTS OF OPERATION OF THE COMPANY

         The  Company has five  reportable  operating  segments:  Fractionation,
Pipeline,  Processing,  Octane Enhancement and Other. Fractionation includes NGL
fractionation,  polymer grade propylene  fractionation and butane  isomerization
(converting  normal  butane  into  high  purity  isobutane)  services.  Pipeline
consists of pipeline,  storage and import/export  terminal services.  Processing
includes  the  natural gas  processing  business  and its  related NGL  merchant
activities.   Octane  Enhancement  represents  the  Company's  33.33%  ownership
interest in a facility that produces motor gasoline  additives to enhance octane
(currently  producing MTBE).  The Other operating  segment consists of fee-based
marketing services and other plant support functions.

         The  management of the Company  evaluates  segment  performance  on the
basis of gross  operating  margin.  Gross  operating  margin  reported  for each
segment represents earnings before depreciation and amortization,  lease expense
obligations retained by EPCO, gains and losses on the sale of assets and general
and  administrative  expenses.  In addition,  segment gross operating  margin is
exclusive of interest expense,  interest income (from unconsolidated  affiliates
or others), dividend income from unconsolidated  affiliates,  minority interest,
extraordinary charges and other income and expense  transactions.  The Company's
equity  earnings from  unconsolidated  affiliates  are included in segment gross
operating margin.


                                       18
<PAGE>

         The  Company's  gross  operating  margin by segment  (in  thousands  of
dollars) along with a  reconciliation  to consolidated  operating income for the
three and six month periods ended June 30, 2000 and 1999 were as follows:

<TABLE>
<CAPTION>
                                                       For Three Months Ended          For Six Months Ended
                                                              June 30,                       June 30,
                                                    -----------------------------  -----------------------------
                                                            2000           1999             2000          1999
                                                    -----------------------------  -----------------------------
Gross Operating Margin by segment:
<S>                                                      <C>            <C>              <C>           <C>
     Fractionation                                       $ 29,591       $ 26,491         $ 63,922      $ 42,813
     Pipeline                                              14,192          4,350           28,827         8,851
     Processing                                            18,486         (1,524)          58,040          (433)
     Octane enhancement                                     8,307          1,936           10,812         2,237
     Other                                                    872            277            1,426           481
                                                    -----------------------------  -----------------------------
Gross Operating margin total                               71,448         31,530          163,027        53,949
     Depreciation and amortization                          8,754          4,668           16,878         9,356
     Retained lease expense, net                            2,687          2,666            5,324         5,332
     Loss (gain) on sale of assets                          2,303            127            2,303           124
     Selling, general and administrative expenses           7,658          3,000           13,042         6,000
                                                    -----------------------------  -----------------------------
Consolidated operating income                            $ 50,046       $ 21,069         $125,480      $ 33,137
                                                    =============================  =============================
</TABLE>


         The Company's  significant  plant  production and other volumetric data
(in thousands of barrels per day on an equity basis) for the three and six month
periods ended June 30, 2000 and 1999 were as follows:

<TABLE>
<CAPTION>
                                     For Three Months Ended          For Six Months Ended
                                             June 30,                       June 30,
                                   -----------------------------  -----------------------------
                                       2000           1999             2000          1999
                                   -----------------------------  -----------------------------
Plant production data:
<S>                                     <C>          <C>               <C>           <C>
        NGL Production                  71            N/A               71           N/A
         NGL Fractionation             215             61              215            58
        Isomerization                   81             74               74            71
        Propylene Fractionation         30             31               30            27
        MTBE                             5              5                4             4
        Major Pipelines                331            186              338           173
</TABLE>


         1999 Acquisitions

         The Company  completed two  significant  acquisitions  during the third
quarter of 1999.  Effective  August 1, 1999, the Company  acquired Tejas Natural
Gas Liquids,  LLC ("TNGL")  from Tejas Energy,  LLC, now Coral  Energy,  LLC, an
affiliate of Shell Oil Company ("Shell", including subsidiaries and affiliates),
in exchange  for 14.5  million  non-distribution  bearing,  convertible  special
partnership  Units of the Company  and $166  million in cash.  The Company  also
agreed to issue up to 6.0 million  additional  non-distribution  bearing special
partnership  Units to Shell in the future if the volumes of natural gas that the
Company processes for Shell reach agreed upon levels in 2000 and 2001. The first
3.0 million of these additional special  partnership Units were issued on August
1, 2000.

         The businesses  acquired from Shell include  natural gas processing and
NGL  fractionation,  transportation and storage in Louisiana and Mississippi and
its NGL supply  and  merchant  business.  The assets  acquired  include  varying
interests  in eleven  natural  gas  processing  plants,  four NGL  fractionation
facilities,  four NGL storage  facilities,  operator and non-operator  ownership
interests in approximately  1,500 miles of NGL pipelines,  and a 20-year natural
gas processing  agreement with Shell. The Company accounted for this acquisition
using the purchase method.

                                       19
<PAGE>

         Effective  July 1, 1999,  a  subsidiary  of the  Operating  Partnership
acquired  an  additional  25%  interest in the Mont  Belvieu  NGL  fractionation
facility  from Kinder Morgan  Operating LP "A" ("Kinder  Morgan") for a purchase
price of approximately $41.2 million in cash and the assumption of $4 million in
debt. An additional  0.5% interest in the same facility was purchased  from EPCO
for a cash purchase price of $0.9 million.  This acquisition (referred to as the
"MBA  acquisition")  increased the Company's  effective economic interest in the
Mont Belvieu NGL fractionation facility from 37.0% to 62.5%. As a result of this
acquisition,  the  results of  operations  after July 1, 1999 were  consolidated
rather than included in equity in earnings of unconsolidated affiliates.

         The results of  operations  for the three and six month  periods  ended
June 30,  1999 do not include  the impact of the assets  acquired  from TNGL and
MBA.  See the section  below  labeled  "Pro Forma  impact of  Acquisitions"  for
selected financial data reflecting these transactions as if they had occurred on
January 1, 1999.

THREE MONTHS ENDED JUNE 30, 2000 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1999

         Revenues,  Costs and  Expenses  and  Operating  Income.  The  Company's
revenues  increased  by 240.3%  to $604.0  million  in 2000  compared  to $177.5
million in 1999. The Company's costs and expenses  increased by 256.1% to $546.3
million in 2000 versus $153.4 million in 1999.  Operating income before selling,
general and administrative  expenses ("SG&A") increased to $57.7 million in 2000
from $24.1  million in 1999.  The  principal  factors  behind the $33.6  million
increase in operating income before SG&A were the additional earnings associated
with the assets acquired in the TNGL acquisition and the overall  improvement in
NGL product prices in 2000 over 1999.

         Fractionation.   The   Company's   gross   operating   margin  for  the
Fractionation  segment  increased to $29.6 million in 2000 from $26.5 million in
1999 due to higher overall  volumes and NGL pricing plus the addition of margins
from the assets acquired from TNGL. NGL  Fractionation  gross  operating  margin
increased  to $12.6  million  in 2000 from $1.2  million in 1999  primarily  the
result of substantially higher volumes.  Net NGL fractionation  volumes were 215
thousand  barrels  per day  ("MBPD") in 2000  compared  to 61 MBPD in 1999.  The
increase is attributable to the four NGL  fractionators  acquired in August 1999
as a  result  of  the  TNGL  acquisition  and  the  completion  of the  BRF  NGL
fractionation  facility  in July  1999.  Of the $11.4  million  increase  in NGL
fractionation gross margin,  $10.8 million is derived from the NGL fractionators
acquired in the TNGL acquisition (including equity earnings of $1.5 million from
Promix) with $0.4 million arising from higher equity earnings from BRF. The Mont
Belvieu NGL fractionation  facility  contributed the remaining $0.2 million rise
in  earnings.  Margins from the Mont Belvieu  facility  increased  due to higher
volumes and the additional  ownership interest acquired in July 1999 as a result
of the MBA acquisition.

         Gross operating  margin from the  isomerization  business  decreased to
$11.4 million in 2000 from $17.2 million in 1999. The decrease in  isomerization
margins is primarily due to expenses  associated  with the restart of one of the
Mont  Belvieu  isomerization  units in May 2000 and  higher  operating  expenses
stemming  from  an  increase  in  fuel  costs.  Isomerization  production  rates
increased  to 81 MBPD in 2000  compared  to 74 MBPD in 1999 as a  result  of the
restart of the  isomerization  unit. The Company's gross operating margin on its
propylene fractionation facilities decreased to $5.4 million in 2000 versus $7.0
million in 1999.  The decrease  stems from the impact of propylene  storage well
charges and higher fuel costs. Propylene production decreased to 30 MBPD in 2000
from 31 MBPD in 1999.

         Pipeline. The Company's gross operating margin for the Pipeline segment
was $14.2 million in the second  quarter of 2000 compared to $4.4 million during
the same period in 1999. The Louisiana Pipeline Distribution System gross margin
for 2000 was $6.7 million  versus $1.4 million in 1999  primarily  due to a 135%
increase in throughput  volumes  stemming from pipeline  assets  acquired in the
TNGL  acquisition.  The gross  operating  margin  of the  Houston  Ship  Channel
Distribution  system increased to $2.9 million in 2000 from $2.1 million in 1999
on the  strength  of  increased  export  volumes at the EPIK  loading  facility.
Earnings from the newly acquired Lou-Tex Propylene Pipeline were $2.3 million.

         Equity earnings from unconsolidated  affiliates in the Pipeline segment
increased  from a loss of $0.2 million in 1999 to a $1.1 million profit in 2000.
A portion of the  improvement in equity  earnings is  attributable to EPIK which
posted an increase of $0.4  million  from a $0.2  million loss in 1999 to a $0.2
million  profit in 2000.  EPIK's  higher  earnings  are  attributable  to a 344%
increase in export volumes due to the new chiller unit that began  operations in


                                       20
<PAGE>

the fourth quarter of 1999.  The remaining $0.9 million  increase stems from the
Wilprise, Tri-States and Belle Rose pipeline systems in which an equity interest
was acquired by the Company as a result of the TNGL acquisition.

         Processing.  The Company's  gross  operating  margin for Processing was
$18.5 million in 2000  compared to a loss of $1.5 million in 1999.  The increase
is  attributable  to  the  gas  processing   operations  acquired  in  the  TNGL
acquisition.  The gas  processing  operations  benefited  from a  favorable  NGL
pricing environment and 71 MBPD of equity NGL production during the quarter.

         Octane  Enhancement.  The Company's gross  operating  margin for Octane
Enhancement  increased to $8.3  million in 2000 from $1.9 million in 1999.  This
segment consists entirely of the Company's equity earnings and 33.33% investment
in BEF, a joint venture  facility that  currently  produces  MTBE.  The earnings
improvement stems from higher MTBE prices and lower debt service costs. BEF made
its final note payment on May 31, 2000 and now owns a debt-free  facility.  MTBE
production,  on an equity  basis,  was steady at 5 MBPD during both the 2000 and
1999 periods.

         Other.  The Company's gross operating  margin for the Other segment was
$0.9 million in 2000  compared to $0.3 million in 1999.  Beginning in the fourth
quarter of 1999, this segment includes fee-based marketing services. The Company
acquired  its  fee-based  marketing  services  business  as  part  of  the  TNGL
acquisition.  For the second quarter of 2000, this business earned $0.7 million.
Apart  from  this  portion  of  the  segment's  operations,   the  gross  margin
contribution  of the other  aspects of this segment were  insignificant  in both
2000 and 1999.

         Selling,  general and administrative  expenses. SG&A expenses increased
to $7.7 million in the second  quarter of 2000 from $3.0 million during the same
period in 1999.  The higher  costs stem from an increase  in the  administrative
services fee charged by EPCO to $1.6 million per month beginning in January 2000
versus the $1.0  million per month  charged in the second  quarter of 1999.  The
remainder  of  the  increase  is   attributable   to   additional   general  and
administrative expenses related to the TNGL acquisition.

         Interest  expense.  The Company's  interest  expense  increased to $8.1
million in the second quarter of 2000 from $2.1 million in the second quarter of
1999. The increase is primarily attributable to a rise in average debt levels to
$404  million  in the  second  quarter  of 2000 from $132  million in the second
quarter  of  1999.  Debt  levels  have  increased  over  the  last  year  due to
acquisitions and capital expenditures.  Specifically,  $215 million was borrowed
to  complete  the TNGL and MBA  acquisitions  in the third  quarter  of 1999 and
approximately  $60 million was borrowed to fund a portion of the purchase of the
Lou-Tex Propylene Pipeline in the first quarter of 2000.

         Dividend   income  from   unconsolidated   affiliates.   The  Company's
investment  in Dixie and VESCO are recorded  using the cost method as prescribed
by  generally  accepted   accounting   principles.   In  accordance  with  these
guidelines,  the Company records as dividend income the cash  distributions from
these  investments as opposed to recording equity  earnings.  Both the Dixie and
VESCO investments were acquired as part of the TNGL acquisition.  For the second
quarter of 2000, the Company recorded dividend income totaling $2.8 from VESCO.

         Loss on sale of assets.  During the second quarter of 2000, the Company
recognized a one-time $2.3 million  non-cash  charge on the sale of its Longview
Terminal  to  Huntsman  Corporation.  The  Longview  Terminal  was  part  of the
Pipelines  segment and was used to unload polymer grade  propylene from NGL tank
trucks.

SIX MONTHS ENDED JUNE 30, 2000 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1999

         Revenues,  Costs and  Expenses  and  Operating  Income.  The  Company's
revenues  increased  by 316.0% to  $1,357.7  million in 2000  compared to $326.4
million  in 1999.  The  Company's  costs  and  expenses  increased  by 324.5% to
$1,219.2 million in 2000 versus $287.2 million in 1999.  Operating income before
SG&A  increased  to $138.5  million  in 2000 from  $39.2  million  in 1999.  The
principal  factors behind the $99.4 million  increase in operating income before
SG&A were the additional  earnings  associated  with the assets  acquired in the
TNGL acquisition and the overall  improvement in NGL product prices in 2000 over
1999.

         Fractionation.   The   Company's   gross   operating   margin  for  the
Fractionation  segment  increased to $63.9 million in 2000 from $42.8 million in
1999 due to higher overall  volumes and NGL pricing plus the addition of margins


                                       21
<PAGE>

from the assets acquired from TNGL. NGL  Fractionation  gross  operating  margin
increased  to $29.0  million  in 2000 from $2.9  million in 1999  primarily  the
result of substantially higher volumes.  Net NGL fractionation  volumes were 215
MBPD in 2000 compared to 58 MBPD in 1999.  The increase is  attributable  to the
four  NGL  fractionators  acquired  in  August  1999  as a  result  of the  TNGL
acquisition  and the  completion of the BRF NGL  fractionation  facility in July
1999. Of the $26.1 million  increase in NGL  fractionation  gross margin,  $24.6
million is derived from the NGL  fractionators  acquired in the TNGL acquisition
(including  equity  earnings of $3.2  million  from  Promix)  with $1.0  million
arising from higher equity earnings from BRF. The Mont Belvieu NGL fractionation
facility  contributed the remaining $0.5 million rise in earnings.  Margins from
the Mont Belvieu  facility  increased due to higher  volumes and the  additional
ownership interest acquired in July 1999 as a result of the MBA acquisition.

         Gross operating  margin from the  isomerization  business  decreased to
$21.0 million in 2000 from $24.7 million in 1999. The decrease in  isomerization
margins is primarily due to expenses  associated  with the restart of one of the
Mont  Belvieu  isomerization  units in May 2000 and  higher  operating  expenses
stemming  from  an  increase  in  fuel  costs.  Isomerization  production  rates
increased to 74 MBPD in 2000 compared to 71 MBPD in 1999.  The  Company's  gross
operating  margin on its propylene  production  facilities  was $12.7 million in
2000 and 1999.  The margin for 2000 includes  $0.7 million in propylene  storage
well charges along with $0.6 million in higher fuel expenses associated with the
increased cost of natural gas. Propylene production volumes increased to 30 MBPD
in 2000 versus 27 MBPD in 1999.

         Pipeline. The Company's gross operating margin for the Pipeline segment
was $28.9  million  in 2000  compared  to $8.9  million in 1999.  The  Louisiana
Pipeline Distribution System gross margin for 2000 was $14.5 million versus $3.0
million in 1999 primarily due to a 164% increase in throughput  volumes stemming
from  pipeline  assets  acquired in the TNGL  acquisition.  The gross  operating
margin of the Houston Ship Channel Distribution system increased to $5.9 million
in 2000 from $4.1 million in 1999 on the strength of increased export volumes at
the EPIK loading facility.

         On February 25, 2000,  the purchase of the Lou-Tex  Propylene  Pipeline
and related assets from Concha Chemical Pipeline Company, an affiliate of Shell,
was completed at a cost of approximately $100 million. The effective date of the
transaction was March 1, 2000. The Lou-Tex Propylene Pipeline is a 263-mile, 10"
pipeline that transports  chemical grade  propylene from Sorrento,  Louisiana to
Mont Belvieu, Texas. Also acquired in this transaction was a 27.5-mile 6" ethane
pipeline between Sorrento and Norco,  Louisiana and a 0.5 million barrel storage
cavern at Sorrento,  Louisiana.  For the four months  ended June 30,  2000,  the
Lou-Tex Propylene Pipeline gross operating margin was $3.1 million on volumes of
21 MBPD. Due to customer demand,  a project is currently  underway and should be
completed in the third quarter of 2000 to increase the capacity of this pipeline
to 50,000 BPD .

         Equity earnings from unconsolidated  affiliates in the Pipeline segment
increased  from $0.2  million  in 1999 to $3.8  million  in 2000.  The  greatest
improvement  in  equity  earnings  was from  EPIK  which  posted a $1.8  million
increase  to $2.0  million  in 2000 from $0.2  million  in 1999.  EPIK's  higher
earnings are  attributable  to a 211% increase in export  volumes due to the new
chiller unit that began  operations in the fourth  quarter of 1999.  The Company
recorded a combined $1.8 million in equity income from the Wilprise, Tri-States,
and Belle Rose Systems. Individually, equity earnings from Wilprise, Tri-States,
and Belle Rose were $0.2 million, $1.5 million and $0.1 million, respectively.

         Processing.  The Company's  gross  operating  margin for Processing was
$58.0 million in 2000  compared to a loss of $0.4 million in 1999.  The increase
is  attributable  to  the  gas  processing   operations  acquired  in  the  TNGL
acquisition.  The gas  processing  operations  benefited  from a  favorable  NGL
pricing  environment  and 71 MBPD of equity NGL production  during the first six
months of 2000.

         Octane  Enhancement.  The Company's gross  operating  margin for Octane
Enhancement  increased to $10.8 million in 2000 from $2.2 million in 1999.  This
segment consists entirely of the Company's equity earnings and 33.33% investment
in BEF, a joint venture facility that currently  produces MTBE. The 1999 results
included the impact of a $4.5  million  non-cash  write-off  of the  unamortized
balance of deferred  start-up costs. The Company's share of this non-cash charge
was $1.5 million. The 2000 results reflect the impact of higher than normal MTBE
market prices during the second quarter and lower debt service  costs.  BEF made


                                       22
<PAGE>

its final  note  payment in May 2000 and now owns the MTBE  facility  debt-free.
MTBE production, on an equity basis, was 4 MBPD in 2000 and 1999.

         Other.  The Company's gross operating  margin for the Other segment was
$1.4 million in 2000  compared to $0.5 million in 1999.  Beginning in the fourth
quarter of 1999, this segment includes fee-based marketing services. The Company
acquired  its  fee-based  marketing  services  business  as  part  of  the  TNGL
acquisition.  For the  first six  months  of 2000,  this  business  earned  $1.2
million.  Apart from this portion of the segment's operations,  the gross margin
contribution  of the other  aspects of this segment were  insignificant  in both
2000 and 1999.

         Selling,  general and administrative  expenses. SG&A expenses increased
to $13.0  million in the first six months of 2000 from $6.0  million  during the
same period in 1999.  The primary reason for the higher costs was an increase in
the  administrative  services  fee  charged  by EPCO to $1.6  million  per month
beginning in January 2000 versus the $1.0 million per month charged in the first
quarter of 1999.  The  remainder of the increase is  attributable  to additional
general and administrative costs related to the TNGL acquisition.

         Interest  expense.  The Company's  interest expense  increased to $15.8
million in the first six months of 2000 from $4.4 million during the same period
for 1999.  The  increase is primarily  attributable  to a rise in debt levels to
$374 million in 2000 from $128 million in 1999.  Debt levels have increased over
the last year due to acquisitions and capital expenditures.  Specifically,  $215
million  was  borrowed to complete  the TNGL and MBA  acquisitions  in the third
quarter of 1999 and $60 million was  borrowed to fund a portion of the  purchase
of the Lou-Tex Propylene Pipeline in the first quarter of 2000.

         Dividend   income  from   unconsolidated   affiliates.   The  Company's
investment  in Dixie and VESCO are recorded  using the cost method as prescribed
by  generally  accepted   accounting   principles.   In  accordance  with  these
guidelines,  the Company records as dividend income the cash  distributions from
these  investments as opposed to recording equity  earnings.  Both the Dixie and
VESCO investments were acquired as part of the TNGL  acquisition.  For the first
six months of 2000, the Company  recorded  dividend income totaling $3.4 million
from VESCO and $0.6 million from Dixie.

         Loss on sale of assets.  During the second quarter of 2000, the Company
recognized a one-time $2.3 million  non-cash  charge on the sale of its Longview
Terminal  to  Huntsman  Corporation.  The  Longview  Terminal  was  part  of the
Pipelines  segment and was used to unload polymer grade  propylene from NGL tank
trucks.

PRO FORMA IMPACT OF ACQUISITIONS

         As noted above under 1999  Acquisitions,  the Company acquired TNGL and
MBA in the third quarter of 1999. As a result of these  acquisitions,  revenues,
operating costs and expenses,  interest expense,  and other amounts shown on the
Statements of  Consolidated  Operations  for the three and six months ended June
30, 2000 have increased  significantly  over the amounts shown for the three and
six months ended June 30, 1999. The following table presents  certain  unaudited
pro forma  information  as if the  acquisition  of TNGL from  Shell and the Mont
Belvieu  fractionator  facility  from Kinder Morgan and EPCO had been made as of
January 1, 1999:


                                       23
<PAGE>
                                                       Three              Six
                                                       Months            Months
                                                       Ended             Ended
                                                --------------------------------
                                                            June 30, 1999
                                                --------------------------------
Revenues                                           $  343,990        $  644,500
                                                ================================
Net income                                         $   26,831        $   40,112
                                                ================================
Allocation of net income to
      Limited partners                             $   26,562        $   39,710
                                                ================================
      General Partner                              $      268        $      401
                                                ================================
Units used in earning per Unit calculations
      Basic                                            66,725            66,725
                                                ================================
      Diluted                                          81,225            81,225
                                                ================================

Income per Unit before minority interest
      Basic                                        $     0.40        $     0.60
                                                ================================
      Diluted                                      $     0.33        $     0.49
                                                ================================

Net income per Unit
      Basic                                        $     0.40        $     0.60
                                                ================================
      Diluted                                      $     0.33        $     0.49
                                                ================================



LIQUIDITY AND CAPITAL RESOURCES

         General. The Company's primary cash requirements, in addition to normal
operating  expenses,   are  debt  service,   maintenance  capital  expenditures,
expansion capital expenditures, and quarterly distributions to the partners. The
Company  expects to fund  future  cash  distributions  and  maintenance  capital
expenditures with cash flows from operating activities. Capital expenditures for
future  expansion  activities and asset  acquisitions  are expected to be funded
with cash flows from operating  activities  and  borrowings  under the revolving
bank credit facility or issuance of additional Common Units.

         Cash flows from operating  activities  were a $177.6 million inflow for
the  first  six  months  of 2000  compared  to a $14.2  million  inflow  for the
comparable  period of 1999.  Cash  flows  from  operating  activities  primarily
reflect the effects of net income, depreciation and amortization,  extraordinary
items,  equity  income of  unconsolidated  affiliates  and  changes  in  working
capital.  Net income  increased  significantly  as a result of improved  overall
margins and the TNGL  acquisition.  Depreciation  and  amortization  increased a
combined  $8.6  million  in the first six  months of 2000 over  comparable  1999
levels  as a result  of  additional  capital  expenditures  and the TNGL and MBA
acquisitions  in the third quarter of 1999.  Amortization  expense  increased by
$2.8 million due to  amortization  of the intangible  asset  associated with the
Shell Processing  Agreement ($1.5 million),  the write-off of prepaid loan costs
associated  with the payoff of the $200  Million  Bank Credit  Facility in March
2000 ($0.3  million) and the  continued  amortization  of excess costs and other
prepaid loan and bond issue costs ($1.0  million).  The net effect of changes in
operating  accounts  from year to year is generally  the result of timing of NGL
sales and purchases near the end of the period.

         Cash outflows used in investing  activities  were $136.4 million in the
first six months of 2000 and $31.6  million for the  comparable  period of 1999.
Cash outflows included capital  expenditures of $154.2 million for the first six
months  of 2000  versus  $2.5  million  for the same  period  in  1999.  Capital
expenditures  for the first six months of 2000  included  $99.6  million for the
purchase of the Lou-Tex Propylene Pipeline and related assets,  $39.2 million in


                                       24
<PAGE>

construction   costs  for  the  Lou-Tex  NGL  Pipeline,   and  $4.4  million  in
construction costs for the Neptune gas processing facility.  Included in capital
expenditures  for  the  first  six  months  of  2000  are  maintenance   capital
expenditures  of $0.5  million  versus $0.7 million for the same period in 1999.
Investing  cash  outflows  in 2000  include  $3.0  million  in  advances  to and
investments  in  unconsolidated  affiliates  versus $40.4 million for 1999.  The
$37.4 million  decrease stems  primarily from the completion of the BRF facility
and the Tri-States and Wilprise  pipeline  systems in 1999. The first six months
of 1999 included $27.9 million in investments in and advances to these projects.

