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 September 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 46,535,715 Common Units outstanding as of November 13, 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,  September 30, 2000 and December 31, 1999                     1

         Statements of Consolidated Operations
                  for the Three and Nine Months ended September 30, 2000 and 1999                   2

         Statements of Consolidated Cash Flows
                  for the Nine Months ended September 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                                                                      18

Item 3.   Quantitative and Qualitative Disclosures about Market Risk                                33

Part II.  Other Information

Item 4.  Submission of Matters to a Vote of Security Holders.                                       35

Item 6.   Exhibits and Reports on Form 8-K                                                          35

         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>
                                                                                        September 30,
                                                                                             2000           December 31,
                                       ASSETS                                            (Unaudited)            1999
                                                                                      ---------------------------------------
Current Assets
<S>                                                                                          <C>                  <C>
     Cash and cash equivalents                                                               $    41,443          $    5,230
     Accounts receivable - trade, net of allowance for doubtful accounts of
        $12,053 at September 30, 2000 and $15,871 at December 31, 1999                           302,766             262,348
     Accounts receivable - affiliates                                                             37,050              56,075
     Inventories                                                                                 138,039              39,907
     Current maturities of participation in notes receivable from
        unconsolidated affiliates                                                                      -               6,519
     Prepaid and other current assets                                                             13,162              14,459
                                                                                      ---------------------------------------
               Total current assets                                                              532,460             384,538
Property, Plant and Equipment, Net                                                               941,836             767,069
Investments in and Advances to Unconsolidated Affiliates                                         280,206             280,606
Intangible assets, net of accumulated amortization of $4,186 at
     September 30, 2000 and $1,345 at December 31, 1999                                           88,577              61,619
Other Assets                                                                                       4,457               1,120
                                                                                      ---------------------------------------
               Total                                                                        $  1,847,536        $  1,494,952
                                                                                      =======================================
                          LIABILITIES AND PARTNERS' EQUITY

Current Liabilities

     Current maturities of long-term debt                                                    $    50,000         $   129,000
     Accounts payable - trade                                                                    107,356              69,294
     Accounts payable - affiliate                                                                 34,035              64,780
     Accrued gas payables                                                                        278,651             233,360
     Accrued expenses                                                                             11,496              16,510
     Other current liabilities                                                                    30,925              18,176
                                                                                      ---------------------------------------
               Total current liabilities                                                         512,463             531,120
Long-Term Debt                                                                                   404,000             166,000
Other Long-Term liabilities                                                                        7,094                 296
Minority Interest                                                                                  9,353               8,071
Commitments and Contingencies
Partners' Equity
     Common  Units  (45,552,915  Units  outstanding  at  December  31,  1999 and
        46,535,715 Units outstanding at September 30, 2000)                                      463,239             428,707
     Subordinated Units (21,409,870 Units outstanding at December 31, 1999
        and September 30, 2000)                                                                  154,205             131,688
     Special Units  (14,500,000  Units  outstanding  at  December  31,  1999 and
        16,500,000 Units outstanding at September 30, 2000)                                      292,715             225,855
     Treasury Units  acquired by Trust,  at cost (267,200  Units  outstanding at
        December 31, 1999 and September 30, 2000)                                                 (4,727)             (4,727)
     General Partner

                                                                                                   9,194               7,942
                                                                                      ---------------------------------------
               Total Partners' Equity                                                            914,626             789,465
                                                                                      ---------------------------------------
               Total                                                                        $  1,847,536        $  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                       Nine Months
                                                                  Ended September 30,                Ended September 30,
                                                                  2000           1999               2000            1999
                                                             -------------------------------   --------------------------------

REVENUES
<S>                                                               <C>             <C>              <C>               <C>
Revenues from consolidated operations                             $ 717,113       $ 441,880        $ 2,056,307       $ 763,793
Equity income in unconsolidated affiliates                            4,750           3,148             23,290           7,591
                                                             -------------------------------   --------------------------------
         Total                                                      721,863         445,028          2,079,597         771,384
                                                             -------------------------------   --------------------------------
COST AND EXPENSES
Operating costs and expenses                                        659,021         401,758          1,878,233         688,977
Selling, general and administrative                                   6,978           3,200             20,020           9,200
                                                             -------------------------------   --------------------------------
         Total                                                      665,999         404,958          1,898,253         698,177
                                                             -------------------------------   --------------------------------
OPERATING INCOME                                                     55,864          40,070            181,344          73,207
OTHER INCOME (EXPENSE)
Interest expense                                                     (7,486)         (4,515)           (23,330)         (8,907)
Interest income (expense) from unconsolidated affiliates                (88)            407                182           1,096
Dividend income from unconsolidated affiliates                        2,241               -              6,236               -
Interest income - other                                                 317             682              3,023           1,114
Other, net                                                              (71)             72               (496)            117
                                                             -------------------------------   --------------------------------
          Other income  (expense)                                    (5,087)         (3,354)           (14,385)         (6,580)
                                                             -------------------------------   --------------------------------
INCOME BEFORE MINORITY INTEREST                                      50,777          36,716            166,959          66,627
MINORITY INTEREST                                                      (514)           (370)            (1,689)           (672)
                                                             -------------------------------   --------------------------------
NET INCOME                                                        $  50,263       $  36,346          $ 165,270       $  65,955
                                                             ===============================   ================================
ALLOCATION OF NET INCOME TO:
          Limited partners                                        $  49,566       $  35,983          $ 163,423       $  65,295
                                                             ===============================   ================================
          General partner                                           $   697         $   363           $  1,847         $   660
                                                             ===============================   ================================
BASIC EARNINGS PER UNIT
          Income before minority interest                          $   0.75        $   0.54           $   2.47        $   0.99
                                                             ===============================   ================================
          Net income per Common and Subordinated unit              $   0.74        $   0.54           $   2.44        $   0.98
                                                             ===============================   ================================
DILUTED EARNINGS PER UNIT

          Income before minority interest                          $   0.60        $   0.48           $   2.02        $   0.94
                                                             ===============================   ================================
          Net income per Common, Subordinated
                and Special unit                                   $   0.60        $   0.47           $   2.00        $   0.93
                                                             ===============================   ================================
</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>
                                                                                              Nine Months Ended
                                                                                                September 30,

                                                                                            2000              1999
                                                                                     -------------------------------------
OPERATING ACTIVITIES
<S>                                                                                          <C>               <C>
Net income                                                                                  $  165,270        $   65,955
Adjustments to reconcile net income to cash flows provided by
      (used for) operating activities:
      Depreciation and amortization                                                             27,952            17,280
      Equity in income of unconsolidated affiliates                                            (23,290)           (7,591)
      Distributions received from unconsolidated affiliates                                     25,997             4,607
      Leases paid by EPCO                                                                        7,904             7,918
      Minority interest                                                                          1,689               672
      Loss on sale of assets                                                                     2,276               122
      Net effect of changes in operating accounts                                              (29,942)          (34,246)
                                                                                     -------------------------------------
Operating activities cash flows                                                                177,856            54,717
                                                                                     -------------------------------------
INVESTING ACTIVITIES
Capital expenditures                                                                          (200,157)          (10,603)
Proceeds from sale of assets                                                                        85                 8
Business acquisitions, net of cash acquired                                                                     (208,095)
Collection of notes receivable from unconsolidated affiliates                                    6,519            16,719
Investments in and advances to unconsolidated affiliates                                        (2,307)          (58,460)
                                                                                     -------------------------------------
Investing activities cash flows                                                               (195,860)         (260,431)
                                                                                     -------------------------------------
FINANCING ACTIVITIES
Long-term debt borrowings                                                                      514,000           350,000
Long-term debt repayments                                                                     (355,000)          (59,923)
Cash dividends paid to partners                                                               (103,347)          (81,321)
Cash dividends paid to minority interest by Operating Partnership                               (1,055)             (830)
Units acquired by consolidated trust                                                                 -            (4,727)
Unit repurchases                                                                                  (465)                -
Cash contributions from EPCO to minority interest                                                   84                59
                                                                                     -------------------------------------
Financing activities cash flows                                                                 54,217           203,258
                                                                                     -------------------------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS                                                         36,213            (2,456)
CASH AND CASH EQUIVALENTS, JANUARY 1                                                             5,230            24,103
                                                                                     -------------------------------------
CASH AND CASH EQUIVALENTS, SEPTEMBER 30                                                     $   41,443        $   21,647
                                                                                     =====================================
</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 September 30, 2000, consolidated
results of operations  for the three and nine month periods ended  September 30,
2000 and 1999 and  consolidated  cash  flows for the nine  month  periods  ended
September 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 nine month periods ended  September
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 September 30, 2000, the Company's 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 37.35% 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.



                                       4
<PAGE>

K/D/S Promix LLC ("Promix") - a 33.33% economic  interest in a NGL fractionation
facility  and  related  storage  facilities  located  in  south  Louisiana.  The
Company's  investment includes excess cost over the underlying equity in the net
assets of Promix of $7.5 million at September 30, 2000 which is being  amortized
using the straight-line method over a period of 20 years. For the three and nine
months ended  September  30, 2000,  the Company  recorded  amortization  expense
associated with this excess cost of $0.1 million and $0.3 million, respectively,
which is reflected in the equity earnings from Promix.  For the third quarter of
1999, such amortization was $0.2 million.

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.  At September  30, 2000,  the Dixie
investment  consisted of an 11.5% interest in a corporation  owning a 1,301-mile
propane pipeline and associated facilities extending from Mont Belvieu, Texas to
North  Carolina.  On October 6, 2000, the Company  purchased an additional  8.4%
economic  interest in Dixie from Conoco Pipe Line Company for $19.4 million (see
Note 11). The Company's ownership interest in Dixie now stands at 19.9%. Through
September 30, 2000, these investments were 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:

                                        September 30,       December 31,
                                            2000                1999
                                     ---------------------------------------
Accounted for on equity basis:
    BEF                                      $   61,989          $   63,004
    Promix                                       49,981              50,496
    BRF                                          29,673              36,789
    Tri-States                                   27,697              28,887
    EPIK                                         17,662              15,258
    Belle Rose                                   11,655              12,064
    BRPC                                         19,344              11,825
    Wilprise                                      9,160               9,283
Accounted for  on cost basis:
    VESCO                                        33,000              33,000
    Dixie                                        20,045              20,000
                                     ---------------------------------------
Total                                       $   280,206         $   280,606
                                     =======================================



                                       5
<PAGE>

The following table shows equity in income (loss) of  unconsolidated  affiliates
for the three and nine month periods ended September 30, 2000 and 1999:
<TABLE>
<CAPTION>

                                 For Three Months Ended                  For Nine Months Ended
                                     September 30,                           September 30,
                                 2000              1999                 2000               1999
                          -------------------------------------   -------------------------------------
<S>                                <C>               <C>                 <C>                 <C>
BEF                                $   2,190         $   2,519           $   13,002          $   4,756
MBA                                        -                72                    -              1,256
BRF                                      434              (258)               1,171               (544)
BRPC                                     134                 4                  115                  4
EPIK                                    (124)               59                1,846                236
Wilprise                                 135              (130)                 297               (130)
Tri-States                               694               472                2,215                472
Promix                                 1,170               (93)               4,378                (93)
Belle Rose                               117               245                  266                245
Other                                      -               258                    -              1,389
                          -------------------------------------   -------------------------------------
Total                              $   4,750         $   3,148           $   23,290          $   7,591
                          =====================================   =====================================
</TABLE>

The following table presents  summarized  income  statement  information for the
unconsolidated subsidiaries accounted for by the equity method:

<TABLE>
<CAPTION>
                              For the Three Months ended                            For the Nine Months ended
                                  September 30, 2000                                    September 30, 2000
                  ---------------------------------------------------   ---------------------------------------------------
                                      Operating           Net                               Operating           Net
                      Revenues          Income           Income             Revenues          Income           Income
                  ---------------------------------------------------   ---------------------------------------------------
<S>                      <C>              <C>              <C>                 <C>              <C>              <C>
BEF                      $  77,330        $   6,201        $   6,570           $ 214,761        $  38,575        $  39,007
EPIK                         1,856            (290)            (249)              14,789            3,561            3,699
BRF                          4,775            1,282            1,347              13,989            3,504            3,631
BRPC                         2,333              398              477               2,333              211              383
Wilprise                       727              398              406               2,149              867              891
Tri-States                   3,430            2,059            2,088              10,677            6,530            6,650
Promix                      12,242            3,959            4,019              36,968           14,057           14,274
Belle Rose                     536              279              279               1,802              645              645
                  ---------------------------------------------------   ---------------------------------------------------
Total                    $ 103,229        $  14,286        $  14,937           $ 297,468        $  67,950        $  69,180
                  ===================================================   ===================================================

                              For the Three Months ended                            For the Nine Months ended
                                  September 30, 1999                                    September 30, 1999
                  ---------------------------------------------------   ---------------------------------------------------
                                      Operating           Net                               Operating           Net
                      Revenues          Income           Income             Revenues          Income           Income
                  ---------------------------------------------------   ---------------------------------------------------
BEF                      $  47,885        $   7,067        $   7,556           $ 128,516        $  19,476        $  14,269
EPIK                         2,520              253              264               5,954              733              751
BRF                          2,317             (512)            (827)              2,317             (579)          (1,741)
BRPC                             -                -               13                   -                -               13
Wilprise                       291             (399)            (390)                291             (399)            (390)
Tri-States                   4,611            1,377            1,417               4,611            1,377            1,417
Promix                       7,990            1,715              354               7,990            1,715              354
Belle Rose                     639              566              566               1,138              551              590
MBA                              -                -              147              12,329            2,731            2,563
Other                          910              516              516               4,842            2,778            2,778
                  ---------------------------------------------------   ---------------------------------------------------
Total                    $  67,163        $  10,583        $   9,616           $ 167,988        $  28,383        $  20,604
                  ===================================================   ===================================================
</TABLE>

                                       6
<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  forecasted  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 its contingent Unit 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 $55.2  million  using  present  value
techniques. In August 2000, the TNGL acquisition purchase price and the value of
the Shell Processing  Agreement were increased by the $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
Shell Processing Agreement will be adjusted accordingly.  The value of the Shell
Processing  Agreement  (classified as an Intangible  Asset on the balance sheet)
was $80.2  million at September 30, 2000 and $54.0 million at December 31, 1999.
The value has been  adjusted for the new Special Units issued to Shell (as noted
previously),   finalization  of  purchase  accounting  adjustments  and  related
amortization.

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.



                                       7
<PAGE>

Pro Forma effect of Acquisitions

The following table presents  unaudited pro forma  information for the three and
nine month periods ended  September 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             Nine
                                                    Months            Months
                                                     Ended            Ended
                                             -----------------------------------
                                                     September 30, 1999
                                             -----------------------------------
Revenues                                            $  506,944      $ 1,151,444
                                             ===================================
Net income                                          $   40,586      $    80,698
                                             ===================================
Allocation of net income to
      Limited partners                              $   40,180      $    79,891
                                             ===================================
      General Partner                               $      406      $       807
                                             ===================================
Units used in earning per Unit calculations
      Basic                                             66,696           66,715
                                             ===================================
      Diluted                                           81,196           81,215
                                             ===================================

Income per Unit before minority interest
      Basic                                         $     0.61      $      1.21
                                             ===================================
      Diluted                                       $     0.50      $      0.99
                                             ===================================

Net income per Unit
      Basic                                         $     0.60      $      1.20
                                             ===================================
      Diluted                                       $     0.49      $      0.98
                                             ===================================


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 September 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"),  a 10-year $54
million loan agreement with the Mississippi Business Finance Corporation ("MBFC"
and the "$54  Million  MBFC  Loan") and $50 million  outstanding  under the $350
Million Bank Credit  Facility.  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 at the time of the offerings.



                                       8
<PAGE>

The following table summarizes long-term debt at:

                                             September 30,       December 31,
                                                 2000                1999
                                          --------------------------------------
Borrowings under:
     $200 Million Bank Credit Facility                               $   129,000
     $350 Million Bank Credit Facility             $   50,000            166,000
     $350 Million Senior Notes                        350,000
     $54 Million MBFC Loan                             54,000
                                          --------------------------------------
            Total                                     454,000            295,000
Less current maturities of long-term debt              50,000            129,000
                                          --------------------------------------
            Long-term debt                        $   404,000        $   166,000
                                          ======================================

At September 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 credit 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 credit facility.  The $300
million revolving credit 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.  Due to borrowings in the third quarter for investment and
working capital  purposes,  $50 million was  outstanding  under this facility at
September 30, 2000.

The  credit  agreement  relating  to this  facility  contains a  prohibition  on
distributions to or purchases 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  credit  agreement  generally  prohibits
redemptions of Units except for those transactions related to the 1,000,000 Unit
Buy-back Program announced in July 2000. In August 2000, the lenders and Company
executed a waiver allowing for this program.  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 September 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


                                       9
<PAGE>

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 $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 September 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 September 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


                                       10
<PAGE>

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.

Subordinated  Units.  The  21,409,872  Subordinated  Units have no voting rights
until converted into Common Units at the end of the  Subordination  Period.  The
Subordination  Period will  generally  extend until the first day of any quarter
beginning  after June 30, 2003 when the  Conversion  Tests have 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.

The  Partnership  Agreement  stipulates that 50% of the  Subordinated  Units (or
10,704,936 Subordinated Units) may undergo an early conversion into Common Units
should certain  criteria be satisfied.  Based upon these criteria,  the earliest
that the first 25% of the Subordinated Units (or 5,352,468  Subordinated  Units)
would convert into Common Units is April 1, 2002.  Should the criteria  continue
to be satisfied  through the first  quarter of 2003,  an  additional  25% of the
Subordinated  Units would undergo an early conversion into Common Units on April
1, 2003. The remaining  10,704,936  Subordinated Units would convert into Common
Units on July 1, 2003 should the balance of the conversion requirements be met.

Special Units. The Special Units issued to Shell do not accrue distributions and
are not entitled to cash distributions until their conversion into Common Units.
For financial accounting purposes,  the Special Units are allocated a portion of
net income based on the ownership  interest that such Units  represent.  For tax
purposes,  the Special Units generally are not allocated a portion of net income
but are allocated a certain amount of depreciation  until their  conversion into
Common  Units.  On August 1, 2000,  1.0 million of the original  tranche of 14.5
million  Special Units  converted into Common Units.  The remaining 13.5 million
Special  Units of the original  tranche will  automatically  convert into Common
Units as follows:  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
(referred to as the "second  tranche" of Special  Units).  Per an agreement with
Shell, the Company issued the second tranche of Special Units on August 1, 2000.
Shell has the  opportunity  to earn an additional  3.0 million  non-distribution
bearing,  convertible  Contingency  Units  (i.e.,  a "third  tranche" of Special
Units)  based  on  certain   performance   criteria  for  calendar   year  2001.
Specifically, Shell will earn the third tranche of Special 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
the third  tranche of Special  Units.  If both the second and third  tranches of
Special Units are earned,  1.0 million of these Special Units would convert into
Common  Units on August 1, 2002 and 5.0  million of these  Special  Units  would
convert  into Common Units on August 1, 2003.  Special  Units issued to Shell as
part of these  contingent  agreements  do not accrue  distributions  and are not
entitled to cash distributions  until conversion into Common Units. With regards
to income and depreciation  allocation from either a financial accounting or tax
basis,  these  Special  Units will be treated  identically  to the 14.5  million
Special Units originally issued.



                                       11
<PAGE>

Under the rules of the New York Stock  Exchange,  the conversion  feature of the
Special Units into Common Units requires approval of the Company's  Unitholders.
With respect to the August 2000  conversion,  EPC Partners II, Inc.  ("EPC II"),
which owns in excess of 81% of the outstanding  Common Units, voted its Units in
favor of conversion, which provided 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 September 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.

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 Nine Months Ended
                                                      At September 30,               At September 30,
                                                     2000          1999             2000          1999
                                                -----------------------------  -----------------------------
<S>                                                 <C>           <C>              <C>           <C>
Weighted average number of Common
     and Subordinated Units outstanding             67,356        66,696           66,917        66,715
Weighted average number of Special
     Units to be converted to Common Units          15,826         9,614           14,945         3,240
                                                -----------------------------  -----------------------------
Units used to compute diluted
     earnings per Unit                              83,182        76,310           81,862        69,955
                                                =============================  =============================
</TABLE>

The second tranche of Special Units  (formerly  Contingency  Units, as described
above) are included in diluted earnings per Unit calculation beginning August 1,
2000 (the  effective  date of the  contingent  agreement  between  Shell and the
Company).  The Contingency  Units relating to the third tranche of Special Units
to be issued upon achieving certain performance  criteria in future periods have
been  excluded  from diluted  earnings per Unit because such tests have not been
met at September 30, 2000.

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  incentive cash  distributions  to the General
Partner of $0.2  million on August 10,  2000 and $0.2  million on  November  10,
2000 for the second and third quarter of 2000, respectively.



                                       12
<PAGE>

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

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
    Fourth Quarter       $      0.525      $      0.525     October 31, 2000    November 10, 2000
      (through November 13, 2000)
</TABLE>


7.   SUPPLEMENTAL CASH FLOW DISCLOSURE

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

                                Nine Months Ended
                                  September 30,

                                                2000               1999
                                           ------------------------------------
(Increase) decrease in:
    Accounts receivable                        $   (15,409)       $   (48,448)
    Inventories                                    (66,270)           (64,992)
    Prepaid and other current assets                 1,297             (4,647)
    Intangible assets                               (4,805)                 -
    Other assets                                    (5,419)            (1,757)
Increase (decrease) in:
    Accounts payable                                 7,109             43,944
    Accrued gas payable                             47,517             61,474
    Accrued expenses                                (6,314)             1,236
    Other current liabilities                       12,749            (21,595)
    Other liabilities                                 (397)               539
                                           ------------------------------------
Net effect of changes in operating accounts    $   (29,942)       $   (34,246)
                                           ====================================


Capital  expenditures  for the first  nine  months of 2000 were  $200.2  million
compared to $10.6 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,  $71.5  million in  construction  costs for the Lou-Tex NGL
Pipeline and $4.1 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.



                                       13
<PAGE>

8.   RECENTLY ISSUED ACCOUNTING STANDARDS

In December 1999, the  Securities and Exchange  Commission  ("SEC") issued Staff
Accounting   Bulletin  ("SAB")  No.  101  "  Revenue  Recognition  in  Financial
Statements."  SAB 101  summarizes  certain  of the  staff's  views  in  applying
generally  accepted  accounting  principles to revenue  recognition in financial
statements. On June 26, 2000, the SEC issued an amendment to SAB 101 effectively
delaying its  implementation  until the fourth quarter of fiscal years beginning
after December 15, 1999. The Company  believes that the adoption of SAB 101 will
not have a material effect on its results of operations.

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.


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 of the General Partner.

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.   At  September  30,  2000,  the  Operating
Partnership's  consolidated debt portfolio interest rate exposure was 55 percent
fixed and 45 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.



                                       14
<PAGE>

The effect of these swaps  (none of which are  leveraged)  was to  decrease  the
Company's  interest  expense by $0.4  million and $0.9 million for the three and
nine months  ended  September  30,  2000,  respectively.  Following  is selected
information  on the Company's  portfolio of interest rate swaps at September 30,
2000:

Interest Rate Swap Portfolio at September 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% / 7.3100%
      $ 50.0 March 2000 - March 2005        March 2001         8.25% / 7.3150%
      $ 54.0 March 2000 - March 2010        March 2003         8.70% / 7.6575%

Notes:
(1)  All swaps  outstanding  at  September  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-rate  payor.  The
     floating rate was the rate in effect as of September 30, 2000.

10.  SEGMENT INFORMATION

The Company has five reportable  operating  segments:  Fractionation,  Pipeline,
Processing,   Octane   Enhancement   and  Other.   Fractionation   includes  NGL
fractionation,  butane isomerization  (converting normal butane into high purity
isobutane) and polymer grade propylene fractionation 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 operating income 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.

Consolidated  property,  plant and equipment and  investments in and advances to
unconsolidated  affiliates  are  allocated  to each segment on the basis of each
asset's or investment's  principal  operations.  The principal  reconciling item
between consolidated property,  plant and equipment and segment property,  plant
and equipment is construction-in-progress. Segment property, plant and equipment
represents  those  facilities  and projects that  contribute to gross  operating
margin.  Since assets under construction do not generally  contribute to segment
gross operating  margin,  these assets are not included in the operating 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.



                                       15
<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
                                         -------------------------------------------------------------------------------------------
<S>                                        <C>          <C>          <C>           <C>           <C>        <C>          <C>
Revenues from external customers
   Three months ended September 30, 2000   $  120,227   $   (1,864)  $  605,875    $   2,191     $    793   $  (5,359)   $  721,863
   Three months ended September 30, 1999       56,278        6,059      387,218        2,519            -      (7,046)      445,028
   Nine months ended September 30, 2000       322,793       25,998    1,730,976       13,003        2,059     (15,232)    2,079,597
   Nine months ended September 30, 1999       174,427       14,160      610,729        4,756            -     (32,688)      771,384

Intersegment revenues
   Three months ended September 30, 2000       46,538       12,083      165,761            -           93    (224,475)            -
   Three months ended September 30, 1999       49,353        9,815       62,299            -          123    (121,590)            -
   Nine months ended September 30, 2000       129,266       40,108      447,646            -          282    (617,302)            -
   Nine months ended September 30, 1999        86,713       27,126       62,336            -          327    (176,502)            -

Total revenues
   Three months ended September 30, 2000      166,765       10,219      771,636        2,191          886    (229,834)      721,863
   Three months ended September 30, 1999      105,631       15,874      449,517        2,519          123    (128,636)      445,028
   Nine months ended September 30, 2000       452,059       66,106    2,178,622       13,003        2,341    (632,534)    2,079,597
   Nine months ended September 30, 1999       261,140       41,286      673,065        4,756          327    (209,190)      771,384

Gross operating margin by segment
   Three months ended September 30, 2000       32,510       10,292       29,083        2,190          429           -        74,504
   Three months ended September 30, 1999       36,142        6,985        7,110        2,519          170           -        52,926
   Nine months ended September 30, 2000        96,432       39,120       87,123       13,002        1,854           -       237,531
   Nine months ended September 30, 1999        78,955       15,836        6,677        4,756          651           -       106,875


Property, plant and equipment
   At September 30, 2000                      358,802      356,307      127,001            -        1,062      98,664       941,836
   At December 31, 1999                       362,198      249,453      122,495            -          113      32,810       767,069


Investments in and advances
   to unconsolidated affiliates
   At September 30, 2000                       98,998       86,219       33,000       61,989            -           -       280,206
   At December 31, 1999                        99,110       85,492       33,000       63,004            -           -       280,606
</TABLE>

Pipeline  revenues  for the three months  ended  September  30, 2000 include the
impact of a $9.8 million intercompany elimination between revenues and operating
costs and  expenses  (attributable  to the second  quarter  of 2000).  Since the
decrease  in  revenues is offset by an equal  decrease  in  operating  costs and
expenses,  there  was no  impact  on gross  operating  margin as a result of the
reclassification.

                                       16
<PAGE>

A reconciliation of segment gross operating margin to consolidated income before
minority interest follows:

<TABLE>
<CAPTION>
                                                                   For Three Months Ended              For Nine Months Ended
                                                                       September 30,                       September 30,
                                                                   2000             1999               2000             1999
                                                              ---------------------------------  ----------------------------------
<S>                                                                <C>              <C>                <C>              <C>
Total segment gross operating margin                               $   74,504       $   52,926         $  237,531       $  106,875
     Depreciation and amortization                                     (9,029)          (7,012)           (25,907)         (16,368)
     Retained lease expense, net                                       (2,660)          (2,645)            (7,984)          (7,978)
     Loss on sale of assets                                                27                1             (2,276)            (122)
     Selling, general and administrative                               (6,978)          (3,200)           (20,020)          (9,200)
                                                              ---------------------------------  ----------------------------------
Consolidated operating income                                          55,864           40,070            181,344           73,207
     Interest expense                                                  (7,486)          (4,515)           (23,330)          (8,907)
     Interest income (expense) from unconsolidated affiliates             (88)             407                182            1,096
     Dividend income from unconsolidated affiliates                     2,241                -              6,236                -
     Interest income - other                                              317              682              3,023            1,114
     Other, net                                                           (71)              72               (496)             117
                                                              ---------------------------------  ----------------------------------
Consolidated income before minority interest                       $   50,777       $   36,716         $  166,959       $   66,627
                                                              =================================  ==================================
</TABLE>


11.      SUBSEQUENT EVENTS

On September 25, 2000, the Company announced that its Operating  Partnership has
executed a definitive  agreement to purchase  Acadian Gas, LLC ("Acadian")  from
Coral Energy, LLC, an affiliate of Shell Oil Company,  for $226 million in cash,
inclusive of working capital.  The acquisition of Acadian integrates natural gas
pipeline  systems in South  Louisiana  with the Company's Gulf Coast natural gas
processing and NGL fractionation,  pipeline and storage system. Acadian's assets
are comprised of the 438-mile Acadian,  577-mile Cypress and 27-mile  Evangeline
natural gas pipeline  systems,  which  together have over one billion cubic feet
("Bcf") per day of capacity. These natural gas pipeline systems are wholly-owned
by Acadian,  with the exception of the Evangeline  system in which Acadian holds
an approximate 49.5% economic interest. The system includes a leased natural gas
storage  facility  at  Napoleonville,   Louisiana  with  3.4  Bcf  of  capacity.
Completion  of this  transaction  is subject to  certain  conditions,  including
regulatory  approvals.  The  purchase is expected to be  completed in the fourth
quarter of 2000.

On October 6, 2000,  the Company  announced  that a subsidiary  had purchased an
additional  3,521  shares of common stock of Dixie from Conoco Pipe Line Company
for  approximately  $19.4 million.  The purchase  brings the Company's  economic
interest in Dixie to 19.9%.

                                       17
<PAGE>

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

            For the Interim Periods ended September 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. (the "Company") included elsewhere herein. All
references  herein to "Shell",  unless the context  indicates  otherwise,  shall
refer collectively to Shell Oil Company, its subsidiaries and affiliates.

Uncertainty of Forward-Looking Statements and Information

         MD&A 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,"
"believe," 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 due to weather and other
concerns, (c) operational and systems risks, (d) environmental  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.

         In addition,  the Company's  expectations  regarding its future capital
expenditures  as described in  "Liquidity  and Capital  Resources"  are only its
forecasts  regarding these matters.  In addition to the factors described in the
previous paragraph,  these forecasts may be substantially  different from actual
results,  which are affected by the following major factors: (a) the accuracy of
the Company's estimates regarding its spending requirements,  (b) the occurrence
of any  unanticipated  acquisition  opportunities,  (c) the need to replace  any
unanticipated  losses in capital assets, (d) changes in the strategic  direction
of  the  Company  and  (e)  unanticipated  legal,   regulatory  and  contractual
impediments with regards to its construction projects.

Company Overview

         The Company is a leading  integrated North American provider of natural
gas  processing  and  natural  gas  liquids  ("NGL"  or  "NGLs")  fractionation,
transportation  and storage  services to producers of NGLs and  consumers of NGL
products.  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  document  include the assets and  operations  of the  Operating
Partnership and its subsidiaries.



                                       18
<PAGE>

         The  Company  (i)  processes   natural  gas  into  a  merchantable  and
transportable  form of energy  that meets  industry  quality  specifications  by
removing NGLs and impurities;  (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:  (a) one of
the largest NGL  fractionation  facilities  in the United States with an average
gross  production  capacity of 210 thousand  barrels per day  ("MBPD");  (b) the
largest  butane  isomerization  complex  in the  United  States  with an average
isobutane  production  capacity of 116 MBPD; (c) a MTBE production facility with
an  average  gross  production  capacity  of 15  MBPD;  and  (d)  two  propylene
fractionation units with an average combined production capacity of 31 MBPD. 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 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,  five NGL
fractionation  facilities  with a combined  gross  capacity  of 341 MBPD and net
capacity  of 151  MBPD  and a  propylene  fractionation  facility  with a  gross
capacity of 22.5 MBPD and net  capacity of 6.8 MBPD.  In  addition,  the Company
owns and operates a NGL  fractionation  facility in Petal,  Mississippi  with an
average production capacity of 7 MBPD.

         The Company  owns,  operates or has an interest in  approximately  65.0
million barrels of gross storage capacity (44.3 million barrels of net capacity)
in Texas,  Louisiana and Mississippi that are an integral part of its processing
operations.  The Company also leases and operates one of only two commercial NGL
import/export  terminals  on the  Gulf  Coast.  In  addition,  the  Company  has
operating  and  non-operating  ownership  interests  in over 2,900  miles of NGL
pipelines  along the Gulf Coast  (including  the  206-mile  Lou-Tex NGL Pipeline
currently under  construction  and expected in service during the fourth quarter
of 2000).

         The Company's  operating  margins are derived from services provided to
its tolling  customers  and from  merchant  activities.  In the  Company's  toll
processing operations,  it does not take title to the product and is simply paid
a fee based on volumes processed,  transported, stored or handled. The Company's
profitability  from toll processing  operations depends primarily on the volumes
of natural gas, NGLs and  refinery-sourced  propane/propylene  mix processed and
transported  and the level of associated  fees charged to its customers.  In the
Company's  isomerization  merchant  activities  and  to  a  certain  extent  its
propylene fractionation business, it takes title to feedstock products and sells
processed  end  products.  The  Company's   profitability  from  these  merchant
activities is dependent on the prices of feedstocks and end products,  which may
vary on a seasonal basis. In the Company's propylene  fractionation business and
isomerization  business,  the Company generally attempts to match the timing and
price of its feedstock  purchases  with those of the sales of end products so as
to reduce exposure to fluctuations in commodity prices. The Company's  operating
margins from its natural gas processing  business are generally derived from the
margins  earned on the sale of purity NGL  products  extracted  from natural gas
streams.  To the extent it takes title to the NGLs  removed from the natural gas
stream and reimburses the producer for the reduction in the British thermal unit
("Btu") content and/or the natural gas used as fuel (the "PTR" or  "shrinkage"),
the  Company's  margins are  affected  by the prices of  NGLs and  natural  gas.
Management  uses  financial  instruments to reduce its exposure to the change in
the prices of NGLs and natural gas.



                                       19
<PAGE>

         The Company  will  continue to analyze  potential  acquisitions,  joint
ventures or similar  transactions  with businesses that operate in complementary
markets and  geographic  regions.  In recent years,  major oil and gas companies
have sold  non-strategic  assets including  assets in the midstream  natural gas
industry in which the Company operates. Management believes that this trend will
continue,  and the Company expects  independent oil and natural gas companies to
consider  similar  options.  In the last two years,  the Company  has  announced
several  acquisitions,  the largest of which are Tejas Natural Gas Liquids,  LLC
("TNGL")  (completed  in the  third  quarter  of  1999)  and  Acadian  Gas,  LLC
("Acadian")  (announced in September 2000 and pending  completion).  See "Recent
Acquisitions" under the "Results of Operations of the Company" section below for
further details on these and other acquisition transactions.

Business Environment

         The  domestic  and  international  economies  continue  to  be  strong,
creating  firm demand for the products  and services of the U. S. NGL  industry.
Each of the Company's  business segments have benefited from steady domestic and
international demand for NGLs, petroleum liquids and MTBE.

         During  the  first  nine  months of 2000,  the  Company's  natural  gas
processing  business  was  running at  optimal  levels due to a strong NGL price
environment  and robust demand for natural gas processing  services by producers
such as Shell, the Company's largest natural gas processing customer. The strong
NGL price  environment  has  supported  full NGL recovery at the  Company's  gas
processing  plants.  Recent increases in natural gas prices may moderate maximum
recovery  levels  for some NGL  products  (primarily  ethane)  during the fourth
quarter of 2000.  An  increase  in natural  gas  production  that is high in NGL
content, which will be available for processing as producers respond to the high
natural  gas  price  environment,  is  expected  to offset  to some  degree  the
potential decline in product recovery levels.

         The Company's NGL production in 2000 has  significantly  increased over
1999 levels as a result of steady to growing  levels of natural  gas  production
available  for  processing,  higher NGL content  natural gas and new  processing
facilities,  such as the Company's Neptune plant. Neptune was brought on-line in
February 2000 and is now producing in excess of 16 MBPD.  For the three and nine
months ended  September  30, 2000,  equity NGL  production  at the Company's gas
processing facilities averaged 73 MBPD and 72 MBPD, respectively, as compared to
65 MBPD during the third quarter of 1999. Management believes that the Company's
equity NGL  production  volumes  will  continue to increase  during  2001.  This
increase will result from gas production coming on-line from several new Gulf of
Mexico gas fields to which the Company  holds gas  processing  rights,  the most
significant  of which is Shell's  deepwater  Brutus  development  (with expected
equity NGL production of 10 MBPD by the end of 2001).

         The highly competitive  environment in which the Company's Mont Belvieu
NGL fractionators  operate has continued to suppress NGL  fractionation  fees at
these facilities.  The Company has and is continuing to aggressively acquire new
and  reacquire  previous  NGL  fractionation  customers,   along  with  offering
competitively-priced   bundled  service   packages   involving   transportation,
fractionation  and other services.  These service  packages allow the Company to
take full  advantage of its presence  throughout the entire Gulf Coast NGL value
chain.  As a result  of  these  efforts,  throughput  at the  Mont  Belvieu  NGL
fractionation  facility has increased  significantly  in 2000. For the three and
nine months ended September 30, 2000, throughput averaged 174 MBPD and 169 MBPD,
respectively,  as compared  to 149 MBPD and 155 MBPD during the same  periods in
1999. Throughput levels at the Company's Louisiana NGL fractionation  facilities
have also increased due to additional production from gas processing facilities.
With the  completion of the Lou-Tex NGL Pipeline in the fourth  quarter of 2000,
the  Company  will  be   positioned  to  fully  utilize  its  Mont  Belvieu  NGL
fractionation  facilities to process NGL's from Louisiana  starting in the first
quarter of 2001.

         The demand for the Company's commercial  isomerization services depends
on requirements for isobutane in excess of naturally occurring isobutane that is
produced from NGL  fractionation and refinery  operations.  The market for these
services  has been  firm in 2000 due to the  continued  need for  isobutane  for
alkylation,  propylene  oxide, and as a feedstock for MTBE.  Management  expects
that this market will remain steady throughout the remainder of 2000.



                                       20
<PAGE>

         During  the  third  quarter  of 2000,  the  rapid  price  increase  for
propylene experienced during the first half of 2000 began to reverse. During the
first half,  propylene prices were driven by the dramatic increases in crude oil
and NGL prices.  These factors  contributed to similar increases in the cost for
ethylene and  propylene  from steam  crackers and for refinery  grade  propylene
produced by refineries. In addition, the price spike in motor gasoline created a
very  competitive  market for refinery grade propylene used in the production of
alkylate which is blended to motor  gasoline.  With the perceived  stabilization
and  potential  softening  in crude  oil  prices,  propylene  buyers  have  been
successful in achieving  price  reductions  by reducing  purchases and consuming
inventory.   Contract  prices  for  polymer  grade   propylene   increased  from
approximately  19.5 cents per pound at the  beginning  of 2000 to 27.5 cents per
pound  by the end of June.  By the end of  September,  the  contract  price  had
slipped to 24 cents per pound.  Management anticipates that prices will continue
to soften  throughout  the remainder of this year with the price leveling out to
that seen in the  beginning  of 2000.  The  Company is  exposed  to these  price
decreases  only to the  extent  that it  sells  product  pursuant  to  long-term
agreements with market-based pricing or spot market transactions.

         Favorable  domestic  economic  conditions  have led to an  increase  in
demand for the Company's pipeline  transportation services as NGL feedstocks and
products are being  consumed at record levels  throughout the Gulf Coast region.
Pipeline  throughput  has also  increased as a result of strategic  acquisitions
made by the Company,  such as the purchase of the Lou-Tex Propylene  Pipeline in
the first quarter of 2000. The Company expects  pipeline  throughput to continue
to increase as new projects such as the Lou-Tex NGL Pipeline become operational.
The Company anticipates using the Lou-Tex NGL Pipeline to transport NGL products
and mixed  propane/propylene  streams between the Louisiana and Texas markets to
take  advantage  of  product  value  differentials  between  the two  regions in
addition to transporting  production from Louisiana gas processing facilities to
Mont Belvieu for fractionation.