         On March 8, 2000,  the Company's  offer of February 23, 2000 to buy the
remaining 88.5% ownership interests in Dixie Pipeline Company ("Dixie") from the
other seven owners expired, with no interest being purchased.  In July 2000, the
Company  entered into a letter of intent with a stockholder of Dixie to purchase
all or a portion of that stockholder's interest in Dixie (currently 8.38%) for a
purchase  price of up to  $19.4  million.  The  purchase  of this  stockholder's
interest is subject to a right of first  refusal held by the other  stockholders
of Dixie.

         During the first six months of 2000, the Company  received $6.5 million
in payments from its  participation  in the BEF note that was  purchased  during
1998 with the proceeds from the  Company's  IPO. BEF made its final note payment
in May 2000. With BEF's final payment,  the Company's receivable relating to its
participation in the BEF note was extinguished.

         Cash flows from financing activities were a $40.7 million inflow in the
first six months of 2000  versus a $2.8  million  outflow for the same period in
1999. Cash flows from financing  activities are primarily affected by repayments
of  long-term  debt,   borrowings   under  the  long-term  debt  agreements  and
distributions  to the  partners.  The first six months of 2000 include  proceeds
from the $350 Million Senior Notes and the $54 Million MBFC Loan.  Also included
are the March 2000 payments made to retire the outstanding  balances on the $200
Million and $350 Million Bank Credit  Facilities  using the proceeds of the $350
Million Senior Notes and $54 Million MBFC Loan. For a complete discussion of the
$350  Million  Senior Notes and $54 Million  MBFC Loan,  see the sections  below
entitled  "Long-term  Debt" and  "Senior  Notes and MBFC  Loan." Cash flows from
financing  activities  for 1999 reflected the purchase of $4.6 million of Common
Units by a  consolidated  trust.  The  Company  used $36.1  million of the $87.1
million in cash and cash equivalents at June 30, 2000 to fund the quarterly cash
distribution to Unitholders and the General Partner paid on August 10, 2000.

         On July 27, 2000, the Company  announced that the Board of Directors of
the General  Partner had authorized the Company to purchase up to 1.0 million of
the outstanding Common Units over the next two years. The Units may be purchased
from time to time in the open market or in privately negotiated  transactions as
conditions  warrant.  The timing of any such purchases will be based on the Unit
price and other market factors. The Company may use the repurchased Common Units
as currency  in  connection  with  significant  and  accretive  acquisitions  to
maintain an appropriate capital structure and increase Unitholder value.

         Future Capital  Expenditures.  The Company  estimates that its share of
remaining  capital  expenditures for 2000 in the projects of its  unconsolidated
affiliates will be  approximately  $5.0 million  (including $3.2 million for the
BRPC  propylene  fractionator).  In addition,  the Company  forecasts that $95.0
million  will be spent  during the last six  months of 2000 on capital  projects
that will be recorded as property,  plant,  and equipment.  Of this amount,  the
most  significant  projects  and their  remaining  expenditures  for 2000 are as
follows:

          -    $40.5 million for the Lou-Tex NGL Pipeline;
          -    $16.1 million for the  Garyville,  Louisiana to Norco,  Louisiana
               butane pipelines;
          -    $ 9.9 million for the Venice,  Louisiana to Grand Isle, Louisiana
               pipeline; and
          -    $ 3.6  million  for the Norco  fractionator  ethane  liquefaction
               facility.

The  Company  expects to fund these  expenditures  with  operating  cash  flows,
borrowings under its bank credit  facility,  and offerings of debt and/or equity
securities.  As of June 30, 2000,  the Company had $15.8 million in  outstanding
purchase commitments  attributable to its capital projects. Of this amount, $7.5
million is related to the  construction  of the  Lou-Tex NGL  Pipeline  and $1.3
million is associated with capital projects which will be recorded as additional
investments in unconsolidated affiliates.

                                       25
<PAGE>

         DISTRIBUTIONS AND DIVIDENDS FROM UNCONSOLIDATED AFFILIATES

         Distributions  from  unconsolidated  affiliates.  The Company  received
$14.3 million in distributions  from its equity method  investments in the first
six months of 2000  compared to $4.0 million for the same period in 1999. Of the
$10.3 million  increase in  distributions,  $4.7 million was from EPIK. As noted
before,  EPIK's earnings increased in the first six months of 2000 due to higher
export activity. In addition, the first six months of 2000 included $3.3 million
in cash  receipts  from  Promix  which  was  acquired  as a  result  of the TNGL
acquisition in August 1999.

         Dividends received from unconsolidated affiliates. The Company received
$4.0 million in cash dividend payments from its cost method investments in Dixie
and VESCO. Specifically, dividends paid by Dixie and VESCO were $0.6 million and
$3.4 million,  respectively.  Distributions  received from these investments are
recorded by the Company as "Dividend income from  unconsolidated  affiliates" in
the Statements of Consolidated Operations. Both Dixie and VESCO were acquired in
August 1999 as part of the TNGL acquisition.

         LONG-TERM DEBT

         Long-term debt at June 30, 2000 was comprised of $350 million in 5-year
public Senior Notes (the "$350 Million  Senior Notes") and a 10-year $54 million
loan agreement with the Mississippi Business Finance Corporation ("MBFC" and the
"$54  Million  MBFC  Loan").  The  issuance  of the $350  Million  Senior  Notes
represented a partial takedown of the $800 million universal shelf  registration
(the  "Registration  Statement") that was filed with the Securities and Exchange
Commission in December 1999. The proceeds from the $350 Million Senior Notes and
the $54 Million MBFC Loan were used to extinguish all outstanding  balances owed
under the $200  Million  Bank Credit  Facility  and the $350 Million Bank Credit
Facility.

         The following table summarizes long-term debt at:

                                                  JUNE 30,          DECEMBER 31,
                                                    2000                1999
                                                --------------------------------
Borrowings under:
     $200 Million Bank Credit Facility                              $   129,000
     $350 Million Bank Credit Facility                                  166,000
     $350 Million Senior Notes                  $   350,000
     $54  Million MBFC Loan                          54,000
                                                --------------------------------
              Total                                 404,000             295,000
Less current maturities of long-term debt                 -             129,000
                                                --------------------------------
              Long-term debt                    $   404,000         $   166,000
                                                ================================

         At June 30,  2000,  the  Company  had a total of $40 million of standby
letters  of  credit  available  of  which   approximately   $13.3  million  were
outstanding under letter of credit agreements with the banks.

         Bank Credit Facilities

         $200  Million  Bank  Credit  Facility.  In July  1998,  the  Enterprise
Products  Operating  L.P.  (the  "Operating  Partnership")  entered  into a $200
Million  Bank  Credit  Facility  that  included a $50  million  working  capital
facility and a $150 million revolving term loan facility. On March 15, 2000, the
Company used $169 million of the proceeds  from the issuance of the $350 Million
Senior Notes to retire this credit  facility in  accordance  with its  agreement
with the banks.

         $350  Million  Bank  Credit  Facility.  In  July  1999,  the  Operating
Partnership entered into a $350 Million Bank Credit Facility that includes a $50
million  working  capital  facility  and a  $300  million  revolving  term  loan
facility.  The $300 million  revolving term loan facility includes a sublimit of
$40 million for letters of credit. Borrowings under the $350 Million Bank Credit
Facility  will bear  interest at either the bank's prime rate or the  Eurodollar


                                       26
<PAGE>

rate plus the applicable  margin as defined in the facility.  The Company elects
the basis for the interest rate at the time of each borrowing.

         This  facility  is  scheduled  to expire  in July 2001 and all  amounts
borrowed  thereunder  shall be due and  payable at that  time.  There must be no
amount   outstanding  under  the  working  capital  facility  for  at  least  15
consecutive  days during each fiscal year. In March 2000,  the Company used $179
million of the proceeds  from the issuance of the $350 Million  Senior Notes and
$47 million from the $54 Million MBFC Loan to payoff the outstanding  balance on
this credit facility.  No amount was outstanding on this credit facility at June
30, 2000.

         The credit agreement  relating to this facility  contains a prohibition
on  distributions  on,  or  purchases  or  redemptions  of Units if any event of
default is continuing.  In addition,  the bank credit facility  contains various
affirmative and negative covenants  applicable to the ability of the Company to,
among  other  things,  (i) incur  certain  additional  indebtedness,  (ii) grant
certain  liens,  (iii) sell assets in excess of certain  limitations,  (iv) make
investments,  (v) engage in  transactions  with affiliates and (vi) enter into a
merger, consolidation, or sale of assets. The bank credit facility requires that
the Operating  Partnership  satisfy the following financial covenants at the end
of each fiscal quarter: (i) maintain Consolidated Tangible Net Worth (as defined
in the bank credit  facility) of at least $250.0 million,  (ii) maintain a ratio
of EBITDA (as  defined in the bank credit  facility)  to  Consolidated  Interest
Expense (as  defined in the bank  credit  facility)  for the  previous  12-month
period of at least 3.5 to 1.0 and (iii)  maintain a ratio of Total  Indebtedness
(as defined in the bank credit  facility)  to EBITDA of no more than 3.0 to 1.0.
The Company was in compliance with the restrictive covenants at June 30, 2000.

         Senior Notes and MBFC Loan

         $350 Million Senior Notes. On March 13, 2000, the Operating Partnership
completed  a public  offering  of $350  million  in  principal  amount  of 8.25%
fixed-rate  Senior  Notes due March 15, 2005 at a price to the public of 99.948%
per Senior Note. In the offering,  the Operating  Partnership received proceeds,
net of underwriting discounts and commissions,  of approximately $347.7 million.
The  proceeds  were used to pay the entire $169  million  outstanding  principal
balance on the $200  Million  Bank Credit  Facility and $179 million of the $226
million outstanding principal balance on the $350 Million Bank Credit Facility.

         The notes are subject to a make-whole redemption right by the Operating
Partnership.  They are an unsecured obligation of the Operating  Partnership and
rank  equally  with  its  existing  and  future  unsecured  and   unsubordinated
indebtedness and senior to any future subordinated  indebtedness.  The notes are
guaranteed by the Company through an unsecured and unsubordinated  guarantee and
were issued under an indenture containing certain restrictive  covenants.  These
covenants  restrict  the ability of the Company and the  Operating  Partnership,
with certain  exceptions,  to incur debt secured by liens and engage in sale and
leaseback transactions. The Company and Operating Partnership were in compliance
with these restrictive covenants at June 30, 2000.

         Settlement  was  completed on March 15, 2000.  The offering of the $350
Million   Senior  Notes  was  a  takedown   under  the  Company's  $800  million
Registration Statement;  therefore, the amount of securities available under the
Registration Statement is reduced to $450 million.

         $54 Million MBFC Loan.  On March 27, 2000,  the  Operating  Partnership
executed  a $54  million  loan  agreement  with the MBFC which was funded by the
proceeds from the sale of Revenue Bonds by the MBFC. The Revenue Bonds issued by
the MBFC are  10-year  bonds  with a  maturity  date of March 1, 2010 and bear a
fixed rate interest coupon of 8.70 percent.  The Operating  Partnership received
proceeds from the sale of the Revenue Bonds,  net of underwriting  discounts and
commissions,  of approximately $53.6 million.  The proceeds were used to pay the
remaining  $47 million  outstanding  principal  balance on the $350 Million Bank
Credit Facility and for working capital and other general partnership  purposes.
In  general,  the  proceeds  of the  Revenue  Bonds were used to  reimburse  the
Operating  Partnership for costs it incurred in acquiring and  constructing  the
Pascagoula, Mississippi natural gas processing plant.

         The Revenue  Bonds were  issued at par and are subject to a  make-whole
redemption right by the Operating Partnership.  The Revenue Bonds are guaranteed
by the Company  through an  unsecured  and  unsubordinated  guarantee.  The loan
agreement contains certain covenants including maintaining appropriate levels of


                                       27
<PAGE>

insurance on the  Pascagoula  natural gas processing  facility and  restrictions
regarding  mergers.  The  Company  was  in  compliance  with  these  restrictive
covenants at June 30, 2000.

         Interest Rate Swaps. The Company's  interest rate exposure results from
variable  rate  borrowings  from  commercial  banks  and fixed  rate  borrowings
pursuant to the $350 Million  Senior  Notes and the $54 Million  MBFC Loan.  The
company  manages its exposure to changes in interest  rates in its  consolidated
debt  portfolio by utilizing  interest  rate swaps.  An interest  rate swap,  in
general, requires one party to pay a fixed rate on the notional amount while the
other party pays a floating rate based on the notional amount.

         In March 2000,  after the issuance of the $350 Million Senior Notes and
the execution of the $54 Million MBFC Loan, 100% of the Operating  Partnership's
consolidated  debt were fixed rate  obligations.  To maintain a balance  between
variable rate and fixed rate exposure,  the Operating  Partnership  entered into
interest rate swap  agreements  with a notional  amount of $154 million by which
the Operating  Partnership  receives  payments based on a fixed rate and pays an
amount based on a floating rate. The Operating  Partnership's  consolidated debt
portfolio  interest rate exposure was 62 percent fixed and 38 percent  floating,
after considering the effect of the interest rate swap agreements.  The notional
amount does not represent  exposure to credit loss.  The  Operating  Partnership
monitors its positions and the credit ratings of its counterparties.  Management
believes  the risk of  incurring a credit  related  loss is remote,  and that if
incurred, such losses would be immaterial.

The effect of these swaps  (none of which are  leveraged)  was to  decrease  the
Company's  interest  expense by $3.2 million for the three months ended June 30,
2000 and $3.5  million  for the six months  ended  June 30,  2000.  For  further
information regarding the interest rate swaps, see Note 9 of the unaudited Notes
to the Consolidated Financial Statements.

AMENDMENT TO PARTNERSHIP AGREEMENT

         The Partnership  Agreement generally authorizes the Company to issue an
unlimited  number of  additional  limited  partner  interests  and other  equity
securities  of the  Company  for  such  consideration  and  on  such  terms  and
conditions as shall be established by the General Partner in its sole discretion
without  the  approval  of the  Unitholders.  During the  Subordination  Period,
however,  the Company is limited with regards to the number of equity securities
that it may issue that rank senior to Common Units (except for Common Units upon
conversion of  Subordinated  Units,  pursuant to employee  benefit  plans,  upon
conversion of the general partner  interest as a result of the withdrawal of the
General Partner or in connection with acquisitions or capital  improvements that
are accretive on a per Unit basis) or an equivalent number of securities ranking
on a parity with the Common  Units,  without  the  approval of the holders of at
least a Unit Majority.  A Unit Majority is defined as at least a majority of the
outstanding  Common Units (during the  Subordination  Period),  excluding Common
Units held by the General Partner and its affiliates, and at least a majority of
the outstanding Common Units (after the Subordination Period).

         In April  2000,  the  Company  mailed a Proxy  Statement  to its public
Unitholders  asking  them to  consider  and vote  for a  proposal  to amend  the
Partnership Agreement to increase the number of additional Common Units that may
be issued  during  the  Subordination  Period  without  the  approval  of a Unit
Majority from 22,775,000  Common Units to 47,775,000  Common Units.  The primary
purpose  of  the  requested   increase  was  to  improve  the  future  financial
flexibility  of the Company  since  20,500,000  Common  Units of the  22,775,000
Common Units available to the partnership  during the Subordination  Period were
reserved  for issuance in  connection  with the TNGL  acquisition.  At a special
meeting of the  Unitholders  and  General  Partner  held on June 9,  2000,  this
proposal  was  approved  by  90.7%  of the  public  Unitholders.  The  amendment
increases the number of Common Units  available (and  unreserved) to the Company
for general partnership  purposes during the Subordination Period from 2,275,000
to 27,275,000.

MTBE FACILITY

         The Company owns a 33.33% economic interest in the BEF partnership that
owns the MTBE  production  facility  located  within the Company's  Mont Belvieu
complex.  The production of MTBE is driven by oxygenated  fuels programs enacted
under the federal Clean Air Act  Amendments of 1990 and other  legislation.  Any
changes to these programs that enable  localities to opt out of these  programs,
lessen the requirements  for oxygenates or favor the use of non-isobutane  based


                                       28
<PAGE>

oxygenated  fuels reduce the demand for MTBE and could have an adverse effect on
the Company's results of operations.

         In recent years,  MTBE has been detected in water  supplies.  The major
source of the ground water  contamination  appears to be leaks from  underground
storage  tanks.  Although  these  detections  have  been  limited  and the great
majority  of these  detections  have been  well  below  levels of public  health
concern,  there have been  actions  calling for the  phase-out  of MTBE in motor
gasoline in various federal and state governmental agencies.

         In  light  of  these   developments,   the  Company  is  formulating  a
contingency   plan  for  use  of  the  BEF  facility  if  MTBE  were  banned  or
significantly  curtailed.  Management is exploring a possible  conversion of the
BEF  facility  from MTBE  production  to  alkylate  production.  At present  the
forecast  cost of this  conversion  would be in the $20  million to $25  million
range,  with the Company's share being $6.7 million to $8.3 million.  Management
anticipates that if MTBE is banned alkylate demand will rise as producers use it
to replace MTBE as an octane enhancer.  Alkylate production would be expected to
generate  spot market  margins  comparable  to those of MTBE.  Greater  alkylate
production would be expected to increase  isobutane  consumption  nationwide and
result in improved isomerization margins for the Company.

         Sun, the MTBE facility's major customer and one of the partners of BEF,
has entered into a contract with BEF to take all of the MTBE production  through
September 2004.

YEAR 2000 READINESS DISCLOSURE

         The Company's  efforts at preparing  its computer  systems for the Year
2000 were successful and no significant problems were encountered. The Year 2000
Readiness team reported that all systems functioned properly as the date changed
from  December 31, 1999 to January 1, 2000.  The Company is also pleased to note
that no problems  were reported to it by its customers or vendors as a result of
the Year 2000 issue.  The Company  continues  to be vigilant in  monitoring  its
systems for any potential  Year 2000 problems that may arise in the  short-term.
There is no  assurance  that  residual  Year 2000  issues  will not arise in the
future  which  could have a material  adverse  effect on the  operations  of the
Company.

ACCOUNTING STANDARDS

         In June 1999, the Financial  Accounting Standards Board ("FASB") issued
Statement of Financial  Accounting  Standard  ("SFAS") No. 137,  "Accounting for
Derivative Instruments and Hedging  Activities-Deferral of the Effective Date of
FASB Statement No. 133-an amendment of FASB Statement No. 133" which effectively
delays the application of SFAS No. 133  "Accounting  for Derivative  Instruments
and Hedging  Activities"  for one year, to fiscal years beginning after June 15,
2000.  In June 2000,  the FASB  issued  SFAS No.  138,  "Accounting  for Certain
Derivative  Instruments  and Certain  Hedging  Activities - an amendment of FASB
Statement No. 133" which amends and supercedes various sections of SFAS No. 133.
Management  is  currently  studying  SFAS No. 133 and its  amendments  for their
possible impact on the consolidated  financial  statements when they are adopted
in January 2001.

UNCERTAINTY OF FORWARD-LOOKING STATEMENTS AND INFORMATION

         This quarterly report contains various  forward-looking  statements and
information that are based on the belief of the Company and the General Partner,
as well  as  assumptions  made by and  information  currently  available  to the
Company  and the  General  Partner.  When used in this  document,  words such as
"anticipate,"  "estimate,"  "project,"  "expect," "plan," "forecast,"  "intend,"
"could," and "may," and similar  expressions and statements  regarding the plans
and  objectives of the Company for future  operations,  are intended to identify
forward-looking statements. Although the Company and the General Partner believe
that  the  expectations   reflected  in  such  forward-looking   statements  are
reasonable,  they can give no assurance that such  expectations will prove to be
correct.  Such  statements  are  subject to certain  risks,  uncertainties,  and
assumptions.  If one or more of these risks or uncertainties materialize,  or if
underlying assumptions prove incorrect,  actual results may vary materially from
those anticipated, estimated, projected, or expected. Among the key risk factors
that may have a direct  bearing  on the  Company's  results  of  operations  and
financial  condition are: (a)  competitive  practices in the industries in which
the Company  competes,  (b)  fluctuations  in oil,  natural gas, and NGL product
prices and  production,  (c) operational  and systems risks,  (d)  environmental


                                       29
<PAGE>

liabilities  that are not covered by indemnity or  insurance,  (e) the impact of
current and future laws and governmental  regulations  (including  environmental
regulations) affecting the NGL industry in general, and the Company's operations
in particular,  (f) loss of a significant customer,  and (g) failure to complete
one or more new projects on time or within budget.


ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         The Company is exposed to financial market risks,  including changes in
interest rates with respect to a portion of its debt  obligations and changes in
commodity prices.  The Company may use derivative  financial  instruments (i.e.,
futures,  forwards, swaps, options, and other financial instruments with similar
characteristics)  to mitigate  these risks.  The Company does not use derivative
financial instruments for speculative (or trading) purposes.

         Beginning  with the  fourth  quarter  of 1999,  the  Company  adopted a
commercial  policy  to  manage  exposures  to the  risks  generated  by the  NGL
businesses  acquired in the TNGL acquisition.  The objective of the policy is to
assist the Company in achieving  its  profitability  goals while  maintaining  a
portfolio of  conservative  risk,  defined as remaining with the position limits
established by the Board of Directors of the General  Partner.  The Company will
enter into risk  management  transactions  to manage  price  risk,  basis  risk,
physical risk or other risks related to energy  commodities on both a short-term
(less than 30 days) and long-term  basis,  not to exceed 18 months.  The General
Partner has  established a Risk  Committee (the  "Committee")  that will oversee
overall  strategies  associated with physical and financial risks. The Committee
will approve specific commercial policies of the Company subject to this policy,
including  authorized  products,  instruments and markets. The Committee is also
charged with  establishing  specific  guidelines and procedures for implementing
the policy and ensuring compliance with the policy.

INTEREST RATE RISK

         Variable rate Debt. At June 30, 2000 and December 31, 1999, the Company
had no derivative instruments in place to cover any potential interest rate risk
on its variable-rate  debt obligations.  Variable interest rate debt obligations
do expose the Company to possible increases in interest expense and decreases in
earnings if interest rates were to rise. The Company's long-term debt associated
with the $350 Million Bank Credit  Facility is at variable  interest  rates.  No
amount was outstanding under this facility during the second quarter of 2000.

         If  the  weighted   average  base  interest   rates   selected  on  the
variable-rate  long-term  debt at December 31, 1999 were to have been 10% higher
than the weighted  average of the actual base interest rates selected,  assuming
no changes in weighted average variable debt levels, interest expense would have
increased  by  approximately  $1.4  million  with a  corresponding  decrease  in
earnings  before  minority  interest.  No  calculation  has  been  made  on  the
variable-rate  debt for June 30, 2000 since no amount was outstanding  under the
$350 Million Bank Credit Facility.

         Fixed rate Debt. In March 2000, the Operating  Partnership entered into
interest  rate swaps whereby the fixed rate of interest on a portion of the $350
Million Senior Notes and the $54 Million MBFC Loan was  effectively  swapped for
floating rates tied to the six month London  Interbank  Offering Rate ("LIBOR").
Interest  rate swaps are used to manage  the  Company's  exposure  to changes in
interest  rates and to lower overall costs of financing.  An interest rate swap,
in general,  requires one party to pay a fixed rate on the notional amount while
the other party pays a floating rate based on the notional amount.

         After the issuance of the $350 Million  Senior Notes and the  execution
of the $54 Million MBFC Loan, 100% of the Operating  Partnership's  consolidated
debt were fixed rate  obligations.  To maintain a balance between  variable rate
and fixed rate exposure,  the Operating  Partnership  entered into interest rate
swap  agreements  with a notional  amount of $154 million by which the Operating
Partnership  receives payments based on a fixed rate and pays an amount based on
a  floating  rate.  The  Operating  Partnership's  consolidated  debt  portfolio
interest  rate  exposure  was 62 percent  fixed and 38 percent  floating,  after
considering the effect of the interest rate swap agreements. The notional amount
does not represent exposure to credit loss. The Operating  Partnership  monitors
its positions and the credit ratings of its counterparties.  Management believes
the risk of  incurring a credit  related  loss is remote,  and that if incurred,
such losses would be immaterial.

                                       30
<PAGE>

         The effect of these swaps (none of which are leveraged) was to decrease
the Company's  interest  expense by $3.2 million for the three months ended June
30, 2000 and $3.5 million for the six months  ended June 30, 2000.  Following is
selected  information on the Company's  portfolio of interest rate swaps at June
30, 2000:

INTEREST RATE SWAP PORTFOLIO AT JUNE 30, 2000 (1) :
(Dollars in millions)
                                                 Early             Fixed /
  Notional                                    Termination         Floating
   Amount            Period Covered             Date (2)          Rate (3)
--------------------------------------------------------------------------------

      $ 50.0 March 2000 - March 2005        March 2001         8.25% / 6.9500%
      $ 50.0 March 2000 - March 2005        March 2001         8.25% / 6.9550%
      $ 54.0 March 2000 - March 2010        March 2003         8.70% / 7.2575%

Notes:

(1)  All swaps outstanding at June 30, 2000 were entered into for the purpose of
     managing the Operating  Partnership's  exposure to  fluctuations  in market
     interest rates.
(2)  In each case,  the  counterparty  has the option to terminate  the interest
     rate swap on the Early Termination Date.
(3)  In each case, the Operating  Partnership is the  floating-price  payor. The
     floating rate was the rate in effect as of June 30, 2000.