         During the second quarter of 2000, Belvieu Environmental Fuels' ("BEF")
MTBE operations benefited from tight international  supplies as Middle East MTBE
volumes were diverted to European  countries  instead of the United States.  The
spot price  increased to near record  levels in the second  quarter of 2000 when
the lower  imports were met with the  increased  seasonal  demands from domestic
gasoline producers.  During the second quarter of 2000, MTBE prices reached near
record levels  averaging  $1.32 per gallon ($1.58 during the month of June).  As
refiners  decreased  demand and imports  returned to the domestic  market,  MTBE
market prices began to decline in the third quarter to  approximately  $1.11 per
gallon by the end of September.  The Company's operating results from its Octane
Enhancement  segment  are  impacted  by changes  in market  prices  since  BEF's
contract with Sunoco, Inc. R&M ("Sun"),  which is contracted to purchase 100% of
BEF's MTBE  production,  is based on a  market-related  negotiated  price.  As a
result,  management believes that gross operating margin in this segment will be
affected  by  seasonal  variations  in the  demand for motor  gasoline  which is
normally  greater in the April to September  period  (i.e.,  the summer  driving
season) than the October to March period.  Management  expects fourth quarter of
2000  gross  operating  margin  from  Octane  Enhancement  will be less than the
results posted for the third quarter of 2000.



                                       21
<PAGE>

         The following table  illustrates  selected average quarterly prices for
natural gas,  crude oil, selected  NGL  products  and  polymer  grade  propylene
since the first quarter of 1999:

<TABLE>
<CAPTION>
                                                                                                   Polymer
                      Natural                                             Normal                    Grade
                        Gas,      Crude Oil,    Ethane,     Propane,     Butane,     Isobutane,  Propylene,
                      $/MMBtu      $/barrel    $/gallon     $/gallon     $/gallon     $/gallon     $/pound
                        (a)          (b)          (c)         (c)          (c)          (c)          (c)
                    -----------------------------------------------------------------------------------------
Fiscal 1999:
<S>                        <C>         <C>          <C>          <C>          <C>          <C>         <C>
   First quarter           $1.70       $13.05       $0.20        $0.24        $0.29        $0.31       $0.12
   Second quarter          $2.12       $17.66       $0.27        $0.31        $0.37        $0.38       $0.13
   Third quarter           $2.56       $21.74       $0.34        $0.42        $0.49        $0.49       $0.16
   Fourth quarter          $2.52       $24.54       $0.30        $0.41        $0.52        $0.52       $0.19

Fiscal 2000:

   First quarter           $2.49       $28.84       $0.38        $0.54        $0.64        $0.64       $0.21
   Second quarter          $3.41       $28.79       $0.36        $0.52        $0.60        $0.68       $0.26
   Third quarter           $4.22       $31.61       $0.40        $0.60        $0.68        $0.67       $0.26
</TABLE>

Notes:
(a)  Natural gas, NGL and polymer grade propylene prices represent an average of
     index prices
(b)  Crude Oil price is representative of West Texas Intermediate

Results of Operation of the Company

         The  Company has five  reportable  operating  segments:  Fractionation,
Pipeline,  Processing,  Octane Enhancement and Other. Fractionation includes NGL
fractionation,  butane isomerization  (converting normal butane into high purity
isobutane) and polymer grade propylene fractionation 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" or "margin").  Gross
operating  margin reported for each segment  represents  operating income 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.



                                       22
<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 nine month periods ended September 30, 2000 and 1999 were as follows:

<TABLE>
<CAPTION>
                                                        For Three Months Ended                For Nine Months Ended
                                                            September 30,                         September 30,
                                                        2000              1999                2000             1999
                                                  -----------------------------------   -----------------------------------

Gross Operating Margin by segment:
<S>                                                      <C>              <C>                 <C>               <C>
     Fractionation                                       $   32,510       $   36,142          $   96,432        $   78,955
     Pipeline                                                10,292            6,985              39,120            15,836
     Processing                                              29,083            7,110              87,123             6,677
     Octane enhancement                                       2,190            2,519              13,002             4,756
     Other                                                      429              170               1,854               651
                                                  -----------------------------------   -----------------------------------
Gross Operating margin total                                 74,504           52,926             237,531           106,875
     Depreciation and amortization                            9,029            7,012              25,907            16,368
     Retained lease expense, net                              2,660            2,645               7,984             7,978
     Loss (gain) on sale of assets                             (27)              (1)               2,276               122
     Selling, general and administrative expenses             6,978            3,200              20,020             9,200
                                                  -----------------------------------   -----------------------------------
Consolidated operating income                            $   55,864       $   40,070          $  181,344        $   73,207
                                                  ===================================   ===================================
</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 nine
month periods ended September 30, 2000 and 1999 were as follows:

<TABLE>
<CAPTION>
                                                        For Three Months Ended                For Nine Months Ended
                                                            September 30,                         September 30,
                                                        2000              1999                2000             1999
                                                  -----------------------------------   -----------------------------------
Plant production and operating data:
<S>                                                       <C>              <C>                 <C>               <C>
        NGL Production                                    73               65                  72                65
        NGL Fractionation                                214              201                 215               178
        Isomerization                                     84               77                  77                73
        Propylene Fractionation                           34               26                  31                27
        MTBE                                               6                4                   5                 4
        Major Pipelines                                  278              264                 323               230
</TABLE>

         In order to more  accurately  compare  operating rates between the 2000
and 1999 periods, the 1999 volumes associated with the assets acquired from TNGL
have been adjusted to reflect the period in which the Company owned them.

Recent Acquisitions

         1999  Acquisitions.  The Company completed two acquisitions  during the
third quarter of 1999.  Effective August 1, 1999, the Company acquired TNGL from
Shell,  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


                                       23
<PAGE>

using the  purchase  method.  The value of the 20-year  natural  gas  processing
agreement  (classified  as an Intangible  Asset on the balance  sheet) was $80.2
million at September 30, 2000 and $54.0 million at December 31, 1999.  The value
has been  adjusted  for the 3.0 million  additional  special  partnership  Units
issued  to  Shell  on  August  1,  2000,  finalization  of  purchase  accounting
adjustments and related amortization.

         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 income from unconsolidated affiliates.

         The results of  operations  for the three and nine month  periods ended
September 30, 1999 include two month's  impact of the  businesses  acquired from
TNGL and three month's impact of the additional ownership interest acquired as a
result of the MBA  transaction.  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.

         2000  Acquisitions.  On September 25, 2000, the Company  announced that
its  Operating  Partnership  has  executed a  definitive  agreement  to purchase
Acadian Gas, LLC ("Acadian")  from Coral Energy,  LLC, an affiliate of Shell Oil
Company, for $226 million in cash, inclusive of working capital. The acquisition
of Acadian  integrates  natural gas pipeline systems in South Louisiana with the
Company's Gulf Coast natural gas processing and NGL fractionation,  pipeline and
storage system. Acadian's assets are comprised of the 438-mile Acadian, 577-mile
Cypress and 27-mile Evangeline natural gas pipeline systems, which together have
over one billion  cubic feet  ("Bcf")  per day of  capacity.  These  natural gas
pipeline  systems  are  wholly-owned  by  Acadian  with  the  exception  of  the
Evangeline system in which Acadian holds an approximate 49.5% economic interest.
The system  includes a leased  natural  gas storage  facility at  Napoleonville,
Louisiana with 3.4 Bcf of capacity. Completion of this transaction is subject to
certain conditions,  including regulatory approvals. The purchase is expected to
be completed in the fourth quarter of 2000.

Three Months Ended September 30, 2000 compared with Three Months Ended September
30, 1999

         Revenues,  Costs and  Expenses  and  Operating  Income.  The  Company's
revenues  increased 62% to $721.9  million in 2000 compared to $445.0 million in
1999.  The  Company's  operating  costs and expenses  increased by 64% to $659.0
million in 2000 versus $401.8 million in 1999. Operating income increased 39% to
$55.9 million in 2000 from $40.1 million in 1999.  The principal  factors behind
the increase in operating  income were (a) the improvement in NGL product prices
in  2000  versus  1999  and (b)  the  additional  margins  associated  with  the
businesses acquired in the TNGL acquisition. The 1999 period includes two months
of margins  associated with the TNGL operations whereas the 2000 period includes
three months.

         Fractionation.  For the third quarter of 2000,  gross operating  margin
for the  Fractionation  segment was $32.5  million  compared to $36.1 million in
1999. NGL  fractionation  margin increased $3.3 million in 2000 compared to 1999
primarily due to additional  margins from the  fractionators  acquired from TNGL
(i.e., Norco, Promix, Venice and Tebone). As noted earlier, the third quarter of
1999  includes  only two months of margin from these  fractionators  whereas the
third quarter of 2000 includes three months.  On a net basis, NGL  fractionation
volumes  increased  from  201 MBPD in 1999 to 214  MBPD in 2000  reflecting  the
Company's  successful campaign to increase its customer base at its Mont Belvieu
facilities.  Gross operating margin from the isomerization  business decreased a
net  $6.3  million  during  the  third  quarter  of  2000  primarily  due to the
reclassification  of margins from NGL merchant  activities that,  beginning with
the implementation of the current segment reporting  structure which was adopted
effective  with the beginning of the fourth quarter of 1999, are now reported in
the Processing segment.  Isomerization volumes increased from 77 MBPD in 1999 to
84 MBPD in 2000  due to  increased  demand  for the  Company's  services.  Gross
operating margin from the Company's propylene  fractionation  business decreased
slightly  primarily  due to  higher  energy  and  maintenance  costs.  Propylene
fractionation  volumes  increased from 26 MBPD in 1999 to 34 MBPD in 2000 due to
the startup of the BRPC facilities in July 2000.



                                       24
<PAGE>

         Pipeline.  The  Company's  gross  operating  margin  from the  Pipeline
segment was $10.3  million in the third quarter of 2000 compared to $7.0 million
during the same period in 1999.  Overall  volumes  increased to 278 MBPD in 2000
versus 264 MBPD in 1999.  The $3.3 million  increase  from quarter to quarter is
generally  attributable to the addition of margins from the pipeline and storage
assets  acquired from TNGL. As noted earlier,  the 1999 period includes only two
months of margin from these assets whereas the 2000 period reflects three months
of operations.

         Processing.  The Company's  gross  operating  margin for Processing was
$29.1  million  in 2000  compared  to $7.1  million  in  1999.  Due to the  TNGL
acquisition,  the  1999  margin  includes  only  two  months  of gas  processing
operations whereas the third quarter of 2000 includes three months. This segment
benefited  from  the strong  NGL  pricing  environment in 2000 versus 1999 and a
rise in equity NGL production from 65 MBPD in 1999 to 73 MBPD in 2000.

         Octane  Enhancement.  The Company's gross  operating  margin for Octane
Enhancement  decreased to $2.2  million in 2000 from $2.5  million in 1999.  The
decrease is the result of lower  margins on spot MTBE sales in the third quarter
of 2000 versus the margins on contract-based  MTBE sales in the third quarter of
1999. Equity MTBE production increased to 6 MBPD in 2000 from 4 MBPD in 1999.

         Other.  The Company's gross operating  margin for the Other segment was
$0.4 million in 2000 compared to $0.2 million in 1999. The increase is primarily
due to fee-based marketing services added in the fourth quarter of 1999.

         Selling,  general and administrative  expenses ("SG&A").  SG&A expenses
increased to $7.0 million in the third quarter of 2000 from $3.2 million  during
the same  period in 1999.  The  higher  costs  result  from an  increase  in the
administrative  services fee charged by EPCO to $1.6 million per month beginning
in January 2000 versus the  approximately  $1.1 million per month charged in the
third  quarter of 1999.  The  remainder of the increase is  attributable  to the
additional staff and resources deemed necessary to support the Company's ongoing
expansion activities resulting from acquisitions and other business development.

         Interest  expense.  The Company's  interest  expense  increased to $7.5
million in the third  quarter of 2000 from $4.5 million in the third  quarter of
1999. The increase is primarily attributable to a rise in average debt levels to
$437 million in the third quarter of 2000 from $255 million in the third quarter
of 1999. Debt levels have increased over the last year due to  acquisitions  and
various capital expenditures.

Nine Months Ended  September 30, 2000 compared with Nine Months Ended  September
30, 1999

         Revenues,  Costs and  Expenses  and  Operating  Income.  The  Company's
revenues  increased 170% to $2,079.6  million in 2000 compared to $771.4 million
in 1999.  The  Company's  operating  costs  and  expenses  increased  by 173% to
$1,878.2  million  in 2000  versus  $689.0  million  in 1999.  Operating  income
increased  148% to  $181.3  million  in 2000 from  $73.2  million  in 1999.  The
principal  factors  behind  the  increase  in  operating  income  were  (a)  the
improvement  in NGL product  prices in 2000  versus 1999 and (b) the  additional
margins  associated with the businesses  acquired in the TNGL  acquisition.  The
1999 period  includes two months of margins  associated with the TNGL operations
whereas the 2000 period includes nine months.

         Fractionation.   The   Company's   gross   operating   margin  for  the
Fractionation  segment  increased to $96.4 million in 2000 from $79.0 million in
1999.  For the first nine months of 2000,  NGL  fractionation  margin  increased
$29.4 million over 1999 as a result of the additional  margins from the four NGL
fractionators acquired from TNGL. As noted previously,  the 1999 period includes
only two  months of margin  from these  fractionators  whereas  the 2000  period
includes  nine  months.  In  addition,  equity  income from BRF  reflects  three
quarters  of  operations  in 2000  versus  one  quarter in 1999.  BRF  commenced
operations in the third quarter of 1999. Net NGL fractionation volumes increased
from  178  MBPD in 1999 to 215  MBPD  in  2000  primarily  due to the  Company's
acquisition of new and previous  customers at its Mont Belvieu NGL  fractionator
in 2000 and the increased  ownership of the Mont Belvieu NGL  fractionator  as a
result  of the MBA  acquisition.  For the  first  nine  months  of  2000,  gross
operating  margin  from  the  isomerization  business  decreased  $10.0  million
compared  to 1999  primarily  due to a  reclassification  of  margins  from  NGL
merchant  activities  that,  beginning  with the  implementation  of the current


                                       25
<PAGE>

segment reporting  structure which was adopted effective with the fourth quarter
of 1999,  are now  reported in the  Processing  segment.  Isomerization  volumes
increased  from 73 MBPD in 1999 to 77 MBPD in 2000 due to strong  demand for the
Company's services.  Gross operating margin from propylene fractionation for the
first nine months of 2000 decreased  slightly  compared to 1999 primarily due to
higher energy and  maintenance  costs.  Net equity  volumes at these  facilities
improved  to 31 MBPD in 2000  versus 27 MBPD in 1999 due to the  startup  of the
BRPC propylene concentrator in July 2000.

         Pipeline. The Company's gross operating margin for the Pipeline segment
was $39.2  million in 2000 compared to $15.8  million in 1999.  Overall  volumes
increased  to 323  MBPD in 2000  from 230 MBPD in  1999.  Generally,  the  $23.4
million increase in margin is attributable to the additional volumes and margins
contributed  by the  pipeline  and storage  assets  acquired  from TNGL,  higher
margins  from the Houston Ship  Channel  Distribution  System and EPIK due to an
increase in export volumes plus the margins from the Lou-Tex Propylene  Pipeline
that was purchased in March 2000.

         The growth in export volumes is attributable to EPIK's new chiller unit
that began  operations in the fourth  quarter of 1999. 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
up to 50 MBPD of 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.

         Processing.  The Company's  gross  operating  margin for Processing was
$87.1  million  in 2000  compared  to $6.7  million  in  1999.  Due to the  TNGL
acquisition,  the  1999  margin  includes  only  two  months  of gas  processing
operations whereas the 2000 period includes nine months.  This segment benefited
from the strong NGL pricing environment in 2000 versus 1999 and a rise in equity
NGL production from 65 MBPD in 1999 to 72 MBPD in 2000.

         Octane  Enhancement.  The Company's gross  operating  margin for Octane
Enhancement  increased to $13.0 million in 2000 from $4.8 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 early third quarter and lower debt
service costs. BEF made 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 1999 and
5 MBPD in 2000.

         Other.  The Company's gross operating  margin for the Other segment was
$1.9 million in 2000 compared to $0.7 million in 1999. The increase is primarily
due to fee-based marketing services added in the fourth quarter of 1999.

         Selling,  general and administrative  expenses. SG&A expenses increased
to $20.0 million in 2000 from $9.2 million  during 1999. The higher costs result
from an  increase  in the  administrative  services  fee charged by EPCO to $1.6
million  per month  beginning  in January  2000  versus the  approximately  $1.0
million per month charged in 1999. The remainder of the increase is attributable
to the additional  staff and resources deemed necessary to support the Company's
ongoing  expansion  activities  resulting from  acquisitions  and other business
development.

         Interest  expense.  The Company's  interest expense  increased to $23.3
million  in  2000  from  $8.9  million  in  1999.   The  increase  is  primarily
attributable  to a rise in average debt levels to $395 million in 2000 from $170
million  in  1999.  Debt  levels  have  increased  over  the  last  year  due to
acquisitions and various capital expenditures.

         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.



                                       26
<PAGE>

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 nine  months  ended
September 30, 2000 have increased  significantly  over the amounts shown for the
three and nine months ended  September 30, 1999.  The following  table  presents
certain  unaudited pro forma  information as if the TNGL and MBA acquisition had
been made as of January 1, 1999:

<TABLE>
<CAPTION>
                                                          Three               Nine
                                                          Months             Months
                                                          Ended              Ended
                                                -------------------------------------
                                                             September 30, 1999
                                                -------------------------------------
<S>                                                    <C>               <C>
Revenues                                               $  506,944        $ 1,151,444
                                                =====================================
Net income                                             $   40,586        $    80,698
                                                =====================================
Allocation of net income to
      Limited partners                                 $   40,180        $    79,891
                                                =====================================
      General Partner                                  $      406        $       807
                                                =====================================
Units used in earning per Unit calculations
      Basic                                                66,696             66,715
                                                =====================================
      Diluted                                              81,196             81,215
                                                =====================================
Income per Unit before minority interest
      Basic                                            $     0.61        $      1.21
                                                =====================================
      Diluted                                          $     0.50        $      0.99
                                                =====================================
Net income per Unit
      Basic                                            $     0.60        $      1.20
                                                =====================================
      Diluted                                          $     0.49        $      0.98
                                                =====================================
</TABLE>

The unaudited pro forma  information  does not include the impact of the pending
Acadian  acquisition.  As noted above,  completion of this  transaction is still
subject to certain conditions, including regulatory approvals.

Liquidity and Capital Resources

         General. The Company's primary cash requirements, in addition to normal
operating  expenses,   are  for  capital   expenditures  (both  maintenance  and
expansion-related),  business  acquisitions,  distributions  to the partners and
debt service. The Company expects to fund its short-term needs for such items as
maintenance  capital  expenditures  and quarterly  distributions to the partners
from operating cash flows.  Capital  expenditures  for long-term needs resulting
from future  expansion  projects  and business  acquisitions  are expected to be
funded by a variety of sources including  (either  separately or in combination)
cash flows from operating  activities,  borrowings under bank credit  facilities
and the issuance of additional  Common Units and public debt. The Company's debt
service  requirements  are  expected  to be funded by  operating  cash  flows or
refinancing arrangements.

         As noted above, certain of the Company's liquidity and capital resource
requirements are met using borrowings  under bank credit  facilities  and/or the
issuance  of  additional   Common  Units  or  public  debt   (separately  or  in
combination).  As of  September  30,  2000,  availability  under  the  Operating
Partnership's  $350 Million Bank Credit  Facility was $300.0  million plus $26.7
million for letters of credit. The Company is in the process of refinancing this


                                       27
<PAGE>

credit  facility with a $400 million  long-term  revolving bank credit  facility
(increasing to $500 million under certain conditions). The refinancing effort is
expected to be completed in the fourth quarter of 2000.

         In addition  to the  existing  and  potential  bank credit  facilities,
approximately $450 million of shelf availability  remains  outstanding under the
Company's $800 million December 1999 universal shelf registration statement (the
"Registration  Statement") which may be used for general  partnership  purposes.
$350 million of shelf  availability  was used in March 2000 with the issuance of
the $350  Million  Senior  Notes.  For a  broader  discussion  of the  Company's
outstanding  debt and changes  therein since  December 31, 1999, see the section
below labeled "Long-term Debt". In June 2000, the Company received approval from
its  Unitholders to increase by 25,000,000 the number of Common Units  available
(and  unreserved)  to the Company for general  partnership  purposes  during the
Subordination   Period.   This  increase  has  improved  the  future   financial
flexibility of the Company in any potential business acquisition (see "Amendment
to Partnership Agreement" below for further details).

         If deemed  necessary,  management  believes that  additional  financing
arrangements can be obtained at reasonable terms.  Management  believes that the
maintenance of its investment grade credit ratings of its Operating  Partnership
(currently,  Baa3 by Moody's  Investor  Service and BBB by  Standard  and Poors)
combined with a continued  ready access to debt and equity capital at reasonable
rates and sufficient  trade credit to operate its businesses  efficiently  are a
solid  foundation to providing the Company with ample resources to meet its long
and short-term liquidity and capital resource requirements.

Operating,  Investing and Financing  Cash Flows for Nine Months Ended  September
30, 2000 and 1999

         Cash flows from  operating  activities  were a $177.9 million inflow in
2000  compared  to a $54.7  million  inflow in 1999.  Cash flows from  operating
activities  primarily  reflect  the  effects  of net  income,  depreciation  and
amortization,   extraordinary   items,  equity  income  and  distributions  from
unconsolidated  affiliates and changes in working capital.  Net income increased
significantly  in 2000  over  1999 due to  reasons  mentioned  previously  under
"Results of Operations of the Company."  Depreciation and  amortization  expense
increased a combined  $10.7  million in 2000 over 1999  primarily  the result of
additional capital expenditures and acquisitions. Of the $10.7 million increase,
$3.4 million is  attributable to increases in  amortization  expense  associated
with the 20-year Shell natural gas processing agreement,  excess cost related to
past  acquisitions  and loan  origination  and bond  issue  costs.  The  Company
received $26.0 million in  distributions  from its equity method  investments in
2000  compared  to $4.6  million  in 1999.  Of the  $21.4  million  increase  in
distributions,   $7.5   million  was  from  BEF  and  $5.3  million  from  EPIK.
Distributions  from BEF improved  period to period due to the strong MTBE prices
and margins during the second quarter of 2000. EPIK's distributions increased as
a result of higher  export  activity  during  the first six  months of 2000.  In
addition,  the first nine months of 2000  included $5.5 million in cash receipts
from  Promix  which was  acquired as a result of the TNGL  acquisition.  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 used for investing  activities was $195.9 million in 2000 compared
to $260.4 million in 1999. Cash outflows included capital expenditures of $200.2
million in 2000  versus  $10.6  million in 1999.  Capital  expenditures  in 2000
include  $99.6  million for the purchase of the Lou-Tex  Propylene  Pipeline and
related assets, $71.5 million in construction costs for the Lou-Tex NGL Pipeline
and $4.1 million in construction costs for the Neptune gas processing  facility.
In addition,  capital  expenditures include maintenance capital project costs of
$2.3 million in 2000 and $1.7 million in 1999. The 1999 period  reflects  $208.1
million  in net cash  payments  resulting  from  the TNGL and MBA  acquisitions.
Investing  cash  outflows  in 2000  include  $2.3  million  in  advances  to and
investments in unconsolidated  affiliates compared to $58.5 million in 1999. The
$56.2 million  decrease is primarily  due to the  completion of the BRF facility
and the Tri-States and Wilprise  pipeline systems in 1999. The first nine months
of  1999  included  $35.3  million  in  investments  in and  advances  to  these
companies.  Lastly,  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.

         On March 8, 2000,  the Company's  offer of February 23, 2000 to buy the
remaining  88.5%  ownership  interests  in Dixie  from the  other  seven  owners
expired,  with no  interest  being  purchased.  On October 6, 2000,  the Company
announced that a subsidiary  had purchased an additional  3,521 shares of common


                                       28
<PAGE>

stock of Dixie from Conoco Pipe Line Company for  approximately  $19.4  million.
The purchase brings the Company's  economic  interest in Dixie to  approximately
19.9%.

         Cash  inflows  from  financing  activities  were $54.2  million in 2000
compared to $203.3  million in 1999.  Cash flows from  financing  activities are
primarily  affected by repayments of debt,  borrowings under debt agreements and
distributions  to partners.  The first nine months of 2000 include proceeds from
the $350 Million  Senior Notes and the $54 Million MBFC Loan and the  associated
repayments on the $200 Million Bank Credit Facility and $350 Million Bank Credit
Facility. For a complete discussion of the $350 Million Senior Notes and the $54
Million  MBFC Loan and the use of  proceeds  thereof,  see the  section  labeled
"Long-term  Debt" below.  Financing  activities  in 1999 include the  borrowings
associated  with the TNGL and MBA  acquisitions  and  outflows  of $4.7  million
related to the purchase of Common Units by a consolidated  trust.  Distributions
to partners and the minority  interest  increased to $104.4 million in 2000 from
$82.2 million in 1999 primarily due to an increase in the quarterly distribution
rate (see Note 6 in the Notes to the  Consolidated  Financial  Statements  for a
history of the quarterly distribution rates since the first quarter of 1999).

         In July 2000, the Company  announced a 1,000,000 Unit buy-back  program
of its  publicly-owned  Common  Units to be  executed  over a  two-year  period.
Management's intent is to opportunistically  acquire Common Units during periods
of  temporary  market  weakness at price  levels that would be  accretive to the
Company's  remaining  Unitholders.  The repurchase program will be balanced with
plans to grow the Company through  investments in internally  developed projects
and  acquisitions,  while  maintaining  an  investment  grade debt  rating.  The
redemption  program  will be funded by  increased  cash  distributions  from the
Operating  Partnership  from operating cash flows and borrowings  under its bank
credit facilities. During the third quarter of 2000, 17,200  Common  Units  were
repurchased by the buy-back program at a cost of approximately $0.5 million.

         Dividends received from unconsolidated affiliates. The Company received
$2.2 million in cash  distributions  from its cost method  investments  in Dixie
($0.4  million) and VESCO ($1.8  million)  during the third quarter of 2000. For
the nine months ended September 30, 2000, cash  distributions  were $1.1 million
from Dixie and $5.1 million from VESCO.  Cash  distributions  received  from the
Company's  cost  method  investments  are  recorded  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.

         Future Capital Expenditures

          The Company  estimates  that its share of currently  approved  capital
expenditures  in  the  projects  of  its   unconsolidated   affiliates  will  be
approximately  $1.7 million during the remainder of 2000 (including $0.7 million
for the BRPC propylene  fractionator) and $0.1 million in 2001. In addition, the
Company  forecasts that $48.2 million will be spent during the fourth quarter of
2000 on currently  approved  capital projects that will be recorded as property,
plant and equipment.  For 2001 and beyond,  this amount is projected to be $41.8
million. Of the cumulative $90.0 million forecast to be spent on property, plant
and equipment,  the most significant  projects and their remaining  expenditures
are as follows:
     -    $ 18.8 million for the Garyville, Louisiana to Norco, Louisiana butane
          pipelines;
     -    $ 12.9 million for the Port Arthur,  Texas to Lake Charles,  Louisiana
          propylene pipeline system;
     -    $ 12.5 million for the Venice,  Louisiana  to Grande  Isle,  Louisiana
          pipeline;
     -    $ 8.2 million for the Lou-Tex NGL Pipeline; and
     -    $ 4.6 million for the Norco fractionator ethane liquefaction facility.
         As of September 30, 2000,  the Company had $13.7 million in outstanding
purchase commitments  attributable to its capital projects. Of this amount, $4.5
million is related to the  construction  of the  Lou-Tex NGL  Pipeline  and $0.6
million is associated with capital projects which will be recorded as additional
investments in unconsolidated affiliates.

         Long-term Debt

         Long-term  debt at September  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"),  a 10-year $54
million loan agreement with the Mississippi Business Finance Corporation ("MBFC"
and the "$54  Million  MBFC  Loan") and $50 million  outstanding  under the $350


                                       29
<PAGE>

Million Bank Credit  Facility.  The  issuance of the $350  Million  Senior Notes
represented a partial takedown of the $800 million  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 at the time of the
offerings.

         The following table summarizes long-term debt at:

                                           September 30,       December 31,

                                               2000                1999
                                          --------------------------------------
Borrowings under:
     $200 Million Bank Credit Facility                              $   129,000
     $350 Million Bank Credit Facility           $   50,000             166,000
     $350 Million Senior Notes                      350,000
     $54 Million MBFC Loan                           54,000
                                          --------------------------------------
            Total                                   454,000             295,000
Less current maturities of long-term debt            50,000             129,000
                                          --------------------------------------
            Long-term debt                      $   404,000         $   166,000
                                          ======================================

         At September  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.

         Bank Credit Facilities

         $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 credit 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 credit facility.
The $300 million  revolving  credit 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.  Due to borrowings in the third
quarter for investment and working capital purposes, $50 million was outstanding
under this facility at September 30, 2000.

         The credit agreement  relating to this facility  contains a prohibition
on distributions to or purchases 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  credit  agreement  generally  prohibits
redemptions of Units except for those transactions related to the 1,000,000 Unit
Buy-back Program announced in July 2000. In August 2000, the lenders and Company
executed a waiver allowing for this program.  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


                                       30
<PAGE>

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 September 30, 2000.

         As noted above, the Company is pursuing a refinancing  arrangement with
a group of banks to  terminate  this  facility  and  replace  it with a new $400
Million  Bank  Credit  Facility   (increasing  to  $500  million  under  certain
conditions). The completion of this refinancing project is subject to continuing
negotiations between the parties involved and is expected to be finalized during
the fourth quarter of 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 (a) the entire $169 million outstanding  principal
balance on the $200  Million  Bank Credit  Facility  and (b) $179 million of the
$226 million then 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 September 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 then  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
insurance on the  Pascagoula  natural gas processing  facility and  restrictions
regarding  mergers.  The  Company  was  in  compliance  with  these  restrictive
covenants at September 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.   At  September  30,  2000,  the  Operating


                                       31
<PAGE>

Partnership's  consolidated debt portfolio interest rate exposure was 55 percent
fixed and 45 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 $0.4 million and $0.9 million for the three
and nine months ended September 30, 2000, respectively.  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
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


                                       32
<PAGE>

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 December 1999, the Securities and Exchange Commission ("SEC") issued
Staff  Accounting  Bulletin  ("SAB") No. 101 " Revenue  Recognition in Financial
Statements."  SAB 101  summarizes  certain  of the  staff's  views  in  applying
generally  accepted  accounting  principles to revenue  recognition in financial
statements. On June 26, 2000, the SEC issued an amendment to SAB 101 effectively
delaying its  implementation  until the fourth quarter of fiscal years beginning
after December 15, 1999. The Company  believes that the adoption of SAB 101 will
not have a material effect on its results of operations.

         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.


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.

         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.



                                       33
<PAGE>

Interest rate risk

         Variable-rate  Debt. At September  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.  At September 30, 2000, $50 million was  outstanding  under this
credit facility.

         If  the  weighted   average  base  interest   rates   selected  on  the
variable-rate  long-term  debt during 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.  If the same calculation were performed on the variable-rate
long-term debt outstanding during 2000, interest expense would have increased by
approximately  $0.5 million  with a  corresponding  decrease in earnings  before
minority interest.

         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 in March 2000, 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.   At  September  30,  2000,  the  Operating
Partnership's  consolidated debt portfolio interest rate exposure was 55 percent
fixed and 45 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 $0.4 million and $0.9 million for the three
and nine months ended  September 30, 2000,  respectively.  Following is selected
information on the Company's portfolio of interest rate swaps at June 30, 2000:

Interest Rate Swap Portfolio at September 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% / 7.3100%
      $ 50.0 March 2000 - March 2005        March 2001         8.25% / 7.3150%
      $ 54.0 March 2000 - March 2010        March 2003         8.70% / 7.6575%

Notes:
(1)  All swaps  outstanding  at  September  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-rate  payor.  The
     floating rate was the rate in effect as of September 30, 2000.

         If the six month  LIBOR  rates on the  notional  amounts of  fixed-rate
long-term  debt at September  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 nine


                                       34
<PAGE>

months  ended  September  30, 2000 would have  increased by  approximately  $0.3
million  and  $0.5  million,  respectively,  with a  corresponding  decrease  in
earnings before minority interest.

         Other.  At September  30, 2000 and  December 31, 1999,  the Company had
$41.4  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 September 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 September 30, 2000 was
estimated at $0.5 million  payable and $ 3.5 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  September 30, 2000 and November 1, 2000 is due to the change
in the composition of commodities hedged and settlement of November 2000 natural
gas future contracts.

<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>
       At December 31, 1999               $  (0.5)      $   1.2        $   1.7        $  (2.2)       $  (1.7)
       At September 30, 2000              $   3.5       $   4.0        $  (0.5)       $   3.1        $  (0.4)
       At November 1, 2000                $   2.2       $   4.2        $   2.0        $    .2        $  (2.0)
</TABLE>



PART II.   OTHER INFORMATION

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. For a discussion of these matters and the voting results,
see Item 4 of the Company's Form 10-Q for the period ended June 30, 2000.

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).



                                       35
<PAGE>

*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).

*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).



                                       36
<PAGE>

*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).

4.12    Waiver Agreement,  dated as of August 25, 2000, regarding Section 6.5 of
        the $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.

*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).

*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).



                                       37
<PAGE>

*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).

*10.15  Purchase  and  Sale  Agreement  by and  between  Coral  Energy,  LLC and
        Enterprise  Products  Operating  L.P.  dated as of  September  22,  2000
        (Exhibit 10.1 to Form 8-K filed on September 26, 2000).

*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



                                       38
<PAGE>

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


         (b) Reports on Form 8-K

         On September 25, 2000, the Company filed a Form 8-K announcing that its
Operating  Partnership has executed a definitive  agreement to purchase  Acadian
Gas, LLC ("Acadian") from Coral Energy,  LLC, an affiliate of Shell Oil Company,
for $226  million in cash,  inclusive of working  capital.  The  acquisition  of
Acadian  integrates  natural gas pipeline  systems in South  Louisiana  with the
Company's Gulf Coast natural gas processing and NGL fractionation,  pipeline and
storage system. Acadian's assets are comprised of the 438-mile Acadian, 577-mile
Cypress and 27-mile Evangeline natural gas pipeline systems, which together have
over one billion  cubic feet  ("Bcf")  per day of  capacity.  These  natural gas
pipeline  systems  are  wholly-owned  by  Acadian  with  the  exception  of  the
Evangeline system in which Acadian holds an approximate 49.5% economic interest.
The system  includes a leased  natural  gas storage  facility at  Napoleonville,
Louisiana with 3.4 Bcf of capacity. Completion of this transaction is subject to
certain conditions,  including regulatory approvals. The purchase is expected to
be completed in the fourth quarter of 2000.



                                       39
<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:   November 13, 2000                       Vice President, Controller
                                                and Principal Accounting Officer
<PAGE>
                       ENTERPRISE PRODUCTS OPERATING L.P.

August 15, 2000


The Chase Manhattan Bank
270 Park Avenue, Floor 21
New York, New York 10017

Attn: Mr.  Steve Wood

Re:   Requested Waiver - Enterprise Products Operating L.P. ("Company") Credit
      Agreement dated as of July 28, 1999, as amended ("Credit Agreement")

Dear Steve:

         This  letter  ("Waiver  Letter")  is to seek a waiver  from  The  Chase
Manhattan Bank, as  Administrative  Agent ("Agent") under the Credit  Agreement,
and the Required Banks  thereunder as set forth herein.  All  capitalized  terms
used herein as definitions,  but not defined  herein,  are defined in the Credit
Agreement.

         As has been disclosed to you,  Enterprise Products Partners L.P. ("LP")
intends to  initiate a buy-back  program  (the  "Program")  whereby  LP,  over a
two-year time period,  would buy back up to 1,000,000  publically held Units, as
set forth in our letter of August 14,  2000 to Bill  Manias at Chase  Securities
Inc. on this  subject.  Under Section 7.5 of the Credit  Agreement,  the Company
would be  prohibited  from making  Restricted  Payments  consisting of up-stream
dividends  to LP to fund  the  Program,  and the LP  would  be  prohibited  from
conducting the Program under Section 8.1(n)(c) of the Credit Agreement.

         By signing  below,  the Agent and the Required  Banks  hereby  evidence
their  consent to a one- time waiver (i) under said Section 7.5 in order for the
Company to make  Restricted  Payments  consisting  of up-stream  dividends to LP
necessary to fund the Program and (ii) under said Section 8.1(n)(c) in order for
the LP to conduct the Program, which dividends and Program would be permitted as
long as no Default or Event of Default has occurred and is continuing  under the
Credit Agreement either before or occasioned by any such Restricted  Payment. In
addition,  the  waiver  evidenced  by this  letter  is a  one-time  event and is
permitted only through August 25, 2002. Henceforth,  the Company shall not be in
Default under the Credit Agreement,  including without  limitation  Sections 7.5
and  8.1(n)(c)  of the  Credit  Agreement,  solely by  reason of any  Restricted
Payment  consisting  of up-stream  dividends to LP prior to August 26, 2002 made
consistent  with  this  Waiver  Letter  or by the LP's  conducting  the  Program
consistent with this Waiver Letter.


<PAGE>



         Kindly  indicate  the  aforementioned  consent to waiver by signing and
returning a copy of this letter to the attention to the undersigned.

                                    Sincerely,




                                    ENTERPRISE PRODUCTS OPERATING L.P.

                           By:      Enterprise Products GP, LLC, General Partner

                                    By:    /s/ Richard H. Bachmann
                                           ----------------------------------
                                    Name:  Richard H. Bachmann
                                    Title: Executive Vice President &
                                           Chief Legal Officer


         Agreed to and Accepted as of the 25th day of August, 2000.

                                    BANKS AND AGENTS:
                                    ----------------


                                    THE CHASE MANHATTAN BANK, as
                                    Administrative Agent and as a Bank


                                    By:    /s/ Steven Wood
                                           ----------------------------------
                                    Name:  Steven Wood
                                    Title: Vice President



                                     BANK  ONE, NA (formerly known as The First
                                     National Bank of Chicago), as Documentation
                                     Agent and as a Bank

                                     By:    /s/ Dianne L. Russell
                                            ---------------------------------
                                     Name:  Dianne L. Russell
                                     Title: Vice President



                                     THE BANK OF NOVA SCOTIA, as Syndication
                                     Agent and as a Bank

                                     By:    /s/ F.C.H. Ashby
                                            ---------------------------------
                                     Name:  F.C.H. Ashby
                                     Title: Sr. Mgr. Loan Operations



                                      FIRST UNION NATIONAL BANK

                                      By:    /s/ Russell Clingman
                                             --------------------------------
                                      Name:  Russell Clingman
                                      Title: Vice President



                                      SOCIETE GENERALE, SOUTHWEST AGENCY

                                      By:    /s/ Paul E. Cornell
                                             --------------------------------
                                      Name:  Paul E. Cornell
                                      Title: Managing Director



                                       FLEET NATIONAL BANK.

                                       By:    /s/ Christopher Holmgre
                                              -------------------------------
                                       Name:  Christopher Holmgren
                                       Title: Director



                                       THE FUJI BANK, LIMITED, NEW YORK BRANCH

                                       By:    /s/ Nate Elllis
                                              -------------------------------
                                       Name:  Nate Ellis
                                       Title: Senior Vice President & Manager



                                       BANK OF TOKYO-MITSUBISHI, LTD.,
                                       HOUSTON AGENCY

                                       By:    /s/ Michael G. Meis
                                              -------------------------------
                                       Name:  Michael G. Meiss
                                       Title:  Vice President



                                       TORONTO DOMINION (TEXAS), INC.

                                       By:    /s/  Alva J. Jones
                                              -------------------------------
                                       Name:  Alva J. Jones
                                       Title: Vice President



                                       CREDIT AGRICOLE INDOSUEZ

                                       By:    /s/ Patrick Cocquerel
                                              -------------------------------
                                       Name:  Patick Cocquerel
                                       Title: FVP, Managing Director

                                       By:    /s/ Douglas A. Whiddon
                                              -------------------------------
                                       Name:  Douglas A. Whiddon
                                       Title: Senior Relationship Manager



                                       DG BANK DEUTSCHE GENOSSEN
                                       SCHAFTBANK AG, CAYMAN ISLAND BRANCH

                                       By:    /s/ Craig Anderson
                                              -------------------------------
                                       Name:  Craig Anderson
                                       Title: Vice President


                                       By:    /s/ Lynne McCarthy
                                              -------------------------------
                                       Name:  Lynne McCarthy
                                       Title: Vice President



                                       CREDIT LYONNAIS NEW YORK BRANCH

                                       By:     /s/ illegible signature
                                               -------------------------------
                                       Name:
                                       Title:



                                       FORTIS CAPITAL CORP.