         If the six month  LIBOR  rates on the  notional  amounts of  fixed-rate
long-term  debt at June 30, 2000 were to have been 10% higher than the six month
LIBOR  rates  actually  used in the swap  agreements,  assuming  no  changes  in
weighted average fixed-rate debt levels,  interest expense for the three and six
months ended June 30, 2000 would have  increased by  approximately  $0.3 million
with a corresponding decrease in earnings before minority interest.

         Other.  At June 30, 2000 and December  31, 1999,  the Company had $87.1
million and $5.2 million  invested in cash and cash  equivalents,  respectively.
All cash equivalent investments other than cash are highly liquid, have original
maturities of less than three months,  and are considered to have  insignificant
interest rate risk.

COMMODITY PRICE RISK

         The  Company  is  exposed  to  commodity  price  risk  through  its NGL
businesses acquired in the TNGL acquisition. In order to effectively manage this
risk, the Company may enter into swaps, forwards, commodity futures, options and
other derivative  commodity  instruments with similar  characteristics  that are
permitted  by contract or business  custom to be settled in cash or with another
financial  instrument.  The purpose of these risk  management  activities  is to
hedge  exposure to price risks  associated  with natural  gas, NGL  inventories,
commitments and certain anticipated  transactions.  The table below presents the
hypothetical  changes in fair values arising from immediate  selected  potential
changes  in  the  quoted  market  prices  of  derivative  commodity  instruments
outstanding  at  December  31,  1999 and June  30,  2000.  Gain or loss on these
derivative commodity instruments would be offset by a corresponding gain or loss
on the hedged commodity positions, which are not included in the table. The fair
value of the  commodity  futures  at  December  31,  1999 and June 30,  2000 was
estimated at $0.5 million  payable and $7.7  million  receivable,  respectively,
based on quoted market prices of comparable  contracts and  approximate the gain
or loss that would have been  realized if the  contracts had been settled at the
balance  sheet date.  The change in fair value of the  commodity  futures  since
December 31, 1999 is primarily due to an increase in volumes  hedged,  change in
composition of commodities  hedged and higher natural gas prices.  The change in
fair value between June 30, 2000 and August 1, 2000 is due to the  settlement of
the July 2000 contract volumes and changes in natural gas prices.

                                       31
<PAGE>
<TABLE>
<CAPTION>

(MILLIONS OF DOLLARS)                 NO CHANGE             10% INCREASE                   10% DECREASE
                                      ---------             ------------                   ------------

   IMPACT OF CHANGES IN QUOTED          FAIR            FAIR         INCREASE          FAIR          INCREASE
        MARKET PRICES ON:               VALUE          VALUE        (DECREASE)         VALUE        (DECREASE)
------------------------------------------------------------------------------------------------------------------

Commodity futures
<S>                <C> <C>              <C>            <C>           <C>               <C>          <C>
       At December 31, 1999             $ (0.5)        $   1.2       $ 1.7             $ (2.2)      $ (1.7)
       At June 30, 2000                 $  7.7         $  12.1       $ 4.4             $  3.2       $ (4.5)
       At August 1, 2000                $  0.7         $   5.6       $ 4.9             $ (4.2)      $ (4.9)
</TABLE>


PART II.   OTHER INFORMATION

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS.

         The  following  table shows the Use of Proceeds  from the $350  Million
Senior Notes offering completed on March 15, 2000. The $350 Million Senior Notes
represented a partial takedown of the Company's and the Operating  Partnership's
$800  million  Registration  Statement  filed with the  Securities  and Exchange
Commission in December 1999 (File Nos.  333-93239  and  333-93239-01,  effective
January 14,  2000);  therefore,  the amount of  securities  available  under the
Registration Statement was reduced to $450 million.

         The title of the registered debt securities was "8.25% Senior Notes Due
2005." The  underwriters  of the offering were Chase  Securities,  Inc.,  Lehman
Brothers Inc., Banc One Capital Markets,  Inc.,  FleetBoston  Robertson Stephens
Inc.,  First Union  Securities,  Inc.,  Scotia  Capital  (USA) Inc. and SG Cowen
Securities Corp.. The 5-year Senior Notes have a maturity date of March 15, 2005
and bear a fixed-rate interest coupon of 8.25%.

<TABLE>
<CAPTION>

                                                                            Amounts
                                                                         (in millions)
                                                                         --------------
Proceeds:
<S>                                                                         <C>
   Sale of $350 Million Senior Notes to public at 99.948% per Note          $   350
   Less underwriting discount of 0.600% per Note                                 (2)
                                                                         --------------
       Total Proceeds to Company and Operating Partnership                  $   348
                                                                         ==============

Use of Proceeds:
   Retire balance on $200 Million Bank Credit Facility                      $  (169)
   Partial retirement of balance on $350 Million Bank Credit Facility          (179)
                                                                         --------------
           Total uses of funds                                              $  (348)
                                                                         ==============
</TABLE>

         See Note 4 of the  Notes to  Consolidated  Financial  Statements  for a
description of the $350 Million Senior Notes.


                                       32
<PAGE>

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         In April  2000,  the  Company  mailed a Proxy  Statement  to its public
Unitholders  asking  them to  consider  and vote  for a  proposal  to amend  the
Partnership Agreement to increase the number of additional Common Units that may
be issued  during  the  Subordination  Period  without  the  approval  of a Unit
Majority from 22,775,000  Common Units to 47,775,000  Common Units.  The primary
purpose  of  the  requested   increase  was  to  improve  the  future  financial
flexibility  of the Company  since  20,500,000  Common  Units of the  22,775,000
Common Units available to the partnership  during the Subordination  Period were
reserved  for issuance in  connection  with the TNGL  acquisition.  At a special
meeting of the public  Unitholders held on June 9, 2000 in Houston,  Texas, this
proposal  was  approved  by  90.7%  of the  public  Unitholders.  The  amendment
increases the number of Common Units  available (and  unreserved) to the Company
for general partnership  purposes during the Subordination Period from 2,275,000
to 27,275,000.

         The voting results were as follows:

 Number of votes cast approving the amendment                  9,533,215
 Number of votes cast against the amendment                      381,608
 Number of votes withheld                                        489,637
 Number of abstentions                                           104,406

 Total number of public Unitholders                           10,508,866


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

(A)      EXHIBITS

*1.1     Underwriting  Agreement dated March 10, 2000, among Enterprise Products
         Partners L.P.,  Enterprise  Products  Operating L.P.,  Chase Securities
         Inc., Lehman Brothers Inc., Banc One Capital Markets, Inc., FleetBoston
         Robertson  Stephens Inc., First Union Securities,  Inc., Scotia Capital
         (USA) Inc. and SG Cowen Securities Corp. (Exhibit 1.1 on Form 8-K filed
         March 10, 2000).

*3.1     Form of  Amended  and  Restated  Agreement  of Limited  Partnership  of
         Enterprise   Products   Partners  L.P.  (Exhibit  3.1  to  Registration
         Statement on Form S-1, File No. 333-52537, filed on May 13, 1998).

*3.2     Form of  Amended  and  Restated  Agreement  of Limited  Partnership  of
         Enterprise   Products  Operating  L.P.  (Exhibit  3.2  to  Registration
         Statement on Form S-1/A, File No. 333-52537, filed on July 21, 1998).

*3.3     LLC  Agreement of Enterprise  Products GP (Exhibit 3.3 to  Registration
         Statement on Form S-1/A, File No. 333-52537, filed on July 21, 1998).

*3.4     Second  Amended  and  Restated  Agreement  of  Limited  Partnership  of
         Enterprise  Products  Partners  L.P.  dated  September  17, 1999.  (The
         Company  incorporates  by reference the above document  included in the
         Schedule  13D filed  September  27, 1999 by Tejas Energy LLC ; filed as
         Exhibit 99.7 on Form 8-K dated October 4, 1999).

*3.5     First  Amended and  Restated  Limited  Liability  Company  Agreement of
         Enterprise  Products GP, LLC dated September 17, 1999. (Exhibit 99.8 on
         Form 8-K/A-1 filed October 27, 1999).

3.6      Amendment  No. 1 to Second  Amended and  Restated  Agreement of Limited
         Partnership of Enterprise Products Partners L.P. dated June 9, 2000.

*4.1     Form of Common Unit certificate (Exhibit 4.1 to Registration  Statement
         on Form S-1/A, File No. 333-52537, filed on July 21, 1998).

                                       33
<PAGE>

*4.2     $200 million Credit Agreement among Enterprise Products Operating L.P.,
         the Several  Banks from Time to Time  Parties  Hereto,  Den Norske Bank
         ASA,   and  Bank  of   Tokyo-Mitsubishi,   Ltd.,   Houston   Agency  as
         Co-Arrangers,   The  Bank  of  Nova  Scotia,   as  Co-Arranger  and  as
         Documentation  Agent and The Chase Manhattan Bank as Co-Arranger and as
         Agent dated as of July 27, 1998 as Amended and Restated as of September
         30, 1998.  (Exhibit 4.2 on Form 10-K for year ended  December 31, 1998,
         filed March 17, 1999).

*4.3     First  Amendment to $200 million Credit  Agreement  dated July 28, 1999
         among Enterprise Products Operating L.P. and the several banks thereto.
         (Exhibit 99.9 on Form 8-K/A-1 filed October 27, 1999).

*4.4     $350 million Credit Agreement among Enterprise Products Operating L.P.,
         BankBoston,  N.A.,  Societe Generale,  Southwest Agency and First Union
         National  Bank,  as   Co-Arrangers,   The  Chase   Manhattan  Bank,  as
         Co-Arranger  and as  Administrative  Agent,  The First National Bank of
         Chicago,  as Co-Arranger and as  Documentation  Agent, The Bank of Nova
         Scotia,  as Co-Arranger  and Syndication  Agent,  and the Several Banks
         from Time to Time  parties  hereto  with First  Union  Capital  Markets
         acting  as  Managing  Agent and Chase  Securities  Inc.  acting as Lead
         Arranger and Book Manager  dated July 28, 1999  (Exhibit  99.10 on Form
         8-K/A-1 filed October 27, 1999).

*4.5     Unitholder  Rights  Agreement  among Tejas Energy LLC, Tejas  Midstream
         Enterprises,   LLC,  Enterprise  Products  Partners  L.P.,   Enterprise
         Products  Operating  L.P.,  Enterprise  Products  Company,   Enterprise
         Products GP, LLC and EPC Partners II, Inc.  dated  September  17, 1999.
         (The Company  incorporates by reference the above document  included in
         the Schedule 13D filed September 27, 1999 by Tejas Energy LLC; filed as
         Exhibit 99.5 on Form 8-K dated October 4, 1999).

*4.6     Form of Indenture dated as of March 15, 2000, among Enterprise Products
         Operating  L.P.,  as Issuer,  Enterprise  Products  Partners  L.P.,  as
         Guarantor,  and First Union National Bank, as Trustee.  (Exhibit 4.1 on
         Form 8-K filed March 10, 2000).

*4.7     Form of  Global  Note  representing  all 8.25%  Senior  Notes Due 2005.
         (Exhibit 4.2 on Form 8-K filed March 10, 2000).

*4.8     Second Amendment,  dated as of January 24, 2000, to $200 Million Credit
         Agreement  dated as of July 27,  1998,  as Amended  and  Restated as of
         September 30, 1998,  among Enterprise  Products  Operating L.P. and the
         several banks thereto. (Exhibit 4.3 on Form 8-K filed March 10, 2000).

*4.9     First  Amendment,  dated as of January 24, 2000, to $350 Million Credit
         Agreement among Enterprise Products Operating L.P.,  BankBoston,  N.A.,
         Societe  Generale,  Southwest  Agency and First Union National Bank, as
         Co-Arrangers,   The  Chase   Manhattan  Bank,  as  Co-Arranger  and  as
         Administrative   Agent,   BankOne   N.A.,   as  Co-   Arranger  and  as
         Documentation  Agent,  The Bank of Nova Scotia,  as Co-Arranger  and as
         Syndication  Agent,  and the  several  Banks from time to time  parties
         thereto,  with First Union Capital Markets acting as Managing Agent and
         Chase  Securities  Inc. acting as Lead Arranger and Manager dated as of
         July 28, 1999. (Exhibit 4.4 on Form 8-K filed March 10, 2000).

*4.10    Second  Amendment,  dated as of March 7, 2000,  to $350 Million  Credit
         Agreement among Enterprise Products Operating L.P.,  BankBoston,  N.A.,
         Societe  Generale,  Southwest  Agency and First Union National Bank, as
         Co-Arrangers,   The  Chase   Manhattan  Bank,  as  Co-Arranger  and  as
         Administrative   Agent,   BankOne   N.A.,   as  Co-   Arranger  and  as
         Documentation  Agent,  The Bank of Nova Scotia,  as Co-Arranger  and as
         Syndication  Agent,  and the  several  Banks from time to time  parties
         thereto,  with First Union Capital Markets acting as Managing Agent and
         Chase  Securities  Inc. acting as Lead Arranger and Manager dated as of
         July 28, 1999. (Exhibit 4.5 on Form 8-K filed March 10, 2000).

*4.11    Guaranty  Agreement,  dated as of March 7, 2000, by Enterprise Products
         Partners L.P. in favor of The Chase Manhattan  Bank, as  Administrative
         Agent, with respect to the $350 Million Credit Agreement referred to in
         Exhibits 4.4 and 4.5. (Exhibit 4.6 on Form 8-K filed March 10, 2000).

*10.1    Articles  of  Merger  of  Enterprise  Products  Company,  HSC  Pipeline
         Partnership,  L.P., Chunchula Pipeline Company, LLC, Propylene Pipeline
         Partnership,  L.P., Cajun Pipeline Company, LLC and Enterprise Products
         Texas  Operating L.P. dated June 1, 1998 (Exhibit 10.1 to  Registration
         Statement on Form S-1/A, File No: 333-52537, filed on July 8, 1998).

                                       34
<PAGE>

*10.2    Form of EPCO  Agreement  between  Enterprise  Products  Partners  L.P.,
         Enterprise  Products  Operating L.P.,  Enterprise  Products GP, LLC and
         Enterprise Products Company (Exhibit 10.2 to Registration  Statement on
         Form S-1/A, File No. 333-52537, filed on July 21, 1998).

*10.3    Transportation  Contract between Enterprise Products Operating L.P. and
         Enterprise  Transportation  Company dated June 1, 1998 (Exhibit 10.3 to
         Registration Statement on Form S-1/A, File No. 333-52537, filed on July
         8, 1998).

*10.4    Venture Participation Agreement between Sun Company, Inc. (R&M), Liquid
         Energy  Corporation and Enterprise  Products  Company dated May 1, 1992
         (Exhibit  10.4  to  Registration   Statement  on  Form  S-1,  File  No.
         333-52537, filed on May 13, 1998).

*10.5    Partnership  Agreement  between  Sun BEF,  Inc.,  Liquid  Energy  Fuels
         Corporation and Enterprise  Products Company dated May 1, 1992 (Exhibit
         10.5 to Registration  Statement on Form S-1, File No. 333-52537,  filed
         on May 13, 1998).

*10.6    Amended  and  Restated  MTBE   Off-Take   Agreement   between   Belvieu
         Environmental  Fuels and Sun Company,  Inc. (R&M) dated August 16, 1995
         (Exhibit  10.6  to  Registration   Statement  on  Form  S-1,  File  No.
         333-52537, filed on May 13, 1998).

*10.7    Articles of Partnership of Mont Belvieu  Associates dated July 17, 1985
         (Exhibit  10.7  to  Registration   Statement  on  Form  S-1,  File  No.
         333-52537, filed on May 13, 1998).

*10.8    First  Amendment to Articles of Partnership of Mont Belvieu  Associates
         dated July 15, 1996  (Exhibit  10.8 to  Registration  Statement on Form
         S-1, File No. 333-52537, filed on May 13, 1998).

*10.9    Propylene   Facility  and   Pipeline   Agreement   between   Enterprise
         Petrochemical Company and Hercules Incorporated dated December 13, 1978
         (Exhibit  10.9  to  Registration   Statement  on  Form  S-1,  File  No.
         333-52537, dated May 13, 1998).

*10.10   Restated  Operating  Agreement  for  the  Mont  Belvieu   Fractionation
         Facilities Chambers County,  Texas between Enterprise Products Company,
         Texaco  Producing  Inc.,  El Paso  Hydrocarbons  Company  and  Champlin
         Petroleum  Company dated July 17, 1985 (Exhibit  10.10 to  Registration
         Statement on Form S-1/A, File No. 333-52537, filed on July 8, 1998).

*10.11   Ratification and Joinder Agreement  relating to Mont Belvieu Associates
         Facilities between Enterprise Products Company,  Texaco Producing Inc.,
         El Paso  Hydrocarbons  Company,  Champlin  Petroleum  Company  and Mont
         Belvieu  Associates  dated July 17, 1985 (Exhibit 10.11 to Registration
         Statement on Form S-1/A, File No. 333-52537, filed on July 8, 1998).

*10.12   Amendment to Propylene  Facility and Pipeline Sales  Agreement  between
         HIMONT U.S.A.,  Inc. and Enterprise  Products  Company dated January 1,
         1993 (Exhibit 10.12 to Registration  Statement on Form S-1/A,  File No.
         333-52537, filed on July 8, 1998).

*10.13   Amendment to Propylene  Facility and Pipeline  Agreement between HIMONT
         U.S.A.,  Inc. and  Enterprise  Products  Company  dated January 1, 1995
         (Exhibit  10.13  to  Registration  Statement  on Form  S-1/A,  File No.
         333-52537, filed on July 8, 1998).

*10.14   Fourth  Amendment to Conveyance of Gas Processing  Rights between Tejas
         Natural Gas Liquids,  LLC and Shell Oil Company,  Shell  Exploration  &
         Production  Company,  Shell Offshore Inc., Shell Deepwater  Development
         Inc.,  Shell Land & Energy  Company and Shell  Frontier  Oil & Gas Inc.
         dated August 1, 1999. (Exhibit 10.14 to Form 10-Q filed on November 15,
         1999).

                                       35
<PAGE>

*12.1    Computation  of ratio of earnings  to fixed  charges for the year ended
         December 31, 1999. (Exhibit 12.1 on Form 8-K filed March 10, 2000).

*25.1    Statement of Eligibility  and  Qualification  under the Trust Indenture
         Act of 1939 on Form T-1 of First Union National Bank.  (Exhibit 25.1 on
         Form 8-K filed March 10, 2000).

*99.1    Contribution  Agreement  between  Tejas  Energy  LLC,  Tejas  Midstream
         Enterprises,   LLC,  Enterprise  Products  Partners  L.P.,   Enterprise
         Products  Operating  L.P.,  Enterprise  Products  Company,   Enterprise
         Products GP, LLC and EPC Partners II, Inc.  dated  September  17, 1999.
         (The Company  incorporates by reference the above document  included in
         the Schedule 13D filed September 27, 1999 by Tejas Energy LLC; filed as
         Exhibit 99.4 on Form 8-K dated October 4, 1999).

*99.2    Registration  Rights Agreement  between Tejas Energy LLC and Enterprise
         Products   Partners  L.P.  dated   September  17,  1999.  (The  Company
         incorporates  by reference the above document  included in the Schedule
         13D filed  September  27,  1999 by Tejas  Energy LLC ; filed as Exhibit
         99.6 on Form 8-K dated October 4, 1999).

27.1     Financial Data Schedule

*        Asterisk indicates exhibits incorporated by reference as indicated; all
         other exhibits are filed herewith


         (B) REPORTS ON FORM 8-K

         There were no reports on Form 8-K filed during the quarter.



                                       36
<PAGE>

                                   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 thereunto duly authorized.


                                            ENTERPRISE PRODUCTS PARTNERS L.P.
                                            (A Delaware Limited Partnership)

                                            By:   Enterprise Products GP, LLC
                                                  as General Partner


                                                  /s/ Michael J. Knesek
                                                  ------------------------------
Date:   August 11, 2000                           Vice President, Controller and
                                                  Principal Accounting Officer

<PAGE>
                                                                     EXHIBIT 3.6
                                                                     -----------

                                 AMENDMENT NO. 1
                                       TO
                           SECOND AMENDED AND RESTATED
                        AGREEMENT OF LIMITED PARTNERSHIP
                                       OF
                        ENTERPRISE PRODUCTS PARTNERS L.P.

     This Amendment No. 1, dated as of June 9, 2000 (this  "Amendment"),  to the
Second  Amended and Restated  Agreement  of Limited  Partnership  of  Enterprise
Products  Partners  L.P.  dated  as of  September  17,  1999  (the  "Partnership
Agreement"),  is  entered  into by and among  Enterprise  Products  GP,  LLC,  a
Delaware limited  liability  company,  as the General  Partner,  and the Limited
Partners  as  provided  herein.  Each  capitalized  term used but not  otherwise
defined herein shall have the meaning  assigned to such term in the  Partnership
Agreement.

                              W I T N E S S E T H:

     WHEREAS, the first sentence of Section 5.7(a) of the Partnership  Agreement
limits the unrestricted  number of additional  Parity Units that the Partnership
may issue during the Subordination  Period without prior approval of the holders
of a Unit Majority to 22,775,000 Parity Units;

     WHEREAS,  the General Partner deems it advisable to increase such number of
additional  Parity Units to 47,775,000 to give the Partnership  more flexibility
in connection with acquisitions and capital raising transactions;

     WHEREAS,  on March 28, 2000, the Board of Directors of the General  Partner
approved this  Amendment and directed that it be presented to the holders of the
Outstanding  Common Units excluding any Common Units held by the General Partner
and its Affiliates (the "Public Unitholders"), for their approval;

     WHEREAS,  in  accordance  with  the  provisions  of  Article  XIII  of  the
Partnership Agreement, the General Partner presented the Amendment to the Public
Unitholders for their approval at a special meeting held on June 9, 2000 and the
approval of the  Amendment was received at that meeting by the holders of a Unit
Majority, as required by Section 13.2 of the Partnership Agreement;

     NOW, THEREFORE,  in consideration of the premises, the parties hereto agree
as follows:

     1.   The first sentence of Section 5.7(a) of the  Partnership  Agreement is
          hereby amended to read in its entirety as follows:

          "During the Subordination Period, the Partnership shall not issue (and
          shall not issue any options,  rights,  warrants or appreciation rights
          relating to) an aggregate of more than  47,775,000  additional  Parity
          Units without the prior approval of the holders of a Unit Majority."
<PAGE>

     2.   As  amended  hereby,  the  Partnership  Agreement  is in all  respects
          ratified,  confirmed  and  approved and shall remain in full force and
          effect.

     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the date first written above.

                    GENERAL PARTNER:

                    ENTERPRISE PRODUCTS GP, LLC


                    By: /s/ O.S. Andras
                        -----------------------
                        O. S. Andras
                        President and Chief Executive Officer


                    LIMITED PARTNERS:

                    All Limited  Partners now and hereafter  admitted as Limited
                    Partners of the Partnership,  pursuant to Powers of Attorney
                    now and  hereafter  executed  in favor of, and  granted  and
                    delivered to the General Partner.

                    By:  Enterprise Products GP, LLC
                         General Partner, as attorney-in-fact for the Limited
                         Partners pursuant to the Powers of Attorney granted
                         pursuant to Section 2.6.



                    By:  /s/ O.S. Andras
                         ----------------------
                         O. S. Andras
                         President and Chief Executive Officer
[{"type": "10-Q", "sequence": "1", "filename": "0001.txt", "description": "SECOND QUARTER FORM 10-Q", "secsgml_size_bytes": 167362}]
{"company-data": {"conformed-name": "ENTERPRISE PRODUCTS PARTNERS L P", "cik": "0001061219", "assigned-sic": "1311", "irs-number": "760568219", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "001-14323", "film-number": "692359"}, "business-address": {"street1": "2727 NORTH LOOP WEST", "city": "HOUSTON", "state": "TX", "zip": "77008", "phone": "7138806500"}}
FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

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

                  For the quarterly period ended June 30, 2000

                                       OR

|_|  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: 1-14323

                        ENTERPRISE PRODUCTS PARTNERS L.P.
             (Exact name of Registrant as specified in its charter)

        DELAWARE                                                76-0568219
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                              Identification No.)

                              2727 NORTH LOOP WEST
                                 HOUSTON, TEXAS
                                   77008-1037
               (Address of principal executive offices) (Zip code)

                                 (713) 880-6500
               (Registrant's telephone number including area code)

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

The registrant had 46,552,915 Common Units outstanding as of August 11, 2000.
ENTERPRISE PRODUCTS PARTNERS L.P. AND SUBSIDIARIES

                                TABLE OF CONTENTS
Page
                                                                                           No.
PART I.  FINANCIAL INFORMATION

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

ENTERPRISE PRODUCTS PARTNERS L.P. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets,  June 30, 2000 and December 31, 1999                 1

         Statements of Consolidated Operations
                  for the Three and Six Months ended June 30, 2000 and 1999                2

         Statements of Consolidated Cash Flows
                  for the Six Months ended June 30, 2000 and 1999                          3

         Notes to Unaudited Consolidated Financial Statements                              4

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS                                                             17

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                       30

PART II.  OTHER INFORMATION

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS.                                       32

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                              33

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K                                                 33

         Signature Page
PART 1. FINANCIAL INFORMATION.
                   ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.

                        ENTERPRISE PRODUCTS PARTNERS L.P.
                           CONSOLIDATED BALANCE SHEETS
                          (Dollar amounts in thousands)
JUNE 30,
                                                                                    2000         DECEMBER 31,
                                   ASSETS                                       (UNAUDITED)          1999
                                                                              ----------------------------------
CURRENT ASSETS
Cash and cash equivalents                                                      $   87,135      $     5,230
     Accounts receivable - trade, net of allowance for doubtful accounts of
       $15,948 at June 30, 2000 and $15,871 at December 31, 1999                       192,569          262,348
     Accounts receivable - affiliates                                                   59,480           56,075
     Inventories                                                                       145,068           39,907
     Current maturities of participation in notes receivable from
       unconsolidated affiliates                                                             -            6,519
     Prepaid and other current assets                                                   11,849           14,459
                                                                              ----------------------------------
              Total current assets                                                     496,101          384,538
PROPERTY, PLANT AND EQUIPMENT, NET                                                     903,832          767,069
INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES                               287,918          280,606
INTANGIBLE ASSETS, NET OF ACCUMULATED AMORTIZATION OF $3,055 AT
     JUNE 30, 2000 AND $1,345 AT DECEMBER 31, 1999                                      63,975           61,619
OTHER ASSETS                                                                             3,898            1,120
                                                                              ----------------------------------
              TOTAL                                                                 $1,755,724      $ 1,494,952
                                                                              ==================================

                      LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
     Current maturities of long-term debt                                           $        -      $   129,000
     Accounts payable - trade                                                           44,959           69,294
     Accounts payable - affiliate                                                       24,552           64,780
     Accrued gas payables                                                              396,545          233,360
     Accrued expenses                                                                    4,812           16,510
     Other current liabilities                                                          24,080           18,176
                                                                              ----------------------------------
              Total current liabilities                                                494,948          531,120
LONG-TERM DEBT                                                                         404,000          166,000
OTHER LONG-TERM LIABILITIES                                                              6,060              296
MINORITY INTEREST                                                                        8,613            8,071
COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY
     Common Units  (45,552,915 Units outstanding at June 30, 2000
       and December 31, 1999)                                                          449,787          428,707
     Subordinated Units (21,409,870 Units outstanding at June 30, 2000
       and December 31, 1999)                                                          141,550          131,688
     Special Units (14,500,000 Units outstanding at June 30, 2000
       and December 31, 1999)                                                          247,025          225,855
     Treasury Units  acquired by Trust,  at cost (267,200  Units  outstanding at
       June 30, 2000 and December 31, 1999)                                             (4,727)          (4,727)
     General Partner                                                                     8,468            7,942
                                                                              ----------------------------------
              Total Partners' Equity                                                   842,103          789,465
                                                                              ----------------------------------
              TOTAL                                                                 $1,755,724      $ 1,494,952
                                                                              ==================================
See Notes to Unaudited Consolidated Financial Statements

                                       1
ENTERPRISE PRODUCTS PARTNERS L.P.
                      STATEMENTS OF CONSOLIDATED OPERATIONS
                                   (UNAUDITED)
                 (Amounts in thousands, except per Unit amounts)
THREE MONTHS                      SIX MONTHS
                                                                    ENDED JUNE 30,                   ENDED JUNE 30,
                                                            -------------------------------  -------------------------------
                                                                 2000           1999              2000           1999
                                                            -------------------------------  -------------------------------

REVENUES
Revenues from consolidated operations                           $  592,913      $  174,599      $ 1,339,194      $  321,913
Equity income in unconsolidated affiliates                          11,097           2,880           18,540           4,443
                                                            -------------------------------  -------------------------------
         Total                                                     604,010         177,479        1,357,734         326,356
                                                            -------------------------------  -------------------------------
COST AND EXPENSES
Operating costs and expenses                                       546,306         153,410        1,219,212         287,219
Selling, general and administrative                                  7,658           3,000           13,042           6,000
                                                            -------------------------------  -------------------------------
         Total                                                     553,964         156,410        1,232,254         293,219
                                                            -------------------------------  -------------------------------
OPERATING INCOME                                                    50,046          21,069          125,480          33,137
OTHER INCOME (EXPENSE)
Interest expense                                                    (8,070)         (2,129)         (15,844)         (4,392)
Interest income from unconsolidated affiliates                         126             292              270             689
Dividend income from unconsolidated affiliates                       2,761               -            3,995               -
Interest income - other                                              1,225             148            2,706             432
Other, net                                                             (62)            (30)            (425)             45
                                                            -------------------------------  -------------------------------
          Other income  (expense)                                   (4,020)         (1,719)          (9,298)         (3,226)
                                                            -------------------------------  -------------------------------
INCOME BEFORE MINORITY INTEREST                                     46,026          19,350          116,182          29,911
MINORITY INTEREST                                                     (466)           (196)          (1,175)           (302)
                                                            -------------------------------  -------------------------------
NET INCOME                                                      $   45,560      $   19,154      $   115,007      $   29,609
                                                            ===============================  ===============================

ALLOCATION OF NET INCOME TO:
Limited partners                                                $   45,104      $   18,962      $   113,857      $   29,313
                                                            ===============================  ===============================
General partner                                                 $      456      $      192      $     1,150      $      296
                                                            ===============================  ===============================

BASIC EARNINGS PER COMMON UNIT
Income before minority interest                                 $     0.68      $     0.29      $      1.72      $     0.44
                                                            ===============================  ===============================
Net income per common and subordinated unit                     $     0.68      $     0.28      $      1.71      $     0.44
                                                            ===============================  ===============================

DILUTED EARNINGS PER COMMON UNIT
Income before minority interest                                 $     0.56      $     0.29      $      1.42      $     0.44
                                                            ===============================  ===============================
Net income per common, subordinated and special unit            $     0.56      $     0.28      $      1.40      $     0.44
                                                            ===============================  ===============================
See Notes to Unaudited Consolidated Financial Statements

                                       2
ENTERPRISE PRODUCTS PARTNERS L.P
                                         STATEMENTS OF CONSOLIDATED CASH FLOWS
                                                 (Dollars in Thousands)
SIX MONTHS ENDED
                                                                                JUNE 30,
                                                                  -------------------------------------
                                                                         2000              1999
                                                                  -------------------------------------
OPERATING ACTIVITIES
Net income                                                                $  115,007         $  29,609
Adjustments to reconcile net income to cash flows provided by
      (used for) operating activities:
      Depreciation and amortization                                           18,347             9,790
      Equity in income of unconsolidated affiliates                          (18,540)           (4,443)
      Leases paid by EPCO                                                      5,270             5,278
      Minority interest                                                        1,175               302
      Loss on sale of assets                                                   2,303               124
      Net effect of changes in operating accounts                             54,062          (26,417)
                                                                  -------------------------------------
Operating activities cash flows                                              177,624            14,243
                                                                  -------------------------------------
INVESTING ACTIVITIES
Capital expenditures                                                        (154,246)           (2,513)
Proceeds from sale of assets                                                      52                 7
Collection of notes receivable from unconsolidated affiliates                  6,519             7,369
Unconsolidated affiliates:
      Investments in and advances to                                          (3,040)          (40,432)
      Distributions received                                                  14,268             3,991
                                                                  -------------------------------------
Investing activities cash flows                                             (136,447)          (31,578)
                                                                  -------------------------------------
FINANCING ACTIVITIES
Long-term debt borrowings                                                    464,000            85,000
Long-term debt repayments                                                   (355,000)          (30,000)
Cash dividends paid to partners                                              (67,639)          (52,718)
Cash dividends paid to minority interest by Operating Partnership               (690)             (538)
Units acquired by consolidated trust                                               -            (4,607)
Cash contributions from EPCO to minority interest                                 57                54
                                                                  -------------------------------------
Financing activities cash flows                                               40,728            (2,809)
                                                                  -------------------------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS                                       81,905           (20,144)
CASH AND CASH EQUIVALENTS, JANUARY 1                                           5,230            24,103
                                                                  -------------------------------------
CASH AND CASH EQUIVALENTS, JUNE 30                                        $   87,135         $   3,959
                                                                  =====================================
See Notes to Unaudited Consolidated Financial Statements

                                       3
ENTERPRISE PRODUCTS PARTNERS L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.   GENERAL

In the  opinion of  Enterprise  Products  Partners  L.P.  (the  "Company"),  the
accompanying unaudited consolidated financial statements include all adjustments
consisting of normal recurring accruals necessary for a fair presentation of the
Company's  consolidated  financial  position as of June 30,  2000,  consolidated
results of  operations  for the three and six month  periods ended June 30, 2000
and 1999 and  consolidated  cash flows for the six month  periods ended June 30,
2000 and 1999.  Although the Company believes the disclosures in these financial
statements  are  adequate  to make the  information  presented  not  misleading,
certain  information  and  footnote  disclosures  normally  included  in  annual
financial  statements  prepared in accordance with generally accepted accounting
principles have been condensed or omitted  pursuant to the rules and regulations
of the Securities and Exchange Commission.  These unaudited financial statements
should be read in  conjunction  with the financial  statements and notes thereto
included in the Company's  Annual Report on Form 10-K (File No. 1-14323) for the
year ended December 31, 1999.

The results of  operations  for the three and six month  periods  ended June 30,
2000 are not  necessarily  indicative of the results to be expected for the full
year.

Certain reclassifications have been made to prior years' financial statements to
conform to the presentation of the current period financial statements.

Dollar amounts presented in the tabulations within the notes to the consolidated
financial  statements  are stated in  thousands  of  dollars,  unless  otherwise
indicated.

2.   INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES

At June 30, 2000, the Company's significant  unconsolidated affiliates accounted
for by the equity method included the following:

Belvieu  Environmental  Fuels ("BEF") - a 33.33%  economic  interest in a Methyl
Tertiary Butyl Ether ("MTBE") production facility located in southeast Texas.

Baton Rouge  Fractionators LLC ("BRF") - an approximate 32.25% economic interest
in a natural gas liquid ("NGL")  fractionation  facility located in southeastern
Louisiana.

Baton Rouge Propylene Concentrator,  LLC ("BRPC") - a 30.0% economic interest in
a propylene  concentration  unit located in  southeastern  Louisiana that became
operational in July 2000.

EPIK Terminalling L.P. and EPIK Gas Liquids, LLC (collectively,  "EPIK") - a 50%
aggregate  economic  interest  in a  refrigerated  NGL marine  terminal  loading
facility located in southeast Texas.

Wilprise  Pipeline  Company,  LLC ("Wilprise") - a 33.33% economic interest in a
NGL pipeline system located in southeastern Louisiana.

Tri-States  NGL  Pipeline LLC  ("Tri-States")  - an  aggregate  33.33%  economic
interest  in a NGL  pipeline  system  located  in  Louisiana,  Mississippi,  and
Alabama.

Belle Rose NGL Pipeline LLC ("Belle Rose") - a 41.7% economic  interest in a NGL
pipeline system located in south Louisiana.

K/D/S Promix LLC ("Promix") - a 33.33% economic  interest in a NGL fractionation
facility  and  related  storage  facilities  located  in  south  Louisiana.

                                       4
The Company's  investments  in and advances to  unconsolidated  affiliates  also
includes  Venice Energy  Services  Company,  LLC  ("VESCO")  and Dixie  Pipeline
Company ("Dixie"). The VESCO investment consists of a 13.1% economic interest in
a LLC owning a natural gas processing plant, fractionation facilities,  storage,
and gas gathering  pipelines in Louisiana.  The Dixie investment  consists of an
11.5%  interest in a corporation  owning a 1,301-mile  propane  pipeline and the
associated  facilities  extending  from Mont Belvieu,  Texas to North  Carolina.
These investments are accounted for using the cost method.

During the third quarter of 1999, the Company acquired the remaining interest in
Mont  Belvieu  Associates,  51%,  ("MBA")  and Entell NGL  Services,  LLC,  50%,
("Entell").  Accordingly,  after the acquisition of the remaining interests, MBA
terminated  and Entell  became a wholly owned  subsidiary  of the Company and is
included as a consolidated entity from that point forward.

The  following  table  shows  investments  in  and  advances  to  unconsolidated
affiliates at:

                                                JUNE 30,        DECEMBER 31,
                                                  2000              1999
                                           -------------------------------------
Accounted for on equity basis:
    BEF                                           $   67,665         $   63,004
    Promix                                            50,991             50,496
    BRF                                               30,767             36,789
    Tri-States                                        27,808             28,887
    EPIK                                              16,869             15,258
    Belle Rose                                        11,926             12,064
    BRPC                                              19,707             11,825
    Wilprise                                           9,185              9,283
Accounted for on cost basis:
    VESCO                                             33,000             33,000
    Dixie                                             20,000             20,000
                                           -------------------------------------
Total                                             $  287,918         $  280,606
                                           =====================================

The following table shows equity in income (loss) of  unconsolidated  affiliates
for the three and six month periods ended June 30, 2000 and 1999:

                For Three Months Ended              For Six Months Ended
                       June 30,                           June 30,
             -----------------------------   -------------------------------
                    2000            1999             2000             1999
             -----------------------------   -------------------------------
BEF             $   8,307       $   1,936       $   10,812        $   2,237
MBA                     -             424                -            1,184
BRF                   208            (143)             737             (286)
BRPC                  (29)              -              (19)               -
EPIK                  178            (220)           1,970              177
Wilprise               74               -              162                -
Tri-States            843               -            1,521                -
Promix              1,546               -            3,208                -
Belle Rose            (30)              -              149                -
Other                   -             883                -            1,131
             -----------------------------  --------------------------------
Total           $  11,097       $   2,880       $   18,540        $   4,443
             =============================  ================================

                                       5
BEF

BEF is a partnership  that owns the MTBE production  facility located within the
Company's Mont Belvieu  complex.  The production of MTBE is driven by oxygenated
fuels  programs  enacted under the federal Clean Air Act  Amendments of 1990 and
other legislation. Any changes to these programs that enable localities to elect
not to participate in these programs,  lessen the requirements for oxygenates or
favor the use of non-isobutane based oxygenated fuels reduce the demand for MTBE
and could have an adverse effect on the Company's results of operations.

In recent years,  MTBE has been detected in water supplies.  The major source of
the ground  water  contamination  appears to be leaks from  underground  storage
tanks.  Although  these  detections  have been limited and the great majority of
these  detections  have been well below levels of public health  concern,  there
have been actions calling for the phase-out of MTBE in motor gasoline in various
federal and state governmental agencies.

In light of these  developments,  the Company is formulating a contingency  plan
for use of the BEF  facility  if MTBE were  banned or  significantly  curtailed.
Management  is exploring a possible  conversion  of the BEF  facility  from MTBE
production  to  alkylate  production.  At  present  the  forecast  cost  of this
conversion would be in the $20 million to $25 million range,  with the Company's
share being $6.7 million to $8.3 million.

3.  ACQUISITIONS

Effective  August 1, 1999, the Company  acquired Tejas Natural Gas Liquids,  LLC
("TNGL")  from a subsidiary  of Tejas  Energy,  LLC, now Coral  Energy,  LLC, an
affiliate  of Shell  Oil  Company  ("Shell")  for $166  million  in cash and the
issuance of 14.5 million  non-distribution  bearing,  convertible Special Units.
All references  hereafter to "Shell",  unless the context  indicates  otherwise,
shall refer collectively to Shell Oil Company,  its subsidiaries and affiliates.
TNGL engages in natural gas  processing and NGL  fractionation,  transportation,
storage and marketing in Louisiana  and  Mississippi.  TNGL's  assets  include a
20-year  natural  gas  processing   agreement  with  Shell  ("Shell   Processing
Agreement") and varying interests in eleven natural gas processing plants,  four
NGL  fractionation  facilities;  four NGL storage  facilities and  approximately
1,500 miles in pipelines.

In  addition  to  the   Special   Units,   Shell  may  be  granted  6.0  million
non-distribution  bearing,  convertible  Contingency Units provided that certain
performance criteria are met in calendar years 2000 and 2001 (see Note 5). Under
terms  of  the  agreement  with  Shell,  the  Company  will  issue  3.0  million
Contingency  Units in 2000 and an additional  3.0 million  Contingency  Units in
2001 provided the  performance  tests are  successfully  completed.  On June 28,
2000, Shell met the performance  criteria outlined for calendar year 2000 and in
accordance  with an  agreement  with Shell,  the Company  issued the 3.0 million
Contingency  Units  (deemed  "Special  Units" once they are issued) on August 1,
2000.

The value of these new Special  Units is currently  estimated  at $55.2  million
using present value techniques. In August 2000, the purchase price and the value
of the natural gas processing agreement will be increased by the estimated $55.2
million value of the Units. If the remainder of the Contingency Units are issued
in 2001 (or at such later date as agreed to by the parties),  the purchase price
and value of the natural gas processing agreement will be adjusted accordingly.

Effective July 1, 1999, the Company  acquired  Kinder Morgan  Operating LP "A"'s
25% indirect ownership interest and Enterprise  Products Company's ("EPCO") 0.5%
indirect  ownership  interest  in a  210,000  barrel  per day NGL  fractionation
facility located in Mont Belvieu,  Texas for  approximately  $42 million in cash
and the assumption of approximately $4 million in debt.

Both  acquisitions  were accounted for using the purchase  method of accounting,
and  accordingly,  the purchase  price of each has been  allocated to the assets
purchased and  liabilities  assumed based on their  estimated  fair value at the
effective date of each transaction.

                                       6
PRO FORMA EFFECT OF ACQUISITIONS

The following table presents  unaudited pro forma  information for the three and
six month periods ended June 30, 1999 as if the  acquisition  of TNGL from Shell
and the Mont Belvieu NGL fractionation  facility from Kinder Morgan and EPCO had
been made as of January 1, 1999:

                                                    Three                Six
                                                    Months              Months
                                                    Ended               Ended
                                                --------------------------------
                                                          June 30, 1999
                                                --------------------------------
Revenues                                           $  343,990        $  644,500
                                                ================================
Net income                                         $   26,831        $   40,112
                                                ================================
Allocation of net income to
      Limited partners                             $   26,562        $   39,711
                                                ================================
      General Partner                              $      268        $      401
                                                ================================
Units used in earning per Unit calculations
      Basic                                            66,725            66,725
                                                ================================
      Diluted                                          81,225            81,225
                                                ================================
Income per Unit before minority interest
      Basic                                        $     0.40        $     0.60
                                                ================================
      Diluted                                      $     0.33        $     0.49
                                                ================================
Net income per Unit
      Basic                                        $     0.40        $     0.60
                                                ================================
      Diluted                                      $     0.33        $     0.49
                                                ================================

Diluted  earnings per Unit do not include the pro rata effect of the 3.0 million
Contingency Units issued on August 1, 2000.

4.   LONG-TERM DEBT

GENERAL. Long-term debt at June 30, 2000 was comprised of $350 million in 5-year
public  Senior Notes (the "$350  Million  Senior  Notes")  issued by  Enterprise
Products Operating L.P. (the "Operating  Partnership") and a 10-year $54 million
loan agreement with the Mississippi Business Finance Corporation ("MBFC" and the
"$54  Million  MBFC  Loan").  The  issuance  of the $350  Million  Senior  Notes
represented a partial takedown of the $800 million universal shelf  registration
(the  "Registration  Statement") that was filed with the Securities and Exchange
Commission in December 1999. The proceeds from the $350 Million Senior Notes and
the $54 Million MBFC Loan were used to extinguish all outstanding  balances owed
under the $200  Million  Bank Credit  Facility  and the $350 Million Bank Credit
Facility.

                                       7
The following table summarizes long-term debt at:

                                                    JUNE 30,        DECEMBER 31,
                                                     2000              1999
                                              ----------------------------------
Borrowings under:
     $200 Million Bank Credit Facility                              $   129,000
     $350 Million Bank Credit Facility                                  166,000
     $350 Million Senior Notes                    $   350,000
     $54  Million MBFC Loan                            54,000
                                              ----------------------------------
              Total                                   404,000           295,000
Less current maturities of long-term debt                   -           129,000
                                              ----------------------------------
               Long-term debt                     $   404,000       $   166,000
                                              ==================================

At June 30,  2000,  the  Operating  Partnership  had a total of $40  million  of
standby letters of credit  available of which  approximately  $13.3 million were
outstanding under letter of credit agreements with the banks.

$200 MILLION  BANK CREDIT  FACILITY.  In July 1998,  the  Operating  Partnership
entered  into a $200 million bank credit  facility  that  included a $50 million
working  capital  facility and a $150 million  revolving term loan facility.  On
March 15, 2000, the Operating Partnership used $169 million of the proceeds from
the issuance of the $350 Million Senior Notes to retire this credit  facility in
accordance with its agreement with the banks.

$350 MILLION  BANK CREDIT  FACILITY.  In July 1999,  the  Operating  Partnership
entered  into a $350 Million Bank Credit  Facility  that  includes a $50 million
working capital  facility and a $300 million  revolving term loan facility.  The
$300 million revolving term loan facility includes a sublimit of $40 million for
letters of credit.  Borrowings  under the $350 Million Bank Credit Facility will
bear  interest at either the bank's prime rate or the  Eurodollar  rate plus the
applicable margin as defined in the facility.  The Operating  Partnership elects
the basis for the interest rate at the time of each borrowing.

This  facility  is  scheduled  to expire in July 2001 and all  amounts  borrowed
thereunder  shall be due and  payable  at that  time.  There  must be no  amount
outstanding  under the working capital facility for at least 15 consecutive days
during each fiscal year.  In March 2000,  the  Operating  Partnership  used $179
million of the proceeds  from the issuance of the $350 Million  Senior Notes and
$47 million from the $54 Million MBFC Loan to payoff the outstanding  balance on
this credit facility.  No amount was outstanding on this credit facility at June
30, 2000.

The  credit  agreement  relating  to this  facility  contains a  prohibition  on
distributions  on, or purchases or  redemptions of Units if any event of default
is  continuing.   In  addition,   the  bank  credit  facility  contains  various
affirmative  and negative  covenants  applicable to the ability of the Operating
Partnership to, among other things, (i) incur certain  additional  indebtedness,
(ii) grant certain  liens,  (iii) sell assets in excess of certain  limitations,
(iv) make investments, (v) engage in transactions with affiliates and (vi) enter
into a  merger,  consolidation,  or sale of  assets.  The bank  credit  facility
requires  that  the  Operating   Partnership  satisfy  the  following  financial
covenants at the end of each fiscal quarter: (i) maintain  Consolidated Tangible
Net Worth (as defined in the bank credit  facility) of at least $250.0  million,
(ii)  maintain a ratio of EBITDA (as  defined in the bank  credit  facility)  to
Consolidated  Interest  Expense (as defined in the bank credit facility) for the
previous  12-month  period of at least 3.5 to 1.0 and (iii)  maintain a ratio of
Total Indebtedness (as defined in the bank credit facility) to EBITDA of no more
than  3.0  to  1.0.  The  Operating  Partnership  was  in  compliance  with  the
restrictive covenants at June 30, 2000.

$350  MILLION  SENIOR  NOTES.  On March  13,  2000,  the  Operating  Partnership
completed  a public  offering  of $350  million  in  principal  amount  of 8.25%
fixed-rate  Senior  Notes due March 15, 2005 at a price to the public of 99.948%
per  Senior  Note.  The  Operating   Partnership   received  proceeds,   net  of
underwriting  discounts and commissions,  of approximately  $347.7 million.  The
proceeds were used to pay the entire $169 million outstanding  principal balance
on the $200  Million  Bank Credit  Facility and $179 million of the $226 million
outstanding principal balance on the $350 Million Bank Credit Facility.

                                       8
The $350 Million  Senior Notes are subject to a make-whole  redemption  right by
the  Operating  Partnership.  The  notes  are  an  unsecured  obligation  of the
Operating  Partnership  and rank equally with its existing and future  unsecured
and   unsubordinated   indebtedness  and  senior  to  any  future   subordinated
indebtedness.  The notes are guaranteed by the Company  through an unsecured and
unsubordinated  guarantee and were issued under an indenture  containing certain
restrictive  covenants.  These covenants restrict the ability of the Company and
the Operating  Partnership,  with certain  exceptions,  to incur debt secured by
liens and engage in sale and leaseback  transactions.  The Company and Operating
Partnership were in compliance with the restrictive covenants at June 30, 2000.

Settlement  was  completed on March 15,  2000.  The issuance of the $350 Million
Senior  Notes was a  takedown  under the  Company's  $800  million  Registration
Statement;  therefore, the amount of securities available under the Registration
Statement have been reduced to $450 million.

$54 MILLION MBFC LOAN. On March 27, 2000, the Operating  Partnership  executed a
$54 million loan agreement with the MBFC which was funded with proceeds from the
sale of Taxable Industrial Revenue Bonds ("Bonds") by the MBFC. The Bonds issued
by the MBFC are 10-year  bonds with a maturity  date of March 1, 2010 and bear a
fixed rate interest coupon of 8.70%. The Operating Partnership received proceeds
from the sale of the Bonds, net of underwriting  discounts and  commissions,  of
approximately  $53.6  million.  The proceeds  were used to pay the remaining $47
million  outstanding  principal balance on the $350 Million Bank Credit Facility
and for working capital and other general partnership  purposes. In general, the
proceeds of the Bonds were used to reimburse the Operating Partnership for costs
incurred in acquiring and constructing the Pascagoula,  Mississippi  natural gas
processing plant.

The Bonds were issued at par and are subject to a make-whole redemption right by
the Operating  Partnership.  The Bonds are guaranteed by the Company  through an
unsecured and  unsubordinated  guarantee.  The loan agreement  contains  certain
covenants  including   maintaining   appropriate  levels  of  insurance  on  the
Pascagoula natural gas processing  facility and restrictions  regarding mergers.
The Company was in compliance with the restrictive covenants at June 30, 2000.