                                        By:    /s/ Darrell W. Holley
                                               ------------------------------
                                        Name:  Darrell W. Holley
                                        Title: Managing Director



                                        HIBERNIA NATIONAL BANK

                                        By:    /s/ Trudy W. Nelson
                                               ------------------------------
                                        Name:  Trudy W. Nelson
                                        Title: Vice President
[{"type": "10-Q", "sequence": "1", "filename": "0001.txt", "description": "FORM 10Q", "secsgml_size_bytes": 195525}]
{"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": "760157"}, "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 September 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 46,535,715 Common Units outstanding as of November 13, 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,  September 30, 2000 and December 31, 1999                     1

         Statements of Consolidated Operations
                  for the Three and Nine Months ended September 30, 2000 and 1999                   2

         Statements of Consolidated Cash Flows
                  for the Nine Months ended September 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                                                                      18

Item 3.   Quantitative and Qualitative Disclosures about Market Risk                                33

Part II.  Other Information

Item 4.  Submission of Matters to a Vote of Security Holders.                                       35

Item 6.   Exhibits and Reports on Form 8-K                                                          35

         Signature Page
PART 1. FINANCIAL INFORMATION.
                   Item 1. CONSOLIDATED FINANCIAL STATEMENTS.
                        Enterprise Products Partners L.P.
                           Consolidated Balance Sheets
                          (Dollar amounts in thousands)
September 30,
                                                                                             2000           December 31,
                                       ASSETS                                            (Unaudited)            1999
                                                                                      ---------------------------------------
Current Assets
Cash and cash equivalents                                                               $    41,443          $    5,230
     Accounts receivable - trade, net of allowance for doubtful accounts of
        $12,053 at September 30, 2000 and $15,871 at December 31, 1999                           302,766             262,348
     Accounts receivable - affiliates                                                             37,050              56,075
     Inventories                                                                                 138,039              39,907
     Current maturities of participation in notes receivable from
        unconsolidated affiliates                                                                      -               6,519
     Prepaid and other current assets                                                             13,162              14,459
                                                                                      ---------------------------------------
               Total current assets                                                              532,460             384,538
Property, Plant and Equipment, Net                                                               941,836             767,069
Investments in and Advances to Unconsolidated Affiliates                                         280,206             280,606
Intangible assets, net of accumulated amortization of $4,186 at
     September 30, 2000 and $1,345 at December 31, 1999                                           88,577              61,619
Other Assets                                                                                       4,457               1,120
                                                                                      ---------------------------------------
               Total                                                                        $  1,847,536        $  1,494,952
                                                                                      =======================================
                          LIABILITIES AND PARTNERS' EQUITY

Current Liabilities

     Current maturities of long-term debt                                                    $    50,000         $   129,000
     Accounts payable - trade                                                                    107,356              69,294
     Accounts payable - affiliate                                                                 34,035              64,780
     Accrued gas payables                                                                        278,651             233,360
     Accrued expenses                                                                             11,496              16,510
     Other current liabilities                                                                    30,925              18,176
                                                                                      ---------------------------------------
               Total current liabilities                                                         512,463             531,120
Long-Term Debt                                                                                   404,000             166,000
Other Long-Term liabilities                                                                        7,094                 296
Minority Interest                                                                                  9,353               8,071
Commitments and Contingencies
Partners' Equity
     Common  Units  (45,552,915  Units  outstanding  at  December  31,  1999 and
        46,535,715 Units outstanding at September 30, 2000)                                      463,239             428,707
     Subordinated Units (21,409,870 Units outstanding at December 31, 1999
        and September 30, 2000)                                                                  154,205             131,688
     Special Units  (14,500,000  Units  outstanding  at  December  31,  1999 and
        16,500,000 Units outstanding at September 30, 2000)                                      292,715             225,855
     Treasury Units  acquired by Trust,  at cost (267,200  Units  outstanding at
        December 31, 1999 and September 30, 2000)                                                 (4,727)             (4,727)
     General Partner

                                                                                                   9,194               7,942
                                                                                      ---------------------------------------
               Total Partners' Equity                                                            914,626             789,465
                                                                                      ---------------------------------------
               Total                                                                        $  1,847,536        $  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                       Nine Months
                                                                  Ended September 30,                Ended September 30,
                                                                  2000           1999               2000            1999
                                                             -------------------------------   --------------------------------

REVENUES
Revenues from consolidated operations                             $ 717,113       $ 441,880        $ 2,056,307       $ 763,793
Equity income in unconsolidated affiliates                            4,750           3,148             23,290           7,591
                                                             -------------------------------   --------------------------------
         Total                                                      721,863         445,028          2,079,597         771,384
                                                             -------------------------------   --------------------------------
COST AND EXPENSES
Operating costs and expenses                                        659,021         401,758          1,878,233         688,977
Selling, general and administrative                                   6,978           3,200             20,020           9,200
                                                             -------------------------------   --------------------------------
         Total                                                      665,999         404,958          1,898,253         698,177
                                                             -------------------------------   --------------------------------
OPERATING INCOME                                                     55,864          40,070            181,344          73,207
OTHER INCOME (EXPENSE)
Interest expense                                                     (7,486)         (4,515)           (23,330)         (8,907)
Interest income (expense) from unconsolidated affiliates                (88)            407                182           1,096
Dividend income from unconsolidated affiliates                        2,241               -              6,236               -
Interest income - other                                                 317             682              3,023           1,114
Other, net                                                              (71)             72               (496)            117
                                                             -------------------------------   --------------------------------
          Other income  (expense)                                    (5,087)         (3,354)           (14,385)         (6,580)
                                                             -------------------------------   --------------------------------
INCOME BEFORE MINORITY INTEREST                                      50,777          36,716            166,959          66,627
MINORITY INTEREST                                                      (514)           (370)            (1,689)           (672)
                                                             -------------------------------   --------------------------------
NET INCOME                                                        $  50,263       $  36,346          $ 165,270       $  65,955
                                                             ===============================   ================================
ALLOCATION OF NET INCOME TO:
          Limited partners                                        $  49,566       $  35,983          $ 163,423       $  65,295
                                                             ===============================   ================================
          General partner                                           $   697         $   363           $  1,847         $   660
                                                             ===============================   ================================
BASIC EARNINGS PER UNIT
          Income before minority interest                          $   0.75        $   0.54           $   2.47        $   0.99
                                                             ===============================   ================================
          Net income per Common and Subordinated unit              $   0.74        $   0.54           $   2.44        $   0.98
                                                             ===============================   ================================
DILUTED EARNINGS PER UNIT

          Income before minority interest                          $   0.60        $   0.48           $   2.02        $   0.94
                                                             ===============================   ================================
          Net income per Common, Subordinated
                and Special unit                                   $   0.60        $   0.47           $   2.00        $   0.93
                                                             ===============================   ================================
See Notes to Unaudited Consolidated Financial Statements

                                       2
Enterprise Products Partners L.P.
                      Statements of Consolidated Cash Flows
                             (Dollars in Thousands)
Nine Months Ended
                                                                                                September 30,

                                                                                            2000              1999
                                                                                     -------------------------------------
OPERATING ACTIVITIES
Net income                                                                                  $  165,270        $   65,955
Adjustments to reconcile net income to cash flows provided by
      (used for) operating activities:
      Depreciation and amortization                                                             27,952            17,280
      Equity in income of unconsolidated affiliates                                            (23,290)           (7,591)
      Distributions received from unconsolidated affiliates                                     25,997             4,607
      Leases paid by EPCO                                                                        7,904             7,918
      Minority interest                                                                          1,689               672
      Loss on sale of assets                                                                     2,276               122
      Net effect of changes in operating accounts                                              (29,942)          (34,246)
                                                                                     -------------------------------------
Operating activities cash flows                                                                177,856            54,717
                                                                                     -------------------------------------
INVESTING ACTIVITIES
Capital expenditures                                                                          (200,157)          (10,603)
Proceeds from sale of assets                                                                        85                 8
Business acquisitions, net of cash acquired                                                                     (208,095)
Collection of notes receivable from unconsolidated affiliates                                    6,519            16,719
Investments in and advances to unconsolidated affiliates                                        (2,307)          (58,460)
                                                                                     -------------------------------------
Investing activities cash flows                                                               (195,860)         (260,431)
                                                                                     -------------------------------------
FINANCING ACTIVITIES
Long-term debt borrowings                                                                      514,000           350,000
Long-term debt repayments                                                                     (355,000)          (59,923)
Cash dividends paid to partners                                                               (103,347)          (81,321)
Cash dividends paid to minority interest by Operating Partnership                               (1,055)             (830)
Units acquired by consolidated trust                                                                 -            (4,727)
Unit repurchases                                                                                  (465)                -
Cash contributions from EPCO to minority interest                                                   84                59
                                                                                     -------------------------------------
Financing activities cash flows                                                                 54,217           203,258
                                                                                     -------------------------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS                                                         36,213            (2,456)
CASH AND CASH EQUIVALENTS, JANUARY 1                                                             5,230            24,103
                                                                                     -------------------------------------
CASH AND CASH EQUIVALENTS, SEPTEMBER 30                                                     $   41,443        $   21,647
                                                                                     =====================================
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 September 30, 2000, consolidated
results of operations  for the three and nine month periods ended  September 30,
2000 and 1999 and  consolidated  cash  flows for the nine  month  periods  ended
September 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 nine month periods ended  September
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 September 30, 2000, the Company's 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 37.35% 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.

                                       4
K/D/S Promix LLC ("Promix") - a 33.33% economic  interest in a NGL fractionation
facility  and  related  storage  facilities  located  in  south  Louisiana.  The
Company's  investment includes excess cost over the underlying equity in the net
assets of Promix of $7.5 million at September 30, 2000 which is being  amortized
using the straight-line method over a period of 20 years. For the three and nine
months ended  September  30, 2000,  the Company  recorded  amortization  expense
associated with this excess cost of $0.1 million and $0.3 million, respectively,
which is reflected in the equity earnings from Promix.  For the third quarter of
1999, such amortization was $0.2 million.

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.  At September  30, 2000,  the Dixie
investment  consisted of an 11.5% interest in a corporation  owning a 1,301-mile
propane pipeline and associated facilities extending from Mont Belvieu, Texas to
North  Carolina.  On October 6, 2000, the Company  purchased an additional  8.4%
economic  interest in Dixie from Conoco Pipe Line Company for $19.4 million (see
Note 11). The Company's ownership interest in Dixie now stands at 19.9%. Through
September 30, 2000, these investments were 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:

                                        September 30,       December 31,
                                            2000                1999
                                     ---------------------------------------
Accounted for on equity basis:
    BEF                                      $   61,989          $   63,004
    Promix                                       49,981              50,496
    BRF                                          29,673              36,789
    Tri-States                                   27,697              28,887
    EPIK                                         17,662              15,258
    Belle Rose                                   11,655              12,064
    BRPC                                         19,344              11,825
    Wilprise                                      9,160               9,283
Accounted for  on cost basis:
    VESCO                                        33,000              33,000
    Dixie                                        20,045              20,000
                                     ---------------------------------------
Total                                       $   280,206         $   280,606
                                     =======================================

                                       5
The following table shows equity in income (loss) of  unconsolidated  affiliates
for the three and nine month periods ended September 30, 2000 and 1999:
For Three Months Ended                  For Nine Months Ended
                                     September 30,                           September 30,
                                 2000              1999                 2000               1999
                          -------------------------------------   -------------------------------------
BEF                                $   2,190         $   2,519           $   13,002          $   4,756
MBA                                        -                72                    -              1,256
BRF                                      434              (258)               1,171               (544)
BRPC                                     134                 4                  115                  4
EPIK                                    (124)               59                1,846                236
Wilprise                                 135              (130)                 297               (130)
Tri-States                               694               472                2,215                472
Promix                                 1,170               (93)               4,378                (93)
Belle Rose                               117               245                  266                245
Other                                      -               258                    -              1,389
                          -------------------------------------   -------------------------------------
Total                              $   4,750         $   3,148           $   23,290          $   7,591
                          =====================================   =====================================
The following table presents  summarized  income  statement  information for the
unconsolidated subsidiaries accounted for by the equity method:
For the Three Months ended                            For the Nine Months ended
                                  September 30, 2000                                    September 30, 2000
                  ---------------------------------------------------   ---------------------------------------------------
                                      Operating           Net                               Operating           Net
                      Revenues          Income           Income             Revenues          Income           Income
                  ---------------------------------------------------   ---------------------------------------------------
BEF                      $  77,330        $   6,201        $   6,570           $ 214,761        $  38,575        $  39,007
EPIK                         1,856            (290)            (249)              14,789            3,561            3,699
BRF                          4,775            1,282            1,347              13,989            3,504            3,631
BRPC                         2,333              398              477               2,333              211              383
Wilprise                       727              398              406               2,149              867              891
Tri-States                   3,430            2,059            2,088              10,677            6,530            6,650
Promix                      12,242            3,959            4,019              36,968           14,057           14,274
Belle Rose                     536              279              279               1,802              645              645
                  ---------------------------------------------------   ---------------------------------------------------
Total                    $ 103,229        $  14,286        $  14,937           $ 297,468        $  67,950        $  69,180
                  ===================================================   ===================================================

                              For the Three Months ended                            For the Nine Months ended
                                  September 30, 1999                                    September 30, 1999
                  ---------------------------------------------------   ---------------------------------------------------
                                      Operating           Net                               Operating           Net
                      Revenues          Income           Income             Revenues          Income           Income
                  ---------------------------------------------------   ---------------------------------------------------
BEF                      $  47,885        $   7,067        $   7,556           $ 128,516        $  19,476        $  14,269
EPIK                         2,520              253              264               5,954              733              751
BRF                          2,317             (512)            (827)              2,317             (579)          (1,741)
BRPC                             -                -               13                   -                -               13
Wilprise                       291             (399)            (390)                291             (399)            (390)
Tri-States                   4,611            1,377            1,417               4,611            1,377            1,417
Promix                       7,990            1,715              354               7,990            1,715              354
Belle Rose                     639              566              566               1,138              551              590
MBA                              -                -              147              12,329            2,731            2,563
Other                          910              516              516               4,842            2,778            2,778
                  ---------------------------------------------------   ---------------------------------------------------
Total                    $  67,163        $  10,583        $   9,616           $ 167,988        $  28,383        $  20,604
                  ===================================================   ===================================================
6
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  forecasted  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 its contingent Unit 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 $55.2  million  using  present  value
techniques. In August 2000, the TNGL acquisition purchase price and the value of
the Shell Processing  Agreement were increased by the $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
Shell Processing Agreement will be adjusted accordingly.  The value of the Shell
Processing  Agreement  (classified as an Intangible  Asset on the balance sheet)
was $80.2  million at September 30, 2000 and $54.0 million at December 31, 1999.
The value has been  adjusted for the new Special Units issued to Shell (as noted
previously),   finalization  of  purchase  accounting  adjustments  and  related
amortization.

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.

                                       7
Pro Forma effect of Acquisitions

The following table presents  unaudited pro forma  information for the three and
nine month periods ended  September 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             Nine
                                                    Months            Months
                                                     Ended            Ended
                                             -----------------------------------
                                                     September 30, 1999
                                             -----------------------------------
Revenues                                            $  506,944      $ 1,151,444
                                             ===================================
Net income                                          $   40,586      $    80,698
                                             ===================================
Allocation of net income to
      Limited partners                              $   40,180      $    79,891
                                             ===================================
      General Partner                               $      406      $       807
                                             ===================================
Units used in earning per Unit calculations
      Basic                                             66,696           66,715
                                             ===================================
      Diluted                                           81,196           81,215
                                             ===================================

Income per Unit before minority interest
      Basic                                         $     0.61      $      1.21
                                             ===================================
      Diluted                                       $     0.50      $      0.99
                                             ===================================

Net income per Unit
      Basic                                         $     0.60      $      1.20
                                             ===================================
      Diluted                                       $     0.49      $      0.98
                                             ===================================

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 September 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"),  a 10-year $54
million loan agreement with the Mississippi Business Finance Corporation ("MBFC"
and the "$54  Million  MBFC  Loan") and $50 million  outstanding  under the $350
Million Bank Credit  Facility.  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 at the time of the offerings.

                                       8
The following table summarizes long-term debt at:

                                             September 30,       December 31,
                                                 2000                1999
                                          --------------------------------------
Borrowings under:
     $200 Million Bank Credit Facility                               $   129,000
     $350 Million Bank Credit Facility             $   50,000            166,000
     $350 Million Senior Notes                        350,000
     $54 Million MBFC Loan                             54,000
                                          --------------------------------------
            Total                                     454,000            295,000
Less current maturities of long-term debt              50,000            129,000
                                          --------------------------------------
            Long-term debt                        $   404,000        $   166,000
                                          ======================================

At September 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 credit 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 credit facility.  The $300
million revolving credit 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.  Due to borrowings in the third quarter for investment and
working capital  purposes,  $50 million was  outstanding  under this facility at
September 30, 2000.

The  credit  agreement  relating  to this  facility  contains a  prohibition  on
distributions to or purchases 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  credit  agreement  generally  prohibits
redemptions of Units except for those transactions related to the 1,000,000 Unit
Buy-back Program announced in July 2000. In August 2000, the lenders and Company
executed a waiver allowing for this program.  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 September 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

                                       9
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 $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 September 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 September 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

                                       10
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.

Subordinated  Units.  The  21,409,872  Subordinated  Units have no voting rights
until converted into Common Units at the end of the  Subordination  Period.  The
Subordination  Period will  generally  extend until the first day of any quarter
beginning  after June 30, 2003 when the  Conversion  Tests have 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.

The  Partnership  Agreement  stipulates that 50% of the  Subordinated  Units (or
10,704,936 Subordinated Units) may undergo an early conversion into Common Units
should certain  criteria be satisfied.  Based upon these criteria,  the earliest
that the first 25% of the Subordinated Units (or 5,352,468  Subordinated  Units)
would convert into Common Units is April 1, 2002.  Should the criteria  continue
to be satisfied  through the first  quarter of 2003,  an  additional  25% of the
Subordinated  Units would undergo an early conversion into Common Units on April
1, 2003. The remaining  10,704,936  Subordinated Units would convert into Common
Units on July 1, 2003 should the balance of the conversion requirements be met.

Special Units. The Special Units issued to Shell do not accrue distributions and
are not entitled to cash distributions until their conversion into Common Units.
For financial accounting purposes,  the Special Units are allocated a portion of
net income based on the ownership  interest that such Units  represent.  For tax
purposes,  the Special Units generally are not allocated a portion of net income
but are allocated a certain amount of depreciation  until their  conversion into
Common  Units.  On August 1, 2000,  1.0 million of the original  tranche of 14.5
million  Special Units  converted into Common Units.  The remaining 13.5 million
Special  Units of the original  tranche will  automatically  convert into Common
Units as follows:  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
(referred to as the "second  tranche" of Special  Units).  Per an agreement with
Shell, the Company issued the second tranche of Special Units on August 1, 2000.
Shell has the  opportunity  to earn an additional  3.0 million  non-distribution
bearing,  convertible  Contingency  Units  (i.e.,  a "third  tranche" of Special
Units)  based  on  certain   performance   criteria  for  calendar   year  2001.
Specifically, Shell will earn the third tranche of Special 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
the third  tranche of Special  Units.  If both the second and third  tranches of
Special Units are earned,  1.0 million of these Special Units would convert into
Common  Units on August 1, 2002 and 5.0  million of these  Special  Units  would
convert  into Common Units on August 1, 2003.  Special  Units issued to Shell as
part of these  contingent  agreements  do not accrue  distributions  and are not
entitled to cash distributions  until conversion into Common Units. With regards
to income and depreciation  allocation from either a financial accounting or tax
basis,  these  Special  Units will be treated  identically  to the 14.5  million
Special Units originally issued.

                                       11
Under the rules of the New York Stock  Exchange,  the conversion  feature of the
Special Units into Common Units requires approval of the Company's  Unitholders.
With respect to the August 2000  conversion,  EPC Partners II, Inc.  ("EPC II"),
which owns in excess of 81% of the outstanding  Common Units, voted its Units in
favor of conversion, which provided 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 September 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.