5.  CAPITAL STRUCTURE AND EARNINGS PER UNIT

SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF THE COMPANY. The
Second Amended and Restated Agreement of Limited Partnership of the Company (the
"Partnership  Agreement") sets forth the calculation to be used to determine the
amount  and  priority  of  cash  distributions  that  the  Common   Unitholders,
Subordinated  Unitholders and the General Partner will receive.  The Partnership
Agreement also contains provisions for the allocation of net earnings and losses
to the Unitholders and the General Partner.  For purposes of maintaining partner
capital accounts,  the Partnership  Agreement specifies that items of income and
loss shall be allocated among the partners in accordance  with their  respective
percentage  interests.  Normal allocations according to percentage interests are
done only, however,  after giving effect to priority earnings  allocations in an
amount  equal to  incentive  cash  distributions  allocated  100% to the General
Partner. As an incentive, the General Partner's percentage interest in quarterly
distributions  is increased after certain  specified target levels are met. When
quarterly  distributions  exceed $0.506 per Unit, the General Partner receives a
percentage  of the excess  between the actual  distribution  rate and the target
level  ranging  from  approximately  15% to 50%  depending  on the target  level
achieved.

The Partnership Agreement generally authorizes the Company to issue an unlimited
number of additional  limited partner  interests and other equity  securities of
the Company for such  consideration and on such terms and conditions as shall be
established by the General Partner in its sole  discretion  without the approval
of the Unitholders.  During the Subordination  Period,  however,  the Company is
limited with regards to the number of equity  securities  that it may issue that
rank  senior to Common  Units  (except  for  Common  Units  upon  conversion  of
Subordinated  Units,  pursuant to employee benefit plans, upon conversion of the
general partner interest as a result of the withdrawal of the General Partner or
in connection with acquisitions or capital  improvements that are accretive on a
per Unit basis) or an equivalent  number of securities  ranking on a parity with
the  Common  Units,  without  the  approval  of the  holders  of at least a Unit
Majority.  A Unit Majority is defined as at least a majority of the  outstanding
Common Units (during the Subordination  Period),  excluding Common Units held by
the  General  Partner  and  its  affiliates,  and at  least  a  majority  of the
outstanding Common Units (after the Subordination Period).

                                       9
In April 2000,  the Company mailed a Proxy  Statement to its public  Unitholders
asking  them to  consider  and vote for a  proposal  to  amend  the  Partnership
Agreement to increase the number of  additional  Common Units that may be issued
during the  Subordination  Period  without the approval of a Unit  Majority from
22,775,000  Common Units to 47,775,000  Common Units. The primary purpose of the
requested  increase  was to improve  the  future  financial  flexibility  of the
Company since 20,500,000  Common Units of the 22,775,000  Common Units available
to the partnership during the Subordination Period were reserved for issuance in
connection  with the TNGL  acquisition.  At a special meeting of the Unitholders
and General Partner held on June 9, 2000, this proposal was approved by 90.7% of
the public  Unitholders.  The  amendment  increases  the number of Common  Units
available  (and  unreserved)  to the Company for  general  partnership  purposes
during the Subordination Period from 2,275,000 to 27,275,000.

SUBORDINATED UNITS. The Subordinated Units have no voting rights until converted
into Common Units at the end of the Subordination Period (as defined below). The
Subordination  Period for the Subordinated Units will generally extend until the
first day of any quarter  beginning after June 30, 2003 when the Conversion Test
has been satisfied. Generally, the Conversion Test will have been satisfied when
the  Company  has paid  from  Operating  Surplus  and  generated  from  Adjusted
Operating  Surplus the minimum  quarterly  distribution on all Units for each of
the three preceding  four-quarter  periods. Upon expiration of the Subordination
Period,  all  remaining  Subordinated  Units will convert into Common Units on a
one-for-one basis and will thereafter participate pro rata with the other Common
Units in distributions of Available Cash.

If the Conversion  Test has been met for any quarter ending on or after June 30,
2001,  25% of the  Subordinated  Units will  convert into Common  Units.  If the
Conversion  Test has been met for any quarter  ending on or after June 30, 2002,
an additional 25% of the Subordinated  Units will convert into Common Units. The
early conversion of the second 25% of Subordinated  Units may not occur until at
least one year following the early  conversion of the first 25% of  Subordinated
Units.

SPECIAL UNITS. The 14.5 million Special Units issued do not accrue distributions
and are not entitled to cash  distributions  until their  conversion into Common
Units, which occurs automatically with respect to 1.0 million Units on August 1,
2000,  5.0 million  Units on August 1, 2001 and 8.5  million  Units on August 1,
2002.

On June 28,  2000,  Shell met certain  year 2000  performance  criteria  for the
issuance of 3.0 million non-distribution bearing,  convertible Contingency Units
(hereafter referred to as Special Units once they are issued).  Per an agreement
with Shell,  the Company issued these Special Units on August 1, 2000. Shell has
the  opportunity  to earn an additional  3.0 million  non-distribution  bearing,
convertible Contingency Units based on certain performance criteria for calendar
year  2001.  Specifically,  Shell  will earn  another  3.0  million  convertible
Contingency  Units if at any point  during  calendar  year  2001 (or  extensions
thereto due to force majeure  events) gas  production by Shell from its offshore
Gulf of Mexico producing properties and leases is 900 million cubic feet per day
for  180  not-necessarily-consecutive  days  or  350  billion  cubic  feet  on a
cumulative  basis.  If the year  2001  performance  test is not met but  Shell's
offshore  Gulf of Mexico gas  production  reaches  725  billion  cubic feet on a
cumulative  basis in calendar years 2000 and 2001 (or extensions  thereto due to
force  majeure  events),  Shell  would  still  earn an  additional  3.0  million
non-distribution   bearing,   convertible  Contingency  Units.  If  all  of  the
Contingency Units are earned,  1.0 million  Contingency Units would convert into
Common Units on August 1, 2002 and 5.0 million  Contingency  Units would convert
into  Common  Units on August  1,  2003.  The  Contingency  Units do not  accrue
distributions and are not entitled to cash  distributions  until conversion into
Common Units.

Under the rules of the New York Stock Exchange,  conversion of the Special Units
into Common Units requires approval of the Company's  Unitholders.  EPC Partners
II,  Inc.  ("EPC  II"),  which owns in excess of 81% of the  outstanding  Common
Units,  has voted its  Units in favor of  conversion,  which  will  provide  the
necessary votes for approval.

UNITS  ACQUIRED  BY  TRUST.  During  the  first  quarter  of 1999,  the  Company
established a revocable  grantor trust (the "Trust") to fund future  liabilities
of a long-term incentive plan. At June 30, 2000, the Trust had purchased a total
of 267,200  Common Units (the "Trust Units") which are accounted for in a manner
similar to treasury stock under the cost method of  accounting.  The Trust Units
are considered  outstanding and will receive  distributions;  however,  they are
excluded from the calculation of net income per Unit.

                                       10
On May 12, 2000, the Company filed a Registration  Statement with the Securities
and Exchange  Commission for the transfer of up to (i) 1,000,000 Common Units to
fund a long-term  incentive  plan  established  by the General  Partner and (ii)
1,000,000  Common  Units  to fund a  long-term  incentive  plan  established  by
Enterprise Products Company.

EARNINGS PER UNIT.  The Company has no dilutive  securities  that would  require
adjustment to net income for the  computation of diluted  earnings per Unit. The
following is a reconciliation  of the number of units used in the computation of
basic and diluted earnings per Unit for all periods presented.
For Three Months Ended                For Six Months Ended
                                                             At June 30,                          At June 30,
                                                        2000             1999                2000             1999
                                                  ----------------------------------   ----------------------------------
Weighted average number of Common
     and Subordinated Units outstanding                 66,696           66,696              66,696           66,725
Weighted average number of Special
     Units to be converted to Common Units              14,500                               14,500
                                                  ----------------------------------   ----------------------------------
Units used to compute diluted
     earnings per Unit                                  81,196           66,696              81,196           66,725
                                                  ==================================   ==================================
The  Contingency  Units  (described  above) to be issued upon achieving  certain
performance  criteria have been excluded from diluted  earnings per Unit because
such tests have either not been met at June 30, 2000 or have not been issued per
agreement with Shell.

6.  DISTRIBUTIONS

The Company  intends,  to the extent  there is  sufficient  available  cash from
Operating  Surplus,  as defined by the Partnership  Agreement,  to distribute to
each holder of Common Units at least a minimum  quarterly  distribution of $0.45
per Common Unit.  The minimum  quarterly  distribution  is not guaranteed and is
subject to adjustment as set forth in the Partnership Agreement. With respect to
each quarter  during the  subordination  period,  which will  generally  not end
before June 30, 2003,  the Common  Unitholders  will generally have the right to
receive the minimum quarterly distribution, plus any arrearages thereon, and the
General  Partner will have the right to receive the related  distribution on its
interest before any  distributions of available cash from Operating  Surplus are
made to the Subordinated  Unitholders.  As an incentive,  the General  Partner's
interest in quarterly  distributions is increased after certain specified target
levels are met (see Note 5 discussion  regarding  incentive  distributions under
the section titled Second Amended and Restated Agreement of Limited  Partnership
of the Company.) The Company made its first  incentive cash  distribution to the
General Partner on August 10, 2000 in the amount of $0.2 million.

On January 17,  2000,  the Company  declared an increase in its  quarterly  cash
distribution  to $0.50 per Unit.  This  amount  was raised to $0.525 per Unit on
July 17, 2000.

                                       11
The following is a summary of cash distributions to partnership  interests since
the first quarter of 1999:
CASH DISTRIBUTIONS
                   --------------------------------------------------------------------------
                       PER COMMON     PER SUBORDINATED        RECORD            PAYMENT
                          UNIT              UNIT               DATE              DATE
                   --------------------------------------------------------------------------
1999
----
First Quarter        $ 0.450          $ 0.450         January 29, 1999    February 11, 1999
    Second Quarter       $ 0.450          $ 0.070         April 30, 1999      May 12, 1999
    Third Quarter        $ 0.450          $ 0.370         July 30, 1999       August 11, 1999
    Fourth Quarter       $ 0.450          $ 0.450         October 29, 1999    November 10, 1999
2000
----
    First Quarter        $ 0.500          $ 0.500         January 31, 2000    February 10, 2000
    Second Quarter       $ 0.500          $ 0.500         April 28, 2000      May 10, 2000
    Third Quarter        $ 0.525          $ 0.525         July 31, 2000       August 10, 2000
      (through August 11, 2000)
7.   SUPPLEMENTAL CASH FLOW DISCLOSURE

The net effect of changes in operating assets and liabilities is as follows:

                                                        SIX MONTHS ENDED
                                                            MARCH 31,
                                                --------------------------------
                                                     2000              1999
                                                --------------------------------
(Increase) decrease in:
      Accounts receivable                        $   66,374      $    (6,574)
      Inventories                                  (105,161)         (37,952)
      Prepaid and other current assets                2,610              970
      Other assets                                   (4,287)               -
Increase (decrease) in:
      Accounts payable                              (64,563)            (164)
      Accrued gas payable                           163,185           22,864
      Accrued expenses                              (11,698)          (1,949)
      Other current liabilities                       5,904           (3,612)
      Other liabilities                               1,698                -
                                                --------------------------------
Net effect of changes in operating accounts      $   54,062      $   (26,417)
                                                ================================

Capital  expenditures  for the first six  months  of 2000  were  $154.2  million
compared to $2.5 million for the same period in 1999.  Capital  expenditures  in
2000 included $99.6 million for the purchase of the Lou-Tex  Propylene  Pipeline
and related  assets,  $39.2  million in  construction  costs for the Lou-Tex NGL
Pipeline and $4.4 million in  construction  costs for the Neptune gas processing
facility.

The purchase of the Lou-Tex  Propylene  Pipeline and related  assets from Concha
Chemical Pipeline Company,  an affiliate of Shell, was completed on February 25,
2000.  The  effective  date of the  transaction  was March 1, 2000.  The Lou-Tex
Propylene  Pipeline is a 263-mile,  10" pipeline that transports  chemical grade
propylene from Sorrento, Louisiana to Mont Belvieu, Texas. Also acquired in this
transaction  was 27.5 miles of 6" ethane  pipeline  between  Sorrento and Norco,
Louisiana, and a 0.5 million barrel storage cavern at Sorrento, Louisiana.

8.   RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1999, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial  Accounting  Standard ("SFAS") No. 137,  "Accounting for Derivative
Instruments  and  Hedging  Activities-Deferral  of the  Effective  Date  of FASB

                                       12
Statement No.  133-an  amendment of FASB  Statement  No. 133" which  effectively
delays the application of SFAS No. 133  "Accounting  for Derivative  Instruments
and Hedging  Activities"  for one year, to fiscal years beginning after June 15,
2000.  In June 2000,  the FASB  issued  SFAS No.  138,  "Accounting  for Certain
Derivative  Instruments  and Certain  Hedging  Activities - an amendment of FASB
Statement No. 133" which amends and supercedes various sections of SFAS No. 133.
Management  is  currently  studying  SFAS No. 133 and its  amendments  for their
possible impact on the consolidated  financial  statements when they are adopted
in January 2001.

9.   FINANCIAL INSTRUMENTS

The  Company  enters  into swaps and other  contracts  to hedge the price  risks
associated with inventories,  commitments and certain anticipated  transactions.
The Company does not currently hold or issue  financial  instruments for trading
purposes.  The swaps and other contracts are with  established  energy companies
and major  financial  institutions.  The  Company  believes  its credit  risk is
minimal  on these  transactions,  as the  counterparties  are  required  to meet
stringent credit standards. There is continuous day-to-day involvement by senior
management in the hedging decisions,  operating under resolutions adopted by the
board of directors.

INTEREST RATE SWAPS. The Company's  interest rate exposure results from variable
rate borrowings from commercial banks and fixed rate borrowings  pursuant to the
$350 Million Senior Notes and the $54 Million MBFC Loan. The company manages its
exposure to changes in interest  rates in its  consolidated  debt  portfolio  by
utilizing  interest rate swaps. An interest rate swap, in general,  requires one
party to pay a fixed rate on the  notional  amount  while the other party pays a
floating rate based on the notional amount.

In March 2000,  after the  issuance  of the $350  Million  Senior  Notes and the
execution  of the $54 Million  MBFC Loan,  100% of the  Operating  Partnership's
consolidated  debt were fixed rate  obligations.  To maintain a balance  between
variable rate and fixed rate exposure,  the Operating  Partnership  entered into
interest rate swap  agreements  with a notional  amount of $154 million by which
the Operating  Partnership  receives  payments based on a fixed rate and pays an
amount based on a floating rate. The Operating  Partnership's  consolidated debt
portfolio  interest rate exposure was 62 percent fixed and 38 percent  floating,
after considering the effect of the interest rate swap agreements.  The notional
amount does not represent  exposure to credit loss.  The  Operating  Partnership
monitors its positions and the credit ratings of its counterparties.  Management
believes  the risk of  incurring a credit  related  loss is remote,  and that if
incurred, such losses would be immaterial.

The effect of these swaps  (none of which are  leveraged)  was to  decrease  the
Company's  interest  expense by $3.2 million for the three months ended June 30,
2000 and $3.5  million  for the six months  ended June 30,  2000.  Following  is
selected  information on the Company's  portfolio of interest rate swaps at June
30, 2000:

INTEREST RATE SWAP PORTFOLIO AT JUNE 30, 2000 (1) :
(Dollars in millions)
                                                 Early             Fixed /
  Notional                                    Termination         Floating
   Amount            Period Covered             Date (2)          Rate (3)
--------------------------------------------------------------------------------

      $ 50.0 March 2000 - March 2005        March 2001         8.25% / 6.9500%
      $ 50.0 March 2000 - March 2005        March 2001         8.25% / 6.9550%
      $ 54.0 March 2000 - March 2010        March 2003         8.70% / 7.2575%

Notes:

(1)  All swaps outstanding at June 30, 2000 were entered into for the purpose of
     managing the Operating  Partnership's  exposure to  fluctuations  in market
     interest rates.
(2)  In each case,  the  counterparty  has the option to terminate  the interest
     rate swap on the Early Termination Date.
(3)  In each case, the Operating  Partnership is the  floating-price  payor. The
     floating rate was the rate in effect as of June 30, 2000.

                                       13
10.  SEGMENT INFORMATION

The Company has five reportable  operating  segments:  Fractionation,  Pipeline,
Processing,   Octane   Enhancement   and  Other.   Fractionation   includes  NGL
fractionation,  polymer grade propylene  fractionation and butane  isomerization
(converting  normal  butane  into  high  purity  isobutane)  services.  Pipeline
consists of pipeline,  storage and import/export  terminal services.  Processing
includes  the  natural gas  processing  business  and its  related NGL  merchant
activities.   Octane  Enhancement  represents  the  Company's  33.33%  ownership
interest in a facility that produces motor gasoline  additives to enhance octane
(currently  producing MTBE).  The Other operating  segment consists of fee-based
marketing services and other plant support functions.

Operating  segments are components of a business about which separate  financial
information  is  available  that is evaluated  regularly by the chief  operating
decision  maker  in  deciding  how  to  allocate   resources  and  in  assessing
performance.  Generally, financial information is required to be reported on the
basis that it is used internally for evaluating segment performance and deciding
how to allocate resources to segments.

The  management of the Company  evaluates  segment  performance  on the basis of
gross  operating  margin.  Gross  operating  margin  reported  for each  segment
represents  earnings  before   depreciation  and  amortization,   lease  expense
obligations retained by EPCO, gains and losses on the sale of assets and general
and  administrative  expenses.  In addition,  segment gross operating  margin is
exclusive of interest expense,  interest income (from unconsolidated  affiliates
or others), dividend income from unconsolidated  affiliates,  minority interest,
extraordinary charges and other income and expense  transactions.  The Company's
equity  earnings from  unconsolidated  affiliates  are included in segment gross
operating margin.

Segment  assets  consists of  property,  plant and  equipment  and the amount of
investments  in  and  advances  to  unconsolidated   affiliates.  The  principal
reconciling item between consolidated property,  plant and equipment and segment
assets  is  construction-in-progress.   Segment  assets  are  defined  as  those
facilities and projects that generate segment gross margin amounts. Since assets
under construction do not generally contribute to segment earnings, these assets
are not included in the segment totals until they are deemed operational.

Segment gross  operating  margin is inclusive of  intersegment  revenues.  These
revenues have been eliminated from the consolidated totals.

                                       14
Information  by  operating  segment,   together  with   reconciliations  to  the
consolidated totals, is presented in the following table:
Operating Segments                         Adjustments
                                           ------------------------------------------------------------------
                                                                                      Octane                   and      Consolidated
                                           Fractionation Pipelines    Processing   Enhancement   Other     Eliminations    Totals
                                           -----------------------------------------------------------------------------------------

Revenues from external customers
Three months ended June 30, 2000            $103,741     $ 18,048      $478,244     $  8,307    $   751    $(5,081)     $604,010
   Three months ended June 30, 1999              64,453        4,360       120,638        1,936          -    (13,908)      177,479
   Six months ended June 30, 2000               202,566       27,862     1,125,101       10,812      1,266     (9,873)    1,357,734
   Six months ended June 30, 1999               118,149        8,101       223,511        2,237          -    (25,642)      326,356

Intersegment revenues
   Three months ended June 30, 2000              42,537       14,760       139,655            -         95   (197,047)            -
   Three months ended June 30, 1999              25,137        9,279            16            -        108    (34,540)            -
   Six months ended June 30, 2000                82,728       28,025       281,885            -        189   (392,827)            -
   Six months ended June 30, 1999                37,360       17,310            38            -        204    (54,912)            -

Total revenues
   Three months ended June 30, 2000             146,278       32,808       617,899        8,307        846   (202,128)      604,010
   Three months ended June 30, 1999              89,590       13,639       120,654        1,936        108    (48,448)      177,479
   Six months ended June 30, 2000               285,294       55,887     1,406,986       10,812      1,455   (402,700)    1,357,734
   Six months ended June 30, 1999               155,509       25,411       223,549        2,237        204    (80,554)      326,356

Gross operating margin by segment
   Three months ended June 30, 2000              29,591       14,192        18,486        8,307        872          -        71,448
   Three months ended June 30, 1999              26,491        4,350        (1,524)       1,936        277          -        31,530
   Six months ended June 30, 2000                63,922       28,827        58,040       10,812      1,426          -       163,027
   Six months ended June 30, 1999                42,813        8,851          (433        2,237        481          -        53,949

Segment assets
   At June 30, 2000                             360,410      357,107       125,642            -        111     60,562       903,832
   At December 31, 1999                         362,198      249,453       122,495            -         13     32,810       767,069

Investments in and advances
   to unconsolidated affiliates
   At June 30, 2000                             101,465       85,788        33,000       67,665          -          -       287,918
   At December 31, 1999                          99,110       85,492        33,000       63,004          -          -       280,606
15
A reconciliation of segment gross operating margin to consolidated income before
minority interest follows:
For Three Months Ended           For Six Months Ended
                                                                  June 30,                        June 30,
                                                        -----------------------------   -----------------------------
                                                               2000           1999             2000           1999
                                                        -----------------------------   -----------------------------
Total segment gross operating margin                         $ 71,448       $ 31,530         $163,027       $ 53,949
     Depreciation and amortization                             (8,754)        (4,668)         (16,878)        (9,356)
     Retained lease expense, net                               (2,687)        (2,666)          (5,324)        (5,332)
     Loss on sale of assets                                    (2,303)          (127)          (2,303)          (124)
     Selling, general and administrative                       (7,658)        (3,000)         (13,042)        (6,000)
                                                        -----------------------------   -----------------------------
Consolidated operating income                                  50,046         21,069          125,480         33,137
     Interest expense                                          (8,070)        (2,129)         (15,844)        (4,392)
     Interest income from unconsolidated affiliates               126            292              270            689
     Dividend income from unconsolidated affiliates             2,761              -            3,995              -
     Interest income - other                                    1,225            148            2,706            432
     Other, net                                                   (62)           (30)            (425)            45
                                                        -----------------------------   -----------------------------
Consolidated income before minority interest                 $ 46,026       $ 19,350         $116,182       $ 29,911
                                                        =============================   =============================
11.      SUBSEQUENT EVENTS

On July 27,  2000,  the Company  announced  that the Board of  Directors  of the
General  Partner had authorized the Company to purchase up to 1.0 million of the
outstanding  Common  Units over the next two years.  The Units may be  purchased
from time to time in the open market or in privately negotiated  transactions as
conditions  warrant.  The timing of any such purchases will be based on the Unit
price and other market factors.

                                       16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS.

              FOR THE INTERIM PERIODS ENDED JUNE 30, 2000 AND 1999

         The following  discussion  and analysis  should be read in  conjunction
with the  unaudited  consolidated  financial  statements  and notes  thereto  of
Enterprise  Products  Partners L.P.  ("Enterprise"  or the  "Company")  included
elsewhere herein.

THE COMPANY

         ENTERPRISE   PRODUCTS  PARTNERS  L.P.  (the  "Company")  is  a  leading
integrated North American provider of processing and transportation  services to
domestic  and foreign  producers  of natural  gas liquids  ("NGL" or "NGLs") and
other liquid  hydrocarbons and domestic and foreign consumers of NGLs and liquid
hydrocarbon  products.  The Company  manages a fully  integrated and diversified
portfolio  of  midstream  energy  assets and is engaged  in NGL  processing  and
transportation  through  direct and  indirect  ownership  and  operation  of NGL
fractionators.  It also  operates  and or  manages  NGL  processing  facilities,
storage facilities, pipelines, rail transportation facilities, a methyl tertiary
butyl  ether  ("MTBE")  facility,  a  propylene  production  complex  and  other
transportation  facilities in which it has a direct and indirect ownership. As a
result of acquisitions completed in 1999, the Company is also engaged in natural
gas processing.

         The Company is a publicly  traded  master  limited  partnership  (NYSE,
symbol "EPD") that conducts substantially all of its business through ENTERPRISE
PRODUCTS   OPERATING   L.P.  (the   "Operating   Partnership"),   the  Operating
Partnership's  subsidiaries,  and a  number  of  joint  ventures  with  industry
partners.  The Company was formed in April 1998 to acquire, own, and operate all
of the NGL processing and  distribution  assets of Enterprise  Products  Company
("EPCO").  The general partner of the Company,  Enterprise Products GP, LLC (the
"General  Partner"),  a majority-owned  subsidiary of EPCO, holds a 1.0% general
partner  interest in the Company and a 1.0101% general  partner  interest in the
Operating Partnership.

         The principal  executive office of the Company is located at 2727 North
Loop West, Houston, Texas,  77008-1038,  and the telephone number of that office
is 713-880-6500. References to, or descriptions of, assets and operations of the
Company in this  Quarterly  Report  include  the assets  and  operations  of the
Operating  Partnership and its  subsidiaries as well as the  predecessors of the
Company.

GENERAL

         The  Company  (i)  processes  natural  gas;  (ii)  fractionates  for  a
processing  fee mixed  NGLs  produced  as  by-products  of oil and  natural  gas
production into their component products:  ethane,  propane,  isobutane,  normal
butane and natural  gasoline;  (iii) converts normal butane to isobutane through
the process of  isomerization;  (iv) produces MTBE from  isobutane and methanol;
and (v)  transports  NGL  products to end users by  pipeline  and  railcar.  The
Company   also   separates   high   purity   propylene   from   refinery-sourced
propane/propylene   mix  and  transports  high  purity   propylene  to  plastics
manufacturers by pipeline.  Products processed by the Company generally are used
as  feedstocks  in  petrochemical  manufacturing,  in the  production  of  motor
gasoline and as fuel for residential and commercial heating.

         The Company's NGL operations are concentrated in the Texas,  Louisiana,
and  Mississippi  Gulf  Coast  area.  A large  portion is  concentrated  in Mont
Belvieu, Texas, which is the hub of the domestic NGL industry and is adjacent to
the largest  concentration of refineries and petrochemical  plants in the United
States. The facilities the Company operates at Mont Belvieu include:  (i) one of
the largest NGL  fractionation  facilities  in the United States with an average
production capacity of 210,000 barrels per day ("BPD");  (ii) the largest butane
isomerization  complex in the United States with an average isobutane production
capacity of 80,000 BPD; (iii) one of the largest MTBE  production  facilities in
the United  States with an average  production  capacity of 14,800 BPD; and (iv)
two propylene  fractionation  units with an average combined production capacity
of 31,000 BPD. The Company  owns all of the assets at its Mont Belvieu  facility
except for the NGL fractionation  facility,  in which it owns an effective 62.5%
economic interest; one of the propylene  fractionation units, in which it owns a
54.6% interest and controls the remaining  interest  through a long-term  lease;
the MTBE production facility, in which it owns a 33.33% interest; and one of its

                                       17
three isomerization units and one deisobutanizer  which are held under long-term
leases  with  purchase  options.  The  Company's  operations  in  Louisiana  and
Mississippi  include varying  interests in eleven natural gas processing  plants
with a combined  capacity of 11.0  billion  cubic feet per day  ("Bcfd") and net
capacity of 3.1 Bcfd and four NGL fractionation facilities with a combined gross
capacity  of 281,000  BPD and net  capacity of 131,500  BPD.  In  addition,  the
Company owns and  operates a NGL  fractionation  facility in Petal,  Mississippi
with an average production capacity of 7,000 BPD.

         The  Company  owns and  operates  approximately  28 million  barrels of
storage  capacity at Mont Belvieu and 7 million  barrels of storage  capacity in
Petal,  Mississippi that are an integral part of its processing operations.  The
Company  has  interests  in  four  NGL  storage   facilities  in  Louisiana  and
Mississippi  with  approximately  28.8 million barrels of gross capacity and 8.8
million  barrels of net  capacity.  The Company  also leases and operates one of
only two commercial NGL import/export terminals on the Gulf Coast.

         Lastly, the Company has operating and non-operating ownership interests
in over 2,400 miles of NGL  pipelines  along the Gulf Coast  (including an 11.5%
interest in the 1,301 mile Dixie Pipeline).

         Industry Environment

         Because  certain NGL  products  compete  with other  refined  petroleum
products in the fuel and petrochemical feedstock markets, NGL product prices are
set by or in competition with refined petroleum products.  Increased  production
and  importation  of NGLs and NGL products in the United States may decrease NGL
product  prices in  relation  to  refined  petroleum  alternatives  and  thereby
increase  consumption of NGL products as NGL products are  substituted for other
more  expensive  refined  petroleum  products.  Conversely,  a  decrease  in the
production  and  importation of NGLs and NGL products could increase NGL product
prices in  relation to refined  petroleum  product  prices and thereby  decrease
consumption  of NGLs.  However,  because  of the  relationship  of crude oil and
natural gas production to NGL production,  the Company believes any imbalance in
the prices of NGLs and NGL products and alternative products would be temporary.

         Due to higher  crude oil prices in the first six months of 2000  versus
the same period in 1999, the demand for NGLs in petrochemical  manufacturing was
strong. The increased use of NGLs in petrochemical manufacturing resulted in the
increasing of both production and pricing of NGLs. In the NGL industry, revenues
and cost of goods sold can fluctuate  significantly  up or down based on current
NGL prices. However, operating margins will generally remain constant except for
the effect of inventory price adjustments or increased operating expenses.

RESULTS OF OPERATION OF THE COMPANY

         The  Company has five  reportable  operating  segments:  Fractionation,
Pipeline,  Processing,  Octane Enhancement and Other. Fractionation includes NGL
fractionation,  polymer grade propylene  fractionation and butane  isomerization
(converting  normal  butane  into  high  purity  isobutane)  services.  Pipeline
consists of pipeline,  storage and import/export  terminal services.  Processing
includes  the  natural gas  processing  business  and its  related NGL  merchant
activities.   Octane  Enhancement  represents  the  Company's  33.33%  ownership
interest in a facility that produces motor gasoline  additives to enhance octane
(currently  producing MTBE).  The Other operating  segment consists of fee-based
marketing services and other plant support functions.

         The  management of the Company  evaluates  segment  performance  on the
basis of gross  operating  margin.  Gross  operating  margin  reported  for each
segment represents earnings before depreciation and amortization,  lease expense
obligations retained by EPCO, gains and losses on the sale of assets and general
and  administrative  expenses.  In addition,  segment gross operating  margin is
exclusive of interest expense,  interest income (from unconsolidated  affiliates
or others), dividend income from unconsolidated  affiliates,  minority interest,
extraordinary charges and other income and expense  transactions.  The Company's
equity  earnings from  unconsolidated  affiliates  are included in segment gross
operating margin.

                                       18
The  Company's  gross  operating  margin by segment  (in  thousands  of
dollars) along with a  reconciliation  to consolidated  operating income for the
three and six month periods ended June 30, 2000 and 1999 were as follows:
For Three Months Ended          For Six Months Ended
                                                              June 30,                       June 30,
                                                    -----------------------------  -----------------------------
                                                            2000           1999             2000          1999
                                                    -----------------------------  -----------------------------
Gross Operating Margin by segment:
Fractionation                                       $ 29,591       $ 26,491         $ 63,922      $ 42,813
     Pipeline                                              14,192          4,350           28,827         8,851
     Processing                                            18,486         (1,524)          58,040          (433)
     Octane enhancement                                     8,307          1,936           10,812         2,237
     Other                                                    872            277            1,426           481
                                                    -----------------------------  -----------------------------
Gross Operating margin total                               71,448         31,530          163,027        53,949
     Depreciation and amortization                          8,754          4,668           16,878         9,356
     Retained lease expense, net                            2,687          2,666            5,324         5,332
     Loss (gain) on sale of assets                          2,303            127            2,303           124
     Selling, general and administrative expenses           7,658          3,000           13,042         6,000
                                                    -----------------------------  -----------------------------
Consolidated operating income                            $ 50,046       $ 21,069         $125,480      $ 33,137
                                                    =============================  =============================
The Company's  significant  plant  production and other volumetric data
(in thousands of barrels per day on an equity basis) for the three and six month
periods ended June 30, 2000 and 1999 were as follows:
For Three Months Ended          For Six Months Ended
                                             June 30,                       June 30,
                                   -----------------------------  -----------------------------
                                       2000           1999             2000          1999
                                   -----------------------------  -----------------------------
Plant production data:
NGL Production                  71            N/A               71           N/A
         NGL Fractionation             215             61              215            58
        Isomerization                   81             74               74            71
        Propylene Fractionation         30             31               30            27
        MTBE                             5              5                4             4
        Major Pipelines                331            186              338           173
1999 Acquisitions

         The Company  completed two  significant  acquisitions  during the third
quarter of 1999.  Effective  August 1, 1999, the Company  acquired Tejas Natural
Gas Liquids,  LLC ("TNGL")  from Tejas Energy,  LLC, now Coral  Energy,  LLC, an
affiliate of Shell Oil Company ("Shell", including subsidiaries and affiliates),
in exchange  for 14.5  million  non-distribution  bearing,  convertible  special
partnership  Units of the Company  and $166  million in cash.  The Company  also
agreed to issue up to 6.0 million  additional  non-distribution  bearing special
partnership  Units to Shell in the future if the volumes of natural gas that the
Company processes for Shell reach agreed upon levels in 2000 and 2001. The first
3.0 million of these additional special  partnership Units were issued on August
1, 2000.

         The businesses  acquired from Shell include  natural gas processing and
NGL  fractionation,  transportation and storage in Louisiana and Mississippi and
its NGL supply  and  merchant  business.  The assets  acquired  include  varying
interests  in eleven  natural  gas  processing  plants,  four NGL  fractionation
facilities,  four NGL storage  facilities,  operator and non-operator  ownership
interests in approximately  1,500 miles of NGL pipelines,  and a 20-year natural
gas processing  agreement with Shell. The Company accounted for this acquisition
using the purchase method.

                                       19
Effective  July 1, 1999,  a  subsidiary  of the  Operating  Partnership
acquired  an  additional  25%  interest in the Mont  Belvieu  NGL  fractionation
facility  from Kinder Morgan  Operating LP "A" ("Kinder  Morgan") for a purchase
price of approximately $41.2 million in cash and the assumption of $4 million in
debt. An additional  0.5% interest in the same facility was purchased  from EPCO
for a cash purchase price of $0.9 million.  This acquisition (referred to as the
"MBA  acquisition")  increased the Company's  effective economic interest in the
Mont Belvieu NGL fractionation facility from 37.0% to 62.5%. As a result of this
acquisition,  the  results of  operations  after July 1, 1999 were  consolidated
rather than included in equity in earnings of unconsolidated affiliates.

         The results of  operations  for the three and six month  periods  ended
June 30,  1999 do not include  the impact of the assets  acquired  from TNGL and
MBA.  See the section  below  labeled  "Pro Forma  impact of  Acquisitions"  for
selected financial data reflecting these transactions as if they had occurred on
January 1, 1999.

THREE MONTHS ENDED JUNE 30, 2000 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1999

         Revenues,  Costs and  Expenses  and  Operating  Income.  The  Company's
revenues  increased  by 240.3%  to $604.0  million  in 2000  compared  to $177.5
million in 1999. The Company's costs and expenses  increased by 256.1% to $546.3
million in 2000 versus $153.4 million in 1999.  Operating income before selling,
general and administrative  expenses ("SG&A") increased to $57.7 million in 2000
from $24.1  million in 1999.  The  principal  factors  behind the $33.6  million
increase in operating income before SG&A were the additional earnings associated
with the assets acquired in the TNGL acquisition and the overall  improvement in
NGL product prices in 2000 over 1999.

         Fractionation.   The   Company's   gross   operating   margin  for  the
Fractionation  segment  increased to $29.6 million in 2000 from $26.5 million in
1999 due to higher overall  volumes and NGL pricing plus the addition of margins
from the assets acquired from TNGL. NGL  Fractionation  gross  operating  margin
increased  to $12.6  million  in 2000 from $1.2  million in 1999  primarily  the
result of substantially higher volumes.  Net NGL fractionation  volumes were 215
thousand  barrels  per day  ("MBPD") in 2000  compared  to 61 MBPD in 1999.  The
increase is attributable to the four NGL  fractionators  acquired in August 1999
as a  result  of  the  TNGL  acquisition  and  the  completion  of the  BRF  NGL
fractionation  facility  in July  1999.  Of the $11.4  million  increase  in NGL
fractionation gross margin,  $10.8 million is derived from the NGL fractionators
acquired in the TNGL acquisition (including equity earnings of $1.5 million from
Promix) with $0.4 million arising from higher equity earnings from BRF. The Mont
Belvieu NGL fractionation  facility  contributed the remaining $0.2 million rise
in  earnings.  Margins from the Mont Belvieu  facility  increased  due to higher
volumes and the additional  ownership interest acquired in July 1999 as a result
of the MBA acquisition.

         Gross operating  margin from the  isomerization  business  decreased to
$11.4 million in 2000 from $17.2 million in 1999. The decrease in  isomerization
margins is primarily due to expenses  associated  with the restart of one of the
Mont  Belvieu  isomerization  units in May 2000 and  higher  operating  expenses
stemming  from  an  increase  in  fuel  costs.  Isomerization  production  rates
increased  to 81 MBPD in 2000  compared  to 74 MBPD in 1999 as a  result  of the
restart of the  isomerization  unit. The Company's gross operating margin on its
propylene fractionation facilities decreased to $5.4 million in 2000 versus $7.0
million in 1999.  The decrease  stems from the impact of propylene  storage well
charges and higher fuel costs. Propylene production decreased to 30 MBPD in 2000
from 31 MBPD in 1999.

         Pipeline. The Company's gross operating margin for the Pipeline segment
was $14.2 million in the second  quarter of 2000 compared to $4.4 million during
the same period in 1999. The Louisiana Pipeline Distribution System gross margin
for 2000 was $6.7 million  versus $1.4 million in 1999  primarily  due to a 135%
increase in throughput  volumes  stemming from pipeline  assets  acquired in the
TNGL  acquisition.  The gross  operating  margin  of the  Houston  Ship  Channel
Distribution  system increased to $2.9 million in 2000 from $2.1 million in 1999
on the  strength  of  increased  export  volumes at the EPIK  loading  facility.
Earnings from the newly acquired Lou-Tex Propylene Pipeline were $2.3 million.

         Equity earnings from unconsolidated  affiliates in the Pipeline segment
increased  from a loss of $0.2 million in 1999 to a $1.1 million profit in 2000.
A portion of the  improvement in equity  earnings is  attributable to EPIK which
posted an increase of $0.4  million  from a $0.2  million loss in 1999 to a $0.2
million  profit in 2000.  EPIK's  higher  earnings  are  attributable  to a 344%
increase in export volumes due to the new chiller unit that began  operations in

                                       20
the fourth quarter of 1999.  The remaining $0.9 million  increase stems from the
Wilprise, Tri-States and Belle Rose pipeline systems in which an equity interest
was acquired by the Company as a result of the TNGL acquisition.

         Processing.  The Company's  gross  operating  margin for Processing was
$18.5 million in 2000  compared to a loss of $1.5 million in 1999.  The increase
is  attributable  to  the  gas  processing   operations  acquired  in  the  TNGL
acquisition.  The gas  processing  operations  benefited  from a  favorable  NGL
pricing environment and 71 MBPD of equity NGL production during the quarter.

         Octane  Enhancement.  The Company's gross  operating  margin for Octane
Enhancement  increased to $8.3  million in 2000 from $1.9 million in 1999.  This
segment consists entirely of the Company's equity earnings and 33.33% investment
in BEF, a joint venture  facility that  currently  produces  MTBE.  The earnings
improvement stems from higher MTBE prices and lower debt service costs. BEF made
its final note payment on May 31, 2000 and now owns a debt-free  facility.  MTBE
production,  on an equity  basis,  was steady at 5 MBPD during both the 2000 and
1999 periods.

         Other.  The Company's gross operating  margin for the Other segment was
$0.9 million in 2000  compared to $0.3 million in 1999.  Beginning in the fourth
quarter of 1999, this segment includes fee-based marketing services. The Company
acquired  its  fee-based  marketing  services  business  as  part  of  the  TNGL
acquisition.  For the second quarter of 2000, this business earned $0.7 million.
Apart  from  this  portion  of  the  segment's  operations,   the  gross  margin
contribution  of the other  aspects of this segment were  insignificant  in both
2000 and 1999.

         Selling,  general and administrative  expenses. SG&A expenses increased
to $7.7 million in the second  quarter of 2000 from $3.0 million during the same
period in 1999.  The higher  costs stem from an increase  in the  administrative
services fee charged by EPCO to $1.6 million per month beginning in January 2000
versus the $1.0  million per month  charged in the second  quarter of 1999.  The
remainder  of  the  increase  is   attributable   to   additional   general  and
administrative expenses related to the TNGL acquisition.

         Interest  expense.  The Company's  interest  expense  increased to $8.1
million in the second quarter of 2000 from $2.1 million in the second quarter of
1999. The increase is primarily attributable to a rise in average debt levels to
$404  million  in the  second  quarter  of 2000 from $132  million in the second
quarter  of  1999.  Debt  levels  have  increased  over  the  last  year  due to
acquisitions and capital expenditures.  Specifically,  $215 million was borrowed
to  complete  the TNGL and MBA  acquisitions  in the third  quarter  of 1999 and
approximately  $60 million was borrowed to fund a portion of the purchase of the
Lou-Tex Propylene Pipeline in the first quarter of 2000.

         Dividend   income  from   unconsolidated   affiliates.   The  Company's
investment  in Dixie and VESCO are recorded  using the cost method as prescribed
by  generally  accepted   accounting   principles.   In  accordance  with  these
guidelines,  the Company records as dividend income the cash  distributions from
these  investments as opposed to recording equity  earnings.  Both the Dixie and
VESCO investments were acquired as part of the TNGL acquisition.  For the second
quarter of 2000, the Company recorded dividend income totaling $2.8 from VESCO.

         Loss on sale of assets.  During the second quarter of 2000, the Company
recognized a one-time $2.3 million  non-cash  charge on the sale of its Longview
Terminal  to  Huntsman  Corporation.  The  Longview  Terminal  was  part  of the
Pipelines  segment and was used to unload polymer grade  propylene from NGL tank
trucks.

SIX MONTHS ENDED JUNE 30, 2000 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1999

         Revenues,  Costs and  Expenses  and  Operating  Income.  The  Company's
revenues  increased  by 316.0% to  $1,357.7  million in 2000  compared to $326.4
million  in 1999.  The  Company's  costs  and  expenses  increased  by 324.5% to
$1,219.2 million in 2000 versus $287.2 million in 1999.  Operating income before
SG&A  increased  to $138.5  million  in 2000 from  $39.2  million  in 1999.  The
principal  factors behind the $99.4 million  increase in operating income before
SG&A were the additional  earnings  associated  with the assets  acquired in the
TNGL acquisition and the overall  improvement in NGL product prices in 2000 over
1999.

         Fractionation.   The   Company's   gross   operating   margin  for  the
Fractionation  segment  increased to $63.9 million in 2000 from $42.8 million in
1999 due to higher overall  volumes and NGL pricing plus the addition of margins

                                       21
from the assets acquired from TNGL. NGL  Fractionation  gross  operating  margin
increased  to $29.0  million  in 2000 from $2.9  million in 1999  primarily  the
result of substantially higher volumes.  Net NGL fractionation  volumes were 215
MBPD in 2000 compared to 58 MBPD in 1999.  The increase is  attributable  to the
four  NGL  fractionators  acquired  in  August  1999  as a  result  of the  TNGL
acquisition  and the  completion of the BRF NGL  fractionation  facility in July
1999. Of the $26.1 million  increase in NGL  fractionation  gross margin,  $24.6
million is derived from the NGL  fractionators  acquired in the TNGL acquisition
(including  equity  earnings of $3.2  million  from  Promix)  with $1.0  million
arising from higher equity earnings from BRF. The Mont Belvieu NGL fractionation
facility  contributed the remaining $0.5 million rise in earnings.  Margins from
the Mont Belvieu  facility  increased due to higher  volumes and the  additional
ownership interest acquired in July 1999 as a result of the MBA acquisition.

         Gross operating  margin from the  isomerization  business  decreased to
$21.0 million in 2000 from $24.7 million in 1999. The decrease in  isomerization
margins is primarily due to expenses  associated  with the restart of one of the
Mont  Belvieu  isomerization  units in May 2000 and  higher  operating  expenses
stemming  from  an  increase  in  fuel  costs.  Isomerization  production  rates
increased to 74 MBPD in 2000 compared to 71 MBPD in 1999.  The  Company's  gross
operating  margin on its propylene  production  facilities  was $12.7 million in
2000 and 1999.  The margin for 2000 includes  $0.7 million in propylene  storage
well charges along with $0.6 million in higher fuel expenses associated with the
increased cost of natural gas. Propylene production volumes increased to 30 MBPD
in 2000 versus 27 MBPD in 1999.

         Pipeline. The Company's gross operating margin for the Pipeline segment
was $28.9  million  in 2000  compared  to $8.9  million in 1999.  The  Louisiana
Pipeline Distribution System gross margin for 2000 was $14.5 million versus $3.0
million in 1999 primarily due to a 164% increase in throughput  volumes stemming
from  pipeline  assets  acquired in the TNGL  acquisition.  The gross  operating
margin of the Houston Ship Channel Distribution system increased to $5.9 million
in 2000 from $4.1 million in 1999 on the strength of increased export volumes at
the EPIK loading facility.

         On February 25, 2000,  the purchase of the Lou-Tex  Propylene  Pipeline
and related assets from Concha Chemical Pipeline Company, an affiliate of Shell,
was completed at a cost of approximately $100 million. The effective date of the
transaction was March 1, 2000. The Lou-Tex Propylene Pipeline is a 263-mile, 10"
pipeline that transports  chemical grade  propylene from Sorrento,  Louisiana to
Mont Belvieu, Texas. Also acquired in this transaction was a 27.5-mile 6" ethane
pipeline between Sorrento and Norco,  Louisiana and a 0.5 million barrel storage
cavern at Sorrento,  Louisiana.  For the four months  ended June 30,  2000,  the
Lou-Tex Propylene Pipeline gross operating margin was $3.1 million on volumes of
21 MBPD. Due to customer demand,  a project is currently  underway and should be
completed in the third quarter of 2000 to increase the capacity of this pipeline
to 50,000 BPD .

         Equity earnings from unconsolidated  affiliates in the Pipeline segment
increased  from $0.2  million  in 1999 to $3.8  million  in 2000.  The  greatest
improvement  in  equity  earnings  was from  EPIK  which  posted a $1.8  million
increase  to $2.0  million  in 2000 from $0.2  million  in 1999.  EPIK's  higher
earnings are  attributable  to a 211% increase in export  volumes due to the new
chiller unit that began  operations in the fourth  quarter of 1999.  The Company
recorded a combined $1.8 million in equity income from the Wilprise, Tri-States,
and Belle Rose Systems. Individually, equity earnings from Wilprise, Tri-States,
and Belle Rose were $0.2 million, $1.5 million and $0.1 million, respectively.

         Processing.  The Company's  gross  operating  margin for Processing was
$58.0 million in 2000  compared to a loss of $0.4 million in 1999.  The increase
is  attributable  to  the  gas  processing   operations  acquired  in  the  TNGL
acquisition.  The gas  processing  operations  benefited  from a  favorable  NGL
pricing  environment  and 71 MBPD of equity NGL production  during the first six
months of 2000.

         Octane  Enhancement.  The Company's gross  operating  margin for Octane
Enhancement  increased to $10.8 million in 2000 from $2.2 million in 1999.  This
segment consists entirely of the Company's equity earnings and 33.33% investment
in BEF, a joint venture facility that currently  produces MTBE. The 1999 results
included the impact of a $4.5  million  non-cash  write-off  of the  unamortized
balance of deferred  start-up costs. The Company's share of this non-cash charge
was $1.5 million. The 2000 results reflect the impact of higher than normal MTBE
market prices during the second quarter and lower debt service  costs.  BEF made

                                       22
its final  note  payment in May 2000 and now owns the MTBE  facility  debt-free.
MTBE production, on an equity basis, was 4 MBPD in 2000 and 1999.

         Other.  The Company's gross operating  margin for the Other segment was
$1.4 million in 2000  compared to $0.5 million in 1999.  Beginning in the fourth
quarter of 1999, this segment includes fee-based marketing services. The Company
acquired  its  fee-based  marketing  services  business  as  part  of  the  TNGL
acquisition.  For the  first six  months  of 2000,  this  business  earned  $1.2
million.  Apart from this portion of the segment's operations,  the gross margin
contribution  of the other  aspects of this segment were  insignificant  in both
2000 and 1999.

         Selling,  general and administrative  expenses. SG&A expenses increased
to $13.0  million in the first six months of 2000 from $6.0  million  during the
same period in 1999.  The primary reason for the higher costs was an increase in
the  administrative  services  fee  charged  by EPCO to $1.6  million  per month
beginning in January 2000 versus the $1.0 million per month charged in the first
quarter of 1999.  The  remainder of the increase is  attributable  to additional
general and administrative costs related to the TNGL acquisition.

         Interest  expense.  The Company's  interest expense  increased to $15.8
million in the first six months of 2000 from $4.4 million during the same period
for 1999.  The  increase is primarily  attributable  to a rise in debt levels to
$374 million in 2000 from $128 million in 1999.  Debt levels have increased over
the last year due to acquisitions and capital expenditures.  Specifically,  $215
million  was  borrowed to complete  the TNGL and MBA  acquisitions  in the third
quarter of 1999 and $60 million was  borrowed to fund a portion of the  purchase
of the Lou-Tex Propylene Pipeline in the first quarter of 2000.

         Dividend   income  from   unconsolidated   affiliates.   The  Company's
investment  in Dixie and VESCO are recorded  using the cost method as prescribed
by  generally  accepted   accounting   principles.   In  accordance  with  these
guidelines,  the Company records as dividend income the cash  distributions from
these  investments as opposed to recording equity  earnings.  Both the Dixie and
VESCO investments were acquired as part of the TNGL  acquisition.  For the first
six months of 2000, the Company  recorded  dividend income totaling $3.4 million
from VESCO and $0.6 million from Dixie.

         Loss on sale of assets.  During the second quarter of 2000, the Company
recognized a one-time $2.3 million  non-cash  charge on the sale of its Longview
Terminal  to  Huntsman  Corporation.  The  Longview  Terminal  was  part  of the
Pipelines  segment and was used to unload polymer grade  propylene from NGL tank
trucks.

PRO FORMA IMPACT OF ACQUISITIONS

         As noted above under 1999  Acquisitions,  the Company acquired TNGL and
MBA in the third quarter of 1999. As a result of these  acquisitions,  revenues,
operating costs and expenses,  interest expense,  and other amounts shown on the
Statements of  Consolidated  Operations  for the three and six months ended June
30, 2000 have increased  significantly  over the amounts shown for the three and
six months ended June 30, 1999. The following table presents  certain  unaudited
pro forma  information  as if the  acquisition  of TNGL from  Shell and the Mont
Belvieu  fractionator  facility  from Kinder Morgan and EPCO had been made as of
January 1, 1999:

                                       23
Three              Six
                                                       Months            Months
                                                       Ended             Ended
                                                --------------------------------
                                                            June 30, 1999
                                                --------------------------------
Revenues                                           $  343,990        $  644,500
                                                ================================
Net income                                         $   26,831        $   40,112
                                                ================================
Allocation of net income to
      Limited partners                             $   26,562        $   39,710
                                                ================================
      General Partner                              $      268        $      401
                                                ================================
Units used in earning per Unit calculations
      Basic                                            66,725            66,725
                                                ================================
      Diluted                                          81,225            81,225
                                                ================================

Income per Unit before minority interest
      Basic                                        $     0.40        $     0.60
                                                ================================
      Diluted                                      $     0.33        $     0.49
                                                ================================

Net income per Unit
      Basic                                        $     0.40        $     0.60
                                                ================================
      Diluted                                      $     0.33        $     0.49
                                                ================================

LIQUIDITY AND CAPITAL RESOURCES

         General. The Company's primary cash requirements, in addition to normal
operating  expenses,   are  debt  service,   maintenance  capital  expenditures,
expansion capital expenditures, and quarterly distributions to the partners. The
Company  expects to fund  future  cash  distributions  and  maintenance  capital
expenditures with cash flows from operating activities. Capital expenditures for
future  expansion  activities and asset  acquisitions  are expected to be funded
with cash flows from operating  activities  and  borrowings  under the revolving
bank credit facility or issuance of additional Common Units.