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 Nine Months Ended
                                                      At September 30,               At September 30,
                                                     2000          1999             2000          1999
                                                -----------------------------  -----------------------------
Weighted average number of Common
     and Subordinated Units outstanding             67,356        66,696           66,917        66,715
Weighted average number of Special
     Units to be converted to Common Units          15,826         9,614           14,945         3,240
                                                -----------------------------  -----------------------------
Units used to compute diluted
     earnings per Unit                              83,182        76,310           81,862        69,955
                                                =============================  =============================
The second tranche of Special Units  (formerly  Contingency  Units, as described
above) are included in diluted earnings per Unit calculation beginning August 1,
2000 (the  effective  date of the  contingent  agreement  between  Shell and the
Company).  The Contingency  Units relating to the third tranche of Special Units
to be issued upon achieving certain performance  criteria in future periods have
been  excluded  from diluted  earnings per Unit because such tests have not been
met at September 30, 2000.

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  incentive cash  distributions  to the General
Partner of $0.2  million on August 10,  2000 and $0.2  million on  November  10,
2000 for the second and third quarter of 2000, respectively.

                                       12
On January 17,  2000,  the Company  declared an increase in its  quarterly  cash
distribution  to $0.50 per Unit. This amount was  subsequently  raised to $0.525
per Unit on July 17, 2000.

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
    Fourth Quarter       $      0.525      $      0.525     October 31, 2000    November 10, 2000
      (through November 13, 2000)
7.   SUPPLEMENTAL CASH FLOW DISCLOSURE

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

                                Nine Months Ended
                                  September 30,

                                                2000               1999
                                           ------------------------------------
(Increase) decrease in:
    Accounts receivable                        $   (15,409)       $   (48,448)
    Inventories                                    (66,270)           (64,992)
    Prepaid and other current assets                 1,297             (4,647)
    Intangible assets                               (4,805)                 -
    Other assets                                    (5,419)            (1,757)
Increase (decrease) in:
    Accounts payable                                 7,109             43,944
    Accrued gas payable                             47,517             61,474
    Accrued expenses                                (6,314)             1,236
    Other current liabilities                       12,749            (21,595)
    Other liabilities                                 (397)               539
                                           ------------------------------------
Net effect of changes in operating accounts    $   (29,942)       $   (34,246)
                                           ====================================

Capital  expenditures  for the first  nine  months of 2000 were  $200.2  million
compared to $10.6 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,  $71.5  million in  construction  costs for the Lou-Tex NGL
Pipeline and $4.1 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.

                                       13
8.   RECENTLY ISSUED ACCOUNTING STANDARDS

In December 1999, the  Securities and Exchange  Commission  ("SEC") issued Staff
Accounting   Bulletin  ("SAB")  No.  101  "  Revenue  Recognition  in  Financial
Statements."  SAB 101  summarizes  certain  of the  staff's  views  in  applying
generally  accepted  accounting  principles to revenue  recognition in financial
statements. On June 26, 2000, the SEC issued an amendment to SAB 101 effectively
delaying its  implementation  until the fourth quarter of fiscal years beginning
after December 15, 1999. The Company  believes that the adoption of SAB 101 will
not have a material effect on its results of operations.

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.

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 of the General Partner.

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.   At  September  30,  2000,  the  Operating
Partnership's  consolidated debt portfolio interest rate exposure was 55 percent
fixed and 45 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.

                                       14
The effect of these swaps  (none of which are  leveraged)  was to  decrease  the
Company's  interest  expense by $0.4  million and $0.9 million for the three and
nine months  ended  September  30,  2000,  respectively.  Following  is selected
information  on the Company's  portfolio of interest rate swaps at September 30,
2000:

Interest Rate Swap Portfolio at September 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% / 7.3100%
      $ 50.0 March 2000 - March 2005        March 2001         8.25% / 7.3150%
      $ 54.0 March 2000 - March 2010        March 2003         8.70% / 7.6575%

Notes:
(1)  All swaps  outstanding  at  September  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-rate  payor.  The
     floating rate was the rate in effect as of September 30, 2000.

10.  SEGMENT INFORMATION

The Company has five reportable  operating  segments:  Fractionation,  Pipeline,
Processing,   Octane   Enhancement   and  Other.   Fractionation   includes  NGL
fractionation,  butane isomerization  (converting normal butane into high purity
isobutane) and polymer grade propylene fractionation 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 operating income 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.

Consolidated  property,  plant and equipment and  investments in and advances to
unconsolidated  affiliates  are  allocated  to each segment on the basis of each
asset's or investment's  principal  operations.  The principal  reconciling item
between consolidated property,  plant and equipment and segment property,  plant
and equipment is construction-in-progress. Segment property, plant and equipment
represents  those  facilities  and projects that  contribute to gross  operating
margin.  Since assets under construction do not generally  contribute to segment
gross operating  margin,  these assets are not included in the operating 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.

                                       15
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 September 30, 2000   $  120,227   $   (1,864)  $  605,875    $   2,191     $    793   $  (5,359)   $  721,863
   Three months ended September 30, 1999       56,278        6,059      387,218        2,519            -      (7,046)      445,028
   Nine months ended September 30, 2000       322,793       25,998    1,730,976       13,003        2,059     (15,232)    2,079,597
   Nine months ended September 30, 1999       174,427       14,160      610,729        4,756            -     (32,688)      771,384

Intersegment revenues
   Three months ended September 30, 2000       46,538       12,083      165,761            -           93    (224,475)            -
   Three months ended September 30, 1999       49,353        9,815       62,299            -          123    (121,590)            -
   Nine months ended September 30, 2000       129,266       40,108      447,646            -          282    (617,302)            -
   Nine months ended September 30, 1999        86,713       27,126       62,336            -          327    (176,502)            -

Total revenues
   Three months ended September 30, 2000      166,765       10,219      771,636        2,191          886    (229,834)      721,863
   Three months ended September 30, 1999      105,631       15,874      449,517        2,519          123    (128,636)      445,028
   Nine months ended September 30, 2000       452,059       66,106    2,178,622       13,003        2,341    (632,534)    2,079,597
   Nine months ended September 30, 1999       261,140       41,286      673,065        4,756          327    (209,190)      771,384

Gross operating margin by segment
   Three months ended September 30, 2000       32,510       10,292       29,083        2,190          429           -        74,504
   Three months ended September 30, 1999       36,142        6,985        7,110        2,519          170           -        52,926
   Nine months ended September 30, 2000        96,432       39,120       87,123       13,002        1,854           -       237,531
   Nine months ended September 30, 1999        78,955       15,836        6,677        4,756          651           -       106,875

Property, plant and equipment
   At September 30, 2000                      358,802      356,307      127,001            -        1,062      98,664       941,836
   At December 31, 1999                       362,198      249,453      122,495            -          113      32,810       767,069

Investments in and advances
   to unconsolidated affiliates
   At September 30, 2000                       98,998       86,219       33,000       61,989            -           -       280,206
   At December 31, 1999                        99,110       85,492       33,000       63,004            -           -       280,606
Pipeline  revenues  for the three months  ended  September  30, 2000 include the
impact of a $9.8 million intercompany elimination between revenues and operating
costs and  expenses  (attributable  to the second  quarter  of 2000).  Since the
decrease  in  revenues is offset by an equal  decrease  in  operating  costs and
expenses,  there  was no  impact  on gross  operating  margin as a result of the
reclassification.

                                       16
A reconciliation of segment gross operating margin to consolidated income before
minority interest follows:
For Three Months Ended              For Nine Months Ended
                                                                       September 30,                       September 30,
                                                                   2000             1999               2000             1999
                                                              ---------------------------------  ----------------------------------
Total segment gross operating margin                               $   74,504       $   52,926         $  237,531       $  106,875
     Depreciation and amortization                                     (9,029)          (7,012)           (25,907)         (16,368)
     Retained lease expense, net                                       (2,660)          (2,645)            (7,984)          (7,978)
     Loss on sale of assets                                                27                1             (2,276)            (122)
     Selling, general and administrative                               (6,978)          (3,200)           (20,020)          (9,200)
                                                              ---------------------------------  ----------------------------------
Consolidated operating income                                          55,864           40,070            181,344           73,207
     Interest expense                                                  (7,486)          (4,515)           (23,330)          (8,907)
     Interest income (expense) from unconsolidated affiliates             (88)             407                182            1,096
     Dividend income from unconsolidated affiliates                     2,241                -              6,236                -
     Interest income - other                                              317              682              3,023            1,114
     Other, net                                                           (71)              72               (496)             117
                                                              ---------------------------------  ----------------------------------
Consolidated income before minority interest                       $   50,777       $   36,716         $  166,959       $   66,627
                                                              =================================  ==================================
11.      SUBSEQUENT EVENTS

On September 25, 2000, the Company announced that its Operating  Partnership has
executed a definitive  agreement to purchase  Acadian Gas, LLC ("Acadian")  from
Coral Energy, LLC, an affiliate of Shell Oil Company,  for $226 million in cash,
inclusive of working capital.  The acquisition of Acadian integrates natural gas
pipeline  systems in South  Louisiana  with the Company's Gulf Coast natural gas
processing and NGL fractionation,  pipeline and storage system. Acadian's assets
are comprised of the 438-mile Acadian,  577-mile Cypress and 27-mile  Evangeline
natural gas pipeline  systems,  which  together have over one billion cubic feet
("Bcf") per day of capacity. These natural gas pipeline systems are wholly-owned
by Acadian,  with the exception of the Evangeline  system in which Acadian holds
an approximate 49.5% economic interest. The system includes a leased natural gas
storage  facility  at  Napoleonville,   Louisiana  with  3.4  Bcf  of  capacity.
Completion  of this  transaction  is subject to  certain  conditions,  including
regulatory  approvals.  The  purchase is expected to be  completed in the fourth
quarter of 2000.

On October 6, 2000,  the Company  announced  that a subsidiary  had purchased an
additional  3,521  shares of common stock of Dixie from Conoco Pipe Line Company
for  approximately  $19.4 million.  The purchase  brings the Company's  economic
interest in Dixie to 19.9%.

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

            For the Interim Periods ended September 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. (the "Company") included elsewhere herein. All
references  herein to "Shell",  unless the context  indicates  otherwise,  shall
refer collectively to Shell Oil Company, its subsidiaries and affiliates.

Uncertainty of Forward-Looking Statements and Information

         MD&A 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,"
"believe," 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 due to weather and other
concerns, (c) operational and systems risks, (d) environmental  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.

         In addition,  the Company's  expectations  regarding its future capital
expenditures  as described in  "Liquidity  and Capital  Resources"  are only its
forecasts  regarding these matters.  In addition to the factors described in the
previous paragraph,  these forecasts may be substantially  different from actual
results,  which are affected by the following major factors: (a) the accuracy of
the Company's estimates regarding its spending requirements,  (b) the occurrence
of any  unanticipated  acquisition  opportunities,  (c) the need to replace  any
unanticipated  losses in capital assets, (d) changes in the strategic  direction
of  the  Company  and  (e)  unanticipated  legal,   regulatory  and  contractual
impediments with regards to its construction projects.

Company Overview

         The Company is a leading  integrated North American provider of natural
gas  processing  and  natural  gas  liquids  ("NGL"  or  "NGLs")  fractionation,
transportation  and storage  services to producers of NGLs and  consumers of NGL
products.  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  document  include the assets and  operations  of the  Operating
Partnership and its subsidiaries.

                                       18
The  Company  (i)  processes   natural  gas  into  a  merchantable  and
transportable  form of energy  that meets  industry  quality  specifications  by
removing NGLs and impurities;  (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:  (a) one of
the largest NGL  fractionation  facilities  in the United States with an average
gross  production  capacity of 210 thousand  barrels per day  ("MBPD");  (b) the
largest  butane  isomerization  complex  in the  United  States  with an average
isobutane  production  capacity of 116 MBPD; (c) a MTBE production facility with
an  average  gross  production  capacity  of 15  MBPD;  and  (d)  two  propylene
fractionation units with an average combined production capacity of 31 MBPD. 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 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,  five NGL
fractionation  facilities  with a combined  gross  capacity  of 341 MBPD and net
capacity  of 151  MBPD  and a  propylene  fractionation  facility  with a  gross
capacity of 22.5 MBPD and net  capacity of 6.8 MBPD.  In  addition,  the Company
owns and operates a NGL  fractionation  facility in Petal,  Mississippi  with an
average production capacity of 7 MBPD.

         The Company  owns,  operates or has an interest in  approximately  65.0
million barrels of gross storage capacity (44.3 million barrels of net capacity)
in Texas,  Louisiana and Mississippi that are an integral part of its processing
operations.  The Company also leases and operates one of only two commercial NGL
import/export  terminals  on the  Gulf  Coast.  In  addition,  the  Company  has
operating  and  non-operating  ownership  interests  in over 2,900  miles of NGL
pipelines  along the Gulf Coast  (including  the  206-mile  Lou-Tex NGL Pipeline
currently under  construction  and expected in service during the fourth quarter
of 2000).

         The Company's  operating  margins are derived from services provided to
its tolling  customers  and from  merchant  activities.  In the  Company's  toll
processing operations,  it does not take title to the product and is simply paid
a fee based on volumes processed,  transported, stored or handled. The Company's
profitability  from toll processing  operations depends primarily on the volumes
of natural gas, NGLs and  refinery-sourced  propane/propylene  mix processed and
transported  and the level of associated  fees charged to its customers.  In the
Company's  isomerization  merchant  activities  and  to  a  certain  extent  its
propylene fractionation business, it takes title to feedstock products and sells
processed  end  products.  The  Company's   profitability  from  these  merchant
activities is dependent on the prices of feedstocks and end products,  which may
vary on a seasonal basis. In the Company's propylene  fractionation business and
isomerization  business,  the Company generally attempts to match the timing and
price of its feedstock  purchases  with those of the sales of end products so as
to reduce exposure to fluctuations in commodity prices. The Company's  operating
margins from its natural gas processing  business are generally derived from the
margins  earned on the sale of purity NGL  products  extracted  from natural gas
streams.  To the extent it takes title to the NGLs  removed from the natural gas
stream and reimburses the producer for the reduction in the British thermal unit
("Btu") content and/or the natural gas used as fuel (the "PTR" or  "shrinkage"),
the  Company's  margins are  affected  by the prices of  NGLs and  natural  gas.
Management  uses  financial  instruments to reduce its exposure to the change in
the prices of NGLs and natural gas.

                                       19
The Company  will  continue to analyze  potential  acquisitions,  joint
ventures or similar  transactions  with businesses that operate in complementary
markets and  geographic  regions.  In recent years,  major oil and gas companies
have sold  non-strategic  assets including  assets in the midstream  natural gas
industry in which the Company operates. Management believes that this trend will
continue,  and the Company expects  independent oil and natural gas companies to
consider  similar  options.  In the last two years,  the Company  has  announced
several  acquisitions,  the largest of which are Tejas Natural Gas Liquids,  LLC
("TNGL")  (completed  in the  third  quarter  of  1999)  and  Acadian  Gas,  LLC
("Acadian")  (announced in September 2000 and pending  completion).  See "Recent
Acquisitions" under the "Results of Operations of the Company" section below for
further details on these and other acquisition transactions.

Business Environment

         The  domestic  and  international  economies  continue  to  be  strong,
creating  firm demand for the products  and services of the U. S. NGL  industry.
Each of the Company's  business segments have benefited from steady domestic and
international demand for NGLs, petroleum liquids and MTBE.

         During  the  first  nine  months of 2000,  the  Company's  natural  gas
processing  business  was  running at  optimal  levels due to a strong NGL price
environment  and robust demand for natural gas processing  services by producers
such as Shell, the Company's largest natural gas processing customer. The strong
NGL price  environment  has  supported  full NGL recovery at the  Company's  gas
processing  plants.  Recent increases in natural gas prices may moderate maximum
recovery  levels  for some NGL  products  (primarily  ethane)  during the fourth
quarter of 2000.  An  increase  in natural  gas  production  that is high in NGL
content, which will be available for processing as producers respond to the high
natural  gas  price  environment,  is  expected  to offset  to some  degree  the
potential decline in product recovery levels.

         The Company's NGL production in 2000 has  significantly  increased over
1999 levels as a result of steady to growing  levels of natural  gas  production
available  for  processing,  higher NGL content  natural gas and new  processing
facilities,  such as the Company's Neptune plant. Neptune was brought on-line in
February 2000 and is now producing in excess of 16 MBPD.  For the three and nine
months ended  September  30, 2000,  equity NGL  production  at the Company's gas
processing facilities averaged 73 MBPD and 72 MBPD, respectively, as compared to
65 MBPD during the third quarter of 1999. Management believes that the Company's
equity NGL  production  volumes  will  continue to increase  during  2001.  This
increase will result from gas production coming on-line from several new Gulf of
Mexico gas fields to which the Company  holds gas  processing  rights,  the most
significant  of which is Shell's  deepwater  Brutus  development  (with expected
equity NGL production of 10 MBPD by the end of 2001).

         The highly competitive  environment in which the Company's Mont Belvieu
NGL fractionators  operate has continued to suppress NGL  fractionation  fees at
these facilities.  The Company has and is continuing to aggressively acquire new
and  reacquire  previous  NGL  fractionation  customers,   along  with  offering
competitively-priced   bundled  service   packages   involving   transportation,
fractionation  and other services.  These service  packages allow the Company to
take full  advantage of its presence  throughout the entire Gulf Coast NGL value
chain.  As a result  of  these  efforts,  throughput  at the  Mont  Belvieu  NGL
fractionation  facility has increased  significantly  in 2000. For the three and
nine months ended September 30, 2000, throughput averaged 174 MBPD and 169 MBPD,
respectively,  as compared  to 149 MBPD and 155 MBPD during the same  periods in
1999. Throughput levels at the Company's Louisiana NGL fractionation  facilities
have also increased due to additional production from gas processing facilities.
With the  completion of the Lou-Tex NGL Pipeline in the fourth  quarter of 2000,
the  Company  will  be   positioned  to  fully  utilize  its  Mont  Belvieu  NGL
fractionation  facilities to process NGL's from Louisiana  starting in the first
quarter of 2001.

         The demand for the Company's commercial  isomerization services depends
on requirements for isobutane in excess of naturally occurring isobutane that is
produced from NGL  fractionation and refinery  operations.  The market for these
services  has been  firm in 2000 due to the  continued  need for  isobutane  for
alkylation,  propylene  oxide, and as a feedstock for MTBE.  Management  expects
that this market will remain steady throughout the remainder of 2000.

                                       20
During  the  third  quarter  of 2000,  the  rapid  price  increase  for
propylene experienced during the first half of 2000 began to reverse. During the
first half,  propylene prices were driven by the dramatic increases in crude oil
and NGL prices.  These factors  contributed to similar increases in the cost for
ethylene and  propylene  from steam  crackers and for refinery  grade  propylene
produced by refineries. In addition, the price spike in motor gasoline created a
very  competitive  market for refinery grade propylene used in the production of
alkylate which is blended to motor  gasoline.  With the perceived  stabilization
and  potential  softening  in crude  oil  prices,  propylene  buyers  have  been
successful in achieving  price  reductions  by reducing  purchases and consuming
inventory.   Contract  prices  for  polymer  grade   propylene   increased  from
approximately  19.5 cents per pound at the  beginning  of 2000 to 27.5 cents per
pound  by the end of June.  By the end of  September,  the  contract  price  had
slipped to 24 cents per pound.  Management anticipates that prices will continue
to soften  throughout  the remainder of this year with the price leveling out to
that seen in the  beginning  of 2000.  The  Company is  exposed  to these  price
decreases  only to the  extent  that it  sells  product  pursuant  to  long-term
agreements with market-based pricing or spot market transactions.

         Favorable  domestic  economic  conditions  have led to an  increase  in
demand for the Company's pipeline  transportation services as NGL feedstocks and
products are being  consumed at record levels  throughout the Gulf Coast region.
Pipeline  throughput  has also  increased as a result of strategic  acquisitions
made by the Company,  such as the purchase of the Lou-Tex Propylene  Pipeline in
the first quarter of 2000. The Company expects  pipeline  throughput to continue
to increase as new projects such as the Lou-Tex NGL Pipeline become operational.
The Company anticipates using the Lou-Tex NGL Pipeline to transport NGL products
and mixed  propane/propylene  streams between the Louisiana and Texas markets to
take  advantage  of  product  value  differentials  between  the two  regions in
addition to transporting  production from Louisiana gas processing facilities to
Mont Belvieu for fractionation.