         Cash flows from operating  activities  were a $177.6 million inflow for
the  first  six  months  of 2000  compared  to a $14.2  million  inflow  for the
comparable  period of 1999.  Cash  flows  from  operating  activities  primarily
reflect the effects of net income, depreciation and amortization,  extraordinary
items,  equity  income of  unconsolidated  affiliates  and  changes  in  working
capital.  Net income  increased  significantly  as a result of improved  overall
margins and the TNGL  acquisition.  Depreciation  and  amortization  increased a
combined  $8.6  million  in the first six  months of 2000 over  comparable  1999
levels  as a result  of  additional  capital  expenditures  and the TNGL and MBA
acquisitions  in the third quarter of 1999.  Amortization  expense  increased by
$2.8 million due to  amortization  of the intangible  asset  associated with the
Shell Processing  Agreement ($1.5 million),  the write-off of prepaid loan costs
associated  with the payoff of the $200  Million  Bank Credit  Facility in March
2000 ($0.3  million) and the  continued  amortization  of excess costs and other
prepaid loan and bond issue costs ($1.0  million).  The net effect of changes in
operating  accounts  from year to year is generally  the result of timing of NGL
sales and purchases near the end of the period.

         Cash outflows used in investing  activities  were $136.4 million in the
first six months of 2000 and $31.6  million for the  comparable  period of 1999.
Cash outflows included capital  expenditures of $154.2 million for the first six
months  of 2000  versus  $2.5  million  for the same  period  in  1999.  Capital
expenditures  for the first six months of 2000  included  $99.6  million for the
purchase of the Lou-Tex Propylene Pipeline and related assets,  $39.2 million in

                                       24
construction   costs  for  the  Lou-Tex  NGL  Pipeline,   and  $4.4  million  in
construction costs for the Neptune gas processing facility.  Included in capital
expenditures  for  the  first  six  months  of  2000  are  maintenance   capital
expenditures  of $0.5  million  versus $0.7 million for the same period in 1999.
Investing  cash  outflows  in 2000  include  $3.0  million  in  advances  to and
investments  in  unconsolidated  affiliates  versus $40.4 million for 1999.  The
$37.4 million  decrease stems  primarily from the completion of the BRF facility
and the Tri-States and Wilprise  pipeline  systems in 1999. The first six months
of 1999 included $27.9 million in investments in and advances to these projects.

         On March 8, 2000,  the Company's  offer of February 23, 2000 to buy the
remaining 88.5% ownership interests in Dixie Pipeline Company ("Dixie") from the
other seven owners expired, with no interest being purchased.  In July 2000, the
Company  entered into a letter of intent with a stockholder of Dixie to purchase
all or a portion of that stockholder's interest in Dixie (currently 8.38%) for a
purchase  price of up to  $19.4  million.  The  purchase  of this  stockholder's
interest is subject to a right of first  refusal held by the other  stockholders
of Dixie.

         During the first six months of 2000, the Company  received $6.5 million
in payments from its  participation  in the BEF note that was  purchased  during
1998 with the proceeds from the  Company's  IPO. BEF made its final note payment
in May 2000. With BEF's final payment,  the Company's receivable relating to its
participation in the BEF note was extinguished.

         Cash flows from financing activities were a $40.7 million inflow in the
first six months of 2000  versus a $2.8  million  outflow for the same period in
1999. Cash flows from financing  activities are primarily affected by repayments
of  long-term  debt,   borrowings   under  the  long-term  debt  agreements  and
distributions  to the  partners.  The first six months of 2000 include  proceeds
from the $350 Million Senior Notes and the $54 Million MBFC Loan.  Also included
are the March 2000 payments made to retire the outstanding  balances on the $200
Million and $350 Million Bank Credit  Facilities  using the proceeds of the $350
Million Senior Notes and $54 Million MBFC Loan. For a complete discussion of the
$350  Million  Senior Notes and $54 Million  MBFC Loan,  see the sections  below
entitled  "Long-term  Debt" and  "Senior  Notes and MBFC  Loan." Cash flows from
financing  activities  for 1999 reflected the purchase of $4.6 million of Common
Units by a  consolidated  trust.  The  Company  used $36.1  million of the $87.1
million in cash and cash equivalents at June 30, 2000 to fund the quarterly cash
distribution to Unitholders and the General Partner paid on August 10, 2000.

         On July 27, 2000, the Company  announced that the Board of Directors of
the General  Partner had authorized the Company to purchase up to 1.0 million of
the outstanding Common Units over the next two years. The Units may be purchased
from time to time in the open market or in privately negotiated  transactions as
conditions  warrant.  The timing of any such purchases will be based on the Unit
price and other market factors. The Company may use the repurchased Common Units
as currency  in  connection  with  significant  and  accretive  acquisitions  to
maintain an appropriate capital structure and increase Unitholder value.

         Future Capital  Expenditures.  The Company  estimates that its share of
remaining  capital  expenditures for 2000 in the projects of its  unconsolidated
affiliates will be  approximately  $5.0 million  (including $3.2 million for the
BRPC  propylene  fractionator).  In addition,  the Company  forecasts that $95.0
million  will be spent  during the last six  months of 2000 on capital  projects
that will be recorded as property,  plant,  and equipment.  Of this amount,  the
most  significant  projects  and their  remaining  expenditures  for 2000 are as
follows:

          -    $40.5 million for the Lou-Tex NGL Pipeline;
          -    $16.1 million for the  Garyville,  Louisiana to Norco,  Louisiana
               butane pipelines;
          -    $ 9.9 million for the Venice,  Louisiana to Grand Isle, Louisiana
               pipeline; and
          -    $ 3.6  million  for the Norco  fractionator  ethane  liquefaction
               facility.

The  Company  expects to fund these  expenditures  with  operating  cash  flows,
borrowings under its bank credit  facility,  and offerings of debt and/or equity
securities.  As of June 30, 2000,  the Company had $15.8 million in  outstanding
purchase commitments  attributable to its capital projects. Of this amount, $7.5
million is related to the  construction  of the  Lou-Tex NGL  Pipeline  and $1.3
million is associated with capital projects which will be recorded as additional
investments in unconsolidated affiliates.

                                       25
DISTRIBUTIONS AND DIVIDENDS FROM UNCONSOLIDATED AFFILIATES

         Distributions  from  unconsolidated  affiliates.  The Company  received
$14.3 million in distributions  from its equity method  investments in the first
six months of 2000  compared to $4.0 million for the same period in 1999. Of the
$10.3 million  increase in  distributions,  $4.7 million was from EPIK. As noted
before,  EPIK's earnings increased in the first six months of 2000 due to higher
export activity. In addition, the first six months of 2000 included $3.3 million
in cash  receipts  from  Promix  which  was  acquired  as a  result  of the TNGL
acquisition in August 1999.

         Dividends received from unconsolidated affiliates. The Company received
$4.0 million in cash dividend payments from its cost method investments in Dixie
and VESCO. Specifically, dividends paid by Dixie and VESCO were $0.6 million and
$3.4 million,  respectively.  Distributions  received from these investments are
recorded by the Company as "Dividend income from  unconsolidated  affiliates" in
the Statements of Consolidated Operations. Both Dixie and VESCO were acquired in
August 1999 as part of the TNGL acquisition.

         LONG-TERM DEBT

         Long-term debt at June 30, 2000 was comprised of $350 million in 5-year
public Senior Notes (the "$350 Million  Senior Notes") and a 10-year $54 million
loan agreement with the Mississippi Business Finance Corporation ("MBFC" and the
"$54  Million  MBFC  Loan").  The  issuance  of the $350  Million  Senior  Notes
represented a partial takedown of the $800 million universal shelf  registration
(the  "Registration  Statement") that was filed with the Securities and Exchange
Commission in December 1999. The proceeds from the $350 Million Senior Notes and
the $54 Million MBFC Loan were used to extinguish all outstanding  balances owed
under the $200  Million  Bank Credit  Facility  and the $350 Million Bank Credit
Facility.

         The following table summarizes long-term debt at:

                                                  JUNE 30,          DECEMBER 31,
                                                    2000                1999
                                                --------------------------------
Borrowings under:
     $200 Million Bank Credit Facility                              $   129,000
     $350 Million Bank Credit Facility                                  166,000
     $350 Million Senior Notes                  $   350,000
     $54  Million MBFC Loan                          54,000
                                                --------------------------------
              Total                                 404,000             295,000
Less current maturities of long-term debt                 -             129,000
                                                --------------------------------
              Long-term debt                    $   404,000         $   166,000
                                                ================================

         At June 30,  2000,  the  Company  had a total of $40 million of standby
letters  of  credit  available  of  which   approximately   $13.3  million  were
outstanding under letter of credit agreements with the banks.

         Bank Credit Facilities

         $200  Million  Bank  Credit  Facility.  In July  1998,  the  Enterprise
Products  Operating  L.P.  (the  "Operating  Partnership")  entered  into a $200
Million  Bank  Credit  Facility  that  included a $50  million  working  capital
facility and a $150 million revolving term loan facility. On March 15, 2000, the
Company used $169 million of the proceeds  from the issuance of the $350 Million
Senior Notes to retire this credit  facility in  accordance  with its  agreement
with the banks.

         $350  Million  Bank  Credit  Facility.  In  July  1999,  the  Operating
Partnership entered into a $350 Million Bank Credit Facility that includes a $50
million  working  capital  facility  and a  $300  million  revolving  term  loan
facility.  The $300 million  revolving term loan facility includes a sublimit of
$40 million for letters of credit. Borrowings under the $350 Million Bank Credit
Facility  will bear  interest at either the bank's prime rate or the  Eurodollar

                                       26
rate plus the applicable  margin as defined in the facility.  The Company elects
the basis for the interest rate at the time of each borrowing.

         This  facility  is  scheduled  to expire  in July 2001 and all  amounts
borrowed  thereunder  shall be due and  payable at that  time.  There must be no
amount   outstanding  under  the  working  capital  facility  for  at  least  15
consecutive  days during each fiscal year. In March 2000,  the Company used $179
million of the proceeds  from the issuance of the $350 Million  Senior Notes and
$47 million from the $54 Million MBFC Loan to payoff the outstanding  balance on
this credit facility.  No amount was outstanding on this credit facility at June
30, 2000.

         The credit agreement  relating to this facility  contains a prohibition
on  distributions  on,  or  purchases  or  redemptions  of Units if any event of
default is continuing.  In addition,  the bank credit facility  contains various
affirmative and negative covenants  applicable to the ability of the Company to,
among  other  things,  (i) incur  certain  additional  indebtedness,  (ii) grant
certain  liens,  (iii) sell assets in excess of certain  limitations,  (iv) make
investments,  (v) engage in  transactions  with affiliates and (vi) enter into a
merger, consolidation, or sale of assets. The bank credit facility requires that
the Operating  Partnership  satisfy the following financial covenants at the end
of each fiscal quarter: (i) maintain Consolidated Tangible Net Worth (as defined
in the bank credit  facility) of at least $250.0 million,  (ii) maintain a ratio
of EBITDA (as  defined in the bank credit  facility)  to  Consolidated  Interest
Expense (as  defined in the bank  credit  facility)  for the  previous  12-month
period of at least 3.5 to 1.0 and (iii)  maintain a ratio of Total  Indebtedness
(as defined in the bank credit  facility)  to EBITDA of no more than 3.0 to 1.0.
The Company was in compliance with the restrictive covenants at June 30, 2000.

         Senior Notes and MBFC Loan

         $350 Million Senior Notes. On March 13, 2000, the Operating Partnership
completed  a public  offering  of $350  million  in  principal  amount  of 8.25%
fixed-rate  Senior  Notes due March 15, 2005 at a price to the public of 99.948%
per Senior Note. In the offering,  the Operating  Partnership received proceeds,
net of underwriting discounts and commissions,  of approximately $347.7 million.
The  proceeds  were used to pay the entire $169  million  outstanding  principal
balance on the $200  Million  Bank Credit  Facility and $179 million of the $226
million outstanding principal balance on the $350 Million Bank Credit Facility.

         The notes are subject to a make-whole redemption right by the Operating
Partnership.  They are an unsecured obligation of the Operating  Partnership and
rank  equally  with  its  existing  and  future  unsecured  and   unsubordinated
indebtedness and senior to any future subordinated  indebtedness.  The notes are
guaranteed by the Company through an unsecured and unsubordinated  guarantee and
were issued under an indenture containing certain restrictive  covenants.  These
covenants  restrict  the ability of the Company and the  Operating  Partnership,
with certain  exceptions,  to incur debt secured by liens and engage in sale and
leaseback transactions. The Company and Operating Partnership were in compliance
with these restrictive covenants at June 30, 2000.

         Settlement  was  completed on March 15, 2000.  The offering of the $350
Million   Senior  Notes  was  a  takedown   under  the  Company's  $800  million
Registration Statement;  therefore, the amount of securities available under the
Registration Statement is reduced to $450 million.

         $54 Million MBFC Loan.  On March 27, 2000,  the  Operating  Partnership
executed  a $54  million  loan  agreement  with the MBFC which was funded by the
proceeds from the sale of Revenue Bonds by the MBFC. The Revenue Bonds issued by
the MBFC are  10-year  bonds  with a  maturity  date of March 1, 2010 and bear a
fixed rate interest coupon of 8.70 percent.  The Operating  Partnership received
proceeds from the sale of the Revenue Bonds,  net of underwriting  discounts and
commissions,  of approximately $53.6 million.  The proceeds were used to pay the
remaining  $47 million  outstanding  principal  balance on the $350 Million Bank
Credit Facility and for working capital and other general partnership  purposes.
In  general,  the  proceeds  of the  Revenue  Bonds were used to  reimburse  the
Operating  Partnership for costs it incurred in acquiring and  constructing  the
Pascagoula, Mississippi natural gas processing plant.

         The Revenue  Bonds were  issued at par and are subject to a  make-whole
redemption right by the Operating Partnership.  The Revenue Bonds are guaranteed
by the Company  through an  unsecured  and  unsubordinated  guarantee.  The loan
agreement contains certain covenants including maintaining appropriate levels of

                                       27
insurance on the  Pascagoula  natural gas processing  facility and  restrictions
regarding  mergers.  The  Company  was  in  compliance  with  these  restrictive
covenants at June 30, 2000.

         Interest Rate Swaps. The Company's  interest rate exposure results from
variable  rate  borrowings  from  commercial  banks  and fixed  rate  borrowings
pursuant to the $350 Million  Senior  Notes and the $54 Million  MBFC Loan.  The
company  manages its exposure to changes in interest  rates in its  consolidated
debt  portfolio by utilizing  interest  rate swaps.  An interest  rate swap,  in
general, requires one party to pay a fixed rate on the notional amount while the
other party pays a floating rate based on the notional amount.

         In March 2000,  after the issuance of the $350 Million Senior Notes and
the execution of the $54 Million MBFC Loan, 100% of the Operating  Partnership's
consolidated  debt were fixed rate  obligations.  To maintain a balance  between
variable rate and fixed rate exposure,  the Operating  Partnership  entered into
interest rate swap  agreements  with a notional  amount of $154 million by which
the Operating  Partnership  receives  payments based on a fixed rate and pays an
amount based on a floating rate. The Operating  Partnership's  consolidated debt
portfolio  interest rate exposure was 62 percent fixed and 38 percent  floating,
after considering the effect of the interest rate swap agreements.  The notional
amount does not represent  exposure to credit loss.  The  Operating  Partnership
monitors its positions and the credit ratings of its counterparties.  Management
believes  the risk of  incurring a credit  related  loss is remote,  and that if
incurred, such losses would be immaterial.

The effect of these swaps  (none of which are  leveraged)  was to  decrease  the
Company's  interest  expense by $3.2 million for the three months ended June 30,
2000 and $3.5  million  for the six months  ended  June 30,  2000.  For  further
information regarding the interest rate swaps, see Note 9 of the unaudited Notes
to the Consolidated Financial Statements.

AMENDMENT TO PARTNERSHIP AGREEMENT

         The Partnership  Agreement generally authorizes the Company to issue an
unlimited  number of  additional  limited  partner  interests  and other  equity
securities  of the  Company  for  such  consideration  and  on  such  terms  and
conditions as shall be established by the General Partner in its sole discretion
without  the  approval  of the  Unitholders.  During the  Subordination  Period,
however,  the Company is limited with regards to the number of equity securities
that it may issue that rank senior to Common Units (except for Common Units upon
conversion of  Subordinated  Units,  pursuant to employee  benefit  plans,  upon
conversion of the general partner  interest as a result of the withdrawal of the
General Partner or in connection with acquisitions or capital  improvements that
are accretive on a per Unit basis) or an equivalent number of securities ranking
on a parity with the Common  Units,  without  the  approval of the holders of at
least a Unit Majority.  A Unit Majority is defined as at least a majority of the
outstanding  Common Units (during the  Subordination  Period),  excluding Common
Units held by the General Partner and its affiliates, and at least a majority of
the outstanding Common Units (after the Subordination Period).

         In April  2000,  the  Company  mailed a Proxy  Statement  to its public
Unitholders  asking  them to  consider  and vote  for a  proposal  to amend  the
Partnership Agreement to increase the number of additional Common Units that may
be issued  during  the  Subordination  Period  without  the  approval  of a Unit
Majority from 22,775,000  Common Units to 47,775,000  Common Units.  The primary
purpose  of  the  requested   increase  was  to  improve  the  future  financial
flexibility  of the Company  since  20,500,000  Common  Units of the  22,775,000
Common Units available to the partnership  during the Subordination  Period were
reserved  for issuance in  connection  with the TNGL  acquisition.  At a special
meeting of the  Unitholders  and  General  Partner  held on June 9,  2000,  this
proposal  was  approved  by  90.7%  of the  public  Unitholders.  The  amendment
increases the number of Common Units  available (and  unreserved) to the Company
for general partnership  purposes during the Subordination Period from 2,275,000
to 27,275,000.

MTBE FACILITY

         The Company owns a 33.33% economic interest in the BEF partnership that
owns the MTBE  production  facility  located  within the Company's  Mont Belvieu
complex.  The production of MTBE is driven by oxygenated  fuels programs enacted
under the federal Clean Air Act  Amendments of 1990 and other  legislation.  Any
changes to these programs that enable  localities to opt out of these  programs,
lessen the requirements  for oxygenates or favor the use of non-isobutane  based

                                       28
oxygenated  fuels reduce the demand for MTBE and could have an adverse effect on
the Company's results of operations.

         In recent years,  MTBE has been detected in water  supplies.  The major
source of the ground water  contamination  appears to be leaks from  underground
storage  tanks.  Although  these  detections  have  been  limited  and the great
majority  of these  detections  have been  well  below  levels of public  health
concern,  there have been  actions  calling for the  phase-out  of MTBE in motor
gasoline in various federal and state governmental agencies.

         In  light  of  these   developments,   the  Company  is  formulating  a
contingency   plan  for  use  of  the  BEF  facility  if  MTBE  were  banned  or
significantly  curtailed.  Management is exploring a possible  conversion of the
BEF  facility  from MTBE  production  to  alkylate  production.  At present  the
forecast  cost of this  conversion  would be in the $20  million to $25  million
range,  with the Company's share being $6.7 million to $8.3 million.  Management
anticipates that if MTBE is banned alkylate demand will rise as producers use it
to replace MTBE as an octane enhancer.  Alkylate production would be expected to
generate  spot market  margins  comparable  to those of MTBE.  Greater  alkylate
production would be expected to increase  isobutane  consumption  nationwide and
result in improved isomerization margins for the Company.

         Sun, the MTBE facility's major customer and one of the partners of BEF,
has entered into a contract with BEF to take all of the MTBE production  through
September 2004.

YEAR 2000 READINESS DISCLOSURE

         The Company's  efforts at preparing  its computer  systems for the Year
2000 were successful and no significant problems were encountered. The Year 2000
Readiness team reported that all systems functioned properly as the date changed
from  December 31, 1999 to January 1, 2000.  The Company is also pleased to note
that no problems  were reported to it by its customers or vendors as a result of
the Year 2000 issue.  The Company  continues  to be vigilant in  monitoring  its
systems for any potential  Year 2000 problems that may arise in the  short-term.
There is no  assurance  that  residual  Year 2000  issues  will not arise in the
future  which  could have a material  adverse  effect on the  operations  of the
Company.

ACCOUNTING STANDARDS

         In June 1999, the Financial  Accounting Standards Board ("FASB") issued
Statement of Financial  Accounting  Standard  ("SFAS") No. 137,  "Accounting for
Derivative Instruments and Hedging  Activities-Deferral of the Effective Date of
FASB Statement No. 133-an amendment of FASB Statement No. 133" which effectively
delays the application of SFAS No. 133  "Accounting  for Derivative  Instruments
and Hedging  Activities"  for one year, to fiscal years beginning after June 15,
2000.  In June 2000,  the FASB  issued  SFAS No.  138,  "Accounting  for Certain
Derivative  Instruments  and Certain  Hedging  Activities - an amendment of FASB
Statement No. 133" which amends and supercedes various sections of SFAS No. 133.
Management  is  currently  studying  SFAS No. 133 and its  amendments  for their
possible impact on the consolidated  financial  statements when they are adopted
in January 2001.

UNCERTAINTY OF FORWARD-LOOKING STATEMENTS AND INFORMATION

         This quarterly report contains various  forward-looking  statements and
information that are based on the belief of the Company and the General Partner,
as well  as  assumptions  made by and  information  currently  available  to the
Company  and the  General  Partner.  When used in this  document,  words such as
"anticipate,"  "estimate,"  "project,"  "expect," "plan," "forecast,"  "intend,"
"could," and "may," and similar  expressions and statements  regarding the plans
and  objectives of the Company for future  operations,  are intended to identify
forward-looking statements. Although the Company and the General Partner believe
that  the  expectations   reflected  in  such  forward-looking   statements  are
reasonable,  they can give no assurance that such  expectations will prove to be
correct.  Such  statements  are  subject to certain  risks,  uncertainties,  and
assumptions.  If one or more of these risks or uncertainties materialize,  or if
underlying assumptions prove incorrect,  actual results may vary materially from
those anticipated, estimated, projected, or expected. Among the key risk factors
that may have a direct  bearing  on the  Company's  results  of  operations  and
financial  condition are: (a)  competitive  practices in the industries in which
the Company  competes,  (b)  fluctuations  in oil,  natural gas, and NGL product
prices and  production,  (c) operational  and systems risks,  (d)  environmental

                                       29
liabilities  that are not covered by indemnity or  insurance,  (e) the impact of
current and future laws and governmental  regulations  (including  environmental
regulations) affecting the NGL industry in general, and the Company's operations
in particular,  (f) loss of a significant customer,  and (g) failure to complete
one or more new projects on time or within budget.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         The Company is exposed to financial market risks,  including changes in
interest rates with respect to a portion of its debt  obligations and changes in
commodity prices.  The Company may use derivative  financial  instruments (i.e.,
futures,  forwards, swaps, options, and other financial instruments with similar
characteristics)  to mitigate  these risks.  The Company does not use derivative
financial instruments for speculative (or trading) purposes.

         Beginning  with the  fourth  quarter  of 1999,  the  Company  adopted a
commercial  policy  to  manage  exposures  to the  risks  generated  by the  NGL
businesses  acquired in the TNGL acquisition.  The objective of the policy is to
assist the Company in achieving  its  profitability  goals while  maintaining  a
portfolio of  conservative  risk,  defined as remaining with the position limits
established by the Board of Directors of the General  Partner.  The Company will
enter into risk  management  transactions  to manage  price  risk,  basis  risk,
physical risk or other risks related to energy  commodities on both a short-term
(less than 30 days) and long-term  basis,  not to exceed 18 months.  The General
Partner has  established a Risk  Committee (the  "Committee")  that will oversee
overall  strategies  associated with physical and financial risks. The Committee
will approve specific commercial policies of the Company subject to this policy,
including  authorized  products,  instruments and markets. The Committee is also
charged with  establishing  specific  guidelines and procedures for implementing
the policy and ensuring compliance with the policy.

INTEREST RATE RISK

         Variable rate Debt. At June 30, 2000 and December 31, 1999, the Company
had no derivative instruments in place to cover any potential interest rate risk
on its variable-rate  debt obligations.  Variable interest rate debt obligations
do expose the Company to possible increases in interest expense and decreases in
earnings if interest rates were to rise. The Company's long-term debt associated
with the $350 Million Bank Credit  Facility is at variable  interest  rates.  No
amount was outstanding under this facility during the second quarter of 2000.

         If  the  weighted   average  base  interest   rates   selected  on  the
variable-rate  long-term  debt at December 31, 1999 were to have been 10% higher
than the weighted  average of the actual base interest rates selected,  assuming
no changes in weighted average variable debt levels, interest expense would have
increased  by  approximately  $1.4  million  with a  corresponding  decrease  in
earnings  before  minority  interest.  No  calculation  has  been  made  on  the
variable-rate  debt for June 30, 2000 since no amount was outstanding  under the
$350 Million Bank Credit Facility.

         Fixed rate Debt. In March 2000, the Operating  Partnership entered into
interest  rate swaps whereby the fixed rate of interest on a portion of the $350
Million Senior Notes and the $54 Million MBFC Loan was  effectively  swapped for
floating rates tied to the six month London  Interbank  Offering Rate ("LIBOR").
Interest  rate swaps are used to manage  the  Company's  exposure  to changes in
interest  rates and to lower overall costs of financing.  An interest rate swap,
in general,  requires one party to pay a fixed rate on the notional amount while
the other party pays a floating rate based on the notional amount.

         After the issuance of the $350 Million  Senior Notes and the  execution
of the $54 Million MBFC Loan, 100% of the Operating  Partnership's  consolidated
debt were fixed rate  obligations.  To maintain a balance between  variable rate
and fixed rate exposure,  the Operating  Partnership  entered into interest rate
swap  agreements  with a notional  amount of $154 million by which the Operating
Partnership  receives payments based on a fixed rate and pays an amount based on
a  floating  rate.  The  Operating  Partnership's  consolidated  debt  portfolio
interest  rate  exposure  was 62 percent  fixed and 38 percent  floating,  after
considering the effect of the interest rate swap agreements. The notional amount
does not represent exposure to credit loss. The Operating  Partnership  monitors
its positions and the credit ratings of its counterparties.  Management believes
the risk of  incurring a credit  related  loss is remote,  and that if incurred,
such losses would be immaterial.

                                       30
The effect of these swaps (none of which are leveraged) was to decrease
the Company's  interest  expense by $3.2 million for the three months ended June
30, 2000 and $3.5 million for the six months  ended June 30, 2000.  Following is
selected  information on the Company's  portfolio of interest rate swaps at June
30, 2000:

INTEREST RATE SWAP PORTFOLIO AT JUNE 30, 2000 (1) :
(Dollars in millions)
                                                 Early             Fixed /
  Notional                                    Termination         Floating
   Amount            Period Covered             Date (2)          Rate (3)
--------------------------------------------------------------------------------

      $ 50.0 March 2000 - March 2005        March 2001         8.25% / 6.9500%
      $ 50.0 March 2000 - March 2005        March 2001         8.25% / 6.9550%
      $ 54.0 March 2000 - March 2010        March 2003         8.70% / 7.2575%

Notes:

(1)  All swaps outstanding at June 30, 2000 were entered into for the purpose of
     managing the Operating  Partnership's  exposure to  fluctuations  in market
     interest rates.
(2)  In each case,  the  counterparty  has the option to terminate  the interest
     rate swap on the Early Termination Date.
(3)  In each case, the Operating  Partnership is the  floating-price  payor. The
     floating rate was the rate in effect as of June 30, 2000.

         If the six month  LIBOR  rates on the  notional  amounts of  fixed-rate
long-term  debt at June 30, 2000 were to have been 10% higher than the six month
LIBOR  rates  actually  used in the swap  agreements,  assuming  no  changes  in
weighted average fixed-rate debt levels,  interest expense for the three and six
months ended June 30, 2000 would have  increased by  approximately  $0.3 million
with a corresponding decrease in earnings before minority interest.

         Other.  At June 30, 2000 and December  31, 1999,  the Company had $87.1
million and $5.2 million  invested in cash and cash  equivalents,  respectively.
All cash equivalent investments other than cash are highly liquid, have original
maturities of less than three months,  and are considered to have  insignificant
interest rate risk.

COMMODITY PRICE RISK

         The  Company  is  exposed  to  commodity  price  risk  through  its NGL
businesses acquired in the TNGL acquisition. In order to effectively manage this
risk, the Company may enter into swaps, forwards, commodity futures, options and
other derivative  commodity  instruments with similar  characteristics  that are
permitted  by contract or business  custom to be settled in cash or with another
financial  instrument.  The purpose of these risk  management  activities  is to
hedge  exposure to price risks  associated  with natural  gas, NGL  inventories,
commitments and certain anticipated  transactions.  The table below presents the
hypothetical  changes in fair values arising from immediate  selected  potential
changes  in  the  quoted  market  prices  of  derivative  commodity  instruments
outstanding  at  December  31,  1999 and June  30,  2000.  Gain or loss on these
derivative commodity instruments would be offset by a corresponding gain or loss
on the hedged commodity positions, which are not included in the table. The fair
value of the  commodity  futures  at  December  31,  1999 and June 30,  2000 was
estimated at $0.5 million  payable and $7.7  million  receivable,  respectively,
based on quoted market prices of comparable  contracts and  approximate the gain
or loss that would have been  realized if the  contracts had been settled at the
balance  sheet date.  The change in fair value of the  commodity  futures  since
December 31, 1999 is primarily due to an increase in volumes  hedged,  change in
composition of commodities  hedged and higher natural gas prices.  The change in
fair value between June 30, 2000 and August 1, 2000 is due to the  settlement of
the July 2000 contract volumes and changes in natural gas prices.

                                       31
(MILLIONS OF DOLLARS)                 NO CHANGE             10% INCREASE                   10% DECREASE
                                      ---------             ------------                   ------------

   IMPACT OF CHANGES IN QUOTED          FAIR            FAIR         INCREASE          FAIR          INCREASE
        MARKET PRICES ON:               VALUE          VALUE        (DECREASE)         VALUE        (DECREASE)
------------------------------------------------------------------------------------------------------------------

Commodity futures
At December 31, 1999             $ (0.5)        $   1.2       $ 1.7             $ (2.2)      $ (1.7)
       At June 30, 2000                 $  7.7         $  12.1       $ 4.4             $  3.2       $ (4.5)
       At August 1, 2000                $  0.7         $   5.6       $ 4.9             $ (4.2)      $ (4.9)
PART II.   OTHER INFORMATION

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS.

         The  following  table shows the Use of Proceeds  from the $350  Million
Senior Notes offering completed on March 15, 2000. The $350 Million Senior Notes
represented a partial takedown of the Company's and the Operating  Partnership's
$800  million  Registration  Statement  filed with the  Securities  and Exchange
Commission in December 1999 (File Nos.  333-93239  and  333-93239-01,  effective
January 14,  2000);  therefore,  the amount of  securities  available  under the
Registration Statement was reduced to $450 million.

         The title of the registered debt securities was "8.25% Senior Notes Due
2005." The  underwriters  of the offering were Chase  Securities,  Inc.,  Lehman
Brothers Inc., Banc One Capital Markets,  Inc.,  FleetBoston  Robertson Stephens
Inc.,  First Union  Securities,  Inc.,  Scotia  Capital  (USA) Inc. and SG Cowen
Securities Corp.. The 5-year Senior Notes have a maturity date of March 15, 2005
and bear a fixed-rate interest coupon of 8.25%.
Amounts
                                                                         (in millions)
                                                                         --------------
Proceeds:
Sale of $350 Million Senior Notes to public at 99.948% per Note          $   350
   Less underwriting discount of 0.600% per Note                                 (2)
                                                                         --------------
       Total Proceeds to Company and Operating Partnership                  $   348
                                                                         ==============

Use of Proceeds:
   Retire balance on $200 Million Bank Credit Facility                      $  (169)
   Partial retirement of balance on $350 Million Bank Credit Facility          (179)
                                                                         --------------
           Total uses of funds                                              $  (348)
                                                                         ==============
See Note 4 of the  Notes to  Consolidated  Financial  Statements  for a
description of the $350 Million Senior Notes.

                                       32
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         In April  2000,  the  Company  mailed a Proxy  Statement  to its public
Unitholders  asking  them to  consider  and vote  for a  proposal  to amend  the
Partnership Agreement to increase the number of additional Common Units that may
be issued  during  the  Subordination  Period  without  the  approval  of a Unit
Majority from 22,775,000  Common Units to 47,775,000  Common Units.  The primary
purpose  of  the  requested   increase  was  to  improve  the  future  financial
flexibility  of the Company  since  20,500,000  Common  Units of the  22,775,000
Common Units available to the partnership  during the Subordination  Period were
reserved  for issuance in  connection  with the TNGL  acquisition.  At a special
meeting of the public  Unitholders held on June 9, 2000 in Houston,  Texas, this
proposal  was  approved  by  90.7%  of the  public  Unitholders.  The  amendment
increases the number of Common Units  available (and  unreserved) to the Company
for general partnership  purposes during the Subordination Period from 2,275,000
to 27,275,000.

         The voting results were as follows:

 Number of votes cast approving the amendment                  9,533,215
 Number of votes cast against the amendment                      381,608
 Number of votes withheld                                        489,637
 Number of abstentions                                           104,406

 Total number of public Unitholders                           10,508,866

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

(A)      EXHIBITS

*1.1     Underwriting  Agreement dated March 10, 2000, among Enterprise Products
         Partners L.P.,  Enterprise  Products  Operating L.P.,  Chase Securities
         Inc., Lehman Brothers Inc., Banc One Capital Markets, Inc., FleetBoston
         Robertson  Stephens Inc., First Union Securities,  Inc., Scotia Capital
         (USA) Inc. and SG Cowen Securities Corp. (Exhibit 1.1 on Form 8-K filed
         March 10, 2000).

*3.1     Form of  Amended  and  Restated  Agreement  of Limited  Partnership  of
         Enterprise   Products   Partners  L.P.  (Exhibit  3.1  to  Registration
         Statement on Form S-1, File No. 333-52537, filed on May 13, 1998).

*3.2     Form of  Amended  and  Restated  Agreement  of Limited  Partnership  of
         Enterprise   Products  Operating  L.P.  (Exhibit  3.2  to  Registration
         Statement on Form S-1/A, File No. 333-52537, filed on July 21, 1998).

*3.3     LLC  Agreement of Enterprise  Products GP (Exhibit 3.3 to  Registration
         Statement on Form S-1/A, File No. 333-52537, filed on July 21, 1998).

*3.4     Second  Amended  and  Restated  Agreement  of  Limited  Partnership  of
         Enterprise  Products  Partners  L.P.  dated  September  17, 1999.  (The
         Company  incorporates  by reference the above document  included in the
         Schedule  13D filed  September  27, 1999 by Tejas Energy LLC ; filed as
         Exhibit 99.7 on Form 8-K dated October 4, 1999).

*3.5     First  Amended and  Restated  Limited  Liability  Company  Agreement of
         Enterprise  Products GP, LLC dated September 17, 1999. (Exhibit 99.8 on
         Form 8-K/A-1 filed October 27, 1999).

3.6      Amendment  No. 1 to Second  Amended and  Restated  Agreement of Limited
         Partnership of Enterprise Products Partners L.P. dated June 9, 2000.

*4.1     Form of Common Unit certificate (Exhibit 4.1 to Registration  Statement
         on Form S-1/A, File No. 333-52537, filed on July 21, 1998).

                                       33
*4.2     $200 million Credit Agreement among Enterprise Products Operating L.P.,
         the Several  Banks from Time to Time  Parties  Hereto,  Den Norske Bank
         ASA,   and  Bank  of   Tokyo-Mitsubishi,   Ltd.,   Houston   Agency  as
         Co-Arrangers,   The  Bank  of  Nova  Scotia,   as  Co-Arranger  and  as
         Documentation  Agent and The Chase Manhattan Bank as Co-Arranger and as
         Agent dated as of July 27, 1998 as Amended and Restated as of September
         30, 1998.  (Exhibit 4.2 on Form 10-K for year ended  December 31, 1998,
         filed March 17, 1999).

*4.3     First  Amendment to $200 million Credit  Agreement  dated July 28, 1999
         among Enterprise Products Operating L.P. and the several banks thereto.
         (Exhibit 99.9 on Form 8-K/A-1 filed October 27, 1999).

*4.4     $350 million Credit Agreement among Enterprise Products Operating L.P.,
         BankBoston,  N.A.,  Societe Generale,  Southwest Agency and First Union
         National  Bank,  as   Co-Arrangers,   The  Chase   Manhattan  Bank,  as
         Co-Arranger  and as  Administrative  Agent,  The First National Bank of
         Chicago,  as Co-Arranger and as  Documentation  Agent, The Bank of Nova
         Scotia,  as Co-Arranger  and Syndication  Agent,  and the Several Banks
         from Time to Time  parties  hereto  with First  Union  Capital  Markets
         acting  as  Managing  Agent and Chase  Securities  Inc.  acting as Lead
         Arranger and Book Manager  dated July 28, 1999  (Exhibit  99.10 on Form
         8-K/A-1 filed October 27, 1999).

*4.5     Unitholder  Rights  Agreement  among Tejas Energy LLC, Tejas  Midstream
         Enterprises,   LLC,  Enterprise  Products  Partners  L.P.,   Enterprise
         Products  Operating  L.P.,  Enterprise  Products  Company,   Enterprise
         Products GP, LLC and EPC Partners II, Inc.  dated  September  17, 1999.
         (The Company  incorporates by reference the above document  included in
         the Schedule 13D filed September 27, 1999 by Tejas Energy LLC; filed as
         Exhibit 99.5 on Form 8-K dated October 4, 1999).

*4.6     Form of Indenture dated as of March 15, 2000, among Enterprise Products
         Operating  L.P.,  as Issuer,  Enterprise  Products  Partners  L.P.,  as
         Guarantor,  and First Union National Bank, as Trustee.  (Exhibit 4.1 on
         Form 8-K filed March 10, 2000).

*4.7     Form of  Global  Note  representing  all 8.25%  Senior  Notes Due 2005.
         (Exhibit 4.2 on Form 8-K filed March 10, 2000).

*4.8     Second Amendment,  dated as of January 24, 2000, to $200 Million Credit
         Agreement  dated as of July 27,  1998,  as Amended  and  Restated as of
         September 30, 1998,  among Enterprise  Products  Operating L.P. and the
         several banks thereto. (Exhibit 4.3 on Form 8-K filed March 10, 2000).

*4.9     First  Amendment,  dated as of January 24, 2000, to $350 Million Credit
         Agreement among Enterprise Products Operating L.P.,  BankBoston,  N.A.,
         Societe  Generale,  Southwest  Agency and First Union National Bank, as
         Co-Arrangers,   The  Chase   Manhattan  Bank,  as  Co-Arranger  and  as
         Administrative   Agent,   BankOne   N.A.,   as  Co-   Arranger  and  as
         Documentation  Agent,  The Bank of Nova Scotia,  as Co-Arranger  and as
         Syndication  Agent,  and the  several  Banks from time to time  parties
         thereto,  with First Union Capital Markets acting as Managing Agent and
         Chase  Securities  Inc. acting as Lead Arranger and Manager dated as of
         July 28, 1999. (Exhibit 4.4 on Form 8-K filed March 10, 2000).

*4.10    Second  Amendment,  dated as of March 7, 2000,  to $350 Million  Credit
         Agreement among Enterprise Products Operating L.P.,  BankBoston,  N.A.,
         Societe  Generale,  Southwest  Agency and First Union National Bank, as
         Co-Arrangers,   The  Chase   Manhattan  Bank,  as  Co-Arranger  and  as
         Administrative   Agent,   BankOne   N.A.,   as  Co-   Arranger  and  as
         Documentation  Agent,  The Bank of Nova Scotia,  as Co-Arranger  and as
         Syndication  Agent,  and the  several  Banks from time to time  parties
         thereto,  with First Union Capital Markets acting as Managing Agent and
         Chase  Securities  Inc. acting as Lead Arranger and Manager dated as of
         July 28, 1999. (Exhibit 4.5 on Form 8-K filed March 10, 2000).

*4.11    Guaranty  Agreement,  dated as of March 7, 2000, by Enterprise Products
         Partners L.P. in favor of The Chase Manhattan  Bank, as  Administrative
         Agent, with respect to the $350 Million Credit Agreement referred to in
         Exhibits 4.4 and 4.5. (Exhibit 4.6 on Form 8-K filed March 10, 2000).

*10.1    Articles  of  Merger  of  Enterprise  Products  Company,  HSC  Pipeline
         Partnership,  L.P., Chunchula Pipeline Company, LLC, Propylene Pipeline
         Partnership,  L.P., Cajun Pipeline Company, LLC and Enterprise Products
         Texas  Operating L.P. dated June 1, 1998 (Exhibit 10.1 to  Registration
         Statement on Form S-1/A, File No: 333-52537, filed on July 8, 1998).

                                       34
*10.2    Form of EPCO  Agreement  between  Enterprise  Products  Partners  L.P.,
         Enterprise  Products  Operating L.P.,  Enterprise  Products GP, LLC and
         Enterprise Products Company (Exhibit 10.2 to Registration  Statement on
         Form S-1/A, File No. 333-52537, filed on July 21, 1998).

*10.3    Transportation  Contract between Enterprise Products Operating L.P. and
         Enterprise  Transportation  Company dated June 1, 1998 (Exhibit 10.3 to
         Registration Statement on Form S-1/A, File No. 333-52537, filed on July
         8, 1998).

*10.4    Venture Participation Agreement between Sun Company, Inc. (R&M), Liquid
         Energy  Corporation and Enterprise  Products  Company dated May 1, 1992
         (Exhibit  10.4  to  Registration   Statement  on  Form  S-1,  File  No.
         333-52537, filed on May 13, 1998).

*10.5    Partnership  Agreement  between  Sun BEF,  Inc.,  Liquid  Energy  Fuels
         Corporation and Enterprise  Products Company dated May 1, 1992 (Exhibit
         10.5 to Registration  Statement on Form S-1, File No. 333-52537,  filed
         on May 13, 1998).

*10.6    Amended  and  Restated  MTBE   Off-Take   Agreement   between   Belvieu
         Environmental  Fuels and Sun Company,  Inc. (R&M) dated August 16, 1995
         (Exhibit  10.6  to  Registration   Statement  on  Form  S-1,  File  No.
         333-52537, filed on May 13, 1998).

*10.7    Articles of Partnership of Mont Belvieu  Associates dated July 17, 1985
         (Exhibit  10.7  to  Registration   Statement  on  Form  S-1,  File  No.
         333-52537, filed on May 13, 1998).

*10.8    First  Amendment to Articles of Partnership of Mont Belvieu  Associates
         dated July 15, 1996  (Exhibit  10.8 to  Registration  Statement on Form
         S-1, File No. 333-52537, filed on May 13, 1998).

*10.9    Propylene   Facility  and   Pipeline   Agreement   between   Enterprise
         Petrochemical Company and Hercules Incorporated dated December 13, 1978
         (Exhibit  10.9  to  Registration   Statement  on  Form  S-1,  File  No.
         333-52537, dated May 13, 1998).

*10.10   Restated  Operating  Agreement  for  the  Mont  Belvieu   Fractionation
         Facilities Chambers County,  Texas between Enterprise Products Company,
         Texaco  Producing  Inc.,  El Paso  Hydrocarbons  Company  and  Champlin
         Petroleum  Company dated July 17, 1985 (Exhibit  10.10 to  Registration
         Statement on Form S-1/A, File No. 333-52537, filed on July 8, 1998).

*10.11   Ratification and Joinder Agreement  relating to Mont Belvieu Associates
         Facilities between Enterprise Products Company,  Texaco Producing Inc.,
         El Paso  Hydrocarbons  Company,  Champlin  Petroleum  Company  and Mont
         Belvieu  Associates  dated July 17, 1985 (Exhibit 10.11 to Registration
         Statement on Form S-1/A, File No. 333-52537, filed on July 8, 1998).

*10.12   Amendment to Propylene  Facility and Pipeline Sales  Agreement  between
         HIMONT U.S.A.,  Inc. and Enterprise  Products  Company dated January 1,
         1993 (Exhibit 10.12 to Registration  Statement on Form S-1/A,  File No.
         333-52537, filed on July 8, 1998).

*10.13   Amendment to Propylene  Facility and Pipeline  Agreement between HIMONT
         U.S.A.,  Inc. and  Enterprise  Products  Company  dated January 1, 1995
         (Exhibit  10.13  to  Registration  Statement  on Form  S-1/A,  File No.
         333-52537, filed on July 8, 1998).

*10.14   Fourth  Amendment to Conveyance of Gas Processing  Rights between Tejas
         Natural Gas Liquids,  LLC and Shell Oil Company,  Shell  Exploration  &
         Production  Company,  Shell Offshore Inc., Shell Deepwater  Development
         Inc.,  Shell Land & Energy  Company and Shell  Frontier  Oil & Gas Inc.
         dated August 1, 1999. (Exhibit 10.14 to Form 10-Q filed on November 15,
         1999).

                                       35
*12.1    Computation  of ratio of earnings  to fixed  charges for the year ended
         December 31, 1999. (Exhibit 12.1 on Form 8-K filed March 10, 2000).

*25.1    Statement of Eligibility  and  Qualification  under the Trust Indenture
         Act of 1939 on Form T-1 of First Union National Bank.  (Exhibit 25.1 on
         Form 8-K filed March 10, 2000).

*99.1    Contribution  Agreement  between  Tejas  Energy  LLC,  Tejas  Midstream
         Enterprises,   LLC,  Enterprise  Products  Partners  L.P.,   Enterprise
         Products  Operating  L.P.,  Enterprise  Products  Company,   Enterprise
         Products GP, LLC and EPC Partners II, Inc.  dated  September  17, 1999.
         (The Company  incorporates by reference the above document  included in
         the Schedule 13D filed September 27, 1999 by Tejas Energy LLC; filed as
         Exhibit 99.4 on Form 8-K dated October 4, 1999).

*99.2    Registration  Rights Agreement  between Tejas Energy LLC and Enterprise
         Products   Partners  L.P.  dated   September  17,  1999.  (The  Company
         incorporates  by reference the above document  included in the Schedule
         13D filed  September  27,  1999 by Tejas  Energy LLC ; filed as Exhibit
         99.6 on Form 8-K dated October 4, 1999).

27.1     Financial Data Schedule

*        Asterisk indicates exhibits incorporated by reference as indicated; all
         other exhibits are filed herewith

         (B) REPORTS ON FORM 8-K

         There were no reports on Form 8-K filed during the quarter.

                                       36
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 thereunto duly authorized.

                                            ENTERPRISE PRODUCTS PARTNERS L.P.
                                            (A Delaware Limited Partnership)

                                            By:   Enterprise Products GP, LLC
                                                  as General Partner

                                                  /s/ Michael J. Knesek
                                                  ------------------------------
Date:   August 11, 2000                           Vice President, Controller and
                                                  Principal Accounting Officer
EXHIBIT 3.6
                                                                     -----------

                                 AMENDMENT NO. 1
                                       TO
                           SECOND AMENDED AND RESTATED
                        AGREEMENT OF LIMITED PARTNERSHIP
                                       OF
                        ENTERPRISE PRODUCTS PARTNERS L.P.

     This Amendment No. 1, dated as of June 9, 2000 (this  "Amendment"),  to the
Second  Amended and Restated  Agreement  of Limited  Partnership  of  Enterprise
Products  Partners  L.P.  dated  as of  September  17,  1999  (the  "Partnership
Agreement"),  is  entered  into by and among  Enterprise  Products  GP,  LLC,  a
Delaware limited  liability  company,  as the General  Partner,  and the Limited
Partners  as  provided  herein.  Each  capitalized  term used but not  otherwise
defined herein shall have the meaning  assigned to such term in the  Partnership
Agreement.

                              W I T N E S S E T H:

     WHEREAS, the first sentence of Section 5.7(a) of the Partnership  Agreement
limits the unrestricted  number of additional  Parity Units that the Partnership
may issue during the Subordination  Period without prior approval of the holders
of a Unit Majority to 22,775,000 Parity Units;

     WHEREAS,  the General Partner deems it advisable to increase such number of
additional  Parity Units to 47,775,000 to give the Partnership  more flexibility
in connection with acquisitions and capital raising transactions;

     WHEREAS,  on March 28, 2000, the Board of Directors of the General  Partner
approved this  Amendment and directed that it be presented to the holders of the
Outstanding  Common Units excluding any Common Units held by the General Partner
and its Affiliates (the "Public Unitholders"), for their approval;

     WHEREAS,  in  accordance  with  the  provisions  of  Article  XIII  of  the
Partnership Agreement, the General Partner presented the Amendment to the Public
Unitholders for their approval at a special meeting held on June 9, 2000 and the
approval of the  Amendment was received at that meeting by the holders of a Unit
Majority, as required by Section 13.2 of the Partnership Agreement;

     NOW, THEREFORE,  in consideration of the premises, the parties hereto agree
as follows:

     1.   The first sentence of Section 5.7(a) of the  Partnership  Agreement is
          hereby amended to read in its entirety as follows:

          "During the Subordination Period, the Partnership shall not issue (and
          shall not issue any options,  rights,  warrants or appreciation rights
          relating to) an aggregate of more than  47,775,000  additional  Parity
          Units without the prior approval of the holders of a Unit Majority."
2.   As  amended  hereby,  the  Partnership  Agreement  is in all  respects
          ratified,  confirmed  and  approved and shall remain in full force and
          effect.

     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the date first written above.

                    GENERAL PARTNER:

                    ENTERPRISE PRODUCTS GP, LLC

                    By: /s/ O.S. Andras
                        -----------------------
                        O. S. Andras
                        President and Chief Executive Officer

                    LIMITED PARTNERS:

                    All Limited  Partners now and hereafter  admitted as Limited
                    Partners of the Partnership,  pursuant to Powers of Attorney
                    now and  hereafter  executed  in favor of, and  granted  and
                    delivered to the General Partner.

                    By:  Enterprise Products GP, LLC
                         General Partner, as attorney-in-fact for the Limited
                         Partners pursuant to the Powers of Attorney granted
                         pursuant to Section 2.6.

                    By:  /s/ O.S. Andras
                         ----------------------
                         O. S. Andras
                         President and Chief Executive Officer