         During the second quarter of 2000, Belvieu Environmental Fuels' ("BEF")
MTBE operations benefited from tight international  supplies as Middle East MTBE
volumes were diverted to European  countries  instead of the United States.  The
spot price  increased to near record  levels in the second  quarter of 2000 when
the lower  imports were met with the  increased  seasonal  demands from domestic
gasoline producers.  During the second quarter of 2000, MTBE prices reached near
record levels  averaging  $1.32 per gallon ($1.58 during the month of June).  As
refiners  decreased  demand and imports  returned to the domestic  market,  MTBE
market prices began to decline in the third quarter to  approximately  $1.11 per
gallon by the end of September.  The Company's operating results from its Octane
Enhancement  segment  are  impacted  by changes  in market  prices  since  BEF's
contract with Sunoco, Inc. R&M ("Sun"),  which is contracted to purchase 100% of
BEF's MTBE  production,  is based on a  market-related  negotiated  price.  As a
result,  management believes that gross operating margin in this segment will be
affected  by  seasonal  variations  in the  demand for motor  gasoline  which is
normally  greater in the April to September  period  (i.e.,  the summer  driving
season) than the October to March period.  Management  expects fourth quarter of
2000  gross  operating  margin  from  Octane  Enhancement  will be less than the
results posted for the third quarter of 2000.

                                       21
The following table  illustrates  selected average quarterly prices for
natural gas,  crude oil, selected  NGL  products  and  polymer  grade  propylene
since the first quarter of 1999:
Polymer
                      Natural                                             Normal                    Grade
                        Gas,      Crude Oil,    Ethane,     Propane,     Butane,     Isobutane,  Propylene,
                      $/MMBtu      $/barrel    $/gallon     $/gallon     $/gallon     $/gallon     $/pound
                        (a)          (b)          (c)         (c)          (c)          (c)          (c)
                    -----------------------------------------------------------------------------------------
Fiscal 1999:
First quarter           $1.70       $13.05       $0.20        $0.24        $0.29        $0.31       $0.12
   Second quarter          $2.12       $17.66       $0.27        $0.31        $0.37        $0.38       $0.13
   Third quarter           $2.56       $21.74       $0.34        $0.42        $0.49        $0.49       $0.16
   Fourth quarter          $2.52       $24.54       $0.30        $0.41        $0.52        $0.52       $0.19

Fiscal 2000:

   First quarter           $2.49       $28.84       $0.38        $0.54        $0.64        $0.64       $0.21
   Second quarter          $3.41       $28.79       $0.36        $0.52        $0.60        $0.68       $0.26
   Third quarter           $4.22       $31.61       $0.40        $0.60        $0.68        $0.67       $0.26
Notes:
(a)  Natural gas, NGL and polymer grade propylene prices represent an average of
     index prices
(b)  Crude Oil price is representative of West Texas Intermediate

Results of Operation of the Company

         The  Company has five  reportable  operating  segments:  Fractionation,
Pipeline,  Processing,  Octane Enhancement and Other. Fractionation includes NGL
fractionation,  butane isomerization  (converting normal butane into high purity
isobutane) and polymer grade propylene fractionation 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" or "margin").  Gross
operating  margin reported for each segment  represents  operating income 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.

                                       22
The  Company's  gross  operating  margin by segment  (in  thousands  of
dollars) along with a  reconciliation  to consolidated  operating income for the
three and nine month periods ended September 30, 2000 and 1999 were as follows:
For Three Months Ended                For Nine Months Ended
                                                            September 30,                         September 30,
                                                        2000              1999                2000             1999
                                                  -----------------------------------   -----------------------------------

Gross Operating Margin by segment:
Fractionation                                       $   32,510       $   36,142          $   96,432        $   78,955
     Pipeline                                                10,292            6,985              39,120            15,836
     Processing                                              29,083            7,110              87,123             6,677
     Octane enhancement                                       2,190            2,519              13,002             4,756
     Other                                                      429              170               1,854               651
                                                  -----------------------------------   -----------------------------------
Gross Operating margin total                                 74,504           52,926             237,531           106,875
     Depreciation and amortization                            9,029            7,012              25,907            16,368
     Retained lease expense, net                              2,660            2,645               7,984             7,978
     Loss (gain) on sale of assets                             (27)              (1)               2,276               122
     Selling, general and administrative expenses             6,978            3,200              20,020             9,200
                                                  -----------------------------------   -----------------------------------
Consolidated operating income                            $   55,864       $   40,070          $  181,344        $   73,207
                                                  ===================================   ===================================
The Company's  significant  plant  production and other volumetric data
(in  thousands  of  barrels  per day on an equity  basis) for the three and nine
month periods ended September 30, 2000 and 1999 were as follows:
For Three Months Ended                For Nine Months Ended
                                                            September 30,                         September 30,
                                                        2000              1999                2000             1999
                                                  -----------------------------------   -----------------------------------
Plant production and operating data:
NGL Production                                    73               65                  72                65
        NGL Fractionation                                214              201                 215               178
        Isomerization                                     84               77                  77                73
        Propylene Fractionation                           34               26                  31                27
        MTBE                                               6                4                   5                 4
        Major Pipelines                                  278              264                 323               230
In order to more  accurately  compare  operating rates between the 2000
and 1999 periods, the 1999 volumes associated with the assets acquired from TNGL
have been adjusted to reflect the period in which the Company owned them.

Recent Acquisitions

         1999  Acquisitions.  The Company completed two acquisitions  during the
third quarter of 1999.  Effective August 1, 1999, the Company acquired TNGL from
Shell,  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

                                       23
using the  purchase  method.  The value of the 20-year  natural  gas  processing
agreement  (classified  as an Intangible  Asset on the balance  sheet) was $80.2
million at September 30, 2000 and $54.0 million at December 31, 1999.  The value
has been  adjusted  for the 3.0 million  additional  special  partnership  Units
issued  to  Shell  on  August  1,  2000,  finalization  of  purchase  accounting
adjustments and related amortization.

         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 income from unconsolidated affiliates.

         The results of  operations  for the three and nine month  periods ended
September 30, 1999 include two month's  impact of the  businesses  acquired from
TNGL and three month's impact of the additional ownership interest acquired as a
result of the MBA  transaction.  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.

         2000  Acquisitions.  On September 25, 2000, the Company  announced that
its  Operating  Partnership  has  executed a  definitive  agreement  to purchase
Acadian Gas, LLC ("Acadian")  from Coral Energy,  LLC, an affiliate of Shell Oil
Company, for $226 million in cash, inclusive of working capital. The acquisition
of Acadian  integrates  natural gas pipeline systems in South Louisiana with the
Company's Gulf Coast natural gas processing and NGL fractionation,  pipeline and
storage system. Acadian's assets are comprised of the 438-mile Acadian, 577-mile
Cypress and 27-mile Evangeline natural gas pipeline systems, which together have
over one billion  cubic feet  ("Bcf")  per day of  capacity.  These  natural gas
pipeline  systems  are  wholly-owned  by  Acadian  with  the  exception  of  the
Evangeline system in which Acadian holds an approximate 49.5% economic interest.
The system  includes a leased  natural  gas storage  facility at  Napoleonville,
Louisiana with 3.4 Bcf of capacity. Completion of this transaction is subject to
certain conditions,  including regulatory approvals. The purchase is expected to
be completed in the fourth quarter of 2000.

Three Months Ended September 30, 2000 compared with Three Months Ended September
30, 1999

         Revenues,  Costs and  Expenses  and  Operating  Income.  The  Company's
revenues  increased 62% to $721.9  million in 2000 compared to $445.0 million in
1999.  The  Company's  operating  costs and expenses  increased by 64% to $659.0
million in 2000 versus $401.8 million in 1999. Operating income increased 39% to
$55.9 million in 2000 from $40.1 million in 1999.  The principal  factors behind
the increase in operating  income were (a) the improvement in NGL product prices
in  2000  versus  1999  and (b)  the  additional  margins  associated  with  the
businesses acquired in the TNGL acquisition. The 1999 period includes two months
of margins  associated with the TNGL operations whereas the 2000 period includes
three months.

         Fractionation.  For the third quarter of 2000,  gross operating  margin
for the  Fractionation  segment was $32.5  million  compared to $36.1 million in
1999. NGL  fractionation  margin increased $3.3 million in 2000 compared to 1999
primarily due to additional  margins from the  fractionators  acquired from TNGL
(i.e., Norco, Promix, Venice and Tebone). As noted earlier, the third quarter of
1999  includes  only two months of margin from these  fractionators  whereas the
third quarter of 2000 includes three months.  On a net basis, NGL  fractionation
volumes  increased  from  201 MBPD in 1999 to 214  MBPD in 2000  reflecting  the
Company's  successful campaign to increase its customer base at its Mont Belvieu
facilities.  Gross operating margin from the isomerization  business decreased a
net  $6.3  million  during  the  third  quarter  of  2000  primarily  due to the
reclassification  of margins from NGL merchant  activities that,  beginning with
the implementation of the current segment reporting  structure which was adopted
effective  with the beginning of the fourth quarter of 1999, are now reported in
the Processing segment.  Isomerization volumes increased from 77 MBPD in 1999 to
84 MBPD in 2000  due to  increased  demand  for the  Company's  services.  Gross
operating margin from the Company's propylene  fractionation  business decreased
slightly  primarily  due to  higher  energy  and  maintenance  costs.  Propylene
fractionation  volumes  increased from 26 MBPD in 1999 to 34 MBPD in 2000 due to
the startup of the BRPC facilities in July 2000.

                                       24
Pipeline.  The  Company's  gross  operating  margin  from the  Pipeline
segment was $10.3  million in the third quarter of 2000 compared to $7.0 million
during the same period in 1999.  Overall  volumes  increased to 278 MBPD in 2000
versus 264 MBPD in 1999.  The $3.3 million  increase  from quarter to quarter is
generally  attributable to the addition of margins from the pipeline and storage
assets  acquired from TNGL. As noted earlier,  the 1999 period includes only two
months of margin from these assets whereas the 2000 period reflects three months
of operations.

         Processing.  The Company's  gross  operating  margin for Processing was
$29.1  million  in 2000  compared  to $7.1  million  in  1999.  Due to the  TNGL
acquisition,  the  1999  margin  includes  only  two  months  of gas  processing
operations whereas the third quarter of 2000 includes three months. This segment
benefited  from  the strong  NGL  pricing  environment in 2000 versus 1999 and a
rise in equity NGL production from 65 MBPD in 1999 to 73 MBPD in 2000.

         Octane  Enhancement.  The Company's gross  operating  margin for Octane
Enhancement  decreased to $2.2  million in 2000 from $2.5  million in 1999.  The
decrease is the result of lower  margins on spot MTBE sales in the third quarter
of 2000 versus the margins on contract-based  MTBE sales in the third quarter of
1999. Equity MTBE production increased to 6 MBPD in 2000 from 4 MBPD in 1999.

         Other.  The Company's gross operating  margin for the Other segment was
$0.4 million in 2000 compared to $0.2 million in 1999. The increase is primarily
due to fee-based marketing services added in the fourth quarter of 1999.

         Selling,  general and administrative  expenses ("SG&A").  SG&A expenses
increased to $7.0 million in the third quarter of 2000 from $3.2 million  during
the same  period in 1999.  The  higher  costs  result  from an  increase  in the
administrative  services fee charged by EPCO to $1.6 million per month beginning
in January 2000 versus the  approximately  $1.1 million per month charged in the
third  quarter of 1999.  The  remainder of the increase is  attributable  to the
additional staff and resources deemed necessary to support the Company's ongoing
expansion activities resulting from acquisitions and other business development.

         Interest  expense.  The Company's  interest  expense  increased to $7.5
million in the third  quarter of 2000 from $4.5 million in the third  quarter of
1999. The increase is primarily attributable to a rise in average debt levels to
$437 million in the third quarter of 2000 from $255 million in the third quarter
of 1999. Debt levels have increased over the last year due to  acquisitions  and
various capital expenditures.

Nine Months Ended  September 30, 2000 compared with Nine Months Ended  September
30, 1999

         Revenues,  Costs and  Expenses  and  Operating  Income.  The  Company's
revenues  increased 170% to $2,079.6  million in 2000 compared to $771.4 million
in 1999.  The  Company's  operating  costs  and  expenses  increased  by 173% to
$1,878.2  million  in 2000  versus  $689.0  million  in 1999.  Operating  income
increased  148% to  $181.3  million  in 2000 from  $73.2  million  in 1999.  The
principal  factors  behind  the  increase  in  operating  income  were  (a)  the
improvement  in NGL product  prices in 2000  versus 1999 and (b) the  additional
margins  associated with the businesses  acquired in the TNGL  acquisition.  The
1999 period  includes two months of margins  associated with the TNGL operations
whereas the 2000 period includes nine months.

         Fractionation.   The   Company's   gross   operating   margin  for  the
Fractionation  segment  increased to $96.4 million in 2000 from $79.0 million in
1999.  For the first nine months of 2000,  NGL  fractionation  margin  increased
$29.4 million over 1999 as a result of the additional  margins from the four NGL
fractionators acquired from TNGL. As noted previously,  the 1999 period includes
only two  months of margin  from these  fractionators  whereas  the 2000  period
includes  nine  months.  In  addition,  equity  income from BRF  reflects  three
quarters  of  operations  in 2000  versus  one  quarter in 1999.  BRF  commenced
operations in the third quarter of 1999. Net NGL fractionation volumes increased
from  178  MBPD in 1999 to 215  MBPD  in  2000  primarily  due to the  Company's
acquisition of new and previous  customers at its Mont Belvieu NGL  fractionator
in 2000 and the increased  ownership of the Mont Belvieu NGL  fractionator  as a
result  of the MBA  acquisition.  For the  first  nine  months  of  2000,  gross
operating  margin  from  the  isomerization  business  decreased  $10.0  million
compared  to 1999  primarily  due to a  reclassification  of  margins  from  NGL
merchant  activities  that,  beginning  with the  implementation  of the current

                                       25
segment reporting  structure which was adopted effective with the fourth quarter
of 1999,  are now  reported in the  Processing  segment.  Isomerization  volumes
increased  from 73 MBPD in 1999 to 77 MBPD in 2000 due to strong  demand for the
Company's services.  Gross operating margin from propylene fractionation for the
first nine months of 2000 decreased  slightly  compared to 1999 primarily due to
higher energy and  maintenance  costs.  Net equity  volumes at these  facilities
improved  to 31 MBPD in 2000  versus 27 MBPD in 1999 due to the  startup  of the
BRPC propylene concentrator in July 2000.

         Pipeline. The Company's gross operating margin for the Pipeline segment
was $39.2  million in 2000 compared to $15.8  million in 1999.  Overall  volumes
increased  to 323  MBPD in 2000  from 230 MBPD in  1999.  Generally,  the  $23.4
million increase in margin is attributable to the additional volumes and margins
contributed  by the  pipeline  and storage  assets  acquired  from TNGL,  higher
margins  from the Houston Ship  Channel  Distribution  System and EPIK due to an
increase in export volumes plus the margins from the Lou-Tex Propylene  Pipeline
that was purchased in March 2000.

         The growth in export volumes is attributable to EPIK's new chiller unit
that began  operations in the fourth  quarter of 1999. 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
up to 50 MBPD of 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.

         Processing.  The Company's  gross  operating  margin for Processing was
$87.1  million  in 2000  compared  to $6.7  million  in  1999.  Due to the  TNGL
acquisition,  the  1999  margin  includes  only  two  months  of gas  processing
operations whereas the 2000 period includes nine months.  This segment benefited
from the strong NGL pricing environment in 2000 versus 1999 and a rise in equity
NGL production from 65 MBPD in 1999 to 72 MBPD in 2000.

         Octane  Enhancement.  The Company's gross  operating  margin for Octane
Enhancement  increased to $13.0 million in 2000 from $4.8 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 early third quarter and lower debt
service costs. BEF made 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 1999 and
5 MBPD in 2000.

         Other.  The Company's gross operating  margin for the Other segment was
$1.9 million in 2000 compared to $0.7 million in 1999. The increase is primarily
due to fee-based marketing services added in the fourth quarter of 1999.

         Selling,  general and administrative  expenses. SG&A expenses increased
to $20.0 million in 2000 from $9.2 million  during 1999. The higher costs result
from an  increase  in the  administrative  services  fee charged by EPCO to $1.6
million  per month  beginning  in January  2000  versus the  approximately  $1.0
million per month charged in 1999. The remainder of the increase is attributable
to the additional  staff and resources deemed necessary to support the Company's
ongoing  expansion  activities  resulting from  acquisitions  and other business
development.

         Interest  expense.  The Company's  interest expense  increased to $23.3
million  in  2000  from  $8.9  million  in  1999.   The  increase  is  primarily
attributable  to a rise in average debt levels to $395 million in 2000 from $170
million  in  1999.  Debt  levels  have  increased  over  the  last  year  due to
acquisitions and various capital expenditures.

         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.

                                       26
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 nine  months  ended
September 30, 2000 have increased  significantly  over the amounts shown for the
three and nine months ended  September 30, 1999.  The following  table  presents
certain  unaudited pro forma  information as if the TNGL and MBA acquisition had
been made as of January 1, 1999:
Three               Nine
                                                          Months             Months
                                                          Ended              Ended
                                                -------------------------------------
                                                             September 30, 1999
                                                -------------------------------------
Revenues                                               $  506,944        $ 1,151,444
                                                =====================================
Net income                                             $   40,586        $    80,698
                                                =====================================
Allocation of net income to
      Limited partners                                 $   40,180        $    79,891
                                                =====================================
      General Partner                                  $      406        $       807
                                                =====================================
Units used in earning per Unit calculations
      Basic                                                66,696             66,715
                                                =====================================
      Diluted                                              81,196             81,215
                                                =====================================
Income per Unit before minority interest
      Basic                                            $     0.61        $      1.21
                                                =====================================
      Diluted                                          $     0.50        $      0.99
                                                =====================================
Net income per Unit
      Basic                                            $     0.60        $      1.20
                                                =====================================
      Diluted                                          $     0.49        $      0.98
                                                =====================================
The unaudited pro forma  information  does not include the impact of the pending
Acadian  acquisition.  As noted above,  completion of this  transaction is still
subject to certain conditions, including regulatory approvals.

Liquidity and Capital Resources

         General. The Company's primary cash requirements, in addition to normal
operating  expenses,   are  for  capital   expenditures  (both  maintenance  and
expansion-related),  business  acquisitions,  distributions  to the partners and
debt service. The Company expects to fund its short-term needs for such items as
maintenance  capital  expenditures  and quarterly  distributions to the partners
from operating cash flows.  Capital  expenditures  for long-term needs resulting
from future  expansion  projects  and business  acquisitions  are expected to be
funded by a variety of sources including  (either  separately or in combination)
cash flows from operating  activities,  borrowings under bank credit  facilities
and the issuance of additional  Common Units and public debt. The Company's debt
service  requirements  are  expected  to be funded by  operating  cash  flows or
refinancing arrangements.

         As noted above, certain of the Company's liquidity and capital resource
requirements are met using borrowings  under bank credit  facilities  and/or the
issuance  of  additional   Common  Units  or  public  debt   (separately  or  in
combination).  As of  September  30,  2000,  availability  under  the  Operating
Partnership's  $350 Million Bank Credit  Facility was $300.0  million plus $26.7
million for letters of credit. The Company is in the process of refinancing this

                                       27
credit  facility with a $400 million  long-term  revolving bank credit  facility
(increasing to $500 million under certain conditions). The refinancing effort is
expected to be completed in the fourth quarter of 2000.

         In addition  to the  existing  and  potential  bank credit  facilities,
approximately $450 million of shelf availability  remains  outstanding under the
Company's $800 million December 1999 universal shelf registration statement (the
"Registration  Statement") which may be used for general  partnership  purposes.
$350 million of shelf  availability  was used in March 2000 with the issuance of
the $350  Million  Senior  Notes.  For a  broader  discussion  of the  Company's
outstanding  debt and changes  therein since  December 31, 1999, see the section
below labeled "Long-term Debt". In June 2000, the Company received approval from
its  Unitholders to increase by 25,000,000 the number of Common Units  available
(and  unreserved)  to the Company for general  partnership  purposes  during the
Subordination   Period.   This  increase  has  improved  the  future   financial
flexibility of the Company in any potential business acquisition (see "Amendment
to Partnership Agreement" below for further details).

         If deemed  necessary,  management  believes that  additional  financing
arrangements can be obtained at reasonable terms.  Management  believes that the
maintenance of its investment grade credit ratings of its Operating  Partnership
(currently,  Baa3 by Moody's  Investor  Service and BBB by  Standard  and Poors)
combined with a continued  ready access to debt and equity capital at reasonable
rates and sufficient  trade credit to operate its businesses  efficiently  are a
solid  foundation to providing the Company with ample resources to meet its long
and short-term liquidity and capital resource requirements.

Operating,  Investing and Financing  Cash Flows for Nine Months Ended  September
30, 2000 and 1999

         Cash flows from  operating  activities  were a $177.9 million inflow in
2000  compared  to a $54.7  million  inflow in 1999.  Cash flows from  operating
activities  primarily  reflect  the  effects  of net  income,  depreciation  and
amortization,   extraordinary   items,  equity  income  and  distributions  from
unconsolidated  affiliates and changes in working capital.  Net income increased
significantly  in 2000  over  1999 due to  reasons  mentioned  previously  under
"Results of Operations of the Company."  Depreciation and  amortization  expense
increased a combined  $10.7  million in 2000 over 1999  primarily  the result of
additional capital expenditures and acquisitions. Of the $10.7 million increase,
$3.4 million is  attributable to increases in  amortization  expense  associated
with the 20-year Shell natural gas processing agreement,  excess cost related to
past  acquisitions  and loan  origination  and bond  issue  costs.  The  Company
received $26.0 million in  distributions  from its equity method  investments in
2000  compared  to $4.6  million  in 1999.  Of the  $21.4  million  increase  in
distributions,   $7.5   million  was  from  BEF  and  $5.3  million  from  EPIK.
Distributions  from BEF improved  period to period due to the strong MTBE prices
and margins during the second quarter of 2000. EPIK's distributions increased as
a result of higher  export  activity  during  the first six  months of 2000.  In
addition,  the first nine months of 2000  included $5.5 million in cash receipts
from  Promix  which was  acquired as a result of the TNGL  acquisition.  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 used for investing  activities was $195.9 million in 2000 compared
to $260.4 million in 1999. Cash outflows included capital expenditures of $200.2
million in 2000  versus  $10.6  million in 1999.  Capital  expenditures  in 2000
include  $99.6  million for the purchase of the Lou-Tex  Propylene  Pipeline and
related assets, $71.5 million in construction costs for the Lou-Tex NGL Pipeline
and $4.1 million in construction costs for the Neptune gas processing  facility.
In addition,  capital  expenditures include maintenance capital project costs of
$2.3 million in 2000 and $1.7 million in 1999. The 1999 period  reflects  $208.1
million  in net cash  payments  resulting  from  the TNGL and MBA  acquisitions.
Investing  cash  outflows  in 2000  include  $2.3  million  in  advances  to and
investments in unconsolidated  affiliates compared to $58.5 million in 1999. The
$56.2 million  decrease is primarily  due to the  completion of the BRF facility
and the Tri-States and Wilprise  pipeline systems in 1999. The first nine months
of  1999  included  $35.3  million  in  investments  in and  advances  to  these
companies.  Lastly,  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.

         On March 8, 2000,  the Company's  offer of February 23, 2000 to buy the
remaining  88.5%  ownership  interests  in Dixie  from the  other  seven  owners
expired,  with no  interest  being  purchased.  On October 6, 2000,  the Company
announced that a subsidiary  had purchased an additional  3,521 shares of common

                                       28
stock of Dixie from Conoco Pipe Line Company for  approximately  $19.4  million.
The purchase brings the Company's  economic  interest in Dixie to  approximately
19.9%.

         Cash  inflows  from  financing  activities  were $54.2  million in 2000
compared to $203.3  million in 1999.  Cash flows from  financing  activities are
primarily  affected by repayments of debt,  borrowings under debt agreements and
distributions  to partners.  The first nine months of 2000 include proceeds from
the $350 Million  Senior Notes and the $54 Million MBFC Loan and the  associated
repayments on the $200 Million Bank Credit Facility and $350 Million Bank Credit
Facility. For a complete discussion of the $350 Million Senior Notes and the $54
Million  MBFC Loan and the use of  proceeds  thereof,  see the  section  labeled
"Long-term  Debt" below.  Financing  activities  in 1999 include the  borrowings
associated  with the TNGL and MBA  acquisitions  and  outflows  of $4.7  million
related to the purchase of Common Units by a consolidated  trust.  Distributions
to partners and the minority  interest  increased to $104.4 million in 2000 from
$82.2 million in 1999 primarily due to an increase in the quarterly distribution
rate (see Note 6 in the Notes to the  Consolidated  Financial  Statements  for a
history of the quarterly distribution rates since the first quarter of 1999).

         In July 2000, the Company  announced a 1,000,000 Unit buy-back  program
of its  publicly-owned  Common  Units to be  executed  over a  two-year  period.
Management's intent is to opportunistically  acquire Common Units during periods
of  temporary  market  weakness at price  levels that would be  accretive to the
Company's  remaining  Unitholders.  The repurchase program will be balanced with
plans to grow the Company through  investments in internally  developed projects
and  acquisitions,  while  maintaining  an  investment  grade debt  rating.  The
redemption  program  will be funded by  increased  cash  distributions  from the
Operating  Partnership  from operating cash flows and borrowings  under its bank
credit facilities. During the third quarter of 2000, 17,200  Common  Units  were
repurchased by the buy-back program at a cost of approximately $0.5 million.

         Dividends received from unconsolidated affiliates. The Company received
$2.2 million in cash  distributions  from its cost method  investments  in Dixie
($0.4  million) and VESCO ($1.8  million)  during the third quarter of 2000. For
the nine months ended September 30, 2000, cash  distributions  were $1.1 million
from Dixie and $5.1 million from VESCO.  Cash  distributions  received  from the
Company's  cost  method  investments  are  recorded  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.

         Future Capital Expenditures

          The Company  estimates  that its share of currently  approved  capital
expenditures  in  the  projects  of  its   unconsolidated   affiliates  will  be
approximately  $1.7 million during the remainder of 2000 (including $0.7 million
for the BRPC propylene  fractionator) and $0.1 million in 2001. In addition, the
Company  forecasts that $48.2 million will be spent during the fourth quarter of
2000 on currently  approved  capital projects that will be recorded as property,
plant and equipment.  For 2001 and beyond,  this amount is projected to be $41.8
million. Of the cumulative $90.0 million forecast to be spent on property, plant
and equipment,  the most significant  projects and their remaining  expenditures
are as follows:
     -    $ 18.8 million for the Garyville, Louisiana to Norco, Louisiana butane
          pipelines;
     -    $ 12.9 million for the Port Arthur,  Texas to Lake Charles,  Louisiana
          propylene pipeline system;
     -    $ 12.5 million for the Venice,  Louisiana  to Grande  Isle,  Louisiana
          pipeline;
     -    $ 8.2 million for the Lou-Tex NGL Pipeline; and
     -    $ 4.6 million for the Norco fractionator ethane liquefaction facility.
         As of September 30, 2000,  the Company had $13.7 million in outstanding
purchase commitments  attributable to its capital projects. Of this amount, $4.5
million is related to the  construction  of the  Lou-Tex NGL  Pipeline  and $0.6
million is associated with capital projects which will be recorded as additional
investments in unconsolidated affiliates.

         Long-term Debt

         Long-term  debt at September  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"),  a 10-year $54
million loan agreement with the Mississippi Business Finance Corporation ("MBFC"
and the "$54  Million  MBFC  Loan") and $50 million  outstanding  under the $350

                                       29
Million Bank Credit  Facility.  The  issuance of the $350  Million  Senior Notes
represented a partial takedown of the $800 million  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 at the time of the
offerings.

         The following table summarizes long-term debt at:

                                           September 30,       December 31,

                                               2000                1999
                                          --------------------------------------
Borrowings under:
     $200 Million Bank Credit Facility                              $   129,000
     $350 Million Bank Credit Facility           $   50,000             166,000
     $350 Million Senior Notes                      350,000
     $54 Million MBFC Loan                           54,000
                                          --------------------------------------
            Total                                   454,000             295,000
Less current maturities of long-term debt            50,000             129,000
                                          --------------------------------------
            Long-term debt                      $   404,000         $   166,000
                                          ======================================

         At September  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.

         Bank Credit Facilities

         $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 credit 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 credit facility.
The $300 million  revolving  credit 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.  Due to borrowings in the third
quarter for investment and working capital purposes, $50 million was outstanding
under this facility at September 30, 2000.

         The credit agreement  relating to this facility  contains a prohibition
on distributions to or purchases 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  credit  agreement  generally  prohibits
redemptions of Units except for those transactions related to the 1,000,000 Unit
Buy-back Program announced in July 2000. In August 2000, the lenders and Company
executed a waiver allowing for this program.  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

                                       30
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 September 30, 2000.

         As noted above, the Company is pursuing a refinancing  arrangement with
a group of banks to  terminate  this  facility  and  replace  it with a new $400
Million  Bank  Credit  Facility   (increasing  to  $500  million  under  certain
conditions). The completion of this refinancing project is subject to continuing
negotiations between the parties involved and is expected to be finalized during
the fourth quarter of 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 (a) the entire $169 million outstanding  principal
balance on the $200  Million  Bank Credit  Facility  and (b) $179 million of the
$226 million then 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 September 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 then  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
insurance on the  Pascagoula  natural gas processing  facility and  restrictions
regarding  mergers.  The  Company  was  in  compliance  with  these  restrictive
covenants at September 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.   At  September  30,  2000,  the  Operating

                                       31
Partnership's  consolidated debt portfolio interest rate exposure was 55 percent
fixed and 45 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 $0.4 million and $0.9 million for the three
and nine months ended September 30, 2000, respectively.  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
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

                                       32
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 December 1999, the Securities and Exchange Commission ("SEC") issued
Staff  Accounting  Bulletin  ("SAB") No. 101 " Revenue  Recognition in Financial
Statements."  SAB 101  summarizes  certain  of the  staff's  views  in  applying
generally  accepted  accounting  principles to revenue  recognition in financial
statements. On June 26, 2000, the SEC issued an amendment to SAB 101 effectively
delaying its  implementation  until the fourth quarter of fiscal years beginning
after December 15, 1999. The Company  believes that the adoption of SAB 101 will
not have a material effect on its results of operations.

         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.

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.

         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.

                                       33
Interest rate risk

         Variable-rate  Debt. At September  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.  At September 30, 2000, $50 million was  outstanding  under this
credit facility.

         If  the  weighted   average  base  interest   rates   selected  on  the
variable-rate  long-term  debt during 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.  If the same calculation were performed on the variable-rate
long-term debt outstanding during 2000, interest expense would have increased by
approximately  $0.5 million  with a  corresponding  decrease in earnings  before
minority interest.

         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 in March 2000, 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.   At  September  30,  2000,  the  Operating
Partnership's  consolidated debt portfolio interest rate exposure was 55 percent
fixed and 45 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 $0.4 million and $0.9 million for the three
and nine months ended  September 30, 2000,  respectively.  Following is selected
information on the Company's portfolio of interest rate swaps at June 30, 2000:

Interest Rate Swap Portfolio at September 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% / 7.3100%
      $ 50.0 March 2000 - March 2005        March 2001         8.25% / 7.3150%
      $ 54.0 March 2000 - March 2010        March 2003         8.70% / 7.6575%

Notes:
(1)  All swaps  outstanding  at  September  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-rate  payor.  The
     floating rate was the rate in effect as of September 30, 2000.

         If the six month  LIBOR  rates on the  notional  amounts of  fixed-rate
long-term  debt at September  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 nine

                                       34
months  ended  September  30, 2000 would have  increased by  approximately  $0.3
million  and  $0.5  million,  respectively,  with a  corresponding  decrease  in
earnings before minority interest.

         Other.  At September  30, 2000 and  December 31, 1999,  the Company had
$41.4  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 September 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 September 30, 2000 was
estimated at $0.5 million  payable and $ 3.5 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  September 30, 2000 and November 1, 2000 is due to the change
in the composition of commodities hedged and settlement of November 2000 natural
gas future contracts.
(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 September 30, 2000              $   3.5       $   4.0        $  (0.5)       $   3.1        $  (0.4)
       At November 1, 2000                $   2.2       $   4.2        $   2.0        $    .2        $  (2.0)
PART II.   OTHER INFORMATION

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. For a discussion of these matters and the voting results,
see Item 4 of the Company's Form 10-Q for the period ended June 30, 2000.

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).

                                       35
*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).

*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).

                                       36
*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).

4.12    Waiver Agreement,  dated as of August 25, 2000, regarding Section 6.5 of
        the $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.

*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).

*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).

                                       37
*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).

*10.15  Purchase  and  Sale  Agreement  by and  between  Coral  Energy,  LLC and
        Enterprise  Products  Operating  L.P.  dated as of  September  22,  2000
        (Exhibit 10.1 to Form 8-K filed on September 26, 2000).

*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

                                       38
* Asterisk  indicates  exhibits  incorporated by reference as indicated;
        all other exhibits are filed herewith

         (b) Reports on Form 8-K

         On September 25, 2000, the Company filed a Form 8-K announcing that its
Operating  Partnership has executed a definitive  agreement to purchase  Acadian
Gas, LLC ("Acadian") from Coral Energy,  LLC, an affiliate of Shell Oil Company,
for $226  million in cash,  inclusive of working  capital.  The  acquisition  of
Acadian  integrates  natural gas pipeline  systems in South  Louisiana  with the
Company's Gulf Coast natural gas processing and NGL fractionation,  pipeline and
storage system. Acadian's assets are comprised of the 438-mile Acadian, 577-mile
Cypress and 27-mile Evangeline natural gas pipeline systems, which together have
over one billion  cubic feet  ("Bcf")  per day of  capacity.  These  natural gas
pipeline  systems  are  wholly-owned  by  Acadian  with  the  exception  of  the
Evangeline system in which Acadian holds an approximate 49.5% economic interest.
The system  includes a leased  natural  gas storage  facility at  Napoleonville,
Louisiana with 3.4 Bcf of capacity. Completion of this transaction is subject to
certain conditions,  including regulatory approvals. The purchase is expected to
be completed in the fourth quarter of 2000.

                                       39
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:   November 13, 2000                       Vice President, Controller
                                                and Principal Accounting Officer
ENTERPRISE PRODUCTS OPERATING L.P.

August 15, 2000

The Chase Manhattan Bank
270 Park Avenue, Floor 21
New York, New York 10017

Attn: Mr.  Steve Wood

Re:   Requested Waiver - Enterprise Products Operating L.P. ("Company") Credit
      Agreement dated as of July 28, 1999, as amended ("Credit Agreement")

Dear Steve:

         This  letter  ("Waiver  Letter")  is to seek a waiver  from  The  Chase
Manhattan Bank, as  Administrative  Agent ("Agent") under the Credit  Agreement,
and the Required Banks  thereunder as set forth herein.  All  capitalized  terms
used herein as definitions,  but not defined  herein,  are defined in the Credit
Agreement.

         As has been disclosed to you,  Enterprise Products Partners L.P. ("LP")
intends to  initiate a buy-back  program  (the  "Program")  whereby  LP,  over a
two-year time period,  would buy back up to 1,000,000  publically held Units, as
set forth in our letter of August 14,  2000 to Bill  Manias at Chase  Securities
Inc. on this  subject.  Under Section 7.5 of the Credit  Agreement,  the Company
would be  prohibited  from making  Restricted  Payments  consisting of up-stream
dividends  to LP to fund  the  Program,  and the LP  would  be  prohibited  from
conducting the Program under Section 8.1(n)(c) of the Credit Agreement.

         By signing  below,  the Agent and the Required  Banks  hereby  evidence
their  consent to a one- time waiver (i) under said Section 7.5 in order for the
Company to make  Restricted  Payments  consisting  of up-stream  dividends to LP
necessary to fund the Program and (ii) under said Section 8.1(n)(c) in order for
the LP to conduct the Program, which dividends and Program would be permitted as
long as no Default or Event of Default has occurred and is continuing  under the
Credit Agreement either before or occasioned by any such Restricted  Payment. In
addition,  the  waiver  evidenced  by this  letter  is a  one-time  event and is
permitted only through August 25, 2002. Henceforth,  the Company shall not be in
Default under the Credit Agreement,  including without  limitation  Sections 7.5
and  8.1(n)(c)  of the  Credit  Agreement,  solely by  reason of any  Restricted
Payment  consisting  of up-stream  dividends to LP prior to August 26, 2002 made
consistent  with  this  Waiver  Letter  or by the LP's  conducting  the  Program
consistent with this Waiver Letter.
Kindly  indicate  the  aforementioned  consent to waiver by signing and
returning a copy of this letter to the attention to the undersigned.

                                    Sincerely,

                                    ENTERPRISE PRODUCTS OPERATING L.P.

                           By:      Enterprise Products GP, LLC, General Partner

                                    By:    /s/ Richard H. Bachmann
                                           ----------------------------------
                                    Name:  Richard H. Bachmann
                                    Title: Executive Vice President &
                                           Chief Legal Officer

         Agreed to and Accepted as of the 25th day of August, 2000.

                                    BANKS AND AGENTS:
                                    ----------------

                                    THE CHASE MANHATTAN BANK, as
                                    Administrative Agent and as a Bank

                                    By:    /s/ Steven Wood
                                           ----------------------------------
                                    Name:  Steven Wood
                                    Title: Vice President

                                     BANK  ONE, NA (formerly known as The First
                                     National Bank of Chicago), as Documentation
                                     Agent and as a Bank

                                     By:    /s/ Dianne L. Russell
                                            ---------------------------------
                                     Name:  Dianne L. Russell
                                     Title: Vice President

                                     THE BANK OF NOVA SCOTIA, as Syndication
                                     Agent and as a Bank

                                     By:    /s/ F.C.H. Ashby
                                            ---------------------------------
                                     Name:  F.C.H. Ashby
                                     Title: Sr. Mgr. Loan Operations

                                      FIRST UNION NATIONAL BANK

                                      By:    /s/ Russell Clingman
                                             --------------------------------
                                      Name:  Russell Clingman
                                      Title: Vice President

                                      SOCIETE GENERALE, SOUTHWEST AGENCY

                                      By:    /s/ Paul E. Cornell
                                             --------------------------------
                                      Name:  Paul E. Cornell
                                      Title: Managing Director

                                       FLEET NATIONAL BANK.

                                       By:    /s/ Christopher Holmgre
                                              -------------------------------
                                       Name:  Christopher Holmgren
                                       Title: Director

                                       THE FUJI BANK, LIMITED, NEW YORK BRANCH

                                       By:    /s/ Nate Elllis
                                              -------------------------------
                                       Name:  Nate Ellis
                                       Title: Senior Vice President & Manager

                                       BANK OF TOKYO-MITSUBISHI, LTD.,
                                       HOUSTON AGENCY

                                       By:    /s/ Michael G. Meis
                                              -------------------------------
                                       Name:  Michael G. Meiss
                                       Title:  Vice President

                                       TORONTO DOMINION (TEXAS), INC.

                                       By:    /s/  Alva J. Jones
                                              -------------------------------
                                       Name:  Alva J. Jones
                                       Title: Vice President

                                       CREDIT AGRICOLE INDOSUEZ

                                       By:    /s/ Patrick Cocquerel
                                              -------------------------------
                                       Name:  Patick Cocquerel
                                       Title: FVP, Managing Director

                                       By:    /s/ Douglas A. Whiddon
                                              -------------------------------
                                       Name:  Douglas A. Whiddon
                                       Title: Senior Relationship Manager

                                       DG BANK DEUTSCHE GENOSSEN
                                       SCHAFTBANK AG, CAYMAN ISLAND BRANCH

                                       By:    /s/ Craig Anderson
                                              -------------------------------
                                       Name:  Craig Anderson
                                       Title: Vice President

                                       By:    /s/ Lynne McCarthy
                                              -------------------------------
                                       Name:  Lynne McCarthy
                                       Title: Vice President

                                       CREDIT LYONNAIS NEW YORK BRANCH

                                       By:     /s/ illegible signature
                                               -------------------------------
                                       Name:
                                       Title:

                                       FORTIS CAPITAL CORP.

                                        By:    /s/ Darrell W. Holley
                                               ------------------------------
                                        Name:  Darrell W. Holley
                                        Title: Managing Director

                                        HIBERNIA NATIONAL BANK

                                        By:    /s/ Trudy W. Nelson
                                               ------------------------------
                                        Name:  Trudy W. Nelson
                                        Title: Vice President